Who is Trap-Ease America’s competition? placed advertising in Good Housekeeping (after all, the trap had

5. Who is Trap-Ease America’s competition? placed advertising in Good Housekeeping (after all, the trap had

6. How would you change Trap-Ease’s marketing strategy? What earned the Good Housekeeping Seal of Approval) and in other

kinds of control procedures would you establish for this strategy?

Part 1: Defining Marketing and the Marketing Process (Chapters 1–2) Part 2: Understanding the Marketplace and Consumers (Chapters 3–6) Part 3: Designing a Customer-Driven Strategy and Mix (Chapters 7–17) Part 4: Extending Marketing (Chapters 18–20)

3 the basic concepts of market- ships. To develop effective marketing strategies, you must first under-

Analyzing the Marketing

Environment

Chapter Preview threats, and affect the company’s ability to build customer relation-

In Part 1, you learned about

ing and the steps in the marketing process for building profitable rela- stand the environment in which marketing operates. tionships with targeted consumers. In Part 2, we’ll look deeper into the

We start by looking at an American icon, Xerox. A half-century first step of the marketing process—understanding the marketplace

ago, this venerable old company harnessed changing technology to and customer needs and wants. In this chapter, you’ll see that market-

create a whole new industry—photocopying—and dominated that in- ing operates in a complex and changing environment. Other actors in

dustry for decades. But did you know that, barely a decade ago, Xerox this environment—suppliers, intermediaries, customers, competitors,

was on the verge of bankruptcy? Don’t worry, the company is once publics, and others—may work with or against the company. Major

again sound. But Xerox’s harrowing experience provides a cautionary environmental forces—demographic, economic, natural, technologi-

tale of what can happen when a company—even a dominant market cal, political, and cultural—shape marketing opportunities, pose

leader—fails to adapt to its changing marketing environment.

Xerox: Adapting to the Turbulent Marketing Environment

X generic for copying (as in “I’ll Xerox this for you”). Through the competitors. Instead of selling copiers to equipment purchasing

erox introduced the first plain-paper office copier in Frankfurt, weave them into colorful, customized showpieces in

50 years ago. In the decades that followed, the company San Francisco, and print them on demand in London—even alter- that invented photocopying flat-out dominated the in-

ing for American spelling.

dustry it had created. The name Xerox became almost As digital technology changed, so did Xerox’s customers and

years, Xerox fought off round after round of rivals to stay atop the managers, Xerox found itself developing and selling document fiercely competitive copier industry. In 1998, Xerox’s profits were

management systems to high-level information technology man- growing at 20 percent a year, and its stock price was soaring.

agers. Instead of competing head-on with copy machine competi- Then things went terribly wrong for Xerox. The legendary

tors like Sharp, Canon, and Ricoh, Xerox was now squaring off company’s stock and fortunes took a stomach-churning dive. In

against information technology companies like HP and IBM. only 18 months, Xerox lost some $38 billion in market value. By

Xerox’s large and long-respected sales force—made up of mid-2001, its stock price had plunged from almost $70 in 1999 to

people in toner-stained shirts trained to sell and repair copy under $5. The once-dominant market leader found itself on the

machines—simply wasn’t equipped to deal effectively in the brink of bankruptcy. What happened? Blame it on change or—

brave new world of digital document solutions. Xerox, the rather—on Xerox’s failure to adapt to its rapidly changing mar-

iconic “copier company,” just wasn’t cutting it in the new dig- keting environment. The world was quickly going digital, but

ital environment. Increasingly, Xerox found itself occupying Xerox hadn’t kept up.

the dusty and dying “copy machine” corner of the analog In the new digital environment, Xerox customers no longer

office.

relied on the company’s flagship products—stand-alone copiers— Since those dark days on the brink, however, Xerox has to share information and documents. Rather than pumping out

rethought, redefined, and reinvented itself. The company has and distributing stacks of black-and-white copies, they created

undergone a remarkable transformation. Xerox no longer de- digital documents and shared them electronically. Or they popped

fines itself as a “copier company.” In fact, it doesn’t even make out copies on their nearby networked printer. On a broader level,

stand-alone copiers anymore. Instead, Xerox bills itself as a lead- while Xerox was busy perfecting copy machines, customers were

ing global document-management and business-process tech- looking for more sophisticated “document management solu-

nology and services enterprise. It wants to help companies and tions.” They wanted systems that would let them scan documents

people “be smarter about their documents.”