3 MacroMicroFactors Berlin

MACRO & MICRO ENVIRONMENTI n f luence on Marke t ing Dec i s ions

© 2014 Berlin Asong. All rights reserved. 2

Learning Objective

I. Show macro and micro environmental factors which influence marketing decisions.


To achieve a pass in LO2.1, we must show macro and micro environmental factors which influence marketing decisions.


To grasp the objective of this lesson, we needto understand the scope of marketing decisions.


?MARKETINGDECISIONS


— Definition 1 —

Marketing decisions are those decisionsdirected towards delivering value for the customer

in exchange for a return for the company.


— Definition 2 —

Marketing decisions are choices made bymarketers with regards to how best to identify,target, satisfy, retain and excite the customer.


10 minutes

List four decisions that you would have to make to market J20.

© 2014 Berlin Asong. All rights reserved.

Four Marketing Decisions for J20

9


From the preceding exercise, you begin to see thescope of marketing decisions is vast, ranging from…


Marketing Mix

Product

Price

Place

Promotion

…deciding how to design and package the product…


…to providing answers to questions regarding…


Mar

ketin

g De

cisio

ns

Mar

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g De

cisio

ns

Which market should we operate in?

How should we serve the chosen market?

How should we respond to changing market conditions?

Would the new offering increase sales?

How should we improve our sales and profit?

Are we meeting the needs of customers?

Should we exit or enter the market?

Should we adopt the new technology?


Marketing decisions are influenced by a wholerange of factors, which is the basis of this lesson.


Understand the marketplace &

consumer needs.

Decide on suitable target

market(s).

Decide on suitable targeting strategy.

Design suitable marketing mix

strategy.

Implement marketing mix

strategy.

Assess results of marketing mix strategy.

In our previous session, we discussed the stepsinvolved in marketing a product or service…

Adapted from Kotler, P. and Armstrong, G. (2012), “Principles of Marketing”. 14th edition, London: Prentice Hall, p. 5

1 2 3 4 5 6



consumer needs.


market(s).



strategy.


strategy.


Before setting out to market a product or service successfully, understanding the marketplace is essential.




consumer needs.


market(s).



strategy.


strategy.


In fact, understanding the marketplace involvesanalysing macro and micro environment.



I guess you are already asking yourself: what ismacro environment? What is micro environment?


?MACROENVIRONMENT


The macro environment consists of forces thatare beyond the control of a company. These forcesaffect the company’s ability to serve its customers.

Kotler, P. and Armstrong, G. (2012), “Principles of Marketing”. 14th edition, London: Prentice Hall, p. 66


Macro-Environment


Political (In)stability.

Governmental policies.

Change of governments.

Terrorism/War.

Etc.

Political Factors


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The UK is relatively attractive for businesses, partly due to its stable, democratic governance.

— Political Stability —


However, tight fiscal policy (spending cut andtax hike) continues to affect the spending power of

some segments of the alcohol beverage market.

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com— Government Policy —


Price inflation.

Unemployment level.

Size of consumer income.

Nature of market competition.

Overall economic condition of a country.

Fiscal & monetary policy.

Consumer confidence.

Exchange rates.

Interest rate

Etc.

Economic Factors


— Employment Level —

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UK unemployment rate has fallen to 7.2% as of February 2014, and is said to fall further in the next two years, raising the prospect of increased consumer spending in the short term and long-term.


Heineken operates in more than 50 countries.Emerging markets currencies remain volatile. This is expected

to have an adverse impact on reported revenues.

— Exchange Rate Risk —


Rising cost of raw materials like barley and hops has an adverse effect on Heineken’s profit. The company uses

long-term and hedging contracts to manage costs down.

— Price Inflation —


— Monetary Policy: Interest Rate —

UK bank rate stands at 0.5% aimed at making loans attractive for consumers and businesses like Heineken to borrow and ramp up business activities.


Sociocultural Factors

Lifestyle.

Consumer activism.

Consumer preferences.

National culture and sub-cultures.

Population size , structure and growth.

Family size and marital status.

Public health concerns.

Religion.

Etc.


The world’s population is growing, mortality rate is slowing, middle-class segment is growing, and elderly segment is growing in some countries.

Population growth

Picture source: byu.edu


Population changes have huge implicationson businesses. Critically explain how.

15 minutes


— Culture —

In what occasions is beer consumed in the UK? What valuesor meanings do Brits attach to beer? Do these values or meanings

influence how Heineken markets its products in the UK?


Heineken positions the brand in the minds of consumers in a cultural context — UK as a football loving nation -

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— Consumer Preferences —

Heineken serves a variety of beer brands in different sizesand forms to appeal to various consumer preferences.


In response to growing consumer preference for healthy living, Heineken introduces low carb beer.

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Internet.

Cyber attack.

Technological infrastructure.

Smartphones and tablet devices.

Rapid technological change.

Mobile payment.

Social media.

Etc.

Technological Factors


— Internet —

Your business is probably losing out if you don’t have a viableonline presence especially as online retail sales is accelerating.

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The pace of technological innovation and obsolescenceis accelerating nowadays, changing the design, pricing, distribution,

promotion and buying of products and services.

— Rapid Technological Change —


Location based mobile advertising

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Online communities create and share messages about brands.These messages influence consumer choices and preferences. Asa result, Heineken is using online platforms like Facebook, Twitterand YouTube to engage with customers, & grow their brands.

— Social Media —


Primark uses tweets to interact with customers on new offers, and matters that

affect customers and society at large.


Natural disasters (flood, drought, earthquake, hurricanes, tsunami, etc.).

Environmental consciousness.

Natural resources usage.

Environmental activism.

Etc.

Ecological & Ethical Factors


Air pollution from industrial waste like carbon emissions.


Depletion of natural resourcesstemming from excessive use.


Heineken is cutting its water consumption in response to concernand criticism over excessive used of water for beer production. It is

also cutting its carbon emissions through a number of initiatives.

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14— Natural Resource Usage & Carbon Emissions —


Binge drinking and other alcohol-related incidence

continue to generate negative publicity for the alcohol

beverage industry.

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uk

— Ethics —


Irresponsible drinking is bad for the health and contribute to domestic violence and road accidents. Heineken together with other

civil society groups are leading a fight against alcohol misuse.


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Heineken AD campaign against drink-driving.


Consumer Protection Regulations 2008.

Competition Act 1998.

Data Protection Act 1998.

Intellectual property laws.

Health and Safety laws.

Advertising laws.

Other industry-specific laws.

Legal Factors


For instance, UK advertising laws forbid broadcast advertising for alcohol beverages

during programmes aimed at people under 18.

Picture source: huffpost.com


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…and ad should never glamorise alcohol beverages.


Of course, this fits in the category of glamorised ad content, which the UK ASA would frown at.

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Heineken ends its TV ad for Strongbow with drinkaware.co.uk, an anti-alcohol abuse charity.


?MICRO

ENVIRONMENT


The micro environment consists of actors close toa company. These actors can negatively or positively affect

a company’s ability to create value for its customers.

Kotler, P. and Armstrong, G. (2012), “Principles of Marketing”. 14th edition, London: Prentice Hall, p. 66


Organisation

Consumers

Competitors Suppliers

Publics

Industry

Marketing Intermediaries

Micro-Environment



Consumers

Consumer preferences, behaviourand circumstances affect the marketing decisions of goods and services. How?

Picture Source: www.execdecisions.net

© 2014 Berlin Asong. All rights reserved. 62Picture source: http://news.mcdonalds.com/press-releases/mcdonald-s-launches-new-global-packaging-designs-nyse-mcd-975617

McDonald’s launches new packaging with QR codes, which

provide nutritional info. to help health conscious diners make informed

eating decisions.


Today’s consumers want to shop anywhere, anytime and anyhow. They are more savvy and sophisticated than their counterparts 10 years ago thanks to the

increasing adoption rate of the internet, mobile devices and increased literacy.

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Suppliers


As a marketer you want a capable and reliablesupplier to meet the needs of your marketing strategy aimed at

serving the customer and enabling your firm compete effectively.


Primark competes on price to appeal to low-income shoppers. As a result, it sources garments

from low-cost suppliers in Bangladesh, India, Indonesia, etc.

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Ongoing court battle over patent infringements, and stiff competitionbetween Samsung and Apple has led the latter dropped the former as a major

supplier for some of the components used in making the iPad and iPhone.


Competitors

Your competitors are also vying for the same customers youare after. How to beat your competitors to secure customer loyalty and

a larger share of the customer wallet requires smart and responsive product/service design, pricing, distribution and promotion.


Consider the competition between ASDA, Aldi, Co-op, Lidl, Iceland, Morrisons, Sainsbury’s, Tesco and Waitrose. In an effort to

gain the largest share of the customer wallet, all players are constantly battling each other via price, quality, service, etc.


Marketing Intermediaries

They include wholesalers, retailers, service providers, etc.

Marketing intermediaries facilitate the movementof goods and services from the manufacturer to thecustomer through the provision of services such as

distribution, promotion, market research and financing.


Publics

These include communities, civil society groups,investors, regulators, employees, media, etc.


It is increasingly being recognised that marketing must go beyondserving the needs of the customer. It must appeal to a broader audience including local communities, interest groups, etc. A marketing strategy that

does not consider the needs of other audiences is doomed to fail.


As a result, an increasingly number of companies are factoringthe considerations of various publics into their marketing strategies.


The Organisation

The objectives, capabilities, leadership, structure, culture and strategy of an organisation influence its marketing decisions.


McDonald’s (2013), "2013 Annual Report". Available from www.aboutmcdonalds.com/content/dam/AboutMcDonalds/Investors/McDs2013AnnualReport.pdf, accessed 19 May 2014


The objectives and culture of McDonald’s set the overall toneand character of its marketing decisions. The services and products it provides for customers are a direct result of its objectives and culture.


NEXT CLASSPropose segmentation criteria to be used for products in different markets.

3 MacroMicroFactors Berlin

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