Chapter 3 Flashcards
External market environment
- Economic environment
- Technological environment
- Political and legal environment
- Cultural and social environment
3 Business Objectives
- Engage in specific activities that will perform a socially and economically useful function
- Develop an organization to carry on the business and implement its strategies
- Earn enough profit to survive
Mission statement
Sets out the organization’s basic purpose for being
Should focus on a few key goals rather than embracing everything
Patent
Protects a new idea or process
They get a 20-year monopoly to develop and use its new product, process, or material
4 basic kinds of market (competitive) situations
Pure competition
Oligopoly
Monopolistic competition
Monopoly
competitor analysis
an organized approach for evaluating strengths and weaknesses of current or potential competitor’s marketing strategies
initial step: identify potential competitors
competitive rivals
firms that will be the closest competitors
*could be currently serving similar needs with a different type of product
competitive barriers
The conditions that make it difficult, or even impossible, for a firm to compete in a market
Economic and technological environment
Affects the way firms - and the whole economy - uses resources
Technical skills and equipment affect the way companies convert an economy’s resources into output
The economic environment is affected by the way all of the parts of a macro-economic system interact
Interest rates usually __________ during periods of inflation
increase
Exchange rate
How much one country’s money is worth in another country’s money
Have an important efect on international trade
*When the dollar is strong, it’s worth more in foreign countries. Makes U.S. products more expensive overseas and foreign products cheaper in the U.S.
Technology
The application of science to convert an economy’s resources to output
Affects marketing in 2 basic ways:
- opportunities for new products
- for new processes
Nationalism
An emphasis on a country’s interests before everything else
affect how macro-marketing systems work
North American Free Trade Agreement (NAFTA)
Lays out a plan to reshape the rules of trade amont the U.S., Canada, And Mexico
Establishes a forum for resolving future trade disputes
Legal environment
Sets the basic rules for how a business can operate in society
May severely limit some choices, but changes in laws and how they are interpreted also create new opportunities
culture and social environment
Affects how and why people live and behave as they do
Gross domestic product (GDP)
The total market value of all goods and services provided in a country’s economy in a year by both residents and nonresidents of that country
Gross national Income (GNI)
A measure that does not include income earned by foreigners ho own resources in that nation
GDP does include foreign income
Marketers are more interested in the size of _________________ than in the number of people within political boundaries
homogeneous marketing areas
Metropolitan Statistical Area (MSA)
An integrated economic and social unit with a large population nucleus
Generally, centers on one city or urbanized area of 50,000 or more inhabitants and includes bordering urban areas
Quantitative product-market screening data
Sales
Profit
Return on investment (ROI)
Qualitative market screening data
Summarize what kinds of businesses the firm wants to be in
What businesses it wants to exclude
What weaknesses it should aoid
What resources (strengths) and trends it should build on
Ecomagination
Applying GE’s creativity to solve problems related to ecology
Sustainability
The idea that it’s important to meet present needs without compromising the ability of future generations to meet their own needs
Many organizations now screen opportunites on sustainability
Strategic business unit (SBU)
An organizational unit (within a larger company) that focuses on some product-markets and is treated as a seperate profit center
A company formally acknowledges its very different activities
Some SBUs might be milked =>
that is, used to generate cash for the business with more potential
Industrial products tend to be:
insensitive
Basic commodity-type consumer products tend to be:
in the middle of the continum of environmental sensitivity
Consumer products that are linked to cultural variables tend to be:
sensitive on the continum of environmental sensitivity
Senior citizen group
People over 65
Willl increase by 15 percent during this decade
2010-20202 a whopping increase of 35.8% is expected
Baby boomers
Produced over 1/4 of the piopulation
Now beginnig retirement
Generation X
Born after the baby boomers
Generation Y
Millenials
