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• Macro environment environmental scanning; political, legal, economic, socio-cultural,

ecological and technological factors

• Micro environment: stakeholders

(organisation's own employees, suppliers, customers, intermediaries, owners,

financiers, local residents, pressure groups and competitors); direct and indirect

competitors; Porter's competitive forces

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PRODUCERSPRODUCERSPRODUCERS MARKETINGMARKETINGMARKETING

Marketing Is Performed by All Marketing Is Performed by All

OrganizationsOrganizations CONSUMERSCONSUMERS

• An Economic role. . . to allocate resources among competitors so that supply equals demand.

• “The delivery of a standard of living to society.”

• … the process of bringing Buyers and Sellers Together

Macro Marketing.. is a broad view:Macro Marketing.. Macro Marketing.. is a broad view:is a broad view:

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• The macro-environment

• This includes all factors that can influence and organization, but that are out of their direct control. A company does not generally influence any laws (although it is accepted that they could lobby or be part of a trade organization). It is continuously changing, and the company needs to be flexible to adapt. There may be aggressive competition and rivalry in a market. Globalisation means that there is always the threat of substitute products and new entrants. The wider environment is also ever changing, and the marketer needs to compensate for changes in culture, politics, economics and technology

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The Macro Environment Analysis"What every strategic manager should know!""What every strategic manager should know!""What every strategic manager should know!""What every strategic manager should know!"

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• The Macro Environment Analysis is traditionally the first step of a strategic analysis; it is sometimes referred to as an external analysis, a pest analysis or a pestle analysis.

• The purpose of the Macro Environment Analysis is to identify possible opportunities and threats to your industry as a whole that are outside thecontrol of your industry. (Note: You will often be forecasting trends – like “interest rates will remain static” which may or may not be the case)

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• When completing a macro environment analyses you will be seeking to answer the questions “what will affect the growth of our industry as a whole” and “What is the likely impact of all of the things that affect the growth of your industry”

• For example: An aging population is a demographic trend in many western counties, which will result in an increase in the total number of caravans sold – if you are in the caravan industry you should expect to see growth in the total size of your industry.

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• These opportunities and threats may affect many industries, such as possible interest rate rises, but you should only be interested if interest rate rises will affect your industry.

• For example: If you are in the greeting card industry and fluctuations in interest rates will not affect the size of your industry then you do not need to consider interest rates in your macro environment analysis. (However if you are heavily geared or have large borrowings you will need to consider interest rates in your internal analysis)

• Strategic Leadership and the Macro Strategic Leadership and the Macro Strategic Leadership and the Macro Strategic Leadership and the Macro Environment AnalysisEnvironment AnalysisEnvironment AnalysisEnvironment Analysis

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• Once you have grasped the macro environmental analysis, as a good leader you will be continually scanning for macro factors in your daily life, activities such as watching or reading the news, reading management magazines and when in conversation with other industry leaders will all lead to a greater understanding of the macro environment. In addition there are a number of things you can do to improve the depth of your understanding of the macro environment.

• Networking with senior leaders in your industry

• Networking with political parities

• Source strategic analysis information prepared for your industrytypically by a third party provider (Normally through subscription)

• Read the financial papers

• Read management magazines

• Surf the Web for trends

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Micro Marketing is…

�The process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy (individual + organizational) objectives. AMA Board (1985)

☺An organizational function and a set of processes for creating, communicating & delivering value to customers & for managing customer relationships in a way that benefit the organization and its

stakeholders. (AMA 2005)

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• The micro-environment

• This environment influences the organization directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small, but this can be misleading. In this context, micro describes the relationship between firms and the driving forces that control this relationship. It is a more local relationship, and the firm may exercise a degree of influence.

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Micro Environmental Factors

• These are internal factors close to the company that have a direct impact on the

organisations strategy. These factors include:

• Customers

• Organisations survive on the basis of meeting

the needs, wants and providing benefits for

their customers. Failure to do so will result in a failed business strategy.

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• Employees

• Employing the correct staff and keeping these

staff motivated is an essential part of the strategic planning process of an organisation.

Training and development plays an essential role particular in service sector marketing in-

order to gain a competitive edge. This is clearly apparent in the airline industry.

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• Suppliers

• Increase in raw material prices will have

a knock on affect on the marketing mix

strategy of an organisation. Prices may

be forced up as a result. Closer supplier

relationships is one way of ensuring competitive and quality products for an

organisation.

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• Shareholders• As organisation require greater inward investment for

growth they face increasing pressure to move from private ownership to public. However this movement unleashes the forces of shareholder pressure on the strategy of organisations. Satisfying shareholder needs may result in a change in tactics employed by an organisation. Many internet companies who share prices rocketed in 1999 and early 2000 have seen the share price tumble as they face pressures from shareholders to turn in a profit. In a market which has very quickly become overcrowded many failed.

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• Media

• Positive or adverse media attention on an

organisations product or service can in some cases make or break an organisation..

Consumer programmes with a wider and more direct audience can also have a very

powerful and positive impact, forcing organisations to change their tactics.

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• Competitors

• The name of the game in marketing is differentiation. What benefit can the organisation offer which is better then their competitors. Can they sustain this differentiation over a period of time from their competitors?. Competitor analysis and monitoring is crucial if an organisation is to maintain its position within the market.

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Micro Environmental Factor/Stakeholder Analysis

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Porter's Five Forces

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• Porter's Five Forces is a framework for the industry

analysis and business strategy development formed by

Michael E. Porter of Harvard Business School in 1979. It

draws upon Industrial Organization (IO) economics to

derive five forces that determine the competitive intensity

and therefore attractiveness of a market. Attractiveness in

this context refers to the overall industry profitability. An

"unattractive" industry is one in which the combination of

these five forces acts to drive down overall profitability. A

very unattractive industry would be one approaching "pure

competition", in which available profits for all firms are

driven down to zero.

The threat of the entry of new competitors

Profitable markets that yield high returns will attract new firms. This results in many new entrants,

which eventually will decrease profitability for all firms in the industry. Unless the entry of new

firms can be blocked by incumbents, the abnormal profit rate will fall towards zero (perfect

competition).

•The existence of barriers to entry (patents, rights, etc.) The most attractive segment is one in which

entry barriers are high and exit barriers are low. Few new firms can enter and non-performing firms

can exit easily.

•Economies of product differences

•Brand equity

•Switching costs or sunk costs

•Capital requirements

•Access to distribution

•Customer loyalty to established brands

•Absolute cost* Industry profitability; the more profitable the industry the more attractive it will be to

new competitors

[edit] The intensity of competitive rivalry

For most industries, the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry.

•Sustainable competitive advantage through innovation

•Competition between online and offline companies; click-and-mortar -v- slags on a bridge[citation

needed]

•Level of advertising expense

•Powerful competitive strategy

•The visibility of proprietary items on the Web[2] used by a company which can intensify

competitive pressures on their rivals.

How will competition react to a certain behavior by another firm? Competitive rivalry is likely to be

based on dimensions such as price, quality, and innovation. Technological advances protect

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• Three of Porter's five forces refer to competition from external sources. The remainder are internal threats.

• Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally, requires a business unit to re-assess the marketplace given the overall change in industry information. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability.

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• Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models, have been able to make a return in excess of the industry average.

• Porter's five forces include - three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers.

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• This five forces analysis, is just one part of the

complete Porter strategic models. The other

elements are the value chain and the generic

strategies.[citation needed]

• Porter developed his Five Forces analysis in

reaction to the then-popular SWOT analysis,

which he found unrigorous and ad hoc.[