Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

4. Evaluating Opportunities
   in the Changing Marketing
   Environment

Text © The McGraw−Hill

Companies, 2002

Evaluating Opportunities in the Changing Marketing Environment 99

computer accessories had already proved profitable for retailers like Best Buy and

Wal-Mart that could reach the target market. So these retailers were willing to give

the new product shelf space even if they were already carrying competing products

from Nintendo or Sony.^10

Similarly, existing computer systems that effectively share information in the

channel, speed delivery of orders, and control inventory can be a big advantage.

When P&G adds a new type of detergent, the systems to manage distribution are

already in place.

Promotion and price resources must be considered too. Fidelity Investments already

has a skilled sales force. Marketing managers know these sales reps can handle new

products and customers. And expertise to create an Internet website for online orders

may enable a firm to expand its market and undercut competitors’ prices.

Finally, thorough understanding of a target market can give a company an edge.

Many companies fail in new product-markets because they don’t really understand

the needs of the new customers or the new competitive environment.

A familiar brand name—and

other marketing strengths—can

be an advantage in seeking new

opportunities.

Analyzing Competitors and the Competitive Environment

The competitive environmentaffects the number and types of competitors the

marketing manager must face and how they may behave. Although marketing man-

agers usually can’t control these factors, they can choose strategies that avoid

head-on competition. And where competition is inevitable, they can plan for it.

Economists describe four basic kinds of market (competitive) situations: pure

competition, oligopoly, monopolistic competition, and monopoly. Understanding

the differences among these market situations is helpful in analyzing the competi-

tive environment, and our discussion assumes some familiarity with these concepts.

(For a review, see Exhibit A-11 and the related discussion in Appendix A, which

follows Chapter 22.)

Most product-markets head toward pure competition—or oligopoly—over the

long run. In these situations, competitors offer very similar products. Because cus-

tomers see the different available products (marketing mixes) as close substitutes,

managers just compete with lower and lower prices, and profit margins shrink. Some-

times managers do this much too quickly, without really thinking through the

question of how they might add more value to the marketing mix. It’s crucial to

remember that the marketing mix that offers customers the best value is not nec-

essarily the one with the lowest price.

Choose opportunities

that avoid head-on

competition