Topic 1 internal environment

© NSW Technical and Further Education Commission Date | Version 0.0
Develop and Implement Marketing Strategies
Topic One: Introduction to Marketing and Environmental Analysis
SITXMPR502

Overview
At the end of this topic, you should be able to:
Identify and confirm core activities, customer base, business values and current
business direction
Identify and analyse information on current and past marketing and its effectiveness
Review performance information from all areas of the business to identify strengths,
weaknesses and critical success factors
Identify any underperforming products and services and analyse and report on reasons
for under performing
Record and report information according to organisation requirements

Key definitions: Strategy
Strategy: A plan of action designed to achieve overall long-term or overall aim.
Strategic planning: Is the managerial decision process that matches the companys
resources and capabilities to its market opportunities for long-term growth.
Marketing Strategy: A plan of action for identifying and analysing a target market and
developing a marketing mix to meet the needs of that market
Tactics: The day to day operational activities (tactics) that are undertaken to fulfil the
strategic plan.

Introduction to Marketing and Marketing Terms
The following slides will take you through the main definitions for the marketing
process as an introduction. We will go more in depth in later topics.

‘Marketing is the process of planning and
executing the conception, pricing, promotion
and distribution of ideas, goods and services to
create exchanges that satisfy individual and
organisational goals.’
What is marketing?
American Marketing Association definition

What is a Marketing Objective?
• A statement of what is to be achieved through marketing activity.
• Objectives should be SMART
• Specific
• Measurable
• Achievable
• Realistic
• Timely

Marketing orientation

The marketing concept
The idea that the social and economic justification for an
organisation’s existence is the satisfaction of customer
wants and needs, while meeting organisational
objectives.

The marketing concept
Focusing on customer wants and needs can be a source of
competitive advantage through:
 creating customer value
 maintaining customer satisfaction
 building long-term relationships.

The marketing process
Organisation mission
Market opportunity
analysis
Marketing strategy
Target market
selection
Marketing objectives
Marketing
mix
•product
•distribution
•promotion
•price
Implementation
Evaluation
Environ-
mental
scan

A unique blend of
 product
 Pplace (distribution)
 promotion
 pricing strategies.
Designed to produce mutually satisfying exchanges with
a target market.
This is commonly referred to as the 4P’s and this will be
examined in depth in the marketing plan.
The marketing mix

Why is marketing important to an organisation?
It:
• is how the organisation talks to their consumer
• can add value to the product with both tangible and intangible benefits does
tangible and intangible need to be explained.
• can enable new products to be communicated and build brand awareness.
• enables a company to compete in the market.
• shows a product/company competitive advantage.
Not for profit organisations need marketing to build awareness for their cause.

Introducing consumer needs and wants
One of the greatest needs and challenges of any business is to understand and
develop marketing strategies, which best suits, their products, and services. Modern
marketing programs are established, around the “marketing concept,” which directs
managers to focus their efforts on identifying and satisfying customers’ needs.
The success of a business or organisation is the ability to attract and maintain
satisfied customers. Marketing begins and ends with a focus on the customer, who is
the most important person in the process.
If there are no customers, guests or visitors eagerly wishing to use your product then
your tourism or hospitality business will cease to exist. This should in turn lead to
the business or organisation making a profit.

Needs and wants defined (Kotler)
 A human need is a state of deprivation of some basic satisfaction. People require food,
clothing, shelter, safety, belonging, and esteem. These needs are not created by society or by
marketers. They exist in the very texture of human biology and the human condition. e.g. A
hotel if you are on holiday would be a human need
 Wants are desires for specific satisfiers of needs. Although people’s needs are few, their
wants are many. They are continually shaped and reshaped by social forces and institutions,
including churches, schools, families and business corporations. e.g. to stay in a 5 star hotel
 Demands are wants for specific products that are backed by an ability and willingness to buy
them. Companies must measure not only how many people want their product but, more
importantly, how many would actually be willing and able to buy it.

Sales orientated marketing vs Customer
orientated marketing
Sales orientated:
the idea of mass marketing is to mass-produce, mass distribute, and mass promote
one product to all buyers. Traditionally, this was the best way for businesses to
operate, as it was cheaper for a company to produce one item repeatedly, rather
than producing an item with many different variations, or a whole range of different
items. Mass production was economic for organisations; however, it did not cater for
the variety or specificity often required by customers.
Henry Ford, the founder of the motor vehicle giant Ford, strongly endorsed the mass
production philosophy. When asked about the lack of choice for customers, Ford
stated that customers could have any colour car they want, 'as long as it is black!' In
summary, sales oriented marketing focuses on the needs of organisations, rather
than the needs of customers.

Sales orientated marketing vs Customer
orientated marketing
Customer Orientated:
Gradually organisations began to recognise a major flaw in mass marketing: not
every customer needs or wants the same thing. Although mass production is a
cheap mode of production, it does not necessarily equate to high profits. Mass
produced items only appeal to a limited audience and hence have smaller sales
levels and smaller profits. On the other hand, if products or services come in a
number of varieties, and cater to a variety of different customer needs and wants,
then sales levels will be higher. e.g Think of the different style of airlines you can fly
Jetstar compared to Qantas and what they offer
Organisations began to take a completely new approach to business. With the shift
to customer oriented marketing, organisations began to research the needs and
wants of their customers prior to production. This research determined what the
customers required, and the appropriate goods or services produced

The internal environment
• The internal environment is the controllable elements within the organisation that
influences how well it operates.
• Factors that influence the organisation:
• Employees: Relates to their performance, skills, levels, training and current and future
availability
• Corporate Culture: made up of values, norms and beliefs that influence the behaviour of
everyone in the organisation. For example, corporate culture may dictate whether new
ideas are welcomed or discouraged, the importance of ethical behaviour and even the
appropriate dress for work. Think of what Richard Branson who started Virgin corporate
culture would have been like
• Corporate Social Responsibility: Company's consideration on its impact on society and
how it is perceived in the marketplace
• Customers: An organisation must examine their customers buying behaviour relating to
benefits sought, customer motivation, the buying process, frequency of purchase and how
needs change over time.

Resources to examine the internal
environment
Businesses can use a number of tools to examine their internal and external
business environment. Some of these include:
SWOT Analysis
GE Matrix
BCG Growth Share Matrix
These are examined in the slides below.

SWOT analysis
• An assessment of an organisations strengths, weaknesses, opportunities and
threats.
• Strengths and weaknesses are internal factors and are directly controllable by
marketers.
• Strengths refer to competitive advantages or core competencies
• Weaknesses refer to any limitations that a company faces in developing or implementing
marketing strategy
• Opportunities and threats are external factors that exist independently of the
organisation and therefore represent issues to be considered by all organisations
• Opportunities refer to favourable conditions in the environment that could produce rewards
for the organisation
• Threats refer to conditions or barriers that may prevent the organisation from reaching its
objectives.

SWOT analysis

SWOT explained
SWOT is a great tool to use to show both internal and external influences and can
be used to either:
• Identify areas for improvement
• Identify opportunities to take advantage of
• Can be used for a new product such as a new hotel or tourist attraction e.g. Wet
and Wild in Sydney
• Can be used to identify how we are performing in relation to our competitors e.g.
Virgin and Qantas or Flight Centre and Helloworld
View this example
• http://marketingteacher.com/swot/starbucks-swot.html

BCG Growth Share Matrix
The BCG (Boston Consulting Group) model focuses on determining the potential of
a company's existing successful Strategic Business Units to generate cash that the
company can then use to invest in other businesses.

BCG Growth Share Matrix examined
Question marks:
These are the problem child
Most businesses start as question marks
They will absorb great amount of cash if market share remains unchanged
Question marks can become any of the other quadrants
Investment should be high for this quadrant
http://www.slideshare.net/9579764806/bcg-matrix-with-example

Stars:
The leader in the business
Require heavy investment
Leads to large amount of cash generation
Attempts need to be made to hold the market share

Cash Cow:
Foundation of the company and were previous stars
They generate more cash than required
They try to invest as little cash as possible to extract high returns
Industry is mature not declining

Dogs:
Cash traps
Business is in a declining stage
High cost – low quality

Examples: BCG Growth Share Matrix
Star: Ipad
Question Mark: Energy Drinks (Mother), a new hotel in an tourist area with
other hotels on the same street
Cash Cow: Woolworths, specific flight routes e.g. Sydney to Bali
Dog: Video player and DVD Stores (Video Ezy), Sega World in 1998 -2001 in
Sydney

Why use BCG Matrix?
• To understand which products within the company to invest in both cash and
resource allocation
• Profile products as well as competitors
• Understand the stage of the product life cycle of various products
Benefits:
• Quick and easy – simple to understand
Limitations
• Only uses two dimensions
• Difficult to get market share data
• High market share does not always mean profits

GE Matrix-Generic Strategy Options
The Matrix is a 9 quadrant matrix used to identify the positions of businesses
according to market/industry attractiveness and business strengths/competitive
position.

How to use the matrix?
This matrix matches the industry to the business. It uses both internal and industry
data (or sometimes common sense) to map out the results.
First, look at the attractiveness of the industry take the airline industry as an example
Is the industry/market highly competitive or are there gaps in the market? Is there an
opportunity for a high profit product to be introduced? Is there a large cost to enter
this market?
Next you must match your business and its internal strengths. Imagine you have just
opened up a new hotel. For example, do you have the staff to provide a service in
this industry – not just in number but in skills? What is the current state of the
business? Does it have good equity?

3. GE/Mckinsey Matrix (3/3)
Limitations of GE/Mckinsey Matrix
 Like many tools that businesses use, there are some limitations due to the lack of
information potentially available. There are also some specific limitations:
Core competencies of the business are not represented and taken into account
 Interactions between various business units is not identified and this could be a
strength of the business

Portfolio tools/resources offer certain advantages
Portfolio tools have some very real limitations
 It encourages top management to evaluate each of the corporation’s businesses
individually and to set objectives and allocate resources for each
 It stimulates the use of externally oriented data to supplement management’s judgment
 It raises the issue of cash flow availability for use in expansion and growth
 Its graphic depiction facilitates communication
 It is not easy to define market segments
 It suggests the use of standard strategies that can miss opportunities or be impractical
 It provides an illusion of scientific rigor when in reality positions are based on subjective
judgments
 It is not always clear what makes an industry attractive or what stage a product is at in its
lifecycle

References
Marketing, Core Concepts and Applications 2nd Asia Pacific Edition; Elliot, Rundle-
Thiele, Waller, Paladino; Wiley, 2008
Real Marketing, The People, The Choices; Soloman, Saupin, Hughes, Chitty,
Marshall, Stuart; Pearson, 2012
http://knol.google.com/k/the-marketing-concept-kotler#The_Marketing_Concept

Topic 1 internal environment

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