The Marketing Environment

Jobber chap. 3

The Marketing Environment: Key Terms

1. The Marketing EnvironmentThe actors and forces that affect a company’s capability to

operate effectively in providing products and services to its customers.

2. MacroenvironmentThe broad forces that affect not only the company but also

the other actors in the microenvironment. The analysis of the five forces – political/legal, economic, ecological/physical, social/cultural and technological – is known as PEEST analysis.

3. MicroenvironmentThe actors in the company’s immediate environment that

affects its capability to operate effectively in its chosen markets.

The Marketing Environment

Company

Microenvironment

Macroenvironment

Political/legal

Ecological/Physical

Technological

Social/cultural

Economic

SuppliersCustomers

Distributors

Competitors

Political Factors.

• The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. You must consider issues such as:

• 1.How stable is the political environment? • 2.Will government policy influence laws that regulate or tax your

business?• 3.What is the government's position on marketing ethics? • 4. What is the government's policy on the economy? • 5. Does the government have a view on culture and religion? • 6. Is the government involved in trading agreements such as EU, NAFTA,

ASEAN, or others?

Economic Factors

• Marketers need to consider the state of a trading economy in the short and long-terms. This is especially true when planning for international marketing. You need to look at:

• 1. Interest rates.• 2. The level of inflation Employment level per capita. • 3. Long-term prospects for the economy Gross

Domestic Product (GDP) per capita, and so on. • Economic Growth and Unemployment.

European Unemployment Rates - 2012

Toyota

Toyota demonstrates its concern for pollution control with the Toyota Prius automobile.

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Sociocultural Factors.

• The social and cultural influences on business vary from country to country. It is very important that such factors are considered. Factors include:

• 1.What is the dominant religion? • 2.What are attitudes to foreign products and services? • 3.Does language impact upon the diffusion of products onto

markets? • 4.How much time do consumers have for leisure? • 5.What are the roles of men and women within society? • 6.How long are the population living? Are the older

generations wealthy? • 7.Do the population have a strong/weak opinion on green

issues?

World Population Growth

Changes in European Union Population

Population pyramid – Denmark 2010

Population pyramid – Denmark 2050

Population pyramid – China 2010

Weetabix

Weetabix communicates its low sugar, low fat, high fibre attributes.

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Management styles in the European Union and the USA

Group

Individual

Leadership

Organic Systematic

Organisation

Source: Mole, J. (1990) Mind Your Manners

Italy

Portugal

Greece

Netherlands

Spain France

Germany

USA

Ireland

Belgium

Luxembourg

DenmarkUK

Technological Factors.

• Technology is vital for competitive advantage, and is a major driver of globalization. Consider the following points:

• 1. Does technology allow for products and services to be made more cheaply and to a better standard of quality?

• 2.Do the technologies offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile telephones, etc?

• 3.How is distribution changed by new technologies e.g. books via the Internet, flight tickets, auctions, etc?

• 4.Does technology offer companies a new way to communicate with consumers e.g. banners, Customer Relationship Management (CRM), etc?

The Macroenvironment

3. Ecological/Physical Environmental Forces Global Warming. Pollution. Energy and Scarce Resource Conservation. Environmentally Friendly Ingredients and

Components. Recycling and Non-Wasteful Packaging. CSR

The Microenvironment

Customers

Competition

Distributors

Suppliers

Environmental Scanning: Key Tasks

1. Monitoring trends, issues and events, and study their implications.

2. Develop forecasts, scenarios and issues analysis.3. Disseminate information on the business environment

through newsletters, reports and lectures.4. Establish a database for environmental information.5. Provide a focal point for the interpretation and analysis of

environmental information identified by other people in the company.

6. Provide a group of internal experts on environmental affairs.7. Evaluate and revise the scanning system itself.

A Framework for Analysing and Responding to Environmental (Strategic) Issues

Impact

Impact

ImpactImpact

ThreatsOpportunities

Environmental Trends

Strengths Weaknesses

Internal Trends

Performance Trends

Issues

Major

Minor

StrongWeek

Drop fromthe issuelist

Start apriorityproject

Continuetomonitor

Include innext yearsplanning cycle

Start a gradualcommitmentproject

Postponable

UrgentDelayable

PostponableDelayable

Environmental Scanning: Key Benefits

1. Better awareness of, and responsiveness to environmental changes.

2. Better strategic planning and decision-making.3. Improved resource allocation and

diversification decisions.4. Better strategic fit between strategy,

organization and the environment.

Strategic marketing fit

Environment

Strategy Organization

Fit Fit

Fit

Responses to environmental change

Retrenchment

Gradual strategic repositioning

Radical strategic repositioning

Environmental change

Ignorance

Delay

Barriers to

change

Marketing Environment – Deadly Combinations

• The Biggest Problems Tend to Occur when Factors Combine

• New Governments and New Laws– Tax rates, banned products, protectionism

• Technology and Society– Internet, mobile phones

• Demographic and Economic–Which groups have all the money?

Environmental Scanning• What is Environmental Scanning?– Identifying which of the environmental forces are

of particular significance to the organisation– Monitoring and forecasting future trends in these

forces– Interpreting the significance of these factors for

future marketing strategies• What is the Purpose of Environmental

Scanning?– Helps in developing and implementing plans to

respond to these factors/trends

Types of Scanning

• Undirected Viewing– Unsystematic, without purpose

• Conditional Viewing– Limited to factors perceived as key

• Informal Search– Informal systems for collecting data

• Formal Search– Formal systems, organised search

Conclusions• The Dynamic Environment– Organisations that do not adapt may decline and die

• Organisations Must:– Understand what is going on in their business

environment– Respond and adapt to this change

• Making Decisions– Information about the environment is crucial, but

won’t produce decisions