Components of external environment analysis

Customers
Your customers are among the external elements you can attempt to
influence, via marketing and strategic release of corporate information. But
ultimately, your relationship with your clients is based on finding ways to
influence them to purchase your products. Market research is used to
determine the effectiveness of your marketing messages, and to decide what
changes can be made to future marketing programs to improve sales.

Government
Government regulations in product development, packaging and shipping
play a significant role in the cost of doing business and your ability to expand
into new markets. If the government places new regulations on how you
must package your product for shipment, that can increase your unit costs
and affect your profit margins. International laws create processes that your
company must follow to get your product into foreign markets.

Economy
As with the majority of the elements of your organization's external
environment, your company must be efficient at monitoring the economy
and learning how to react to it, rather than trying to manipulate it. Economic
factors affect how you market products, how much money you can spend on
business growth, and the kind of target markets you will pursue.

Competition
Your competition has a significant effect on how you do business and how
you address your target market. You can choose to find markets that the
competition is not active in, or you can decide to take on the competition
directly in the same target market. The success and failure of your various
competitors also determines a portion of your marketing planning, as well.
For example, if a long-time competitor in a particular market suddenly
decides to drop out due to financial losses, then you will need to adjust your
planning to take advantage of the situation.

Public Opinion
Any kind of company scandal can be damaging to your organization's image.
The public perception of your organization can hurt sales it's negative, or it

can boost sales with positive company news. Your firm can influence public
opinion by using public relations professionals to release strategic
information, but it is also important to monitor public opinion to try and
defuse potential issues before they begin to spread.

Scanning: is the process of identifying early signal

of environment changes and trends.

Monitoring: is the process of detecting meaning

through ongoing observation of environmental
changes and trends obtained through scanning.

Forecasting: is the process of developing

projections of anticipated outcomes based on
monitored changes and trends.

Assessing: is the process of determining the timing

and importance of environmental changes and
trends that impact a firms strategies and their
management.

Industry environmental analysis

An industry is defined as a group of firms producing products
that are close substitutes the industry environment has a higher
impact on a firms general competitiveness and ability to earn
above average return compared to the general environment. The
intensity of competition and profit potential are a function of
Porters Five forces analysis.

Porters Five Forces

1. Threat of new Entrants: New entrants can threaten
market share of existing competitors. It brings
additional production capacity to the industry. This is
a function of two factors namely
i.

Barriers to Entry : Economies of scale,

Product differentiation, Capital requirements,
Switching costs, Access to distribution
channels, Cost disadvantage, Government

policy are the various barriers to entry faced

by a new entrant into an industry.
ii.

Expected Retaliation: An expectation of

vigorous and swift retaliation reduces the
likelihood of entry. Retaliation is generally
vigorous when the existing firm has a large
stake in the industry, invested substantial
resources and when industry growth is slow.

2. Bargaining Power of Suppliers: Suppliers can

exercise their power by reducing quality or
increasing price. Suppliers are powerful when there
are very few large suppliers and are they are more
concentrated than the industry they sell to, there are
no substitutes for the suppliers product, the firms
are not a significant customer to the supplier group,
the suppliers goods are critical to a buyers success,
there is a high switching cost due to effectiveness of
a suppliers products. and ther exists a threat of
forward integration.
3. Bargaining power of buyers: Buyers want to buy at
the lowest price and demand higher levels of service
at the best quality. They are powerful when they
purchase a large proportion of the industries output.

The products sales accounts for a significant portion

of the sellers annual revenue. The industries
products are undifferentiated and standardized
raising the threat of backward integration.
4. Threat of substitute products: is the threat when
goods or services outside of the given industry
perform the same or similar functions at a
competitive price or have low switching costs.
Product and service differentiation helps overcome
the threat of substitute products. E.g. Plastic has
replaced steel and other materials in many
applications at a very competitive price and value
preposition.
5. Intensity of rivalry among competing firms: The
intensity of rivalry in an industry is the extent to
which competitors within an industry compete with
one another and limit other profit potential. If rivalry
is fierce the profit potential in the industry declines
for all firms. Low intensity of rivalry increases profit
potential and makes the industry less competitive.
Intensity of Rivalry is high if
o

Competitors are numerous

Competitors have equal size

Competitors have equal market share

Industry growth is slow

Fixed costs are high

Products are undifferentiated

Brand loyalty is insignificant

Consumer switching costs are low

Competitors are strategically diverse

There is excess production capacity

Exit barriers are high

Intensity of Rivalry is Low if

o

Competitors are few

Competitors have unequal size

Competitors have unequal market

share

Industry growth is fast

Fixed costs are low

Products are differentiated

Brand loyalty is significant

Consumer switching costs are high

Competitors are not strategically

diverse

There is no excess production capacity

Exit barriers are low

Competitor Analysis
Competitor intelligence is the data and information that a firm
gathers to better understand and anticipate its competitors
objectives, strategies, assumptions and capabilities.When
gathering competitive intelligence firms must pay specific
attention to complementors who add value to the focal firms
products and strategies. E.g. Microsoft and Intel are
complementors.Competitor Intelligence collection needs to
follow ethical practices which can be through obtaining and
analysing public information or attending trade fairs, obtaining
brochures etc.
MARKETING 5 PS

Product. Your product--which also includes the service

offered in service businesses--should solve an urgent need or
pain for the customer. Your product needs the right features: It
should be easy to use, visually interesting, and well-packaged.
If you own a catering business, the team delivering the service
as well as the food, are all considered the product. Make sure
they have matching uniforms and are trained in how to speak to
the customers, and ensure the food is nicely plated and properly
served. Presentation is everything.

 Place. For local businesses, place matters. Often store-front

businesses pay for prime locations so they can have the needed
foot traffic. Doing your research is important. You want to be
located on a highly coveted corridor, in a location that provides
you easy access to the target customer. A residential cleaning
company might open shop in a neighborhood instead of a
business district. However, if youre focused on corporate
clients, then a commercial district is where you want to be. Not
having the right location is a reason that many small businesses
fail.
Promotion. Write this down! Without proper promotion to
attract your target customer, you wont grow your revenue. Good
promotion starts with a budget and marketing plan. Today,
social media provides small businesses low-cost opportunities
for marketing. If your customer is hanging out on Facebook and
Twitter, you need to be there too, building a relationship that you
will eventually be able to turn into commerce.
Price. When pricing your product you must know four things:
your cost, what the competition is charging, the standard
markup or profit margin in your industry, and the value to the
customer. Ask yourself this key question: What will it cost the
customer to not have what Im offering? If you cant determine a
perceived value, then you need to redesign or reposition your
product. And dont compete on price. A customer whos
deciding solely based on price is not a long-term customer and
will switch to a neighboring business for just a few cents less.

 Profit. Profit is how we keep score in business. Specifically,

its the difference between your cost of goods or services and
the price youre charging the customer. It allows you to grow the
business, pay employees, and donate a few times a year to your
favorite charities. Be sure you understand the margins typical
for your industry. If youre a food business, you would average a
20 percent margin, while a clothing retailer averages 50 percent.
There are no hard rules on this, if you run your business
efficiently, theres no limit to your financial success.

Services are radically different from products and need to be

marketed very differently. So the classical 4 P structure of the
Marketing Mix needs to be modified suitably to incorporate
the 8 Ps for services marketing, which was previously known
as the 7 Ps only.
Services can range from financial services provided by the
banks to technology services provided by the IT company or
hospitality services provided by hotels and restaurants or even
a blog where an author provides a service (information
presentation, interesting reading etc) to his audience. Services
marketing are dominated by the 7 Ps of marketing
namely Product, Price, Place, Promotion, People,
Process and Physical evidence.

To know more in details about the classical 7 Ps of services

marketing do visit our article on The 7 Ps of services marketing
While everyone knows about the 7 Ps of services marketing,
the 8th P of Services Marketing has emerged in research very
recently. The 8th P is Productivity and Quality.
In integral services management, improving productivity is a
requisite in cost management; but quality, as defined by the
customer, is essential for a service to differentiate itself from
other providers.

It has been recognized that overall profitability of a firm may

be greatly impacted by focusing on not only at the top-line by
improving sales but also focusing on the bottom-line by
lowering over-all cost of delivering services. In services
management, often the variable costs are a lot more than fixed
costs, and so incremental costs, if managed properly can have
a huge impact on productivity. So for services, a firm may
greatly benefit through proper re-engineering of processes
and remodeling the same if required to improve productivity
at each stage.
It has also been established in research that process
improvements deliver better standardization and hence better
quality in services. Quality perception is a crucial
differentiating factor on services management and for long
term sustainability of the same. Business Process Remodeling
can lead to major process efficiency improvements which
again can impact overall quality as is actually delivered by the
firm and is also perceived by the customers / clientele .

Do let us know if you liked our article or if you have any

questions.
By the way, have you read our article on the 4 Ps on Social
Marketing?

Also did you read our article on the The 4 Ps of Marketing The
Marketing Mix strategies from which the 7 P Marketing Mix theory
actually evolves?

The 8 P's of Marketing: A Modern Marketing

Mix
Product

Place
Distribution (Numbers and types
of middlemen),Locations,
Availability, Inventory Levels,
Transportation, Physical
Evidence
(Service Environments)

Price

List Price, Discounts, Allowanc

Credit Terms, Payment Perio
Rental, Lease, Pricing Strateg
(Skimming, Penetration, Pric
Leadership, etc.)

Product quality, Features, Style, Options,

Brand Name,Packaging,
Guarantees/Warranties, Service/Spare
Parts, Segmentation

People
Expertise, Capabilities, Experience,
Improvement Training, Leadership
Development, Attitude.

Processes
TQM, CRM, Project
Management, Product
Development, Innovation (StageGate).

Performance

Productivity, Profitability, Grow

Management, Innovation

1. Product
What do ACA and its members "sell"? What does the word "camp" mean or imply to today's
target audience? Does the word "camp" conjure up positive or negative images for today's
parents? Do we need to redefine camp to better communicate benefits to culturally diverse
audiences?
2. Price
ACA-Accredited camps price their programs across a wide spectrum ranging from free to very
high end. As an overall industry, do we do a good job attracting campers from all economic
backgrounds?
3. Placement
Camps can be geographically found all over the world in urban, rural, and suburban
environments from beaches to mountain camps. Do we excel at communicating how varied
the camp environment can be?
4. Promotion
Are camps using a suitable mix of publicity, promotion, and advertising based on each one's
ability to efficiently reach the chosen target audiences?
5. Perspective
Do we resource other youth-serving organizations to gain their perspective how do they
define "camper?"
6. Philosophy
ACA's current mission statement is "enriching the lives of children, youth, and adults through the
camp experience." How does this apply to the work we do at camp?
7. People
Internal How are we engaging people who work in the camp profession? Could we be doing
more to keep alumni staff connected to the camp brand for a lifetime?
External While perspective campers make up the bulk of external customers, what is our
definition of a camper? Have we become too youth-based in a society with more than 78 million
baby boomers reaching retirement age? What are we doing to bring community members, with
and without personal camp experience, into our organizations?

8. Planning
A marketing plan is not a luxury item, but rather a critical tool to guide both internal and external
communications activities. How are camps using this critical tool to reach their goals?

Let's Make a Plan

Using my 8 Ps of Marketing it only makes sense to start at the top the Marketing Plan. We
need to see the world like a marketer does as a set of objectives, strategies, and outcomes
that can be achieved with a well-executed marketing plan. At its core, this plan asks.

What are we trying to accomplish? (objectives)

How will we get there? (strategies)

What will success look like? (outcomes)

ACA's 20/20 Vision is no exception. ACA has outlined some exciting, yet lofty, goals in its 20/20
Vision and, when looked at through a marketing lens, these goals create a new kind of focus
that will benefit every facet of the industry from strengthening the overall worldwide "camp
brand" to increasing registration at your specific camp.
However, a marketing plan itself is more than an idea. It must be a written document, similar to
an architect's blueprint. This blueprint helps everyone in your organization whether they work
on the other side of the room or the other side of the globe understand what you and your
organization are trying to create. Whether you are building a state-of-the-art, multimillion-dollar
facility or attempting to create a more loyal customer base a blueprint is an essential part of
the process. Without this marketing blueprint, you are likely to waste precious time, money, and
energy on ineffective promotional tactics. By taking a few hours, or even minutes, to plan your
promotion, you're guaranteed greater return on your overall marketing investment.

The Q and A Marketing Plan

Whether working with an organization as large as ACA or as small as an individual camp, the
marketing planning process remains the same. A strong marketing foundation is constructed
using a series of questions and answers that ultimately lead to marketing activities. In its
simplest form, a marketing plan can be developed based on the following information:

Product: What are you selling with this marketing plan? Are you selling camp
registration, volunteerism, sponsorship, jobs? Each of these camp "products" may deserve its
own plan. Rarely does a one-size-fits-all plan work well to fit any organization's needs.

Objective: What are we trying to accomplish with this marketing plan? Marketing
objectives must be realistic, measurable/quantifiable, and obtainable in a specific time frame.

Target Audience: Who must be reached to meet the objective? There are several types
of target audiences which must be included in the plan:

End-user targets Potential campers/volunteers/donors/staff/ sponsors/etc.

Gate-keeper targets Those people who, by nature of their jobs, influence, or

power can open (or close) gates that lead to our target audiences and amplify wordof- mouth.

(Teachers are gatekeepers to youth; doctors/therapists are gatekeepers to special needs

campers, etc.).
Internal audiences Those who serve your end-users (counselors, registrars,

front-desk staff, Web designers, etc.).

Decision-makers People within your organization such as board members,

committee members, financial managers.

Market Research: Four Key Areas to Explore - The Competition Who are your
competitors? Don't just think in terms of other camps. Think globally about the ways
noncustomers spend time video games, malls, family vacations, watching television, summer
school, etc.
Customer Needs Assessment What are our customers' needs, concerns,

problems, and desires?

o

Market Factors What outside factors might impact the customer?

Trend Analysis What trends are affecting our customers, camp, community, or
industry?

USP (Unique Selling Proposition) This is like your DNA, your winning formula.

What makes you the best choice for your customers and prospects?

Knowing what you know about your competition, trends, and target audience
needs, what makes you the very best choice?

With all the other options available to this target audience, why will they choose
your product (camp) to fulfill their needs or solve their problems?

Motivating Message

What will you say to motivate action from your target audience?

How will you use theme, copy, and graphics to attract and hold attention?

Media Media refers to any and all communication channels such as publicity,
advertising, on and off-line social networking, face-to-face sales presentations, promotions,
trade shows, direct mail, digital media, and hundreds more. The question for you is which media
will best reach your target audience?

Budget How much will we invest in time, talent, and money to reach the chosen
target audience?

Timeline When will activities take place? Think in terms of before, during, and after
camp activities.
While working through this simple Q and A Plan is a good first step to improving your results,
marketing is also about taking action. The word "promote" literally means to "move forward." So,
all the ideas, research, creative concepts, and brilliant brainstorming are worthless without
putting ideas into action.