Marketing Environment PDF

The Marketing Environment  Objectives Know the environmental forces that affect the company’s ability to serve its customers. Realize how changes in the different environments affect marketing decisions. Understand how companies can react to the marketing environment....

The Marketing Environment  Objectives Know the environmental forces that affect the company’s ability to serve its customers. Realize how changes in the different environments affect marketing decisions. Understand how companies can react to the marketing environment. 4-2 Steps in Market Planning Copyright © 2016, 2012, 2009 Pearson Education, Inc. All Rights Reserved. 1. SITUATIONAL ANALYSIS Analyse the marketing environment Micro, Meso and macro SWOT Marketing Metrics 4-4 Key Environments Marketing Environment  The actors and forces that affect a firm’s ability to build and maintain successful relationships with customers. 4-5  3 LEVELS OF THE MARKETING ENVIRONMENT There are three levels of the marketing environment:  Micro (internal) environment - forces within the company that affect its ability to serve its customers. E.g. staff and capital  Meso environment – the industry in which a company operates and the industry’s market(s). E.g. Competition and suppliers.  Macro (national) environment - larger societal forces that affect the microenvironment. E.g. Culture and politics. 4-6  A WORD OF CAUTION Many textbooks, especially American texts, suggest there are two (2) levels of the marketing environment: micro and macro. As such they combine the company, and its competitors, customers, suppliers etc, as micro However, this module treats the internal aspect of the company as micro; the external factors of the industry comprising competitors, customers, suppliers etc as meso and the external factors that are out of the control of the company such as demography, politics as macro. For this module, there are THREE levels. 4-7 The Microenvironment Departments within the company impact marketing planning. 4-8 MICRO/INTERNAL ENVIRONMENT 4-9 Internal Environment - Micro Internal environment consists of controllable elements within firm. – Key technologies – Patents – Financial stability – Reputation – Human capital – Company’s reputation Copyright © 2016, 2012, 2009 Pearson Education, Inc. All Rights Reserved.  INDUSTRY - MESO ENVIRONMENT g i eSuppliers s Co n ti iar mp e k ed eti ar tor M e rm s t in er Pu om bl ic st s Cu 4 - 11 The Mesoenvironment Suppliers help to create and deliver customer value.  Treat suppliers as partners. 4 - 12 The Meso environment Marketing intermediaries help to sell, promote, and distribute goods.  Intermediaries take many forms.  Resellers  Physical distribution firms  Marketing services agencies  Financial intermediaries 4 - 13 The Meso environment Customer markets must be studied. Market types  Consumer  Business  Government  Reseller  International 4 - 14 The Meso environment Successful companies provide better customer value than the competition  Size and industry position help to determine the competitive strategy. 4 - 15 The Meso environment Various publics must also be considered.  Government  Local  Media  General  Financial  Internal  Citizen Action Groups 4 - 16 Major Macro environmental Forces 4 - 17 External Environment External environment consists of factors outside the firm which that could positively or negatively impact operations Largely beyond direct management control, so planning is critical – Demographic – Economy – Competition – Technology trends – Sociocultural trends – Legal/political/ethical trends Copyright © 2016, 2012, 2009 Pearson Education, Inc. All Rights Reserved. The Macroenvironment Key Demographic Trends  World population growth 4 - 19 The Macroenvironment Key Demographic Trends  Changing age structure  Distinct segments typically exist within demographic groups. 4 - 20 The Macroenvironment Key Demographic Trends  Changing household  Geographic population shifts  Better-educated, more white-collar workforce  Increasing Diversity 4 - 21 The Macroenvironment The Economic Environment  Affects consumer purchasing power and spending patterns. 4 - 22 The Macroenvironment The Economic Environment  Issues:  interest rates Inflation Availability & level of credit unemployment 4 - 23 The Macroenvironment Key Economic Trends  Income distribution is skewed.  social class issues  Consumer spending patterns are changing. 4 - 24 The Macroenvironment The Natural Environment  Concern for the natural environment has grown steadily, increasing the importance of these trends:  Shortage of raw materials  Increased pollution  Increased governmental intervention 4 - 25 The Macroenvironment Many companies use recycling to help protect natural resources 4 - 26 The Macroenvironment Key Technological Trends  The technological environment is characterized by rapid change.  New technologies create new opportunities and markets but make old technologies obsolete. 4 - 27 The Macroenvironment The Political Environment  Includes laws, governmental agencies, and pressure groups that impact organizations and individuals. 4 - 28 The Macroenvironment The Political Environment  Key trends include:  Increased legislation to protect businesses as well as consumers.  Vigilance of governmental agencies to enforce regulations (OUR).  Increased emphasis on ethical behavior and social responsibility. 4 - 29 The Macroenvironment Cause-related marketing is one method of demonstrating social responsibility 4 - 30 The Macroenvironment The Cultural Environment  Is composed of institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors. 4 - 31 ENVIRONMENTAL SCANNING This is the process of collecting information about the environment in order to identify and interpret potential opportunities & threats. 4 - 32  Evaluate the Environment Examination of internal (micro), Industry (meso) and external (macro) environments factors are important when planning and implementing marketing objectives and strategies. Managers often synthesize environmental analysis of the marketiing environment into a format known as SWOT analysis. – SWOT analysis catalogs the firms’ internal strengths and weaknesses and external opportunities and threats. Copyright © 2016, 2012, 2009 Pearson Education, Inc. All Rights Reserved.  SWOT ANALYSIS An analysis of the marketing environment will result in advantages (pluses) or disadvantages (minuses). All advantages found inside the company’s internal (micro) environment are called strengths. All advantages found outside the company, i.e. in the industry (meso) or the macro environments are called opportunities. In short, advantages within the company are strengths and advantages found outside the company are opportunities. 4 - 34  SWOT ANALYSIS All disadvantages found inside the company’s internal (micro) environment are called weaknesses. All disadvantages found outside the company, i.e. in the industry (meso) or the macro environments are called Threats. In short, disadvantages within the company are weaknesses and disadvantages found outside the company are opportunities. 4 - 35  SWOT As such, strengths and weaknesses can only be found in the company i.e. in the internal or micro environment. Opportunities and threats are only found in the industry (meso) and macro environments. 4 - 36 Partial SWOT Analysis for McDonald's Copyright © 2016, 2012, 2009 Pearson Education, Inc. All Rights Reserved. S W O T Analysis: Strengths (S), Weaknesses (W), Opportunities (O), and Threats (T) Copyright © 2016, 2012, 2009 Pearson Education, Inc. All Rights Reserved. STEP 2. Marketing Metrics (1 of 2) Cost of a prospect ROI of a campaign Long-term value of a customer Referral rate Response rates to direct marketing Customer loyalty/retention Customer turnover Customer satisfaction Copyright © 2016, 2012, 2009 Pearson Education, Inc. All Rights Reserved.  MARKET SHARE CALCULATION y Copyright © 2016, 2012, 2009 Pearson Education, Inc. All Rights Reserved. MARKET GROWTH RATE Market Growth Rate = New Amount – Old Amount X 100 Old Amount 1 - 41 MARKET SHARE V SHARE OF WALLET Market share is the percentage of a market that a single company controls by revenue or number of customers. Share of wallet is how much a specific customer spends on a brand relative to its competitors. Acquiring new customers boosts market share while getting existing customers to spend more improves share of wallet. Copyright © 2016, 2012, 2009 Pearson Education, Inc. All Rights Reserved. Organizational or SBU Objectives Organizational goals and objectives should be direct outgrowth of the Situational Analysis and mission statement – Taking into account internal and external environmental factors. Objectives should be Specific, Measureable, Attainable, Realistic, and Timebound (SMART) – May be directed toward financial-, operational-, or customer-based criteria Copyright © 2016, 2012, 2009 Pearson Education, Inc. All Rights Reserved.  Responding to the Marketing Environment Ignore: not usually recommended Reactive: Passive Acceptance and Adaptation  Companies design strategies that avoid threats and capitalize upon opportunities. Proactive: Environmental Management Perspective – firms take aggressive actions to affect the publics and forces in its marketing environment rather than simply reacting to them  Use of lobbyists, PR, advertorials, lawsuits, complaints, and contractual agreements to influence environmental forces. 4 - 44