Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e- Evaluating Opportunities
in the Changing Marketing
Environment
Text © The McGraw−Hill
Companies, 200298 Chapter 4
To find its strengths, a firm must evaluate its functional areas (production,
research and engineering, marketing, general management, and finance) as well as
its present products and markets. The expertise and knowledge of people at the firm
can also be a unique resource. By analyzing successes or failures in relation to the
firm’s resources, management can discover why the firm was successful—or why it
failed—in the past.
Harley-Davidson’s motorcycle business was on
the ropes, and it was losing customers to Japanese
competitors. Studying the Japanese firms helped
Harley identify ways to produce higher quality
motorcycles at lower cost. With these resource-use
problems resolved, Harley was again on the road to
achieving its objectives. As its sales and reputation
grew, its close relationship with Harley owners
became a resource that helped Harley introduce a
profitable line of accessories. The Harley case high-
lights both manufacturing quality and relationships with existing customers as
resources. Other resources that should be considered as part of an evaluation of
strengths and weaknesses are discussed in the following sections.^7Some opportunities require large amounts of capital just to get started. Money
may be required for R&D, production facilities, marketing research, or advertising
before a firm makes its first sale. And even a really good opportunity may not be
profitable for years. So lack of financial strength is often a barrier to entry into an
otherwise attractive market.In many businesses, the cost of producing and selling each unit decreases as the
quantity increases. Therefore, smaller firms can be at a great cost disadvantage if
they try to win business from larger competitors.
On the other hand, new—or smaller—firms sometimes have the advantage of
flexibility. They are not handicapped with large, special-purpose facilities that are
obsolete or poorly located. Large steel producers once enjoyed economies of scale.
But today they have trouble competing with producers using smaller, more flexible
plants.
Some firms are finding that they have the greatest flexibility by not having any
“in house” manufacturing at all. Sara Lee, the company that markets brands like
Hanes and L’Eggs, is a good example. Sara Lee sold its manufacturing facilities for
many of these textile-related markets. Sara Lee says it doesn’t have a competitive
advantage in manufacturing. Further, as its needs change in various markets around
the world it will buy products from whatever suppliers are best able to meet its spec-
ifications. Of course, this could be risky if some other firm can develop a competitive
advantage—because it can provide retailers with faster or more reliable response
when they place orders.Our marketing strategy planning framework (Exhibit 3-1) helps in analyzing cur-
rent marketing resources. In the product area, for example, a familiar brand can be
a big strength. Starbucks is famous for its coffee beverages. Starbucks Coffee Ice
Cream was also a leader within a year of its introduction. People tried it because
they knew what Starbucks flavor meant.^8 A new idea or process may be protected
by a patent.A patent owner has a 20-year monopoly to develop and use its new
product, process, or material. If one firm has a strong patent, competitors may be
limited to second-rate offerings—and their efforts may be doomed to failure.^9
Good relations with established middlemen—or control of good locations—can
be important resources in reaching some target markets. When marketing managers
at Microsoft decided to introduce the Xbox game console, Microsoft software andFinancial strength
Producing capability
and flexibility
Marketing strengths