Issues to be Considered in a

Situation Analysis
Internal, Customer, and
External Environments
Micro Environment
 Micro Environment
• Company: The Marketing function must work closely with other company departments. Finance is
concern with funding and using funds to carry out marketing plan. The R& D department is
concern with designing safe and attractive products. Purchasing worries about getting supplies
and materials whereas manufacturing is concerned with producing the desired quality and
quantity of products. Together all these dep’t has an impact on the marketing dep’t plans

• Suppliers: Important in the “ value delivery” service -> rawmaterials component and parts
packaging etc. MM must watch supply availability as supply shortages or delays, labour strikes and
other event can cause sales in the short run and damage customer satisfaction in the long run

• Distributors or Market Intermediary: Firms that help the company distribute or sell the firm’s
product to final buyers. They include, Agents, retailers, wholesalers- physical distribution firms
• Customers: A company need to study its customer market closely.
– Consumer Market: Individual or household that buys g/s for personal consumption
– Business Markey: Businesses buys G/S for further processing or use in the production process
– Reseller Market: Buys goods and services for resale in business marker
– Government Market: Made up of Government Agencies that buys g/s inorder to produce public services or transfer the
goods and services to others who need them
– International Markets: Consist of buyers in other countries which includes customers, business, resellers and gov’t
• Competitors: Each firm must consider its own size and industry position compared to those of its
competitors. Each firm must select his own strategy that fits his/her competitive position for
instance a large firm who is the leader in market share might be the most dominant company and
may pursue dominant strategies, this might not be suitable for smaller firms who will have to select
niches to serve.

• Publics:- Any group that has an actual or potential interest in or impact on the organization ability
to achieve its objective,
– Financial
– Govt
– Media
– Etc
 The Internal Environment

• Review of Current Objectives, Strategy and

Performance
– An important input to later stages in the planning
process
– Poor or declining performance must be the result of:
• Goals or objectives that are inconsistent with the customer
or external environments
• Flawed marketing strategy
• Poor implementation
• Changes in the customer or external environments that are
beyond the control of the firm
 The Internal Environment

• Availability of Resources
– Includes a review of financial, human, and
experience resources, as well as resources from key
relationships
– Financial resources tend to get most attention
• Organizational Culture and Structure
– Problems can arise when marketing does not hold a
prominent position in the organizational hierarchy
– Culture and structure are relatively stable but can be
affected by mergers
 The Customer Environment

• Who are our Current and Potential Customers?

• What do Customers do with our Products?
• Where do Customers Purchase our Products?
• When do Customers Purchase our Products?
• Why (and How) do Customers Select our
Products?
• Why do Potential Customers not Purchase our
Products?
 Discussion Question
Understanding the motivations of a firm’s noncustomers
is often just as important as understanding its
customers. Look again at the reasons why an individual
would not purchase a firm’s products. How can a firm
reach out to noncustomers and successfully convert
them to customers?
 The Competitive Environment
• Brand Competitors
– Market products with similar features and benefits to the
same customers at similar prices
• Product Competitors
– Compete in the same product class, but with products
that are different in features, benefits, and price
• Generic Competitors
– Market very different products that solve the same
problem or satisfy the same basic customer need
• Total Budget Competitors
– Compete for the limited financial resources of the same
customers
Major Types of Competition
 Stages of Competitive Analysis
• Identification
– Identify all current and potential competitors

• Characteristics
– Assess key competitors’ size, strategy, profitability, markets, etc.

• Assessment
– Assess key competitors’ strengths and weaknesses

• Capabilities
– Focus the analysis on competitors’ marketing capabilities

• Response
– Estimate competitors’ most likely strategies and responses under different
environmental situations
 The External Environment

• Economic Growth and Stability

• Political Trends
• Legal and Regulatory Issues
• Technological Advancements
• Sociocultural Trends
– Demographic trends
– Lifestyle trends
– Trends in cultural values
 Trends in the U.S. Sociocultural
Environment
• Demographic Trends
– Aging of the American population
– Population growth in the Sun Belt states
– Increasing population diversity
• Lifestyle Trends
– Clothing becoming more casual, especially at work
– Americans have less time for leisure activities
– Increasing time spent using computers
• Trends in Cultural Values
– Shorter attention spans and less tolerance for waiting
– Less focus on “me-oriented” values
– Increasing concerns about the natural environment
 The Growing Importance of
Corporate Affairs
• Many firms have corporate affairs specialists on
staff to track emerging trends and develop
strategies for dealing with external concerns.
• Key Corporate Affairs Activities
– Corporate communication
– Government relations
– Investor relations
– Corporate philanthropy
– Corporate sustainability
– Policy analysis
External Environment: PEST/ STEEPLE-
MACRO
 The STEEPLE Analysis
• Social and Cultural :- looks at human issues that affect behaviour. Institutions
and other forces that affect society basic values, perceptions, preferences and behaviour.
» languages spoken
» religions, beliefs, taboos
» type of lifestyles
» roles and status of females in society
» attitudes and opinions
» population demographics

• Technological –
Perhaps the most dramatic force that now shaping our destiny
It refers to forces that create new technologies, creating new product and market
opportunity
» the pace of technology
» new innovations
» ability to compete/supply
• Educational environment:
» levels of education within population
» standards of education
» continuous learning
» employment requirements

• Economic environment
the economic environment affect both customers and suppliers.
» interest rates
» unemployment levels
» exchange rates
» income levels
» taxation policies
» inflation rates
» gross domestic product

• Political environment Gov’t

Govt has responsibility for revenue, trade safety and security of investment

» political stability
» foreign policy
» manifesto promises/policy
» trading blocs
» competition policies
» trading agreements/alliances
Legal environment
» statutory requirements
» codes of practice
» trading laws
» health and safety aspects
» employment legislation
» union issues/legislation

Environmental issues
» packaging
» pollution and waste disposal
» manufacturing methods and restrictions
» presence of pressure groups
• ETHICS IN MARKETING
 Ethics and Social Responsibility
in Marketing
• Grown in importance recently due to firms having
problems in these areas: coke
• Have become necessities due to:
– Stakeholder demands (especially customers)
– Rapid communication and 24/7 news
• Improve marketing performance and profits
NIKE
• Are important to the development of marketing
strategy
 Dimensions of Social
Responsibility
• Social Responsibility
– A broad concept that relates to an organization’s
obligation to maximize its positive impact on
society while minimizing its negative impact
• Marketing Ethics
– Principles and standards that define acceptable
marketing conduct as determined by the public,
government regulators, private interest groups,
competitors, and the firm itself
The Pyramid of Corporate Social
Responsibility
 Social Responsibility

• Economic responsibility of making a profit

• Legal responsibility of obeying laws and
regulations
• Ethical responsibility to uphold principals and
standards
• Philanthropic responsibility to increase the
firm’s positive impact on society
 Marketing Ethics and Strategy
• Require that organizations and individuals accept
responsibility
• Can lead to violations of public trust
• Involve complex and detailed decisions in gray areas
• Deal with experiences and decisions made at work
• Come into play anytime individuals feel manipulated
or cheated
• Are intertwined with respect to a firm’s reputation
 Potential Ethical Issues in
Marketing
• Overall Issues
– Misrepresentation, manipulation, exploitation
• Product Issues
– Failure to disclose defects, counterfeit products
• Pricing Issues
– Deception, price fixing, price discrimination
• Distribution Issues
– Opportunism, exclusive arrangements, tying contracts
• Promotion Issues
– Bait-and-switch, misleading communication, high-pressure sales
Challenges of Being Ethical and
Socially Responsible
• Business decisions involve complex decisions
in which correctness may not be apparent
– Internet privacy, copyright, intellectual property,
advertising claims
• Ethical conflict may emerge from an
inconsistency between personal values and
the values held by members of the work
group
• Ethical issues can develop into legal problems
Types of Misconduct Observed
in Organizations
 Deceptive Practices in
Marketing
• Deceptive Communication and Promotion
– Fraud or any false communication
– Exaggerated claims or statements
– Ambiguous statements
– Product labeling issues
– Selling abuses
• Regulating Deceptive Marketing Practices
– Typically regulated by:
• The firms themselves
• Industry and trade associations (such as the BBB)
Organizational Determinants of
Ethics and Social Responsibility
• Ethical Decision Making
– Determined by an individual’s background and
business colleagues
– Affected by personal values, opportunity for
unethical behavior, and exposure to others
– Intricately tied to the firm’s culture and ethical
climate
– Can only be improved by planning and structure
– Likely to occur when modeled by a strong leader
 Ethical Climate

• Part of a corporate culture that relates to an

organization’s expectations about
appropriate conduct
– The character component of an organization
– Sets the tone for ethical decisions
– Determines whether an individual perceives an
issue to be an ethical issue
 Codes of Conduct

• Code of Conduct (Code of Ethics)

– Formal statement that describes what an
organization expects of its employees
– Not an effective means of controlling ethical
behavior unless integrated into daily decision making
– Not effective unless the code has support of top
management
• Code must reflect management’s desire for
compliance with values, rules, and policies
 Codes of Conduct (continued)
• Code should have six core values
– Trustworthiness
– Respect
– Responsibility
– Fairness
– Caring
– Citizenship
• Code will not resolve every issue encountered in
daily operations
• Code can help managers deal with ethical
dilemmas
Considerations in Developing a
Code of Conduct
 Texas Instruments’
“Ethics Quick Test”
• Is the action legal?
• Does it comply with our values?
• If you do it, will you feel bad?
• How will it look in the newspaper?
• If you know it’s wrong, don’t do it!
• If you’re not sure, ask.
• Keep asking until you get an answer.
 Marketing Ethics and
Leadership
• Ethical cultures emerge from strong leadership.
• Employees look to the leader as a model of
acceptable behavior.
• Great ethical leaders:
• Create a common goal or vision for the company
• Obtain buy-in or support from significant partners
• Motivate others to be ethical
• Use the resources that are available to them
• Enjoy their jobs and approach them with an almost
contagious tenacity, passion, and commitment
 Market Orientation

• Market Orientation
– The development of an organizational culture
that effectively and efficiently promotes the
necessary behaviors for the creation of superior
value for buyers and, thus, continuous superior
performance of the firm
– Strongly tied to ethics and social responsibility
– Means fostering a sense of cooperation and
information exchange
 Stakeholder Orientation
• Stakeholder Orientation
– The degree to which a firm understands and
addresses stakeholder demands
– Strongly tied to ethics and social responsibility
– Comprised of three activities
• Organization-wide generation of data about stakeholder
groups and the assessment of the firm’s effects on these
groups
• Distribution of this information throughout the firm
• The organization’s responsiveness as a whole to this
intelligence
 Connecting Ethics and Social
Responsibility to Performance
• Strong ethics and social responsibility leads
employees to be:
– Motivated to serve customers
– Committed to the firm
– Committed to high quality standards
– Satisfied with their job
• Can lead to trust among firm’s stakeholders
– Often leads to higher customer loyalty
• Is so important that firms can experience major
negative effects if they don’t uphold ethical standards
 Green Marketing Philosophy
• Firms too have become more “green” in their
business methods, particularly production and
other operational methods. They have also
become more “green” in terms of the
packaging used on their products, and of
course in terms of the products and services
themselves.
• A firm that practices green marketing may go
on the extreme of environmentally friendly,
not tested on animals, ethically, non
exploitatively produced cosmetic and related
products.
• Many firms are now adopting a “proactive”
rather than reactive “green” marketing
strategy in an attempt to gain a competitive
business environment.
• If the market wants, and is prepared to pay for,
“green” products and services then marketing-
orientated firms are duty bound to find ways of
offering such goods and services to their
customers
 Marketing Audit
• Definition: pg 39

• The role of the external auditor

• 5 Components to be included in the market audit pg 39

• Environmental audit
• Strategy Audit
• Organizational audit
• Systems audit
• Productivity audit
• Function audit
 Challenges of audit

• Funding
• Defining purpose and objective
• Support
• Time
 SWOT Analysis

• A widely used framework for organizing and

utilizing the pieces of data and information
gained from the situation analysis
• Encompasses both internal and external
environments
• One of the most effective tools in the analysis
of environmental data and information
SWOT is an analytical tool used by an organisation to evaluate various
aspects of its internal operations and to evaluate different aspect of the
external environment.

S = strengths (internal and could be such as strong brands, experienced

management
W = Weaknesses (internal) such as aging production facilities, small market
share
O = Opportunities (external) emerging markets, new technology
T = Threats (external) new competitors, changing markets
Major Benefits and Criticisms of
SWOT Analysis
• Benefits of SWOT Analysis
– Simplicity
– Lower costs
– Flexibility
– Integration and synthesis
– Collaboration
• Common Criticisms of SWOT Analysis
– Allows firms to create lists without serious
consideration of the issues
– Often becomes a sterile academic exercise of
classifying data and information
Breaking Down Managerial
Clichés
Potential Issues to Consider in a
SWOT Analysis (Exhibit 5.4)
• Strengths and Weaknesses
– Presence or absence of scale and cost economies
– Presence or absence of financial or human resources
– Presence or absence of functional skills
– Presence or absence of intellectual, legal or reputational resources
• Opportunities and Threats
– Conditions or changes in the customer environment
– Conditions or changes in the competitive environment
– Conditions or changes in the external environment
 Strength and weakness
• Human resource development • Research and Development
– Employee age/education
– Lab capabilities
– Turnover, satisfaction,
absenteeism – Research programs
– Tech. innov

• Production • Marketing
– Location
– Machinery obsolesce – Distribution
– Purchase system – Market share
– Quality control – Advertising
– Production efficiency – Customer satisfaction
– Product quality
–
• Management and Organization –
Reputation
Sales force turnover
– Management Quality
– Staff Quality • Finance
– Degree of centralization – Profit margin
– Planning, Information and – Credit rating
control
The SWOT Matrix (Exhibit 5.5)
Quantitative Assessment of
the SWOT Matrix