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Amity Business School

Marketing Management II

Dr Ritesh Dwivedi
SWOT Analysis Amity Business School

Identifying
internal strengths (S)
and weaknesses (W)
and also examining
external opportunities (O)
and threats (T)
Amity Business School

S Things the company does well.

Internal

W Things the company does not do well.

O Conditions in the external environment


that favor strengths.
External
Conditions in the external environment
T that do not relate to existing strengths
or favor areasCollege
©South-Western of current
Publishing weakness.
Strengths and Weaknesses
Amity Business School

(Internal)
• Production Costs
• Marketing Skills
• Employee Capabilities
• Financial Resources
• Available Technology
• Company/Brand Image
Opportunities and Threats
Amity Business School

(External)
• Social
• Demographic
• Economic
• Technological
• Political/Legal
• Competitive
Marketing Environment Amity Business School

• Kotler on marketing : “ Today, you have to


run faster to stay in the same place”.

• Marketing environment is constantly


presenting new opportunities and threats
Analyzing Trends Amity Business School

• Many opportunities are found by


identifying trends.
• Successful companies recognize and
respond profitably to unmet needs and
trends.
• A trends is a direction or sequence of events
that has some momentum and durability (Kotler)
or a gradual, long-term up or down movement of
demand (Russel).
Marketing Environment Amity Business School

• The actors and forces outside marketing


that effect marketing management’s ability
to build and maintain successful
relationships with target customers.
Microenvironment Amity Business School

• The actors close to the company that


affect its ability to serve its customers -
The company, suppliers, marketing
intermediaries, customer markets,
competitors and publics.
Macro environment Amity Business School

• The larger societal forces that affect the


microenvironment – demographic,
economic, natural, technological, political
and cultural forces.
Macro Environment Amity Business School

• Macro environment forces and trends shape


opportunities and threats for the company,
marketing intermediaries, customers,
competitors and publics.
• The company must monitor and respond to the
forces of macro environment because it
represents “ non controllable forces”.
Macro Environments Amity Business School

1.Demographic environment
2.Economic environment
3.Natural environment
4.Technological environment
5.Political and Social environment
6.Socio-cultural environment
Demographic environment Amity Business School

• Demography: The study of human populations in


terms of size, density, location, age, gender,
race, occupation and other statistics.
– Increasing population
– Growing middle class
– Changing family systems
– Changing role of women
– Better educated, more white collared, more
professional population
Economic environment Amity Business School

• The factors that affect consumer buying


power and spending patterns.
– Global financial crises
– Changing income distribution and consumer
spending patterns
Natural environment Amity Business School

• Natural resources that are needed as


inputs by marketers or that are affected by
marketing activities.
Technological environment Amity Business School

• Forces that create new technologies,


creating new product and market
opportunities.
Political and Social environment
Amity Business School

• Laws, government agencies, and pressure


groups that influence and limit various
organizations and individuals in a given
society.
– Increasing legislation (laws covering issues,
eg. Competition, fair trade practices,
environmental protection, product safety, truth
in ads, consumer privacy, packaging, labeling,
pricing and other important areas.
Political and Social environment
Amity Business School

– Changing government agency enforcement


– New forms of nontariff barriers in trade
– Increased emphasis on ethics and socially
responsible actions
• Socially Responsible Behaviour
• Cause Related Marketing
Cultural Environment Amity Business School

• Institutions and other forces that affect a


society’s basic value, perceptions, preferences
and behaviours.
– Persistence of cultural values
– Shifts is secondary cultural values
– People’s view of themselves
– People’s view of others
– People’s view of organization
– People’s view of society
– People’s view of nature
– People’s view of the universe
Age Groups: Generation Y Amity Business School

• Born between 1979 and 1994


• Size creates immense marketing impact
• Respond to ads differently
• Love customized products
and services
Age Groups: Generation X Amity Business School

• Born between 1965 and 1978

• Savvy and cynical consumers

• Indulge themselves with meals/alcohol,


clothing, and electronics
Age Groups: Baby Boomers Amity Business School

• Born between 1946 and 1964


• Cherish youth, convenience,
and individuality
• In the “nesting stage” of life
• Individualism has led to a personalized
economy
Competitive Advantage Amity Business School

• The set of unique features of


a company and its products that are
perceived by the target market as
significant and superior to the competition.
Competitive Advantage
Amity Business School

Cost

Types of
Product/Service
Competitive Differentiation
Advantage

Niche Strategies
Cost Competitive Advantage Amity Business School

Being the low-cost competitor in an industry


while maintaining satisfactory
profit margins.
Cost Competitive Advantage Amity Business School

• Obtain inexpensive raw materials


• Create efficient operations
• Design products for manufacture
• Control overhead costs
• Avoid marginal customers
Sources of Cost Reduction Amity Business School

1. Product design: Cutting-edge design and


reverse engineering can offset costs.
2. Reengineering: Reengineering can make
firms more efficient by pruning product lines,
closing obsolete factories, and renegotiating
supplier contracts.
3. Product innovations: New technology and
simplified production techniques can reduce
production costs.
4. New methods of service delivery
Sources of Cost Reduction Amity Business School

5. Experience Curves: Costs decline as


experience with a product increases, and
encompasses marketing, manufacturing, and
administration costs.
6. Efficient Labor: Labor costs in low-skill, labor-
intensive industries can be reduced by going
offshore or by outsourcing.
7. No-frills Products: Removing frills and options
can reduce costs.
8. Government subsidies: Governments may
provide grants and interest-free loans for target
industries.
Product/Service Differentiation
Amity Business School

Advantage achieved when a firm provides


something that is unique and valuable to
buyers beyond simply offering a lower
price than the competition.
Examples of Amity Business School

Product/Service Differentiation
• Brand names
• Strong dealer network
• Product reliability
• Image
• Service
Niche Amity Business School

Competitive Advantage
• Advantage achieved when a firm seeks to
target and effectively serve a small
segment of the market.
Niche Competitive Advantage Amity Business School

• Used by small companies with limited


resources

• May be used in a limited geographic


market
Sustainable Amity Business School

Competitive Advantage
An advantage
that cannot be copied
by the competition
Sources of Sustainable
Amity Business School

Competitive Advantage
• Patents
• Copyrights
• Locations
• Equipments
• Technology
• Customer Service
• Promotions
Amity Business School

MARKET SHARE DOMINANCE


HIGH LOW
MARKET GROWTH RATE

High growth
High growth Low market share
HIGH

Market leaders Need cash


Require cash Poor profit
Large profits margins

$
LOW

Low growth Low growth


High market Low market
share share
High cash flow Minimal cash
flow
Strategies for Resource Allocation Amity Business School

Provide financial resources if SBU


Build (Problem Child) has potential to be a Star.

Preserve market share if SBU is a successful


Hold Cash Cow. Use cash flow for other SBUs.

Increase short-term cash return.


Harvest Appropriate for all SBUs except Stars.

Get rid of SBUs with low shares in


Divest low-growth markets.