marketing environment
TRANSCRIPT
Marketing – The Marketing Environment
Marketing – The Marketing Environment
The marketing environment
• The forces that directly and indirectly influence an organization’s capability to undertake its business.
• The trading forces operating in a marketplace over which a business has no direct control, but which shape the manner in which the business functions and is able to satisfy its customers.
Marketing – The Marketing Environment
Is it not just the external environment?
• The environment external to the firm constitutes a large part of the marketing environment but it is not the whole of the environment.
• Included in the marketing environment is the internal environment - that is, factors internal to the firm which affect the marketing operation.
Marketing – The Marketing Environment
Macro-environment-broad and general Environmental forces
Micro-environmentForces acting directly on the firm
Internal environmentInside the firm.
Marketing – The Marketing Environment
Components of the marketing environment
• The external environment consists of :
• Macro-environment• -broad forces which shape
the character of opportunities and threats
• Micro-environment.• -the actors in the
immediate environment
• Internal environment.• Forces and actors inside
the firm that affect the marketing operation.
• Composed of internal stakeholders and the other functional areas with the business organisation.
Marketing – The Marketing Environment
Controllability
• The organisation has no control over the macro environment. It can only respond to changes taking place
• The organisation has some degree of influence over the micro environment but by no means complete control
• The organisation controls its own internal environment although this does not mean the marketing department or marketing manager has control
Marketing – The Marketing Environment
Why is it important?
• An understanding of macro and micro marketing environment forces
• Is essential for planning.• Helps a business to compete more effectively
against its rivals.• Assists in the identification of opportunities and
threats.• Enables an organization to take advantage of
emerging strategic opportunities.
Marketing – The Marketing Environment
Environmental scanning
• Monitor - trends, issues, events• Identify - trends, issues, events that are significant
to the organisation.• Evaluate - the impact of trends ,issues and events
upon the organisation’s in current markets.• Forecast - where the trends are heading. Examine
the threats and opportunities they are likely to bring in the future.
• Evaluate - the impact of threats and opportunities on the firm’s long term strategy.
Marketing – The Marketing Environment
Forecasts
• Forecasts are integral to:• Marketing planning• Analysis of market attractiveness• The monitoring of marketing performance• Resource allocation• Product and stock management• Marketing opportunity analysis is at the
heart of marketing and this requires accurate sales forecasts
Marketing – The Marketing Environment
The internal or organisational environment
• This refers to the other internal functions that impinge on the marketing function.
• The internal or organisational environment includes– The human resource department– The operations department– The accounting and finance department– The research and development department
Marketing – The Marketing Environment
The internal environment
• Marketing is affected by• Internal processes and procedures• Allocation of responsibilities within the organisation• Resource availability• The extent to which the major functional areas
work together supporting the marketing function to be customer orientated
• The culture of the organisation• The attitude of internal stakeholder
Marketing – The Marketing Environment
The micro-environment
• This refers to the environment mostly closely linked to the organization
• It comprises all those organizations and individuals who directly affect the activities of a company
• All factors which impact directly on a firm and its activities in relation to a particular market
• The actors in the immediate environment that affect the firm’s capability to operate effectively in its chosen market
Marketing – The Marketing Environment
Elements of the micro-environment
• Customers• Intermediaries• Suppliers• Competitors • Local community• Local government
• Employees• Trade unions• Intermediaries• Co-operators (partner
firms in an alliance) • Regulators
Marketing – The Marketing Environment
Regulatory environment
• Legal environment• Contract law• Consumer law• Product safety• Trade descriptions• Data protection • Planning laws• Environmental law
• Codes of practice• Advertising Standards
Authority • Market Research • Direct selling • Trade associations• Codes of practice
might not be legally binding but organisations are expected to comply.
Marketing – The Marketing Environment
The competitive environment
• The starting point is to identify who are the competitors. Four categories can be identified.
• Direct competitors - firms that produce a similar product which is a direct rival e.g. Coca Cola is a direct competitor of Pepsi Cola.
• Close competitors - firms producing similar products e.g. Tango is a close competitor of Pepsi.
• Substitutes -products that are different but might be bought instead. A packet of crisp rather than a bar of chocolate.
• Indirect competition - all other firms are indirect competitors in that they compete for consumers’ money.
Marketing – The Marketing Environment
Market structures
• Economists analyse markets in terms of the degree of competition
• Perfect competition - many firms selling homogeneous goods to customers who buy on price alone
• Monopolistic competition - many firms each selling a differentiated good over which they have a monopoly
• Oligopoly - competition between a small number of firms
• Monopoly - a single supplier
Marketing – The Marketing Environment
Porter’s five forces
• Porter’s five forces analysis helps firms to analyse the strength of competitive threats. The five forces are:
• The intensity of existing competition• Barrier (or lack of) to the entry of new competitors - how
easy is it for newcomers to enter the market.• The threat of substitute products.• The bargaining power of customers - dominant
customers will drive down price.• The bargaining power of suppliers - dominant suppliers
will force up prices.• Profitability and the achievement of objectives will be
affected by the combination of five forces.
Marketing – The Marketing Environment
The market environment
• This refers to the type of market in which the firm operates.
• The market type impacts upon the marketing function.
• The main types are:– Consumer or B2C markets– Business or B2B markets– Export markets– Government markets - where the government is a large
buyer– Reseller markets - where the buyer is an intermediary
who sells on to someone else
Marketing – The Marketing Environment
The macro-environment
• Comprises general forces and trends rather than specific organizations -the big issues that affect all businesses active in the market
• The macro-environment refers to the general environmental factors that influence the organization
• Factors outside the area of marketing which impact on but which cannot be influenced by the marketing effort- including demographics, macro-economic factors, natural environment state, changes in lifestyle
Marketing – The Marketing Environment
Elements of the macro-environment
• Macro-economic environment
• Political environment
• Social and cultural environment
• Demographic environment
• Technical environment
• Legal and regulatory environment.
Marketing – The Marketing Environment
The macro-economic environment
Economic growth Creates marketing opportunities. A major factor in market growth.
Cyclical fluctuations Fluctuations in the level of sales.
Inflation Direct impact on costs and prices charged. Indirect impact on customer demand.
Unemployment Major impact on customer demand via willingness and ability to buy.
Interest rates Direct impact on investment by business. Indirect impact on consumer demand in terms of the amount of discretionary spending.
Exchange rate Fall in the exchange rate boosts exports, makes imports more expensive and causes cost push inflation.
Marketing – The Marketing Environment
The political environment
• Marketing is affected by: • Government and local government policies.• The tax regime - the level and nature of tax. • The extent to which the government is
“business friendly”.• Government attitude to regulation.• Trade polices• The actions of special interest and pressure
groups.
Marketing – The Marketing Environment
The social environment
• Impact on consumer demand of changes in:
• Population size and growth
• The demographic profile of the country (age distribution, family size, regional distribution of the population)
• The culture, beliefs and valves of the community
• Lifestyle
Marketing – The Marketing Environment
The technological environment
• Some ways in which technology affects marketing:• Invention of new goods and services.• CAD has reduced the lead time on new product
development.• The pace of technological change has reduced the
product life cycle.• The use of databases in market research and
direct marketing.• The development of e-commerce.• More responsive manufacturing operations means
shorter customer lead times.• New technology facilitates mass customisation
Marketing – The Marketing Environment
The alphabet soup of environmental analysis
PEST
Political
Economic
Social
Technological
SLEPT
Social
Legal
Economic
Political
Technological
SPECTACLES
Social
Political
Economic
Cultural
Technological
Legal
Environmental
Social
PRESTCOM
Political Regulatory
Economic
Social
Technological
Competitive Organisational
Market
PESTEL
Political
Economic
Social
Technological
Aesthetic
Customers
Legal
Environmental
Sectoral
Marketing – The Marketing Environment
SWOT and PEST
Positive Negative
Internal factors-the internal environment
Strengths
Organisational strengths.
Weaknesses
Organisational weakness.
External factors
-the PEST factors
Opportunities resulting from changes in the political, economic, social and technological environment.
Threats from the political, economic, social and technological environment.
Marketing – The Marketing Environment
A further acronym: PRESTCOM
Political Government policy, taxes etc.
Regulatory Law and voluntary codes of practices
Economic Macro-economic variables
Social Demographics, culture, lifestyle
Technological Processes and products
Competitive Nature of the competition
Organisational Internal environment
Market Type of market.