Marketing Management MKT 600

MM BB AA

Marketing Environment

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Marketing Competitive Environment and The Marketing Process

Lecture Overview

Introduction Micro Environment: Company Markets Stakeholders

Macro Environment: P Political E Economic S Social T Technological

Marketing Process Marketing Mix Summary

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INTRODUCTION It has been said that the only constant in life is change. Organisations exist

today in far more complex business environments than ever before, which

has increased the importance of the marketing function.

Environmental influences might be friendly or hostile and pose varied threats

and 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 which

seeks to identify and take action against threats and opportunities. However,

it also has to recognise the organisations strengths and weaknesses if it is to

avoid the threats and take advantage of opportunities . As such, marketing

needs 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 and plans)

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&D

etc 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 up

of customers with different needs.

Competitors will also differ dependent on the customers needs to be served as

shown 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 often conflicting interests and motivations (see below a hypothetical company working within 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 various

forces involved. There are various acronyms given to the macro forces

such as DEPICTS, SLEPT, but the most common is called PEST and is

shown below:

POLITICAL

TECHNOLOGICALSOCIAL

ECONOMIC

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

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MACRO ENVIRONMENT

Political (includes legal) - self regulation aside, most governments

have developed a body of legislation and enforcement frameworks in

respect 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 also consumer watchdogs such as the Consumer’s Association Bureau European des Union de Consummateurs, Friends of the Earth and Greenpeace etc.

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• Economic – income distribution and changes in purchasing power globally,

upheavals in technology and communications have brought about a shift in the

balance of economic power. From the West (UK, USA, Europe) to the expanding

economies of the Pacific Rim. WTO figures suggest by 2010 purchasing power

income per head in countries like Singapore, South Korea and parts of China will

exceed the USA. In western countries where consumer purchasing power is

reduced, as in economic recession, value for money becomes a key purchasing

criterion. Changing consumer spending patterns – older population means more

spent on leisure, alcohol and health. Increased cost of energy Inflation, recession and recovery Government fiscal policy General agreement on tariffs and Trade GATT

Social – This force can normally be divided into 2 headings,

demographical and cultural.

MACRO ENVIRONMENT

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MACRO ENVIRONMENT Demographics

Summary of key demographic variables shown below:

Data Trends and Projection

UK Population

Size and growth

Growth rate

Age structure

Birth/death rates

Sex distribution

Life expectancy

Density Location Geographic/

regional shifts

Household size

Family size

Single non family households

Marriage/divorce statistics

Income and wealth distribution

Working populations

Education and participation

Socioencomic groups

Occupational groups

Ethnic composition

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Demographics

Population and age distribution – many western countries birth rates are

declining. Nil population growth rate at present but is expected to go into

decline from 2020 onwards. More than 25% of the population will be

retired by 2010.

Household/family composition – people marrying later. Younger people

staying at home with parents. Workforce participation among married

women 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 US

have witnessed major decline in population numbers and employment.

MACRO ENVIRONMENT

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

across individual country markets. Social class structures as demonstrated by socioeconomic

groupings is not always relevant.

Socioeconomic group

Social class Type of occupation Example

A Upper class

Middle class

Higher managerial professional Surgeon, director of large company

B Middle class Intermediate managerial professional, admin

Bank manager, head teacher, surveyor

C1 Lower middle class

Supervisory, junior managerial, or admin, clerical

Bank clerk, nurse, teacher, estate agent, police

C2 Skilled working class

Skilled manual workers Joiner, welder, foreman

D Working class Semi-skilled and unskilled Driver, postman, cleaner, shop worker

E Those at lowest level of subsidence

Low paid/unemployed Casual worker, state pensioners, unemployed, students

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

Pace of technological change – many of today's common products were not available 100 years ago (e.g. TV's, Cars, homes freezers, computers, satellites, aeroplanes and mobile phones). The pace of technological development and therefore the product life cycles is getting shorter.

High R&D budgets – technology and innovations require heavy investment in R & D leading to more collaborative arrangements with suppliers.

Concentration on minor improvements

Increased regulations – as products become more complex they need to know they are safe. Such regulations can add significantly to product costs.

MACRO ENVIRONMENT

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MARKETING PROCESSWhere are we at?

i.e. Opportunities and threats

assessment of environment

Deciding where to go setting of objectives

Determine which way is best Deciding strategies (i.e. who/what market to target with what – positioning)

How do we set about achieving? Planning marketing programmes: 4 P’S

Product Price

Target Market

Promotion Place

Organising the marketing effort Marketing plan – resource planning, implementation

Reappraise through control Rapid changes in the environment means each P needs to be reassessed periodically and its effectiveness checked via a marketing audit.

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PRINCIPLES AND PRACTICE OF MARKETINGThe 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 Marketing Strategy

Monitoring and control of marketing activity

Organisational Objectives

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MARKETING RELATIONSHIPS

Target Customers

Intermediaries

Economic Demographic

Technological

Social Cultural

Political Legal

Suppliers Publics

Competition

Product

Place

PricePromotions

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THE MARKETING ENVIRONMENT AND THE MARKETING PROCESS

Macro Environment

PRICE

PLACE PROMOTION

PRODUCT

ECONOMIC INFLUENCES

DEMOGRAPHIC &

SOCIAL INFLUENCES

LEGAL INFLUENCES

TECHNOLOGICAL INFLUENCES

COMPETITION

POTENTIAL INFLUENCES

A marketing strategy within an environmental system

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SUMMARYThe marketing environment and the marketing process shapes the

marketing strategy. Targeted customers stand in the centre of the

organisation and the company must focus its efforts at satisfying

them.

The company develops a marketing mix made up of the resources

under its control (4 or 7P’s).

The diagram on the next slide demonstrates the relationship

between the environment, the market, the company and its target

customers in enabling the organisation to adapts its micro

environment in order to take advantage of the opportunities or

avoid the threats in its macro environment.