Faculty of Business, City University of Hong Kong
Seminar 02a:External Marketing Environment
FB 2601 Marketing

Objectives
1.	Identify the four components of the marketing environment
2.	Explain the types of competition that marketers face.
3.	Describe the concept of SWOT analysis and its four major elements: leverage, problems, constraints, and vulnerabilities.

External marketing environment
1.	All forces outside a firm that affect market opportunities or pose threats to marketers.
2.	It is difficult, although possible, for marketers to counter-influence the environment.
3.	The influencing factors vs. interacting factors.

Analyses
1.	SWOT analysis: Strengths, weaknesses, opportunities and threats.
2.	PEST analysis: Political/Legal environment, Economic environment, Social/Cultural environment and Technological environment.

Political-Legal Enivronment
1. 	Law and related regulations that require firms to operate under certain competitive conditions and to protect consumer rights.
2. 	It indicates what you can do and what you cannot do.
3. 	Some examples:
a.	The trilateral relationship, Sino-American relationship
b.	Self-regulation
c.	Property right, software piracy
4. 	Possible reaction: lobbying (many P.R. efforts).

Economic Environment
1.	Forces that influence consumers’ buying power and willingness.
2.	Some major indicators:
a.	Unemployment rate
b.	Inflation rate
c.	Income level
d.	Hang Seng index
e.	International economic climate, exchange rate, interest rate, etc.
3.	Possible countermeasures:
a.	Understand that business has cycles.
b.	Differentiation, emphasize different values.

Social-Cultural environment
1. 	Social trends and cultural values that affect marketing efforts.
2. 	Some examples of major social trends
a.	Immigrants from China
b.	Working women
c.	Aging
d.	Consumerism
3.	Some examples of Chinese values
a.	Collectivism culture, social influence is important.
b.	Face saving, gift giving.
c.	Affective in nature.
d.	Past oriented

Technological environment
1.	The application to marketing of discoveries in science, inventions, and innovations.
2.	Some examples
a.	Manufacturing technology (e.g., flexible manufacturing system)
b.	R&D technology
c.	Management philosophy (e.g., TQM, quality circle, EQ)
d.	Distribution technology (online distribution)
e.	Communication technology (global promotion through the Internet)

Competition
1.	Types of competition:
a.	Direct competition (e.g., Apple Daily vs. Oriental daily).
b.	Substitute (Computer vs. typewriter)
c.	Compete for consumers’ purchase (A Nike, or a Sony?)
2.	React to competition
a.	Retreat
b.	Frontal assault
c.	Differentiation (adjust the 4Ps)
d.	Serve the niche market
e.	Time-based competition

Faculty of Business, City University of Hong Kong
Seminar 02B:marketing planning
FB 2601 Marketing

Objectives
1.	Identify the steps in the marketing planning process, outline the major elements of a marketing plan.
2.	Explain how the portfolio model (BCG model) assists marketers’ decision making.

marketing planning
1.	Marketing planning the process of anticipating future events and conditions and determining the courses of action necessary to achieve marketing objectives.
2.	Distinguish from “doing business”.
3.	***You can follow my suggested structure to write your group assignment (but of course you can develop your own structure). For simplicity, I have omitted some concepts (e.g., strategic vs. tactical planning).
4.	You can find another example in your textbook (p.192-5).

The marketing planning process
1.	Corporate directions.
2.	SWOT analysis and portfolio analysis
3.	Market (consumer) analysis.
4.	Competitive analysis.
5.	Marketing objectives and generic strategies.
6.	Developing the marketing mix.
7.	Sales forecasting and adjusting the marketing plan.
8.	Implementation, evaluation and control.

1.	Corporate Ditrections
1.	Define the corporate mission.
2.	Peter Drucker’s fundamental questions (What is our business? Who is the customer? What is the value to the customer? What will our business be? What should our business be?) (Drucker, Peter [1973], Chapter 7, Management: Tasks, Responsibilities and Practices. New York: Harper & Row).
3.	Avoid “marketing Myopia” (Levitt, 1960) “Organization must learn to think of itself not as PRODUCING GOODS or SERVICES but as BUYING CUSTOMERS, as doing the things that will make people want to do business with it. Ask not what products can be produced, ask what needs can be served.
4.	Mission statement (i) Focus on limited number of goals; (ii) Stress the value major policies and values that he company wants to honor; (iii) Define the major competitive scopes within which the company will operate.

2a. SWOT analysis
1.	Strengths and weaknesses (internal assessment); Opportunities and threats (external assessment)
2.	Leverage: An internal strength matches an external opportunity.
3.	Problem: An environmental threat attacks an organizational weakness.
4.	Constraint: An internal weakness prevents the organization to take advantage of opportunities.
5.	Vulnerability: An environmental threat to an organization’s strength.
6.	Suggested elements for assessment:
a.	Opportunity and Threat: PEST analysis
b.	Strength and weakness: technology (hardware), skills and knowledge (software), resources, personnel, financial capability, “guanxi” etc.
7.	Strategic Window: A limited periods with an optimal fit between the key requirements of a market and the particular competencies of a firm. This is, opportunity won’t last long, good timing is everything!

2b. Portfolio Analysis
1.	A marketing planning tool that classifies a firm’s products according to industry growth rates and market shares relative to competing products.
2.	The BCG (Boston Consulting Group) model.
	High relative market share	Low relative marketing share	
High market growth rate	Stars
Invest more to make it a cash cow	Question Marks 
Build: add more resources for long-term growth
Harvest: keep cost low to gain short-term profit	
Low market growth rate	Cash Cow
Hold, use its great profit to support other products
Maintain market dominance.	Dogs
Harvest: minimize costs for survival
Divest: sell the business before it collapses (create low staff morale. Should consider segment switching, harvesting, adding values or liquidation).	
3.	New products usually start from question mark.

3. Consumer Analysis
1.	What market segments can be identified?
2.	What are the characteristics (Demographically and psychographically) the consumers?
3.	How big is the market size?
4.	How much do they buy and why?

4. Competitive analysis
1.	Who are they?
2.	Number of competitors in the market.
3.	Their strategies
4.	Their strengths and weaknesses
5.	Their performances

5a. Marketing Objectives
1.	Sales; profit
2.	Market share
3.	Awareness; image building

5b. Generic Strategy
1.	Interact with the marketing objectives
2.	Porter, Michael E. (1985), Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press.
3.	Cost leadership, differentiation and focus, usually pick neither one.
4.	Cost leadership: Achieve low production and distribution costs (large volume, specialization etc) to achieve low price.
5.	Differentiation (achieve superior performance and concentrate on customer benefits. Seek to be service, quality leader, styling leader etc)
6.	Focus (serve a niche)

6. Developing the marketing mix
1.	Configuration of the 4Ps to achieve the marketing objectives.
2.	Consistent with the generic strategy.
3.	Each P has its own objective and strategy.

7. Sales Forecast
1.	(For your assignment) a simple budget should be made.
2.	Appropriate strategic adjustment can be made.
3.	A program schedule may be needed.
4.	Implementation, evaluation and control.