Chap 3

Question 1

Direct market environment:

Answer 1

Includes customers, the company and competitors

Question 2

External market environment:

Answer 2

Is broader than the direct market environment and includes four major areas: Economic environment, Technological environment, Political and legal environment, Cultural and social environment. Managers can’t alter the variables of the market environment; therefore we consider them uncontrollable variables.

Question 3

Mission statement:

Answer 3

Sets out the organization’s basic purpose of being.

Question 4

Pure competition / Oligopoly:

Answer 4

Most product-markets head toward one of them over the long run. Competitors offer very similar products. Because customers see the different available products (marketing mixes) as substitutes, managers just compete with lower and lower prices, and profit margins shrink.

Question 5

Monopoly:

Answer 5

Situations in which one firm completely controls a broad product-market.

Question 6

Monopolistic competition:

Answer 6

A number of different firms offer marketing mixes that at least some costumers see as different. I.e. a gasoline station that serves the best coffee in town as well.

Question 7

Competitor analysis:

Answer 7

An organized approach for evaluating the strengths and weaknesses of current or potential competitors’ marketing strategies. The basic approach is simple. You just compare the strengths and weaknesses of your current (or planned) target market and marketing mix with what competitors are currently doing or likely to do in response to your strategy.

Question 8

Competitive rivals:

Answer 8

Firms that will be the closest competitors. Rivals offering similar products are often easy to identify.

Question 9

Competitive barriers:

Answer 9

The conditions that may make it difficult, or even impossible, for a firm to compete in a market.

Question 10

Economic environment:

Answer 10

Refers to macroeconomics factors, such as national income, economic growth, inflation, that affects patterns of consumer and business spending. The rise and fall of the economy in general, within certain industries, or in specific parts of the world can have a big impact on what consumers buy.

Question 11

Technological environment:

Answer 11

Is the application of science to convert an economy’s resources to output. Technology affects marketing in two basic ways: opportunities for new products and for new processes.

Question 12

Political environment:

Answer 12

The attitudes and reactions of people, social critics and governments all affect the political environment. Consumers in the same country usually share a common political environment (=nationalism), but note that the political environment can also affect opportunities at a local or international level.

Question 13

Legal environment:

Answer 13

Changes in the political environment often lead to changes in the legal environment and in the way existing laws are enforced.

Question 14

Social and cultural environment:

Answer 14

Affects how and why people live and behave as they do. Which affects customers buying behavior and eventually economic, political and legal environment. Many variables make up the social and cultural environment. Some examples are languages, education, religious beliefs and how they view work, marriage and family.

Question 15

Baby boomers:

Answer 15

Are now creating new opportunities in industries such as tourism, health care and financial services.

Question 16

Screening criteria:

Answer 16

After you analyze the firm’s resources for strengths and weaknesses, the environmental trends the firm faces and the objectives of the top management, you merge them all into a set of product-market screening criteria. These criteria should include both quantitative and qualitative components. Quantitative components summarize the firm’s objectives: sales, profit and return on investment. Qualitative components summarize what kind of business the firm wants to be in, what business it wants to exclude, what weaknesses it should avoid and what resources (strengths) and trends it should build on.

Question 17

Sustainability:

Answer 17

The idea that it’s important to meet present needs without compromising the ability of future generations to meet their own needs.

Question 18

Strategic business unit:

Answer 18

Is an organizational unit (within a larger company) that focuses on some product-markets and is treated as a separate profit center.

Question 19

International markets:

Answer 19

Some products, like industrial products, are relatively insensitive to the economic and cultural environment they are placed in, while others, like consumer products linked to cultural variables, are highly sensitive.