Marketing Environment PDF
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Hayat Ayar Şentürk
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This document covers the marketing environment, including internal analysis using value chain analysis and competitive strategies like cost leadership and differentiation. It delves into micro and macro environments, Porter's five forces, and PESTEL analysis. Examples from industries like airlines, fast food, and others illustrate various concepts, and concluding activities encourage further analysis and application of the presented concepts.
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MARKETING ENVIRONMENT HAYAT AYAR ŞENTÜRK 1 WE WILL ADDRESS THE FOLLOWING QUESTION What is the definition of internal environment? How does Porter’s value chain contribute to firms’ marketing strategies? What are some influential micro and macroenvironment developme...
MARKETING ENVIRONMENT HAYAT AYAR ŞENTÜRK 1 WE WILL ADDRESS THE FOLLOWING QUESTION What is the definition of internal environment? How does Porter’s value chain contribute to firms’ marketing strategies? What are some influential micro and macroenvironment developments? What are Porter’s five forces? What are the elements of PESTEL? 2 Popularity of fresh and premium soups Millennials loved spices and ate more exotic food than their parents—they just couldn’t cook it at home! Campbell’s solution was a new line, Campbell’s Go! Soup ready-to-eat meals in six flavor varieties Sold in pouches rather than cans the product line was promoted entirely online, including music and humor sites, gaming platforms, and social media. Campbell also sells Pepperidge Farms baked goods, vegetable juices, and Prego pasta sauce. Marketing success for the new line was crucial. 3 4 INTERNAL ANALYSİS – VALUE CHAIN ANALYSIS 5 COMPETITIVE STRATEGIES – PORTER The goal of cost leadership strategy is to minimize production and operational cost so that a company can sell its products and services to the customers at the lower price than competitors. By improving internal efficiency and eliminating unnecessary processes, companies can reduce their costs. When a company achieve the cost leadership strategy, it can offer its products at reduced price, thereby gaining competitive advantage through price. In differentiation, companies focus on making their offerings unique in the mind of customers. This can involves superior quality, innovative features and exceptional customer service. Differentiation allows the companies to stand out from competitors and enable them to charge a premium price. Because customers perceive added value in unique features and attributes of the product. 6 optimizing its supply chain, design, maintaining high sales volumes, innovation, negotiating low prices with user friendly ecosystem suppliers. seamless integration of hardware and software. 7 DIFFERENTIATION COST LEADERSHIP by offering low cost furnitue. Modern and functional designs Self-assembly: in flat packs Customer experiences: large showrooms where Efficient supply chain: Access low cost materials customers can try products… and keep production costs down. Sustainability: using ecofriendly materials and Large store format: to reduce retail costs by running energy efficient stores. optimizing space. 8 INTERNAL ENVIRONMENTS THE COMPANY In designing marketing plans, marketing management takes other company groups into account. Top management sets the company’s mission, objectives, broad strategies, and policies. Marketing managers make decisions within the strategies and plans made by top management. «find out what international customers are facing—what their problems and opportunities are. Everyone at Xerox shares this responsibility. That includes people and departments that have not always been customer-facing, like finance, legal, and human resources.” 9 ACTIVITY Everyone will focus on a specific company or industry (e.g. fast food, technology, retail). Identify value-adding activities: Analyze the company’s primary and support activities and determine which ones add the most value. Discuss how the company might create a competitive advantage in these areas. Find opportunities for improvement: Identify any weaknesses or areas where the company could improve its activities to create more value. Present your findings: After analyzing the value chain, please present your results, explaining where you think the company crates value and how it can improve. 10 Primary Activities: Inbound Logistics: McDonald’s sources ingredients like potatoes, meat, and bread from suppliers worldwide. They focus on efficient sourcing and strong relationships with suppliers to ensure high-quality and cost-effective raw materials. Operations: Standardized cooking processes allow McDonald’s to serve food quickly and maintain consistency across locations.bTheir operations are optimized for speed, which is critical in the fast-food industry. Outbound Logistics: The food is served directly to customers in restaurants, drive-thrus, and delivery services. Efficient restaurant layout and digital ordering systems make this process faster. Marketing and Sales: McDonald’s invests heavily in advertising and brand building, with campaigns targeted at all age groups. Their value meals and promotions attract price-conscious consumers. Service: After-sale service includes customer support through their app and feedback mechanisms, ensuring customer satisfaction. 11 Support Activities: 1. Firm Infrastructure: McDonald’s has a strong global management team and a franchise model that allows rapid expansion. 2. Human Resource Management: The company offers extensive training programs for staff to ensure high-quality service. 3. Technology Development: McDonald’s invests in technological advancements like mobile ordering, self-service kiosks, and delivery partnerships to improve customer convenience. 4. Procurement: They use their buying power to negotiate favorable terms with suppliers, ensuring cost savings and high- quality inputs. 12 MICRO ENVIRONMENT 13 SUPPLIERS They provide the resources needed by the company to produce its goods and services. Supplier problems can seriously affect marketing. Marketing managers must watch supply availability and costs. Supply shortages or delays, labor strikes, and other events can cost sales in the short run and damage customer satisfaction in the long run. Rising supply costs may force price increases that can harm the company’s sales volume. 14 MARKETİNG INTERMEDIARIES Marketing intermediaries help the company promote, sell, and distribute its products to final buyers. They include resellers, physical distribution firms, marketing services agencies, and financial intermediaries. Resellers are distribution channel firms that help the company find customers or make sales to them. Physical distribution firms help the company stock and move goods from their points of origin to their destinations. Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets. Financial intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods. 15 COMPETITORS marketers must do more than simply adapt to the needs of target consumers. They also must gain strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of consumers. 16 PUBLICS A public is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. 17 CUSTOMERS The aim of the entire value delivery network is to serve target customers and create strong relationships with them. 18 ACTIVITY Are there barriers that make it dfficult for new companies to enter this industry? Are there other products or services that could place this industry’s offerings? For example, ,n the transportaion industry, trains and buses can substitute for air travel. How much influence do customers have over prices and quality? Are they price-sensitive? Do they have many alternatşves to choose from? How much control do suppliers have over the business? Consider the availability of raw materials, the number of suppliers, and their power to dictate prices or terms. How intense is the competition among existing companies? Are there many competitiors, and how aggresively do they compete? Look at price wars, product innovation, and marketing strategies. Based on your analysis, discuss how companies in this industry can succeed. What strategies should they adapt to overcome these forces or take advantage of them? 19 AIRLINE INDUSTRY Threat of New Entrants: High Barriers to Entry: Entering the airline industry is difficult due to the high capital investment required for aircraft, strict regulations, and airport slot limitations. However, low-cost carriers have made it easier for new players to enter certain markets by offering cheaper flights and fewer services. Threat of Substitute Products: Moderate Threat: Alternatives to air travel include train travel or road transport, particularly for shorter distances. Additionally, virtual meetings (like Zoom or Microsoft Teams) have reduced business travel demand. For long-distance travel, there are few substitutes for air travel, which reduces the overall threat. Bargaining Power of Buyers: High Power: Customers have significant bargaining power because they can easily compare flight prices online. Price sensitivity is very high, and many customers choose airlines based on the lowest fare available. Loyalty programs and brand recognition (e.g., safety, reputation) help airlines retain customers. Bargaining Power of Suppliers: High Power: Suppliers, especially aircraft manufacturers (Boeing, Airbus) and fuel providers, have strong bargaining power. There are few suppliers in these categories, which limits airlines' negotiation leverage. Fuel prices are volatile, and airlines often have limited control over these costs. Industry Rivalry: Intense Rivalry: The airline industry is highly competitive, with many airlines competing for the same routes. Price wars are common, especially between low-cost and traditional airlines. Airlines also compete on service quality, flight frequency, and routes to attract customers. 20 ANALYZING THE MACROENVIRONMENT Needs and Trends 21 A fad is “unpredictable, short-lived, and without social, economic, and political significance.” A company can cash in on a fad such as Crocs clogs, and Pokémon gifts and toys, but getting it right requires luck and good timing. A trend is more predictable and durable than a fad; trends reveal the shape of the future and can provide strategic direction. A trend toward health and nutrition awareness has brought increased government regulation and negative publicity for firms seen as peddling unhealthy food. 22 A megatrend is a “large social, economic, political, and technological change [that] is slow to form, and once in place, influences us for some time—between seven and ten years, or longer.” 23 IDENTIFYING THE MAJOR FORCES 24 POLITICAL FACTORS Policies, regulations, taxes. 25 Tesla adapted its product offerings to fit Turkey’s tax structure, such as modifying the Model Y to have a motor power below 160 kW. This adjustment places it in a lower tax bracket, reducing the overall cost to consumers. Tesla also sources its model from its factory in Germany rather than the U.S. or China, avoiding additional import taxes that apply to non-EU countries. Tesla captures customer interest by leveraging strengths like direct sales and a highly accessible Supercharger network. The direct sales model eliminates intermediary costs, offering consumers more competitive pricing, while the expanding Supercharger network provides Tesla owners with a convenient and fast charging experience. 26 ACTIVITY Why Can’t Huawei Enter The American Market? Why Does The U.S. Goverment Block Huawei From Operating İn This Market? 27 THE ECONOMIC ENVIRONMENT Purchasing power depends on consumers’ income, savings, debt, and credit availability as well as the price level. Marketers must understand consumer psychology and levels and distribution of income, savings, debt, and credit. 28 Income Distribution There are four types of industrial structures: subsistence economies like Papua New Guinea, with few opportunities for marketers; raw-material exporting economies like Democratic Republic of Congo (copper) and Saudi Arabia (oil), with good markets for equipment, tools, supplies, and luxury goods for the rich; industrializing economies like India, Egypt, and the Philippines, where a new rich class and a growing middle class demand new types of goods; and industrial economies like Western Europe, with rich markets for all sorts of goods. Marketers often distinguish countries using five income-distribution patterns: (1) very low incomes; (2) mostly low incomes; (3) very low, very high incomes; (4) low, medium, high incomes; and (5) mostly medium incomes. 29 UNILEVER'S RESPONSE TO ECONOMIC CHALLENGES IN TURKEY Challenge: Unilever, a multinational company offering various consumer products in Turkey, faces rising costs due to inflation and fluctuations in exchange rates. The increased cost of imported raw materials and packaging significantly impacts pricing 30 SOLUTION Local Sourcing: Unilever has increased its collaboration with local suppliers to use more domestic raw materials. This reduces dependence on foreign currency and supports the local economy Pricing Strategies: Instead of raising prices across the board, Unilever has introduced various product lines at different price points, offering more affordable options to satisfy to diverse consumer budgets. Marketing and Communication: During high inflation periods, Unilever emphasizes the value of its products through targeted marketing campaigns. Highlighting quality, cost-effectiveness, and durability helps maintain consumer interest and trust. 31 THE SOCIOCULTURAL ENVIRONMENT 32 Views of ourselves. Some “pleasure seekers” chase fun, change, and escape; others seek “self-realization.” Some adopt more conservative behaviors and ambitions Views of others. People are concerned about the homeless, crime and victims, and other social problems. At the same time, they seek those like themselves for long-lasting relationships, suggesting a growing market for social-support products and services such as health clubs, cruises, and religious activity as well as “social surrogates” like television, video games, and social networking sites. 33 Views of organizations. After a wave of layoffs and corporate scandals, organizational loyalty has declined. Companies need new ways to win back consumer and employee confidence. They need to ensure they are good corporate citizens and that their consumer messages are honest. Views of society. Some people defend society (preservers), some run it (makers), some take what they can from it (takers), some want to change it (changers), some are looking for something deeper (seekers), and still others want to leave it (escapers). Consumption patterns often reflect these social attitudes. Makers are high achievers who eat, dress, and live well. Changers usually live more frugally, drive smaller cars, and wear simpler clothes. Escapers and seekers are a major market for movies, music, surfing, and camping. 34 Views of nature. Business has responded to increased awareness of nature’s fragility and finiteness by making more green products, seeking their own new energy sources, and reducing their environmental footprint. Companies are also tapping into nature more by producing wider varieties of camping, hiking, boating, and fishing gear such as boots, tents, backpacks, and accessories. Views of the universe.. 35 CORE CULTURAL VALUES Core beliefs and values are passed from parents to children and reinforced by social institutions—schools, businesses, and governments. Secondary beliefs and values are more open to change. Believing in the institution of marriage is a core belief; believing people should marry early is a secondary belief. Marketers have some chance of changing secondary values but little chance of changing core values. 36 SUBCULTURES Each society comprises subcultures—groups with shared values, beliefs, preferences, and behaviors shaped by their unique life experiences or circumstances. Within any large, dominant cultural group, there are likely to be subcultures, which consist of smaller groups of people who share their own distinct attitudes, beliefs, and values. These values, attitudes, and beliefs can also be analyzed at the level of any “category of people” within a broader culture. For instance, if you are a vegetarian, then consuming meat represents a behavior that you and others with similar views actively avoid. Subcultures often present attractive niche marketing opportunities. 37 38 39 Hallmark greeting cards have proven immensely popular in both the UK and the United States. Catering for every special occasion – from birthdays to weddings and from Mother’s Day to passing your driving test – the cards are sent by thousands of people every single day of the year. The signature (or ‘hallmark’) of Hallmark cards is the ‘special message’. The advantage of buying from Hallmark is that you don’t have to think about what to write – it is usually all written for you. While this formula may be successful in many countries, it has not proved universal. For instance, when Hallmark tried to introduce their cards in France, no-one bought them as people preferred to write in the cards themselves. Furthermore, the syrupy sentiment inherent within the preprinted messages did not appeal to the Gallic taste. After a few months Hallmark admitted defeat and withdrew its brand. 40 Population growth Population age mix THE Ethnic markets DEMOGRAPHIC ENVIRONMENT Educational groups Household patterns Geographical shifts 41 Worldwide Population Growth Population growth is highest in countries and communities that can least afford it. A growing population does not mean growing markets unless there is sufficient purchasing power. Education can raise the standard of living but is difficult to accomplish in most developing countries. Nonetheless, companies that carefully analyze these markets can find major opportunities and sometimes lessons they can apply at home. 42 Population Age Mix 43 Ethnic and Other Markets Companies are refining their products and marketing to reach this fastest-growing and most influential consumer group. Marketers must not overgeneralize—within each group are consumers quite different from each other. Diversity also goes beyond ethnic and racial markets. 44 Educational Groups The population in any society falls into five educational groups: illiterates, high school dropouts, high school diplomas, college degrees, and professional degrees. 45 Household Patterns Each type of household has distinctive needs and buying habits. The single, separated, widowed, and divorced may need smaller apartments; inexpensive and smaller appliances, furniture, and furnishings; and smaller-size food packages. Many non-traditional households feel advertising ignores families like theirs, suggesting an opportunity for advertisers 46 THE NATURAL (ECOLOGICAL) ENVIRONMENT Corporate environmentalism recognizes the need to integrate environmental issues into the firm’s strategic plans. Trends for marketers to be aware of include the shortage of raw materials, especially water; the increased cost of energy; increased pollution levels; and the changing role of governments 47 48 49 Shift to Digital: Many brands accelerated their digital transformation, increasing their online presence as consumers shifted to online shopping. Changing Consumer Behavior: Health and safety concerns led consumers to prioritize essential goods, resulting in increased demand for hygiene products and home entertainment. Supply Chain Disruptions: The pandemic caused disruptions in supply chains, affecting production and distribution, which forced brands to adapt quickly. Increased Focus on Sustainability: Consumers began to favor brands that demonstrated social responsibility and sustainability, pushing companies to reevaluate their practices. Communication Strategy Changes: Brands adjusted their messaging to be more empathetic and supportive, focusing on community and customer well-being. 50 THE TECHNOLOGICAL ENVIRONMENT Marketers should monitor the following technology trends: the accelerating pace of change, unlimited opportunities for innovation, varying R&D budgets, and increased regulation of technological change 51 CASE: PROBLEM? WHAT PROBLEM? In 1997, a professor of mathematics found a glitch in Intel’s Pentium chip. He discovered that the mathematical functions for the chip’s complicated formula were not consistently accurate. The professor decided to send an article about his findings to a small academic newsgroup. Word spread through the university community and the editor of a trade title caught hold of the story. The general press then reported the professor’s findings and sought Intel’s response. Intel denied any major problem, declaring it would only affect a ‘tiny percentage’ of customers. They failed to take responsibility or replace the affected chips. 52 CASE: PROBLEM? WHAT PROBLEM? The issue grew online, as it became a key topic in an increasing number of online discussion groups, which kept on feeding the offline media. Intel’s share value dropped by over 20 points. It was only when IBM’s declaration that it would not use Intel chips in its computers made the front page of the New York Times that Intel went back on its previous position and agreed to replace the chips. Even today, evidence can be found of how Intel’s poor response to online criticism has affected its reputation on the Net. The ‘Intel Secrets’ site at www.x86.org, which was set up at the time of the media’s damning coverage of Intel’s unhealthy chip, still emphasizes the faults to be found in various Intel products. 53 THE LEGAL ENVIRONMENT The legal environment consists of laws, government agencies, and pressure groups that influence organizations and individuals. Increased Business Legislation Business legislation is intended to protect companies from unfair competition, protect consumers from unfair business practices, protect society from unbridled business behavior, and charge businesses with the social costs of their products or production processes. Each new law may also have the unintended effect of sapping initiative and slowing growth. 54 Growth of Special-Interest Groups Many companies have established public affairs departments to deal with such special-interest groups. The consumerist movement organized citizens and government to strengthen the rights rights and powers of buyers in relationship to sellers. Consumerists have won the right to know the real cost of a loan, the true cost per standard unit of competing brands (unit pricing), the basic ingredients and true benefits of a product, and the nutritional quality and freshness of food. 55 AMAZON'S FAILURE IN THE CHINESE MARKET 56 57