lecture 2 mba marketing management - me tmp

7/28/2019 Lecture 2 Mba Marketing Management - Me Tmp

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MBA MARKETING MANAGEMENTMarketing Environment and The Marketing Process

Lecture Overview

IntroductionMicro Environment:CompanyMarketsStakeholders

Macro Environment:P PoliticalE EconomicS SocialT Technological

Marketing ProcessMarketing Mix

Summary



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INTRODUCTION

It has been said that the only constant in life is change. Organisations existtoday in far more complex business environments than ever before, whichhas increased the importance of the marketing function.Environmental influences might be friendly or hostile and pose varied threatsand opportunities. Marketing needs to understand the changing business

environment in which its organisation operates so it can make informed,appropriate and timely decisions.

The marketing system as shown in your first lesson notes is itself encapsulated by what's generically called the marketing environment.Remember, marketing is essentially an externally focused function whichseeks to identify and take action against threats and opportunities. However,it also has to recognise the organisations strengths and weaknesses if it is toavoid the threats and take advantage of opportunities . As such, marketingneeds to understand its environment both at a macro and at a micro level.



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MARKETING ENVIRONMENTS

MACRO MICRO

(Uncontrollable variables) (Controllable variables)

PoliticalEconomicSocialTechnological

Company (marketing activities andplans)

Markets (customers/competitors)

Stakeholders

(customers/competitors,shareholders, suppliers, banks,retailers, creditors, employees,government etc)



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MICRO ENVIRONMENTIn this environment the company has some control of the various forces or players.

Company: Marketers need to develop close working relationships with other organisational functions, like accounting, engineering, design, production, purchasing, R&Detc in order to assess the strengths and weaknesses of the organisation.

Markets: A company’s customer – can include consumers, wholesalers, retailers, agents,local authorities, charities etc. Each market is different and so will have a different make upof customers with different needs.Competitors will also differ dependent on the customers needs to be served asshown below: - A typology of markets

Consumer markets Products Domestic

Industrial markets

Intermediary markets Services International

Institutional markets



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Stakeholder System:

As the name implies, a company operates when the context of a network of interest

groups each of which has a particular relationship with the organisation and oftenconflicting interests and motivations (see below a hypothetical company workingwithin the prescription and medical field).

Company

Research contractors

Customers/debtors

Retailers/wholesalers

Professional bodies

GovernmentMedical control bodiesHospital authorities

Employee unions

Banks&financial advisors

Shareholders

Competitors Suppliers/Creditors



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MACRO ENVIRONMENTIn this environment the company has very little control of the variousforces involved. There are various acronyms given to the macro forcessuch as DEPICTS , SLEPT , but the most common is called PEST and isshown below:

POLICTICAL

TECHNOLOGICALSOCIAL

ECONOMIC

Macro Environmental forces/ (factors or variables). Further variablessuch as demographics, culture, law, investment, competition areincluded in some of the other acronyms.



MACRO ENVIRONMENT

Political (includes legal) - self regulation aside, most governmentshave developed a body of legislation and enforcement frameworks inrespect of industry trade and consumer rights. For example –

a) Legislation in respect of monopoly and competition standards re:Office of Fair Trading, Resale Price Maintenance Act, 1977,

Competition Act 1979 etc.b) EC membership means UK firms are also subject to Community

provisions in respect of Article 85 of the Treaty of Rome .c) Measures to protect consumers in terms of advice and guidance,

food, drugs etc. Much of this is covered in the Laws of Contract,Trade Description Act 1973 and the Food and Drugs Act 1955,Lotteries and Amusement Act 1976 Act 1976.

d) In addition to government and regulating bodies, there are alsoconsumer watchdogs such as the Consumer’s Association BureauEuropean des Union de Consummateurs, Friends of the Earth andGreenpeace etc.



• Economic – income distribution and changes in purchasing power globally,upheavals in technology and communications have brought about a shift in thebalance of economic power. From the West (UK, USA, Europe) to the expandingeconomies of the Pacific Rim. WTO figures suggest by 2010 purchasing power income per head in countries like Singapore, South Korea and parts of China willexceed the USA. In western countries where consumer purchasing power is

reduced, as in economic recession, value for money becomes a key purchasingcriterion. Changing consumer spending patterns – older population means morespent on leisure, alcohol and health.

Increased cost of energyInflation, recession and recoveryGovernment fiscal policyGeneral agreement on tariffs and Trade GATT

Social – This force can normally be divided into 2 headings,demographical and cultural.

MACRO ENVIRONMENT



MACRO ENVIRONMENTDemographics

Summary of key demographic variables shown below:

Data Trends andProjection

UK Population

Size and growthGrowth rate

Age structureBirth/death rates

Sex distributionLife expectancy

Density Location Geographic/regional shifts

Household sizeFamily size

Single non family householdsMarriage/divorce statistics

Income and wealthdistribution

Workingpopulations

Education andparticipation

Socioencomicgroups

Occupationalgroups

Ethniccomposition



Demographics

Population and age distribution – many western countries birth rates aredeclining. Nil population growth rate at present but is expected to go into

decline from 2020 onwards. More than 25% of the population will beretired by 2010.Household/family composition – people marrying later. Younger peoplestaying at home with parents. Workforce participation among marriedwomen is increasing significantly. Career couples with no children now

commonplace especially among indigenous white population.Geographical shifts – many post-industrial societies in the UK and UShave witnessed major decline in population numbers and employment.

MACRO ENVIRONMENT



MACRO ENVIRONMENTCulture – standardisation of cultural values continues within the EU, but lifestyles differ

across individual country markets. Social class structures as demonstrated by socioeconomicgroupings is not always relevant.

Socioeconomicgroup

Social class Type of occupation Example

A Upper classMiddle class

Higher managerial professional Surgeon, director of large company

B Middle class Intermediate managerialprofessional, admin

Bank manager, headteacher, surveyor

C1 Lower middleclass

Supervisory, junior managerial, or admin, clerical

Bank clerk, nurse,teacher, estate agent,police

C2 Skilled

working class

Skilled manual workers Joiner, welder,

foremanD Working class Semi-skilled and unskilled Driver, postman,

cleaner, shop worker

E Those atlowest level of subsidence

Low paid/unemployed Casual worker, statepensioners,unemployed,students



• Technology – probably the most dramatic force now shaping our destiny which can create whole new markets and destroy others. Factorsinclude;

Pace of technological change – many of today's common products werenot available 100 years ago (e.g. TV's, Cars, homes freezers, computers,satellites, aeroplanes and mobile phones). The pace of technologicaldevelopment and therefore the product life cycles is getting shorter.

High R&D budgets – technology and innovations require heavyinvestment in R & D leading to more collaborative arrangements withsuppliers.

Concentration on minor improvements

Increased regulations – as products become more complex they need toknow they are safe. Such regulations can add significantly to productcosts.

MACRO ENVIRONMENT



PRINCIPLES AND PRACTICE OFMARKETINGThe marketing management process within an organisation’s operations

Opportunity/Threat Analysis Organisation Resources

Development of Marketing strategy

Identification of target market/

determination of marketing mix

Implementation of MarketingStrategy

Monitoring and control of marketing activity

Organisational Objectives



MARKETING RELATIONSHIPS

TargetCustomers

IntermediariesEconomicDemographic

Technological

SocialCultural

PoliticalLegal

Suppliers Publics

Competition

Product

Place

PricePromotions



THE MARKETING ENVIRONMENT ANDTHE MARKETING PROCESS

Macro Environment

PRICE

PLACE PROMOTION

PRODUCT

ECONOMICINFLUENCES

DEMOGRAPHIC&

SOCIALINFLUENCES

LEGALINFLUENCES

TECHNOLOGICALINFLUENCES

COMPETITION

POTENTIALINFLUENCES

A marketing strategy within anenvironmental system



SUMMARY

The marketing environment and the marketing process shapes themarketing strategy. Targeted customers stand in the centre of theorganisation and the company must focus its efforts at satisfyingthem.

The company develops a marketing mix made up of the resourcesunder its control (4 or 7P’s). The diagram on the next slide demonstrates the relationshipbetween the environment, the market, the company and its target

customers in enabling the organisation to adapts its microenvironment in order to take advantage of the opportunities or avoid the threats in its macro environment.

lecture 2 mba marketing management - me tmp

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