BUS602: Marketing Management

2a. Explain the role and importance of environmental scanning in developing the marketing plan 

• What are the objectives of horizon or environmental scanning?
• What are some of the challenges associated with evaluating data from an environmental scan?
• What are some of the ways to assess trends?
  

The objectives of environmental scanning are to detect social, cultural, technological, and other situations or events, identify opportunities and threats, determine the organization's strengths and limitations, and provide an analysis for decision-making. When these factors are uncovered and analyzed, an organization can then develop marketing activities. One of the keys to this practice is to look at the data collected to evaluate how the future will be different than it is currently.

When conducting a scan, there is a great deal of uncovered information. However, some filters can impact how we view that data and determine whether or not it is useful or meaningful. For example, people tend to look for familiar patterns, and when we don't see those patterns, we might ignore the information. Also, there are many different thinking styles, which can cause us to miss important information or make incorrect assumptions. These factors can result in marketing decisions that are not based on accurate events or situations.

Trends are part of numerous other events and activities and are not isolated by themselves. However, their future is uncertain. This is why taking the time to explore them in-depth is important. Opposing views should be explored, research should be done about past events, actions by the competition should be anticipated, and factors that are critical to the analysis should be identified.

To review, see The Scanning Process.
 

2b. Describe various macro-environmental, industry, and competitive forces, from economic and natural to rivals and customers 

• What are the factors that comprise the PESTEL analysis?
• What are the components of an industry analysis?
• What are the elements of Porter's Five Competitive Forces?
  

A PESTEL analysis enables an organization to look at its external environment in depth. PESTEL is an acronym that represents the following: political factors, economic factors, sociocultural factors, technological factors, environmental factors, and legal factors. By exploring these areas, an organization can better understand the elements that can impact its strategies and position in the marketplace.

When evaluating an overall industry, organizations should look at news and innovations that are occurring and take an in-depth analysis of consumer trends and market data. It is important to evaluate the competition in the industry and the economic factors that exist which could influence market conditions. Much like the evaluation of legal factors in a PESTEL analysis, an industry analysis should also include a close look at government regulations and how they affect overall practices in that field.

Michael Porter's Five Competitive Forces Model illustrates the foundation of his theories, which state that competition in an industry is driven by the structure of the industry. As competition in an industry increases, the attractiveness for other players in the industry decreases. Competition within an industry goes beyond the established entities in the marketplace, which he called extended rivalry. The five competitive forces that impact this include rivals within the industry, potential new entrants, substitute products and services, buyers' bargaining power, and suppliers' bargaining power.

To review, see PESTEL, Introduction to Industry Analysis, and Five Competitive Forces Model.

2c. Evaluate a firm's resources and capabilities 

• What are the four questions associated with the tool known as VRIO?
• What are some of the difficult-to-imitate resources within an organization?
• What is the foundation of Resource-Based Theory?
  

VRIO helps a company assess the resources available to them and their capabilities. The acronym – which represents "valuable", "rare", "difficult to imitate", and "organized to capture value" – focuses on the questions that managers should be asking when evaluating their capabilities. These questions are:

• Does the resource or capability create value for an organization?
• Is the resource or capability rare within the industry?
• Would it be difficult for other companies to imitate the resource or capability?
• Is the firm sufficiently organized to capture the value of the resource of capability?
  

A competitive advantage exists if the company can answer "yes" to any of these questions.

Companies can have a difficult time duplicating resources that are hard to imitate. For example, companies cannot generally imitate trademarks or patents, which are legally protected. Companies also cannot imitate the culture of their competitors since these are unique to that organization and generally evolve over time. Additionally, a factor such as culture cannot be substituted for something else since there aren't other ways in which a company can gain the same benefits.

Resource-Based Theory is founded on the principle that an organization's resources provide a sustainable competitive advantage. This also highlights how all qualities come together and represent more than their parts. While individual strategic resources and capabilities may be imitated, the combination of these factors cannot.

To review, see The Internal Environment and Four Characteristics of Strategic Resources.

2d. Determine the specific marketing mix for a firm 

• What are the components of the marketing mix?
• How is a product defined, and what are its characteristics?
• What are some of the introductory pricing strategies companies use, and what are some of the pricing approaches companies implement?
• What is the role of a promotional strategy, and what are the elements of the promotional mix?
• What are the elements of AIDA strategies?
• What are the factors that impact an organization's choice of distribution strategy?
  

The marketing mix encompasses the 4Ps: product, price, place, and promotion. A product is any good, service, or idea that creates value for a customer. Tangible benefits can include packaging and utility, while intangible factors can include image or prestige. Additionally, there are several categories of products, including consumer products, unsought products, convenience products, shopping products, and specialty products.

When a company is introducing a new product, they might consider a skimming price strategy, which is when a company sets an initial high price for their product. A penetration pricing strategy is when an initial low price is set. This strategy is typically used when there are many competitors in the marketplace. An everyday low price strategy is used when the initial price is the one that will be asked throughout the life of the product.

Pricing approaches included cost-plus pricing, which is when a company will add a profit to the cost of the product to determine the price. Odd-even pricing relates to the actual dollar amount, which assumes there is a psychological aspect to pricing something at $9.99 vs. $10.00. Prestige pricing focuses on brand image and the quality associated with a higher-priced item. Leader pricing is used to entice people to come into a store by pricing certain items lower, anticipating that shoppers will buy more than planned.

A promotional strategy aims to generate awareness, encourage trials, provide information, retain loyal customers, increase product usage, and identify potential customers. The elements of a promotional mix include traditional advertising, personal selling, sales promotion, public relations, social media, and e-commerce.

The acronym AIDA represents attention, interest, desire, and action. Attention is the ability to immediately capture the audience. The next element requires the marketer to make the information interesting and demonstrate the problem being solved for the consumer. Creating desire through marketing can be challenging, which is where branding becomes especially important. Finally, it is important to have a clear value proposition that leads to a clear call to action.

Distribution channel selection is based on a variety of factors. If a company wants to sell its product in as many locations as possible, it will choose an intensive distribution strategy. This is generally used for convenience products consumers purchase without spending too much time on the purchase decision. A selective distribution strategy is used for items purchased at specific locations, such as electronics or jewelry. Exclusive distribution applies to items sold at a few locations and strategically placed in those stores to increase demand.

To review, see The 4Ps of Marketing, What is a Product?, Pricing Strategies, Promotion Strategy, AIDA Marketing Strategies, and Marketing Channel Strategies.

Unit 2 Vocabulary 

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• AIDA
• channels
• environmental scanning
• exclusive distribution
• extended rivalry
• filters
• Five Competitive Forces
• industry analysis
• intensive distribution
• Marketing Mix
• patterns
• PESTEL
• place
• price
• product
• promotion
• Resource-Based Theory
• selective distribution
• trends
• VRIO