Lecture 2 Notes

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MKT100 – Lecture 2 Date: September 13 th , 2023 Title: Chapter 2 – Strategic Planning and The Marketing Environment Textbook Notes 2.1 – Components of the Strategic Planning Process  Strategic planning is a process that helps organization allocate resources to capitalize on opportunities in the market place; long term process; includes situation analysis, developing mission statements, objectives, and strategies.  This is then followed by development of a segmentation, targeting, and positioning strategy and the implementation of the marketing mix to support strategy. - Conducting Situation Analysis o Must occur before company can decide on specific action, therefore important to understand the decision or action being considered. o Important to know what decision will need to be made as this will help focus on relevant aspect for the decision to be taken; specificity is key because a lot of data will be available. Therefore, best to consider only those factor that are relevant to your decision. o SitAn involves analyzing the environment in which the business operates.  External factors: outside the organization; political, legal, regulatory, economic, socio-cultural, technological, and competitive environments.  Internal factors: within the organization; company’s resources, capabilities, and corporate partners and how these things compare against competition.

- Assessing the Internal Environment o Should compare the micro-environment of the company with the competition so think about whether the company being analyzed is better or worse in comparison to the competition. o Also, should consider the different types of competition; we often only think about direct competitors but should also look at indirect competitors.  Direct: Canada Ginger Ale vs Schweppes ginger ale  Indirect: Canada Ginger Ale vs. water, coke, sports drink etc. - Assessing the External Environment o Analyzing the external environment involved tracking conditions in the macro environment that, although largely uncontrollable, affects the way the organization does business.  Political/legal/regulatory  Organizations must comply with gov regulation and understand the political and legal environments in which they do business.  Regulations will vary across countries and states and different countries have different laws that can affect company strategy.  Economic  Economic factors include inflation, unemployment, interest rates, and whether the company is in growth or recession. o Inflation: cost of living too high therefore consumers and businesses need more money to purchase goods and services. o Interest rate increase when inflation increases. o Recession occurs when inflation increases because higher prices = low/negative economic growth.  Socio-cultural  Social trends, age, income, marital status, education, and occupation are not static in the global marketplace.  Example: people of the age 65 and up will increase by 60% compared to the younger population that will only increase by

10%, therefore organization must be able to market to the older population.  Technological  Marketers allocate more of their budgets to online ads and mobile marketing rather than just print media.  Competitive  In the macro-environment perspective, competition is of the industry not individual competitors.  In Canada not a lot of cell phone carriers – oligarchy vs in the states there are multiple carriers so how difficult is it to break in both situations.  Porter’s Five Forces Model is a model used to analyze industries and helps organizations become competitive in the future. o Competitive Rivalry o Substitute products o Potential new entrants o Bargaining power of buyers o Bargaining power of suppliers o Example: because buyers are consuming fewer soft drinks, companies like Coke and Pepsi start to offer substitutes like vitamin water and sports drink. Because of which you have new entrants entering the market to supply the vitamin water. When suppliers see how lucrative their customers’ market, they is can also enter it = competitive rivalry. o When the companies globalize, analyzing this macro-environment becomes more complicated because you then have to analyze the macro-environment in all the countries the business is being done in. - Conducting a SWOT Analysis o SWOT stands for Strengths, Weakness, Opportunities, and Threats o It helps organize thought to develop goals and strategies; and as you conduct the SWOT analysis you must keep the decision or action to be taken at the top of your mind. o In determining whether the data point is a strength, weakness, opportunity, or threats, you must consider a number of criteria. Video Lectures

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Chapter 2 – Video 1 – Strategic Planning Process - How to make decision about where the company is going in the upcoming years. - Three steps to take when making strategic decisions: o Strategic planning approach – what are some of the positive and negative aspects of company that impact decisions.  Planning phase  Implementation phase  Control phase  Every phase controls the other phase. o SWOT Analysis Chapter 2 – Video 1 – Situational Analysis (Internal Factors) - Should my company take action ___? o Triggers a series of analysis and then it becomes a decisional yes or no. - First thing to consider is to evaluate the internal environment. o What is the company able to do? o What are the positive and negative things about the company in implementing this decision? o What are some of the things going on outside of the company? o Company  Resources, capabilities o Corporate partners  Distributors, suppliers o Without setting a benchmark, we don’t know if good or bad so always have competitors in mind; therefore, must need this benchmark. o Direct competitors: companies selling the exact same thing. o Indirect competitors: companies that can replace the product. Chapter 3 – Video 3 – Situational Analysis (External Factors) - What are some of the factors external to the company that the company cannot control and that may impact the decision? - Political o Which country of origin? Ontario’s COVID Opening act. o Outside of country of origin. Know the COVID restriction in countries outside of Canada. o Example: should my company expand to France? France says the employee can only work 35 hours per week which can impact my company because what if I need people working for a few hours more? - Economic o If the country’s economy is not great like inflation, recession, high taxes it means I have less disposable income. So, I need to spend more of my income on the necessities and therefore do not have a lot of money left over and so I have less power to purchase any product out there. o Example: should company invest in luxury product line? If the country is in recession the consumer will not have a lot of disposable income.

- Social o Need to understand the customer’s evolving needs and views of the world. The trends and values that shape consumer’s needs or wants. o Example: should my company invest in environmental product line? Look at the country and its views regarding this. - Technological o What are the technological advancements? o Example: should my company prioritize online channel? Look at the available of internet and other technology. - Competition o Not looking at one competitor but how is the entire market? How much competition? A lot or few similar companies in the industry? o Porter’s Five Forces Model

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