104 CHAPTER 5 EXTERNALCONSIDERATIONSINMARKETING
environment.i(ather,it istobrieflydescribeeachofthecomponentsandshowhowexter-
nalfactors affectmarketingstrategy.ExternalSuprises
CarolWolfeandJaneBarneshavebeenfriendsforsixyears,sharingcarpoolresponsibilities,
a commonlove')fsewing,anda beliefthatbeing self-employed wouldbea dreamcometrue.
Aftertwoyearsoftinkering,theyproduceda childcarrier!hattheyfeltwouldappealto devoted
momswhowantedtheirbabytobephysicallyattachedtotheparentina secureandcomfort-
ablemanner.Theyknewthey wouldneedlotsofhelpgettingthisbusinessofftheground,but
neverrealizedhowdifficultandcomplicatedit wouldbetoobtainsuchassistance.
Theycontactedthechairmanofthemarketingdepartmentat a localcollegeandwere
toldtheycouldbeconsideredasa studentprojec~forthecapstonemarketingcourse.One
monthlater, theyweregivena preliminaryreport.Thereportbeganbylistingthevarious
agenciesandintermediariestheywouldneedtocontactinordertostarttheirbusiness.The
listincludedthefollowing:personal attorney,patentattorney,accountant, commercialbanker,
rawmaterialsproviders(e.g., denim, thread, staples),distributors(wholesalersandretail-
ers),advertisingagency,marketingresearchfirm, andfulfillmenthouse. Further, theywould
havetounderstandthecapabilities,options,andcostsassociatedwitheach agency/intermediary.
Sincetheylivedina relativelysmallcity(population 185 ,000),manyoftheseagen-
cieslintermediarieswereno~readilyavailable.Alocalattorneyputthemintouchwitha
patentattorneyanda marketingresearchcompanyina nearbylargecity. Theestimatedcost
ofdoingthepatentsearchwas$5,500 ,whilethecostofpreliminaryresearchwas$9,300.
Their combinedsavingstotalled$18,000.Clearly,theywereunde:funded.Aquickcallto
thelocal bankproducedanotherlistofrequirementstheywouldhavetomeetinorderto
qualify fora businessloan,includinga businessplan,aproformastatement,andsoforth.
Theinitialbusinessplandevelopedbythestudent groupindicatedthattherewere
severalcompetitorsselling a productverysimilartoCarolandJane's babycarrier.Also,
thesourcesfordenimwerelimitedandrequireda minimumpurchaseof 500 boltsoffab-
ric.Finally,becausemostretailerssellingsimilarproductswerealreadycommittedtoother
manufacturers, it wasunJikely thattheywouldfindretaildistri butors. The expectedcostof
manufacturingandmarketing30,000unitsthefirstyearwas$1.4mimon,witha maximum
possible profitof$146,000.Carol andJanegaveupontheiridea.
Whilethisscenariois quitedepressing,itisnotthatunusual.It is criticalthata busi-
nessidentifyandevaluatethevariousagencies andintermediariesthatit mustdealwith.
Throughoutthisbook,wewillconstantlyidentifytheseexternalagenciesandattemptto
assesstheirinfluenceona marketingorganization.Competitors
Aswithotherexternalforces, managementmustalsoprioritizetheimportanceofthefac-
torsthataffectcompetition.Thereiationshipsbetween theseelementsandcompetitionmust
beunderstoodif theorganizationistobeabletodevelopandsustaina competitiveadvantage.
Competitiveanalysisfocuseson opportunitiesandthreatsthatmayoccurbecauseofactual
orpotentialcompetitivechangesinstrategy.It startswithidentifyingcurrentandpotentialcom-petitors.Forexample,whoareGeneralMotorsCOMpetitors')IfyounamedcompanieslikeTo-
yota,Ford,Chrysler,andHonda,youareright,butyou'vejustbegun. Table5.1outlinessome
ofGeneralMotors'competitorsandTable5.2does thesamewithNintendo'scompetitors.
Itisessentialthatthemarketerbeginthisassessmentbyanswering thefollowingques-
tion:"What criteriacanbeusedtoidentifya salientsetofcompetitors?"