Topic outline
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Environmental scanning is necessary to observe current trends and changes within the macro-environment, industry, and competitive environment. This analysis, together with the firm's resources and capabilities, is considered to set the course of action using the marketing mix – the 4 Ps.
As discussed in Unit 1, we learned that environmental scanning is a key component of developing the firm's strategic plan. In Unit 2, we will discuss the important role that marketing plays in developing and executing the environmental scanning process.
Completing this unit should take you approximately 7 hours.
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Environmental scanning aims to uncover changes and trends in the macro-environment and the competitive industry environment that may affect an organization's marketing strategy. As we know, we live in a dynamic world wherein change is the natural order. Marketers must therefore observe current changes and anticipate future changes within the external environment that may require the firm to adjust its marketing strategy and offerings to stay current with observable trends.
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This chapter provides a comprehensive overview of the process of environmental scanning. It goes in depth by describing different methods used in environmental scanning.
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Various factors comprise the macro-environment, or the environment that affects all businesses and industries. Marketers are subject to local, regional, national, and international forces that occur regularly. Accordingly, marketers must adapt to the changes and consider what adaptations may be required strategically and tactically to the marketing mix.
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This chapter outlines a common framework for assessing the macroenvironment. The acronym PESTEL is often used to describe the political, economic, sociocultural, technological, environmental, and legal components of the macro-environment. PESTEL is a framework tool that provides a guideline for marketers to be comprehensive when assessing macro-environmental forces.
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The industry and competitive environment include companies closer to the firm. All firms work within an industry and compete with rival firms. Furthermore, businesses purchase raw materials and supplies from their suppliers and sell them to their customers. Companies that supply substitute products that the firm offers must be considered, along with potential new entrants into the industry which could compete with the firm's offerings.
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This video on industry analysis provides an introduction and overview of how firms must assess their industries and consider close and nearby rivals. Several methods can be used to conduct industry analysis.
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Michael Porter is a well-known Harvard Business School professor and author who developed the five-force analysis, as illustrated in several management, marketing, and strategy textbooks. Practitioners have found that the five-force analysis framework is helpful for marketing and management strategic planners. This video explains the Five-Force model that Michael Porter developed in 1979. The main takeaway is that business and marketing managers must not think too narrowly when assessing the industry and competitive environment.
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Marketing managers must be realistic and practical in determining what offerings the firm can effectively provide to the marketplace. Resources of the firm are tangible and intangible, and capabilities represent what the firm can produce through the coordinated efforts of its management and employees.
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This text gives an example of the firm's value chain as an important tool for determining how it provides value to the customer through its operational functions. The VRIO analytical tool is meant to answer specific questions that the firm must address when evaluating the firm's offerings.
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This short text provides four characteristics of strategic resources that allow the firm to maintain a sustainable competitive advantage. Southwest Airlines is an example of its corporate culture, which is an intangible resource.
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The capabilities of the firm are determined by the individual skill sets of the managers and employees and the combined collective effort of the organizational personnel to complete a job.
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This article shows a research study of new technology-based firms (NTBFs), or otherwise entrepreneurial firms, based in Turkey were shown to be proactive in their marketing strategy and tactics.
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This case study shows how environmental scanning is applied to Egyptian wheat crop production. Note the use of different techniques to deal with the uncertainty of the various environmental factors in producing and marketing wheat crops.
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As we move away from the uncontrollable external factors of the macro-environment and the competitive industry environment, we will now address the controllable decisions that a firm must make within the marketing mix.
Firms that market the products and services manage their marketing efforts by implementing the 4 Ps, or marketing mix. This is distinctively different from studying and assessing the environment, which affects the marketer, as the marketer has no control over the various external factors.
Marketers must be deliberate in establishing a marketing mix strategy and executing the strategy toward their customers after properly analyzing the external environment.
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This outline and brief video shows how an entrepreneurial marketer would use the marketing mix to market a solar powered hearing aid in Zimbabwe. Note that the 4 Ps are expanded to the 7 Ps in this example, to include People, Physical Environment and Process. The hospitality and service industries often use the 7 Ps for developing their marketing mix.
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Products vary in type and, in marketing terminology, include services and information. For example, a haircut is a service, and downloading music is information. However, we consider these two examples to be products within the vocabulary of marketing.
There are different classifications of products. Buyer behavior differs according to the classification of products, and marketers adapt their promotional strategies according to buyer behaviors.
Products contain features, advantages, and benefits to the consumer; consumers make purchasing decisions based on the benefits the product provides.
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This text reviews product classifications. The categorization is related to the consumer effort in shopping for the product.
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This video illustrates a presentation on new automobile products, where the features of the new products are discussed. The product features indicate how the products are differentiated relative to other similar products, and the features must be conveyed to the target audience in terms of benefits to the buyer.
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As consumers of products, we are keenly aware of the importance of price as we attempt to gain value in our purchases. We can also observe different pricing strategies marketers use. Price represents what the consumer gives up in the exchange and therefore is a significant factor in the marketing mix.
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This text illustrates the different pricing strategies marketers use, which are observable by consumers. The firm's pricing strategy must be set to satisfy consumer needs and provide a proper financial return to the marketer.
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This video gives an example of Apple's pricing strategy for the iPhone. This is an example of a product with very strong branding which can command high prices due to high consumer demand.
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Product promotion concerns communicating the messages to the consumer about the product's features, advantages, and benefits. It is not enough to simply produce a viable product without communicating the product and its availability to the consumers and potential consumers.
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This text discusses several objectives to be met when creating promotional messages and provides the components of the promotional mix. Promotional objectives and decisions concerning the promotional mix largely depend upon the stage in the product's lifecycle.
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This video uses the acronym AIDA, commonly associated with emotional and sales strategies. Note the use of terminology such as emotion, core value, branding, and value proposition.
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Place (or distribution) concerns getting the product to the consumer when and where they need it. Deciding on the types of distribution channels, combined with the logistics of moving products, requires strategy and tactics.
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The text outlines distribution strategies and the factors determining what strategy should be followed.
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This video provides an example of a French cake supplier that must decide on a distribution strategy. Note that market, producer, product, and competitive factors are involved in the decision-making, and all factors must be considered collectively.
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This research article looks at tourism of Lake Samosir in North Sumatra, Indonesia. The underlying question is whether the implementation of the marketing mix influenced tourism in the area.
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This review video is an excellent way to review what you've learned so far and is presented by one of the professors who created the course.
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Watch this as you work through the unit and prepare to take the final exam.
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We also recommend that you review this Study Guide before taking the Unit 2 Assessment.
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Students mustReceive a grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.
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