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Foreign and Domestic Business Competition: Definition and Regulations

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  • 0:05 Marketing Environment
  • 0:49 Competition for Market…
  • 1:51 Competitive Analysis
  • 3:16 Key to Competitive Survival
  • 4:13 Lesson Summary
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Lesson Transcript
Instructor: Jennifer Lombardo
Marketers have to understand the environmental factors that can affect a marketing plan. The competitive landscape has a dramatic impact on a marketer's overall strategy for pricing, product development, promotion and logistics.

Marketing Environment

The marketing environment is made up of several elements, including technological, political, social, demographic, competitive and economic aspects. In this lesson, we'll focus on the competitive element of the marketing environment by looking at competition in foreign and domestic businesses.

Companies need to understand the total marketing environment when developing a plan of action. These elements can be uncontrollable in nature and consist of demographics, social, economic, political, technological and competition. Let's look at the foreign and domestic competition sections of the marketing environment. The competitive environment deals with the number of competitors in the market and the size of the competition.

Competition for Market Share and Sales

Parti Favors is a Kansas-based company that sells different party items such as hats, balloons and gift bags. Parti Favors' business has been slowly shrinking due to stiff competition. There are some key reasons why competition is a major factor in the marketing environment. The first reason is that the U.S. population growth is slowing down tremendously. This has led to a shrinking pool of customers for companies to target. There are fewer people in the U.S., which means less need for party items.

Another reason for the increase in competition is the growing of global accessibility to customers. Today, a company located in Kansas might have competitors in Asia or Australia. The growing use of the Internet has increased competition dramatically. It is easy for a customer anywhere in the world to order their party supplies from numerous online stores. Parti Favors has invested large amounts of money in Internet search engine ads to show up on searches for party items.

Competitive Analysis

In the past, global competition has focused on offering a cheaper price than domestic producers. Many global companies have now changed their message to promoting quality versus a cheap price. Companies must not be naive to think that their competitors only exist in their local area. A good marketer will undertake competitive analysis research. This is when research is completed to discover exactly who the competitors are in the market and their strengths and weaknesses.

Parti Favors' marketing manager, Erin, wanted to find out how they were losing business. She first sent surveys to customers who had not purchased from them in a while to see if there were any problems. The survey asked the consumers where they were getting their party items. Next, Erin researched all of the competition on the Internet. She also read reviews on the sites to see what attracted consumers to purchase from those individual party favor companies.

The final research showed that although there were hundreds of party favor sites, the company was losing out to a very large competitor: Cheap Mart. Cheap Mart was a huge mass-merchandiser that stocked a limited, but cheap, party product line. In addition, they offered a bigger selection on their online store. Cheap Mart had realized early on that with their vast coverage of stores and online option, they could easily put the smaller places out of business. Parti Favors needed to come up with a way to survive.

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