scanning mkting environment
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Scanning the Marketing EnvironmentScanning the Marketing Environment
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Needs, Trends & Fads in the Macro environmentNeeds, Trends & Fads in the Macro environment
Companies recognize and respond to the unmet needs & trends in theMacro environment
Trends
Is a direction or sequence of events that has some momentum anddurability.
Have staying power, they take longer to build, and their effects may befelt for years, even decades.
Arise from the culture and contain the essence of a people.
They are more predictable and durable than fads
Fads
Are unpredictable, short-lived and without social, economic and politicalsignificance.
Are fast-moving and cross international and cultural boundaries easily.Mega trends
Are large social, economic, political and technological changes that areslow to form and once in place they influence us for some time,7 10years or longer.
Trends and mega trends merit close attention.
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Identifying the Major ForcesIdentifying the Major Forces
The 6 major non controllables which a company, suppliers,
competition
must monitor and to which it must respond as they
shape opportunities and pose threats.
1. Demographic
2. Economic3. Natural/Physical
4. Technological
5. Political-legal
6. Social-cultural
Egs: Opening of major new markets: China, India, Arabic
countries
Rapid propagation of global lifestyles resulting from the growth of
global communications
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All forces into beingAll forces into being
Increasing population growth (demographics) leads
to more resource depletion & pollution (natural)
which leads consumers to call for more laws
(political/legal). The restrictions stimulate more technological
solutions & pdts (technology) which if they are
affordable (economic) may actually change peoples
attitudes & behavior (social/cultural)
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Demographic EnvironmentDemographic Environment
Demographic trends are highly reliable for the short
and intermediate run
Worldwide population growth
Population age mix Ethnic markets
Educational groups
Household patterns
Geographical shifts in population
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Worldwide Population Growth
The main demographic force is population.
Resources need to support increased population growth
Population growth is highest in countries/communities that can least
afford it
Growing population = growing human needs # growing markets
unless these mkts have sufficient purchasing power
If population demands too hard against the available resources,
costs will shoot up & profit margins will decline
Eg: China & regulation of 1 child per family.entry of Lego & Mattel
into the chinese market
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Population Age Mix
The population can be divided into 6 age groups:Preschool, School-age children, Teens, Young adults (25 40), Middle-
age adults (40 65), Older adults (>65)
For marketers this age mix signals the kinds of products & services that
will be in high demand
Eg: Increase in the segment of older adults.increased demand for
assisted living communities, medical aid, healthier food options.
Stores catering to senior citizens will have larger print signs, safe
restrooms
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Ethnic and racial makeup
Need to careful of over generalising about ethnic groups and
note that diversity goes beyond ethnic and racial groups. As even within each ethnic group, there are consumers who are
as different from each other
Educational Groups
There are 5 educational groups:
Illiterates
High school dropouts
High school diplomas
College degrees Professional degrees
Higher the number of educated people calls for a high demand of
quality books, magazine, travel
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Household Patterns
The change from the traditional household (joint families) todifferent household patterns each with a distinctive set of needs
and buying habits. Marketers must increasingly consider the special needs of non-
traditional households, because they are now growing more rapidlythan traditional households.
Each group will have a distinctive set of eeds & buying habits.
Nuclear families, single/divorced will need smaller houses,appliances, food package sizes
Geographical Shifts in Population
Migration from rural to urban and then to suburban areas
Location makes a difference in their goods and service preference.
Movement from Rajastan to Mumbai will lessen the demand forwarm clothing& home heating appliances, but an increased needfor ACs
Cities have an increased demand for movies, expensiverestaurants, entertainment places
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Economic EnvironmentEconomic Environment
Markets require purchasing power as well as people. They must
pay close attention to major trends in income & consumer
spending patterns.
Available purchasing power in an economy depends on:
Income distribution
Savings, Debt, and Credit availability
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Income distribution:A major determinant is a countrys industrialstructure
Subsistence economies
Raw material exporting economies Industrializing economies
Industrial economies
Marketers distinguish countries into 5 diff income distribution patterns:
1. Very low incomes
2. Mostly low incomes
3. Very low, very high incomes
4. Low, medium, high incomes
5. Mostly medium incomes
Eg: The market for a new Lamborghini in countries with type 1 & 2income patterns would be very small.
In the 2 tier US market, affluent people continue to buy expensive
goods but the working class spend more carefully, look for discounts,
buy at less expensive stores
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Savings, Debt, and Credit availability
Consumer expenditure is affected by consumer savings, debts
& credit availability Marketers must pay careful attention to any major changes in
incomes, cost of living, interest rates, savings, borrowing
patterns as they can have a high impact on business,
specially those pdts who have high income & price sensitivity.
Eg: Japanese save 18% of their income, US consumers save6%
Japanese banks are able to grant loans at a lower rate of
interest than the US banks to their companies
US consumers have a high debt to income ratio which retards
further expenditures on housing and larger items
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Natural/Physical EnvironmentNatural/Physical Environment
Environmentalists protect the physical environment from the cost
associated with producing and marketing pdts /services.
Concerned with the social cost of consumption
7 environmental issues of concern:
1. Use of environmental friendly ingredients
2. Recyclable & non wasteful packaging
3. Animal testing of new pdts
4. Shortage of raw materials5. Increased pollution levels
6. Increased energy consumption
7. Changing role of governments in environmental protection
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1. Use of environmental friendly ingredients
Biodegradable & natural ingredients
Eg: BD plastics, Sony s Milddisc brand of CD made from apolymer derived from maize
Challenge: High cost
2. Recyclable & non wasteful packaging
Pressure on manufacturers/retailers to avoid over packagingisenvironmental friendly & makes commercial sense, substantialsaving
Special companies to organize the collection & sorting of waste forrecycling
Eg: Refill packs, removal of outer carton packaging, lightweight
plastic bottles from conventional glass pkging
3. Animal testing of new pdts
Body shop was the 1st company to introduce their range of animalfriendly pdts
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4. Shortage of raw materials
Limiting the use of propellants like CFCs (Chlorofluorocarbons)
in refrigerators & aerosols
Companies making pdts using resources like coal, oil, silver will
face cost increases on their depletion.which may or may not
be able to be passed on as an increased cost to the customer.
R & D faces a good opportunity to develop new substitute
material
5. Increased energy consumption
Has called for measures to conserve energy with a demand for
energy efficient housing, fuel efficient cars, using solar panels,
electric cars
6. Changing role of governments in environmental protection
Govt may vary in their concern & efforts to promote a clean
environment
Companies to accept more social responsibilities and less
expensive devises to control and reduce pollution
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Political/Legal ForcesPolitical/Legal Forces
Mkting decisions can be influenced by this force which determinethe rules by which business is conducted
Plays an imp role specially in international business
To protect companies from unfair competition To protect consumers from unfair business practices
Protect the interest of society from unethical business behaviour
At what point do the costs of regulation exceed the benefits?
Marketers must have a good working knowledge of the major lawsprotecting competition, consumers and society.
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Political/Legal ForcesPolitical/Legal Forces
Close relationships with politicians are often made by org both to
monitor the political mood & also to influence it
Eg: Cigarette industry..to protect themselves from the ban on
advertising
Companies make contributions to the funds of political parties in
order to maintain favorable relationships
Legal: Tobacco advertising is illegal in Italy, Direct alcohol
advertising in banned on India, on sports grounds in France
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Technological ForcesTechnological Forces
One of the most dramatic forces shaping peoples lives istechnology.
The economys growth rate is affected by how many major newtechnologies are discovered.
The marketer should monitor the following trends intechnology:
Accelerating pace of change
Unlimited opportunities for innovation
Varying R & D budgets
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Technological ForcesTechnological Forces
IT describes a broad range of innovations with the field of computing& telecommunications
Benefits of this advancements : MR thru emails, efficiency of salesforce thru sales force automation, videoconferencing
CRM has improved thru database technology to enhancerelationships with customers
Mobile phones.smaller, sleeker, trendierdownload music, viewvideos, email
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Social/Cultural ForcesSocial/Cultural Forces
Purchasing power is directed toward certain goods &
services according to peoples tastes and preferences:
Views of themselves
Views of others
Views of organisations
Views of society consumption patterns often reflect a
social attitude
Views of nature
Views of the Universe
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High persistence of core cultural values marketers have some
chance of changing secondary values but little chance of changing
core values
Existence of subcultures groups with shared values emerging from
the special life experiences or circumstances
Shifts of secondary cultural values through time
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Responses to ECResponses to EC
Companies respond in diff ways to environmental change:
Ignorance: If environmental scanning is poor, company manynot realize the salient forces are affecting their futureprospects.
They continue to be normal, ignoring the environ. issues thatare threatening their existence or opportunities that could beseized
Delay: Is to delay action due to bureaucratic decision makingprocesses that impair quick action.
Mkting myopia resulting in being more pdt focused rather thancustomer
Technological myopia & psychological recoil where change isalways seen as a threat
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Retrenchment: Deals with efficiency problems but
disregards effectiveness issues.As sales & profits declinethe mngt cut costs leadingto a period of higher profits but it does not tackle thedeclining sales problem
Gradual strategic repositioning: Involves a gradualplanned, continuous application to the changingmarketing environment
Radical strategic repositioning: Sudden change in thedirection of the entire business.
Risky if not successful
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