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Chapter 3

Marketing Chapter 3.docx

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McMaster University
Ambika Badh

Marketing Chapter 3 Environmental scanning • Process of collecting information about the external marketing environment to identify and interpret potential trends • The goal of this process is to analyze the information and decide whether these trends represent significant opportunities or pose major threats to the company Environment management • Attainment of organizational objectives by predicting and influencing the competive, political-legal, economic, technological, and social-cultural environments Strategic alliance • Partnership in which two or more companies combine resources and capital to create competitive advantages in a new market • Common in international marketing Competitive environment • Interactive process that occurs in the marketplace among marketers of directly competitive products, marketers of products that can be substituted for one another, and marketers competing for the consumer’s purchasing power Monopoly • Market structure in which a single seller dominates trade in a good or service for which buyers can find no close substitutes Oligopoly • Market structure in which relatively few sellers compete and where high start-up costs form barriers to keep out new competitors Types of Competition • Marketers face three types of competition o The most direct form occurs among markers of similar products o A second type of competition is indirect and involves products that are easily substituted Marketing 2MA3: Chapter 3 1 1A change such as a price increase or an improvement in a product’s attributes can affect demand for substitute products o The final type of competition occurs among all organizaitons that compete for consumers’ purchases Developing a Competitive Strategy • Competitive strategy o Methods through which a firm deals with its competitive environment o Involves answering the following three questions 1Should we compete? • Depends on the firm’s resources, objectives, and expected profit potential 2If so, in what markets should we compete? • Acknowledge their firm’s limited resources 3How should we compete? • To make the product, distribution, promotion, and pricing decisions that give the firm a competitive advantage in the marketplace • Time-based Competition o Strategy of developing and distributing goods and services more quickly than competitors o Enables them to improve product quality, reduce costs, and expands product offerings to satisfy new market segments and enhance customer satisfaction The Political-Legal Environment • Political-legal environment o Component of the marketing environment consisting of laws and
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