Unit 2: Environmental Scanning, Firm Resources and Capabilities
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.
2.1: The Process of Environmental Scanning
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.
2.2: The Factors of the Macro Environment
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.
2.3: The Factors of the Industry and Competitive Environment
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.
2.4: The Firm's Resources and Capabilities
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.
2.4.1: Determination of Resources
2.4.2: Determination of Capabilities
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.
2.5: Deciding on the Marketing Mix
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.
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.
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.
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.
2.5.4: Place (Distribution)
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.
Unit 2 Discussion
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Study Guide: Unit 2
We recommend reviewing this Study Guide before taking the Unit 2 Assessment.
Unit 2 Assessment
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