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I. The Company's Microenvironment
The environments in which you will have to market
your new product are a major factor in determining your strategy.
In a real-life Marketing Plan you would spend a solid amount of
time researching these environments. For the purpose of your
Marketing Plan, do enough informal and secondary research to have
a good idea of what will affect your product launch.
| Marketing
Plan Hint -
When writing the
SWOT analysis for your Marketing
Plan, the INTERNAL environments
are where you get the information for your STRENGTHS AND
WEAKNESSES; the EXTERAL environments are where you find your
OPPORTUNITIES AND THREATS, and hence the name SWOT. |
The Company
The Marketing Concept tells us that in
an ideal world, the whole company will work together to profitably meet the needs of the
consumer. As the Marketing Manager for a new product, you have to
deal with things over which you have some direct control - the
product itself, its price, its promotion, and where it is sold
(distribution/place). It also means that you cannot just work
within the walls of the Marketing Department; you have to get out
and talk to the rest of the company, break down the artificial
barriers that keep a company from working as a team. This will
include all other functional areas of the company that touch on
any issues of analysis, planning, implementation and control, and
this means pretty much everyone.
Some of the questions you are asked below
to think about will not end up directly in your Marketing Plan, but
thinking about them and talking about them on the Discussion Group will
help you get a better idea of what your company and your product are all
about.
| What does
Top
Management have to say about all this? Are they on-side,
do you have a champion?
|
| What happens when you have a
new product all ready to go and the
Finance department
says they can't get you the funding?
|
| Did you talk to
Research and Development before you started down the road
to producing something that's never been made before? |
| Will
Purchasing be able to handle the volume of orders you are
expecting in your first two months? Nothing kills sales
faster than a company that can't fill orders. |
| What are you
going to do when you talk to
Manufacturing and they tell
you they can only produce the product using three
thingamajigs instead of the two you had planned on? |
| And how about the people in
Accounting? Have
you had coffee with them recently and talked to them about
how costs are going to be allocated? It may make a
difference in your strategic planning. |
 |
Exercise:
Plan
Internal Environments |
Which other parts of the company do you expect will have the most effect
on your Marketing Plan? Who can help you? Who
might possibly sandbag your efforts? How will you deal with
them?
Post your
answer in the
Moodle Discussion Group. |
|
Suppliers
Organizations and people who provide
what you need to produce what you make
 |
When General Motors shuts
down a plant, more people lose their jobs than just the
workers at GM. There are thousands of companies that
supply GM, and when GM has problems, they have problems. This
is why in Detroit, Michigan, USA, GM's home town, they say, "What's good for General Motors
is good for the nation." It is true for a lot of
Canadians too, as many of them work in GM plants here. |
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Exercise:
Lab
Suppliers |
Visit a
manufacturing company, or retail store, or any
organization that buys supplies from someone else. Ask
them, and report back - What is the single biggest
problem they have with suppliers?
Post your answer in the
Moodle Discussion Group. |
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| Marketing
Plan Hint -
When thinking about
your suppliers in your
Marketing
Plan, consider what will be the balance of power. Will
you have to purchase materials that are in great demand by other
companies as well, or will you be one of the few customers your
supplier has? It makes a difference in your expected
relationship with that supplier. If you are short of money
and/or credit rating right now, what can you promise a supplier
later on in the future if they help you out now? |
Marketing Intermediaries (Place - Channels of Distribution)
This is the area where I did my doctoral research.
It involves trucks and warehouses, slotting fees and shelf
space, in-house sales forces and outside agents, and all the
fascinating issues of power and control.
 |
Traditionally the balance of
power in the channels relationship between Arrow shirts
and the retailers who sold them lay with Arrow, a huge
manufacturer on whom a retailer was dependent for a
popular product. But some years ago, fed up with Arrow's
restrictions on selling their shirts on sale, a group of
retailers in western Canada banded together and told Arrow
that if they couldn't mark the shirts down then no one in
the area would carry the shirts. Arrow relented and now
you can buy an Arrow shirt on sale. |
|
We always say that all four
of Marketing's P's are equally important, but Place
(channels of distribution) is perhaps most crucial: |
 |
We've all bought something
that was more than we wanted to pay for it, but we wanted
it and so we bought it (paying $8.50 to park in
Parking Structure II when you already pay a hefty fee for
a yearly parking pass, but in another area of campus) |
 |
We've all bought something
that wasn't quite right but we had to have it and so we
took what was there (your new car has everything you want
but not automatic windows and you decide to get it anyway) |
 |
The sad thing here is that
advertising research shows that often we remember products
BETTER when we hate their ads, and when we go to the
store, we may forget that we hate the ad but we remember
the product enough to buy it |
 |
But no one has ever bought
something that wasn't there to buy; we're not talking here
about ordering something that has run out of stock, or
buying on the Internet where you don't see a physical
product, but rather of a situation where the good simply
wasn't available to be bought |
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Exercise:
Plan
Place |
Who
holds the power in your Marketing Plan product's
channels of distribution? With whom will you need to
establish relationships?
Post your answer in the
Moodle Discussion Group. |
|
Marketing
Plan Hint - read this section
in Distribution carefully in the Marketing
Plan instructions. Students tend to overlook it
or to do it wrong. You must at the early stages of your Plan do
some investigation into how other companies currently distribute
products similar to the one you are proposing to market.
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Competitors
Companies offering your target market similar goods and services.
Imagine you are the owner of a men's suit manufacturing company
called YourLuxury suits and work your way through the exercise
below:
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Your Product: Men's Suits
Your Brand: YourLuxury
Your Price: $2,000 range
Your Target Market: Well-to-do gentlemen
Your Competition
All
Goods, Services, Experiences, Investments, etc. Ultimately everything in the
world is a competitor for the dollar that a customer might
spend at your store. Instead of buying a new suit, your
gentleman might spend his money on
| YourLuxury suit |
| Rolex watch |
| Fixing living room
windows |
| Week in Hawaii |
| Repairing family sedan |
| Donating to charity |
| New sports car |
| Ice cream cones
(many of them) |
| Gambling at Casino
Royale |
| Pouring money
down a rat hole |
Anything is a possible alternative to
his spending his money in your store. He might buy one of
the first five items for around $2,000. He might donate
the money to charity. He might put the
$2,000 in the bank to start saving for a red sports car.
He might fritter away every cent of the $2,000 on small
items like ice cream cones; he might blow the whole $2,000
on a fast night at the gaming tables, or he might
just pour it all down a rat hole (which my father used to
contend he would have just as much fun doing as gambling).
Whatever your guy does with his $2,000, it still means that that
$2,000 won't get spent in your store if he does something
else with it. You need not include
these wilder fringe categories of competition in your list of competitors, but you need
recognize that in a sense, all expenditures are
"competition" for you.
Generic Competition -
The Generic market is narrower.
Generic competitors offer substitute goods which may be very
different physically and conceptually from yours but which meet
a
common need.
|
YourLuxury suit
|
| Rolex watch |
| Weekend in Hawaii |
| Saving for a sports
car |
The Rolex watch, the weekend in Hawaii, the
sports car are all luxury goods. At some level they meet
the same need that a luxury suit does.
Product Competition -
Here the products are more
similar, either physically or conceptually and your
category gets narrower.
You can have
Distant
Product Competitors such as:
| YourLuxury suit |
| Moore's Suits |
| Hudson's Bay Menswear |
| Value Village |
but let's face it, at $2,000 for your
suit, you don't have any real competition from any of
these other places. It is a level of competition, but you
rejected this level when you chose your target market.
And finally you have
Close
Product Competitors
such as:
| YourLuxury suit |
| Yves St. Laurent
suit |
| Lou Miles suit |
Georgio Armani
jacket
(I don't think you can get a whole suit for only
$2,000 anymore) |
Here your competition is very
narrow -- only expensive men's suits. In a product market, your potential
customer has decided what product he wants, and now he's
choosing between brands - yours or someone else's?
This is your direct competition. It's an easier market to
compete in. You know something about men's suits,
particularly luxury suits. You know how to compete. You
may not know how to compete with a Hawaiian vacation.
Note that there are "latent"
competitors as well as current one. There are other companies
out there who already produce what you are planning to; these
are current competitors. What about companies that may start up
business because, seeing you come out with your product, they
sense there is a market there - these are "latent"
competitors.
THERE IS ALMOST* ALWAYS
COMPETITION If you are
producing something that has never been made before, for
which you can find no direct competition, then your
competition is just at a broader level. You can NEVER say
that you have NO competition. In one class, a group came
up with an idea for a device for a car that did not exist
at the time (it now does - a computer assisted map device
to tell you where you are). They thought they had no
competition until they realized that a car buyer would
have to choose between their expensive product and say, an
upgraded stereo system, leather bucket seats, tinted
windows.... there is ALWAYS a competitor for your
potential customer's money. What you choose to consider
your direct competition makes all the difference in what
your marketing strategy will be.
*The
reason I say "almost always" is that there are some
new emerging theories of business which maintain that for some
companies, competition is not relevant but this is beyond the
scope of this introductory course. For this course, assume that
there will always be competition. |
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Exercise:
Plan
Competitors |
Who are your
competitors? your latent competitors? your generic
competitors? your direct competitors?
Post your answer in the
Moodle Discussion Group. |
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| Marketing
Plan Hint -
When listing
"Threats" in the Marketing
Plan, do NOT just list "competition;" it
is always a threat for just about any company. It's such a
serious threat that you cover competition in a section all on
its own. If competition is a particularly major threat for your
company, for example in a situation where competitors can easily
enter the market (see
Penetration
Pricing), list that particular specific threat, but leave
the majority of discussion of competition for the Competition
section. |
| Financial |
Media |
Government |
Citizen
Action |
Local |
General |
Internal |
Note that a public is any group that has an interest
in what your organization does and note that THEY decide if they are
publics, not you. For a case dealing with these various publics,
see UnHip Fries
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Exercise
Publics in Unhip Fries |
Look
again at the Unhip Fries
case, and think back on your answers in the unit on
Marketing and Society. How would your answer differ if you
were a member of one of these Publics?
Post your answer in the
Moodle Discussion Group. |
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Consumer
-
individuals and households that buy goods and services for
their own personal consumption. More on these in the
Learning Unit on Consumer Buyer Behaviour
|
|
Business
- also known as
Industrial markets or B2B markets, they buy goods and
services for further processing or for use in their own
production process. More on these in the
Learning Unit on Business
Buyer Behaviour |
|
Reseller
-
buy goods and
services for repackaging and selling at a profit. We will
look at these in more detail in the Learning Unit on
Place |
|
Government
-
buy goods and
services to produce public services or transfer them to
needy constituents. The number-one user of advertising in
Canada is the government |
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International
- buyers in other
countries. There is a chapter in the text on International
Marketing, but basically the whole text and course
emphasizes global marketing |
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Exercise:
Plan
Customer |
Which one of these five
types will you choose as your customer? To make the project easier, you will be choosing only one.
Post your answer in the
Moodle Discussion Group. |
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II. The Company's Macroenvironment
The macroenvironments are for the
most part uncontrollable by the company. Things happen and the
company must be prepared to react.
| Marketing
Plan Hint -
When writing the
SWOT analysis for your Marketing
Plan, the EXTERNAL environments
are where you get the information for your OPPORTUNITIES AND
THREATS; The INTERNAL environments are where you find your
STRENGTHS AND WEAKNESSES, and hence the name SWOT. |
Demographic
Environment
Demography is the study of human
beings - how many, where they live and how densely
populated, age, sex, race, occupation. Changes in demographics
have a major impact on marketing. Remember
throughout the course but particularly in this Unit that we
refer
mostly to the North American market. These environmental factors
particularly will be
vastly different in different countries and cultures. Even the
North American market is made up of very different consumer
experiences. In an Introductory course we must
generalize sometimes or we'd never get through all the material.
But keep it in mind.
|
Changing
Age Structure of the Population In 1996, David Cork and Susan Lightstone wrote a book
called The Pig and the Python: How to Prosper From the
Aging Baby Boom (Toronto: Stoddart Books). The python
is the consuming public; the pig (lump in python) is the
clump of Baby Boomers as they move through the age
demographics and affect thousands of product
markets. It's still relevant today. |
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When the Baby Boomers were
young, women worked, shopped, danced (even vacuumed if you
believe the ads) in shoes like this red high heel |
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Now these are the popular
women's shoes: low sturdy heel, square rather
than narrow pointed toe -- think about the size of a
target market that includes the Baby Boomers; then think
about one reason why the style of shoes has changed
recently. |
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Exercise
Shoes |
Chunky
shoes didn't used to be in style, ever. What effect
have the baby-boomers had on shoe fashion? If you
can't figure this one out and if your mother is younger than 40, go ask your grandmother.
Post your answer in the
Moodle Discussion Group. |
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The Changing
Canadian Household
The traditional suburban family of dad,
mom, 2 1/3 children, dog, and station wagon is fast disappearing.
Consumer behaviour models now list "single parent" as a
major life-stage variable in marketing (it's about time) and yet
many companies continue to use images of the family to
promote their goods and services.
Geographic Shifts in Population People are moving
all over the world and migration patterns affect the flow of
goods and wants. With the increased popularity of American fast
food, China, once traditionally a country with almost
no heart disease, now is catching up with American rates of that
disease -- a dubious achievement. People in different
geographical areas often eat distinctly different foods.
While in Newfoundland on a strike support visit, I ate
cod tongues for lunch.
A
Better-Educated, More Professional Populationcreasing Diversity
At one time, only 13% of
Canadians held post secondary degrees. Now it is 64%. YOU are part
of that change, coming to school at York University.
Increasing Diversity
In Toronto, where you once had to bring canned chiles up
from the Mexican-influenced southwest of the United States because everything
gastronomic in Toronto was basically related to grey roast beef and mashed
potatoes, you can now buy at your local grocery store burritos hot
enough to singe your tongue, and the ingredients to make authentic
Indian, Thai, Lebanese or many other dishes. Many companies are capitalizing on increased
multiculturalism to promote their goods and services.
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Exercise:
Plan
Demographics |
What demographic
factors specifically affect your Marketing Plan product?
Post your answer in the
Moodle Discussion Group. |
|
Economic Environment
Many things affect consumer purchasing power
and spending patterns.
Changes in
Income and Spending -
The fact that for most consumers rising income
has only barely kept pace with inflation means that consumers have
become more value conscious. Social class makes a difference. The
rich don't worry too much about current economic events. The
middle class keeps trying to have "the good life" and
can generally keep up if they are careful about spending. The
lower middle class has a great deal of difficulty keeping up with the
consumer choices presented to them by Marketing.
1980's - consumption frenzy
1990's - "squeezed consumer"
2000's - value marketing
2010s - ??? What would you call it?
A Paradox of the New
Economy - changes in technology were supposed
to mean we had more leisure time but for most of us we now work
more hours and have less leisure time
|
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Exercise: Plan
Economic |
What
specific economic factors affect your Marketing Plan
product?
Post your answer in the
Moodle Discussion Group. |
|
|
Marketing
Plan Hint -
When listing
Threats in your Marketing
Plan, do not just list a poor economy
as one of the Threats. A poor economy usually affects most
all businesses negatively. Find a
specific economic event which specifically affects your
company and not others. An example: in a declining
economy, Dollar Stores and other discount stores will
often do a brisker business as more people turn to cheaper
ways to buy the same things they still need to buy. |
| Natural
Environment
|
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Exercise: Plan
Natural |
At whose expense
do you produce your products? Name
one element in the Natural environment that will affect
your Marketing Plan product; explain why it is
classified in that environment (there may not be a
Natural environmental factor).
Post your answer in the
Moodle Discussion Group. |
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| Marketing
Plan Hint -
When listing
Threats in your Marketing
Plan, for many products the
Natural Environment will not be a threat and you can
safely say "Not Applicable.". A threat from the
Natural environment has to relate specifically to natural
resources needed by the company, or things that will be
affected by the marketing of your product. An example: a
company making high-quality solid wood furniture would be
affected if there were a forest fire in the area that
supplied the wood. Check your textbook for four major
trends in the natural environment. |
|
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Exercise:
Plan
Technological |
Name one
element in the Technological environment that will
affect your Marketing Plan product; explain why it is
classified in that environment.
Post your answer in the
Moodle Discussion Group. |
|
|
|
Exercise:
Plan
Political |
Name one
element in the Political/Legal environment that will
affect your Marketing Plan product; explain why it is
classified in that environment.
Post your answer in the
Moodle Discussion Group. |
|
Cultural
Environment
Core cultural values are hard to
change; marketers find it easier to change secondary values |
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|
|
Exercise:
Plan
Cultural |
Name one
element in the Cultural environment that will
affect your Marketing Plan product; explain why it is
classified in that environment.
Post your answer in the
Moodle Discussion Group. |
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Reviewing the Environments
|
|
Exercise
Different Environments |
What is
the difference between an internal and an external
environment? This is not a simplistic question with a
like-wise-simple answer - think it through: what main
things make an environment internal or external?
Post your answer in the
Moodle Discussion Group.
|
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Here's an exercise to help
you understand what kind of thing belongs in each environmental area. With this
one, you have to match one-on-one-and-only-one. That is, you can't
use one environment more than once, and you can't leave any
out. There may be more than one correct answer.
|
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Exercise
Matching Environments & Ads |
Click
here to go to another matching
exercise that involves matching
the macro-environment variables - age,
family, geography, education, economic, natural, technological,
political/legal, social/cultural - with real-life ads.
Post your answer in the
Moodle Discussion Group.
Caution:
this linked page of full colour ads may take a while to download
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III. Responding to the Marketing
Environment
Taking an Environmental Management Perspective
means the firm will take aggressive steps to affect the environments in
which it operates rather than waiting to be affected by those
environments.
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Exercise:
Plan
Environmental Management
Perspective
|
For your
Marketing Plan product, are there any environments that
you feel you ought to aggressively work to control, rather
than waiting for them to affect you?
Post your answer in the
Moodle Discussion Group.
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