Marketing environment

BHO1171 - School of HTM - VU

THE MARKETING ENVIRONMENT

OBJECTIVES• Understand what makes up the “environment”• How various forces have influence on the firm• The definitions of micro and macro environments• Factors that comprise micro environment• Factors that comprise macro environment• Why the environment needs to be monitored


THE MARKETING ENVIRONMENT

Decisions regarding the 4Ps of marketing cannot be made in isolation from the changing environment.

• The business environment must be:

Examined and Monitored

on an ongoing basis.• What are the factors the company needs to monitor?


The Operating Environment

• The marketing environment does not actually form part of the marketing process, however the environmental factors influence most aspects of the marketing process

• Business firms are open systems, which means that outside factors impact on business operations


Definition

• A Company's marketing environment consists of the actors and forces that are external to the marketing management function of the firm and that impinge on the marketing managements' ability to develop and maintain successful transactions with its target customers. (Kotler).

• Marketing Environment = Opportunities and threats.• Environment = Micro and Macro.


The Firm’s Environment

• The environment of a company consists of a large range of factors and influences that may impact on its ability to serve its customers and survive in the long term.

• Factors outside the control of the firm• Factors that are internal to the firm and on which the

firm can exercise full control directly• Factors and influences on operations coming from

independent organisations which can be “managed” by the marketing firm


The Firm’s Internal Resources

The firm’s micro environment includes:• Production• Financial capability• Human resources• Company’s location and image• Research and Development capability

Important to have coordination between marketing and these non-marketing resources


Actors in Microenvironment- figure 3.1

Suppliers

Company

Competitors

MarketingInter-

mediariesCustomers

Publics


Internal Environment- Figure 3.2Marketing

Manufacturing

Finance

R & D

Accounting

Purchasing

Senior Management


Why are suppliers and buyers considered as micro factors?

Suppliers

• Provide resources and raw materials to run the business. Can impact on prices, costs, availability and quality

Buyers & Facilitating organisations

• Those that distribute the firm’s output, like wholesalers and retailers (specialists in their field)

• Organisations that provide transportation, warehousing an other support services like financing (publics)

To what extent are these controllable by a firm?


Why are competitors and consumers considered as micro factors?

• Competitors: Other firms in the same line of business, using the same or similar suppliers of raw materials, channels of distribution, and trying to attract the same customers. A firm’s activities may be constantly affected by actions of direct competitors.

• Consumers: also have a constant impact on the activities of the firm and what a firm does is greatly influenced by its customers


Customers and Markets

• Insert Fig 3.3 - describes the various types of markets

• Insert Fig 3.4 -describes the role of “Publics”Eg Why are banks interested in how firm’s perform?

Why would the media be interested?

Why would the Government be interested (regulations)


Types of Customer Markets


Types of Publics


Macro-environment

Macro-environment consists of larger forces that influence the company's operations

• Social & Cultural forces• Demographics• Technology• Economics• Political• Natural & Physical


Major Forces in the organisation’s Macro Environment


MACRO-ENVIRONMENTAL FORCES

Cannot be controlled

External forces influence organisational plans.

Often totally unpredictable.


MACRO-ENVIRONMENTAL FORCESCASE STUDY

1 S11 and airlines and tourism 2001

2 Arnotts Biscuits - 1996


Demographic Environment

GeographicShifts

Education

GrowingEthnic

Diversity

Changing Family

Structure

AgeStructures

KeyDemographic

Trends


DEMOGRAPHICSDescription of the population• Age structure of population• 37% of the population are aged 40-64• Aging population• Family Structure changing

• Increasing age of those marrying Delayed child bearing Increasing two income families Non-family households

• Geographic population shifts• More education• Jobs in the services sector• Women in workforce


• Students will need to understand why marketers need to study the population(markets)

• What are the implications of the changing age structure of the population?

• Explain who the baby boomers are…their changing needs & wants

• What are the implications of– changing household structure,

– ethnic diversity?

– Movement of population


Economic Environment

Changesin Consumer

Spending Patterns

EconomicDevelopment

Changesin Income

KeyEconomic

Concerns forMarketers


THE ECONOMIC ENVIRONMENT

• Inflation and interest rates Unemployment• Economic Cycle• Markets require purchasing power as well as people.

• Purchasing Power = f (income, prices, savings, credit costs, etc.)

• It is often unclear what impact the economy will have on a single industry. Good times do not necessarily help all businesses.


Natural Environment

Key Areasof Concern

in the NaturalEnvironment

Shortage ofRaw Materials

IncreasedPollution

Government Intervention

EnergyCosts


THE NATURAL or PHYSICAL ENVIRONMENT

• Marketers should be aware of the threats and opportunities with four trends in the natural environment:-(a) impending storage of raw materials(b) the increased cost of energy(c) the increased levels of pollution(d) the government intervention in natural resource management.

• Others to be aware of are:– natural phenomena that affects their markets,– greenhouse effect, – solid waste problem (eg: McDonald's move away from

polystyrene packaging),


Technological Environment

Fast Pace of Change

High R & DBudgets

Focus on MinorImprovements

IncreasedRegulation

Issues in the Technological Environment


THE TECHNOLOGICAL ENVIRONMENT

• Determines the type of products that can be made available for the satisfaction of needs and wants.

• Technology fosters opportunities to: increase consumer satisfaction and gain competitive edge.

• Today we have many products not available a few years ago:

• New developments - new markets but destroy existing ones.

• Product development, prices, promotions, packaging and distribution are all directly influenced by technology.


Political Environment

GreaterConcern for

Ethics

Legislation EnforcementKey

Trends in thePolitical

Environment


THE POLITICAL ENVIRONMENT(includes legal framework)

• Inequities develop when the economic and social systems are left to their own devices. Government intervenes and represents the wants and needs of citizens and makes laws on their behalf.

• Government regulation has two purposes -

• (a) to protect companies from one another• (b) to protect individuals and society at large

from unethical business practices.• EG Food Safety legislation


Shift in Secondary Cultural Values

OfOrganizations

OfNature

OfOneself

OfSociety

Ofthe Universe

OfOthers

People’sViews


SOCIAL & CULTURAL ENVIRONMENT

• Beliefs, values, norms of behaviour• Cultural patterns are changing faster• Attitudes, perceptions and behaviour patterns• SubculturesSubcultures display different consumption behaviour:

ethnic groupsolder generationswomengay communitychildrenreligious groups


COLLECTING DATA ON YOUR OPERATING ENVIRONMENT

• Many companies collect data on the environment as a matter of course. Some areas of interest being

• resource availability

• recent and pending legislation

• what competitors are doing

• technological changes.


STATE AND FEDERAL LEGISLATION THAT AFFECT MARKETING

• FEDERAL LEGISLATION• Trade Practices Act• Broadcasting and Television Act• Trade Descriptions Act• Customs Act• Insurance Act• Conciliation and Arbitration Act

• STATE LEGISLATION• Consumer Affairs Act• Sale of Goods Act• Hire Purchase Act• Fair Prices Act• Companies Code• Motor Car Traders Act• Food Safety Act

Marketing environment

Business

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