Chapter 2 Market Opportunity analysis- MBS

MARKETING
OPPORTUNITY
ANALYSIS
By Advance Saraswati Prakashan Pvt. Ltd
Sankhamul, 01-4780359
Asp.feedback@gmail.com
2

LEARNING OBJECTIVES
After comprehensive studying of this chapter, learners will be able to:
 Macro Environmental Trend and Forces,
 Corporate and Division Strategic Planning, Business Unit Strategic Planning,
 Assigning Resources to SBUs: SBU Model BCG Model and GE Model,
 Nature and Content of Marketing Plan.
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MARKET OPPORTUNITIES
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 The market is a source of opportunity. New market, development of the existing
market, development of the new product, improvement in quality, product line
expansion, strong economy, weak competitor, development of new technology,
change in customer needs, economic benefits, product diversification create new
opportunities.
 Therefore, it is important for market managers to understand market opportunities.
The market opportunities can be identified and determined by using following
factors: Target Market
Market Development
Market Size Market Requirements
Market
Opportunity

Sources of Marketing Opportunities
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Short Supply
Improvement
Innovation
Weak Competitors
Sources of Marketing
Opportunities
Changes in Customer's Wants

Contd…
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 Short Supply: Short supply of products can be the source of market
opportunities.
 Improvement: Improvement of product is also a source of market
opportunities. The opportunities can be created by improving or
modifying product features or adding more type or size.
 Innovation: Innovation of new product is also a source of market
opportunities. It is the introduction of many kinds of new products that
are completely new to this world. Innovation is unique or original
product.
 Weak Competitors: One of the important sources of market
opportunities is weak competitors.
 Changes in Customer's Wants: Another source of market
opportunities is changes in customer's wants.

Types of Market Opportunities
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Expanding New Markets
Product Line Expansion
Integration
Faster Delivery
Types of Market
Opportunities
Advice and Information
Global Operations
Mergers and Acquisitions
Strategic Alliances
Use of E-commerce

Contd…
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 Product Line Expansion: Expansion may occur as a result of the company growth.
Line expansion may also result from the consumer's changing preferences.
 Integration: It reduces costs by creating supply chain. Forward integration is the
integration with distributors and channel members for effective distribution.
 Faster Delivery: Faster delivery of goods and services are also the market
opportunities. The company can benefit through faster delivery of products to
customers.
 Advice and Information: For example, Singhadarbar Baidhyakhana provides free
treatment for patients.
 Global Operations: For example, Standard Chartered Bank provides banking
services all over the world.
 Mergers and Acquisitions: For example, Merging of Home Dish and Dish Nepal
had brought Dish Home Services.
 Strategic Alliances: The company can establish relationship among many
business firms to work together for achievement of common objectives.

MARKETING ENVIRONMENT
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 “A company's marketing environment comprises all the actors and
forces outside marketing that affect marketing management’s ability to
develop and maintain successful transactions with its target
customers.”  Philip Kotler
 "The marketing environment consists of external forces that directly or
indirectly influence an organization's acquisition of inputs (human,
financial and natural resources and raw materials and information)
and creation of outputs (goods, services or ideas."
 Pride and Ferrell
 The marketing environment offers both opportunities and threats.
Marketing manager should study and analyze the marketing
environment and identify the environmental forces clearly to make
future plans and programs accordingly.

Features of Marketing Environment
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Features of Marketing
Environment
Dynamic
Complex
Long-term Impact
Multi-faceted
Related with SWOT

MICRO AND MACRO ENVIRONMENTAL FORCES
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 Companies basically interact with two types of environment that is
micro and macro environment.
 Micro environment consists of the factors close to the company that
affect its ability to serve its customers the company, suppliers,
marketing intermediaries, customers, competitors, and public.
 The macro environment consists of the larger societal forces that
affect the micro environment demographic, economic, natural,
technological, political legal and cultural forces.
Marketing Environment
Micro Environment Macro Environment

Micro Environment
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 "Micro environment consists of the forces close to the company that affects its ability to
serve its customers the company, suppliers, marketing channels, customers, competitors
and public.“  Philip Kotler
Customers
Marketing Intermediaries Suppliers
Micro Environment
Components
The Company
Public Competitors
As per the above definition, micro
environmental factors are closely
related to a specific company and
are included as part of the firm’s total
marketing system. They are the
suppliers, marketing intermediaries;
company’s marketing organization,
and the market or customers.

Macro Environment
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 “Macro Environment consists of the large social forces that affect the micro environments-
demographic, economic, natural, technological, political and cultural force.
 Philip Kotler
 “Macro environment consists of the external forces which affect a company’s planning
and performance, and are beyond its control. The major uncontrollable external forces are
economic, demographic, technological, natural, socio-cultural and political-legal forces
which influence a firm’s decision making and have an impact upon its performance.”
 Dictionary of Marketing

Macro Environmental Trends
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 The macro-environmental trends are as follows:
Fad/Need
Fashion, language, and
behaviors all affect the
workplace regardless of how
fleeting they may be. Fads are
often heavily driven by social
media today. Social media at
one time was considered a fad,
which has now evolved into a
trend.
Trends
Trends are a bit slower-paced
but represent something that is
occurring on a much wider
scale than a fad.
Mega Trends
Megatrends are the probable
future-or express what we
know with great confidence
about the future. Megatrends
are certainties.

Macro Environmental Components /Forces
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Economic
Technological Political-legal
Macro Environment
Components
Demographic
Natural Socio-cultural

Demographic Environment
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 Demography represents the statistical study of the human population and its
distribution characteristics. It is an important task for the marketing executives to
explore the changing pattern of demography in the country since the population is
the primary target market of the marketing organization. The primary demographic
environment elements are as follows:
1. Population Size
2. Population Growth
3. Migration
4. Urbanization
5. Age Mix
6. Lifestyle

Economic Environment
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 The economic environment is a significant macro environment
component that affects both the marketing firm and consumers. The
economic environment consists of factors that affect consumers
purchasing and spending power. The key elements of the economic
environment are as follows:
 Changing Income
 Income Distribution
 Spending Trend
 Purchasing Power
 Inflation Rate
 Fiscal Policy
 Availability of Credit
 Per Capita Income
 Trade Cycle
 Willingness to Spend
 Consumer’s Income

Socio-Cultural Environment
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 Society is a group of people having distinct beliefs, knowledge,
costumes, habits, taste, values, culture, lifestyle, etc.
 Cultural is the means used in adjusting to the biological, environment,
psychological, and historical components of human existence.
 These socio-cultural characteristics differ from people to people and
society to society. Therefore, their choice of products and services
also vary.
 The key socio-cultural environment elements are as follows:
Social Environment
Cultural Environment

Technological Environment
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 One of the major macro environment factors that have changed the
entire dynamics of marketing activities is the technological
environment. It is the primary force that is redefining our destiny.
 It changes rapidly and creates an array of marketing opportunities.
The development in the sector of IT, medicine, miniaturization
(development of model), transportation, banking services, etc. has
revolutionized the way marketing is done.
 The key elements of technological environment are explained as
follows:
 Pace of Technological Change
 Level of Technology
 Technology Transfer
 Research and Development Budget

Political-Legal Environment
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The political and legal environment is a broad term covering
the entity by which the nation is governed. It consists of an
interaction set of laws, government agencies, and pressure
groups that influence and constrain the conduct of marketing
firms in the society. They key elements of political legal
environment are as follows:
Political System
Law
Government Policies
Pressure Group
Power Group
Political Stability
Regional Association
Government Agencies

Natural Environment
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 Natural environment refers to the totality of natural resources that are
essential as input for marketers.
 Resources are not distributed by nature in all the countries in the
same ratio. Whatever resources are available, they cannot be used
forever.
 The primary elements of natural environment are as follows:
Natural Resources
Climate
Situation of Ecology
Development of Environmentalism
Topography

ENVIRONMENTAL SCANNING
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 “Environmental scanning involves monitoring changes and developments in the
environment that have potential impact on the organization.”  Richard Steers
 “The process of monitoring and analyzing the marketing environment of a company is
called environmental scanning.”  David Jobber
 Environmental scanning is a review of external sources to discover factors that
impact a business. The main goal is to identify and consult sources outside the
business. Although these sources are uncontrollable from the business
perspective, it is important to consider them in the decision-making process.

Types of Environmental Scanning
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Environmental scanning is a process of obtaining information
from the environment.
It helps prepare an organization to exploit the business
opportunity by developing a sound resource base.
Further, it also assists in preparing scenarios and adjusts with
changes. Environmental scanning may be done in two ways
as mentioned below:
Types of Environmental
Scanning
Concentrated Environmental Scanning
Comprehensive Environmental Scanning

Process of Environmental Scanning
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Identify the Forces of Marketing Environment
Determine Sources of Observation
Select Scanning Methods
Scan and Respond to Data
SWOT Analysis

CORPORATE AND DIVISION STRATEGIC PLANNING
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 Corporate strategic planning formulates an integrated action plan covering the
whole part of the organizational objective. In order to formulate division strategic
planning, senior and middle management level officers are basically involved with
the departmental managers.
 Corporate and division strategic planning formulation requires consideration in
various activities related to planning, which are as follows:
Defining the Corporate Mission
Establishing Strategic Business Units
Assigning Resources to each Strategic Business Unit
Assessing Growth Opportunities
Corporate and Division
Strategic Planning
Organization and Organizational Culture

CORPORATE MISSION
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 The concept of what to do in the long run in the future is called mission.
 It defines the nature and scope of the business as well as gives direction to the
organization.
Characteristics of Mission Statement: The mission statement should have the
following features:
1. Limited Goals
2. Define Policies
3. Defined Competitive Scopes

DIVISION STRATEGIC PLANNING /BUSINESS UNIT STRATEGIC PLANNING
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 After the corporate plan is made, companies go for business unit level planning.
The business unit plan comes out of the corporate plan.
 There are seven steps involved in the business unit level strategic planning. They
are depicted in figure below:
The Business Mission
SWOT Analysis
Goal
Formulation
Strategy
Formulation
Program
Formulation
Strategy
Implementation
Control and Feedback

Contd…
12/14/2021 27
 The Business Mission: A company's mission often is expressed in the form of a
mission statement, which conveys a sense of purpose to employees and projects
a company image to customers. The first step in business unit level strategic
planning is defining the business mission. The business missions are based on
the corporate missions.
 SWOT Analysis: The SWOT analysis is a popular concept to conduct an overall
evaluation of a company's strengths (S), weaknesses (W), opportunities (O) and
threats (T). Based on contrasting the company's strengths and weaknesses with
market opportunities and (potential) threats, it gives recommendations for actions.
 Goal Formulation : After SWOT analysis, the successful manager should be able
to formulate the business goal in measurable terms. Goal can be explained in
terms of market share, sales, profit, level of reputation and image desired by the
business unit in the industry.
 Strategy Formulation : A company deliberately chooses a particular strategy
depending upon its strengths and goals set for the business unit. While goals
indicate what is to be achieved, strategy is the game plan used to achieve these

Contd…
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 Program Formulation: Once the programs are made, the marketing planner
designs authority and responsibility, work and time charts for implementation of
the program. Implementation of a program specifies structures, responsibilities
and roles of each member in the organization.
 Strategy Implementation: Action plans are made about the development of the
new products, formation of consumer perception towards product and maintaining
perception, pricing, promotion mix, distribution, etc. In addition, work, duties, and
work goals, rights, and responsibilities are provided to various departments,
branches and employees.
 Control and Feedback : Finally, for successful business planning and
implementation, it is important to monitor and evaluate the execution at different
points of time. Firm designs milestones and targets to measure the performance
and if they find a gap between what was planned and the results of the plan, they
need to take corrective actions.

ASSIGNING RESOURCES TO STRATEGIC BUSINESS UNITS (SBUS)
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 The purpose of dividing the whole business to different independent strategic
business units is to allocate the total firm resources among various SBUS.
 The popular tools are discussed as below:
The Boston Consulting Group Matrix-BCG Model
Strategic Business Units: SBUs
General Electric Matrix-GE Model
Assigning Resources to
Strategic Business Units

Strategic Business Units: SBUs
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 A strategic business unit, popularly known as SBU, is a fully-functional unit of a
business that has its own vision and direction.
 Typically, a strategic business unit operates as a separate unit, but it is also an
important part of the company. It reports to the headquarters about its operational
status.
 Strategic business units (SBUs) have three characteristics that are as follows:
Characteristic of SBUs
Separate Planning Separate management
Separate competitors

The Boston Consulting Group Matrix-BCG Model
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 Each cell of this matrix has been given an interesting and appropriate name by the
Boston Consulting Group.
 The four cells of the BCG matrix have been termed as stars, cash cows, question
marks (or problem children), and dogs. Each of these cells represents a particular
type of business. These different types of businesses, with some contemporary
examples from the corporate world, are described below:
Low
Low
Relative Market Share
Market
Growth
Rate
Stars Question Marks
Dogs
Cash Cows
High
15%
10%
5%
0%
20%
?
10 1.0 0.1
High

General Electric Matrix-GE Model
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 The nine cells of the GE matrix are grouped on the basis of low to high industry
attractiveness, and weak to strong business strength.
 Three zone of three cells each are made, denoting different combinations
represented by green, yellow and red colours.
Green
(1)
Green
(2)
Red
(6)
Red
(9)
Yellow
(3)
Yellow
(7)
Green
(4)
Yellow
(5)
Red
(8)
Industry High
Medium
Low
Competitive Position
Strong Medium Weak

NATURE AND CONTENTS OF MARKETING PLAN
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 "Marketing planning is the work of setting up objectives for marketing activity and of
determining and scheduling the steps necessary to achieve such objectives."
 American Marketing Association
 "The marketing planning is the central instrument for directing and coordinating
marketing effort."  Philip Kotter
 Hence, marketing planning is concerned with the identification of resources that
are available and their allocation to meet specified objectives. It includes the
selection of target markets and development of long range programs for the major
ingredients in the marketing mix.

Nature of Marketing Plan/Planning
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Purposeful
Primary Function
Pervasive
Forward Looking
Nature of Marketing
Plan/Planning
Intellectual Process
Continuous
Integrated Process
Choice

Contents of Marketing Plan
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Marketing Plan
Controls Objectives
Action Plan Marketing Strategy
Projected Profit and Loss
Current Marketing
Situation Analysis
SWOT
Analysis
Management or
Executive Summary

CASE ANALYSIS & REPORT
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 Please go through the books for case analysis.
 Prepare the report on different types of strategic business units and present it into
the class.

Chapter 2 Market Opportunity analysis- MBS

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