pom 3b

8/13/2019 POM 3b

1/38

ANALYZING

THE

MARKETING

ENVIRONMENT

Lecture 3POMBBA2K10 (A)

8/13/2019 POM 3b

2/38

Class Agenda

1. The Company’s Micro environment

2. The Company’s Macro environemnt

3. Responding to the Marketing Environment

8/13/2019 POM 3b

3/38

Marketing Environment

Consists of actors and forces outside of theorganization that affect management’sability to build and maintain relationships

with target customers. Studying the environment allows marketers to

take advantage of opportunities as well as to

combat threats.

Marketing intelligence and research are used to

collect information about the environment.

8/13/2019 POM 3b

4/38

Marketing Environment

Includes:

Microenvironment: Actors close to the company that affect its abilityto serve its customers.

Macroenvironment: Larger societal forces that affect themicroenvironment.

8/13/2019 POM 3b

5/38

The Microenvironment

Company itself

Suppliers

Marketing intermediaries

Customers

Competitors

Publics

8/13/2019 POM 3b

6/38


The company itself:

Areas/departments inside of a company.

Affects the marketing department’s planningstrategies.

All departments must “think consumer” and worktogether to provide superior customer value and

satisfaction.

8/13/2019 POM 3b

7/38


Suppliers:

Provide resources needed to produce goods andservices.

Important link in the “value delivery system.”

Most marketers treat suppliers like partners.

8/13/2019 POM 3b

8/38


Marketing intermediaries:

Help the company to promote, sell, and distributeits goods to final buyers.

Resellers

Physical distribution firms

Marketing services agencies

Financial intermediaries

8/13/2019 POM 3b

9/38


Customers:

Five types of markets that may purchase acompany’s goods and services.

Consumer

Business

Reseller

Government International

8/13/2019 POM 3b

10/38


Competitors:

Those who serve a target market with productsand services that are viewed by consumers asbeing reasonable substitutes for the firm’sproducts or services.

Company must seek to gain strategic advantageagainst these organizations.

8/13/2019 POM 3b

11/38


Publics: Any group that has an interest in or impact on

an organization’s ability to achieve its

objectives. Financial public

Media public

Government public

Citizen-action public

Local public

General public

Internal public

8/13/2019 POM 3b

12/38

The Macroenvironment

The company and all of the other

actors operate in a larger

macroenvironment of forces that shapeopportunities and pose threats to the

company.

8/13/2019 POM 3b

13/38

The Macroenvironment

Forces in the macroenvironment can

be categorized as:

► Demographic► Economic

► Natural

►Technological

► Political

►Cultural

8/13/2019 POM 3b

14/38

Demographic Environment

Demographics:

The study of human populations in terms of size,density, location, age, gender, race, occupation,

and other statistics.

Marketers track changing age and familystructures, geographic population shifts,educational characteristics, and populationdiversity at home and abroad.

8/13/2019 POM 3b

15/38


The changing age structure of the U.S.population is the single most importantdemographic trend.

Baby boomers, Generation X, and the Millennialsare key generational groups.

8/13/2019 POM 3b

16/38


Baby boomers: 78 million born between 1946 and 1964.

Nearly 30% of population. Spend $2.3 trillion annually and hold ¾ of the

nation’s financial assets.

Spend $30 billion annually on anti-aging productsand services; strong market for financial services,new housing, travel, etc.

Are likely to postpone retirement.

8/13/2019 POM 3b

17/38


Generation X: 49 million born between 1965 and 1976.

Defined by shared experiences: Increased parental divorce rates and more employed

mothers made Generation X the first of the latchkeykids.

Gen X developed a more cautious economic outlook

due to recessions and downsizing that werecommon when they grew up.

8/13/2019 POM 3b

18/38


Generation X: Cares about the environment.

Prizes experience, not acquisition.

Family comes first, career second.

Skeptical of marketing messages; researchespurchases carefully, uses communities to shareinformation.

Represents close to $1.4 trillion in annualpurchasing power.

8/13/2019 POM 3b

19/38


Millennials:

83 million born between 1977 and 2000—larger

than baby boomer segment. Includes tweens, teens, and young adults.

Ethnically diverse.

Fluent with computer and digital technology.

Personalization and product customization are

key to marketing success.

8/13/2019 POM 3b

20/38


The American family and householdmakeup is changing: Traditional households are in decline:

Married couples with children = 23% Non-traditional households are growing:

Married without children = 29% Single parents = 16%

Non-family households = 32% Special needs of non-traditional households

are increasingly being considered bymarketers.

8/13/2019 POM 3b

21/38


Increasing diversity: Ethnic segments will continue to grow.

specially designed ads, products, and promotions atethnic groups.

Marketing efforts are increasing toward:

People with disabilities.

8/13/2019 POM 3b

22/38

Economic Environment

Changes in income 1990s—consumption

frenzy, record debt

2000s—“squeezed

consumer” Marketers focus on

offering greater value

Income distribution Upper class: getting

wealthier

Middle class: shrinking

in size Working class

Underclass: remain poor

Consists of factors that affect consumerpurchasing power and spending patterns.

8/13/2019 POM 3b

23/38

Natural Environment

Involves natural resources that are needed asinputs by marketers or that are affected bymarketing activities.

Factors include: Shortages of raw materials

Increased pollution

Increased government intervention

Environmentally sustainable strategies

8/13/2019 POM 3b

24/38

Technological Environment

Most dramatic force shaping our destiny.

Changes rapidly, creating new markets andopportunities and/or danger of products

becoming obsolete. Challenge is to make practical, affordable new

products.

Safety regulations result in higher research costs

and longer time between productconceptualization and introduction.

8/13/2019 POM 3b

25/38

Political Environment

Includes laws, government agencies, andpressure groups that influence or limitvarious organizations and individuals in agiven society.

Areas of concern:

Increasing legislation.

Changing government agency enforcement.

Increased emphasis on ethics and sociallyresponsible behavior.

8/13/2019 POM 3b

26/38

Cultural Environment

The institutions and other forces thataffect a society’s basic values, perceptions,preferences, and behaviors. Core beliefs and values are passed on from

parents to children and are reinforced byschools, churches, business, and government.

Secondary beliefs and values are more open tochange. Marketers may be able to change secondary beliefs,

but NOT core beliefs.

8/13/2019 POM 3b

27/38

Cultural Environment

Society’s major cultural views are expressedin people’s views of: Themselves

Others Organizations

Society

Nature

The universe

8/13/2019 POM 3b

28/38

Responding to the

Marketing Environment Reactive responses:

Many firms simply react to changes in themarketing environment.

Proactive responses:

Some firms attempt to manage the marketingenvironment via aggressive actions designed to

affect the publics and forces in the marketingenvironment.

8/13/2019 POM 3b

29/38

Responding to the

Marketing Environment Examples of proactive responses:

Hiring lobbyists

Running “advertorials”

Pressing law suits

Filing complaints

Forming agreements to control channels

8/13/2019 POM 3b

30/38

8/13/2019 POM 3b

31/38

PESTLE analysis Is a useful tool for understanding the “big picture”

of the environment in which you are operating

By understanding your environment, you can takeadvantage of the opportunities and minimize thethreats.

This provides the context within which moredetailed planning can take place to take fulladvantage of the opportunities that presentthemselves.

8/13/2019 POM 3b

32/38

The factors in PESTLE analysis P – Political

The current and potential influences from political pressures

E - Economic The local, national and world economic impact

S - Sociological The ways in which changes in society affect the organization

T - Technological How new and emerging technology affects your organization

L - Legal How local, national and global legislation affects the project

E - Environmental Local, national and global environmental issues

8/13/2019 POM 3b

33/38

In contrast to a SWOT, PESTLE encourages you tothink about the wider environment and what might

be happening now and in the future which will

either benefit or be of disadvantage to theorganization, individual etc

– a kind of radar which picks up trends and developmentsin the external environment which can be used to

inform longer term planning and strategy making

PESTLE vs.SWOT

8/13/2019 POM 3b

34/38

Political: Government type and stability

Freedom of the press, rule of law and levels of bureaucracy and corruption

Regulation and de-regulation trends

Social and employment legislation

Tax policy, and trade and tariff controls

Environmental and consumer-protection legislation

Likely changes in the political environment

Economic: Stage of a business cycle

Current and projected economic growth, inflation and interest rates

Unemployment and supply of labor Labor costs

Levels of disposable income and income distribution

Impact of globalization

Likely impact of technological or other changes on the economy

Likely changes in the economic environment

PESTLE

8/13/2019 POM 3b

35/38

PESTLE

Sociological: Cultural aspects, health consciousness, population growth rate, age distribution,

Organizational culture, attitudes to work, management style, staff attitudes

Education, occupations, earning capacity, living standards

Ethical issues, diversity, immigration, ethnic/religious factors

Media views, law changes affecting social factors, trends, advertisements, publicity

Demographics: age, gender, race, family size

Technological: Maturity of technology, competing technological developments, research funding,

technology legislation, new discoveries

Information technology, internet, global and local communications

Technology access, licensing, patents, potential innovation, replacementtechnology/solutions, inventions, research, intellectual property issues, advances inmanufacturing

Transportation, energy uses/sources/fuels, associated/dependent technologies, rates ofobsolescence, waste removal/recycling

8/13/2019 POM 3b

36/38

PESTLE

Legal: current home market legislation, future legislation

European/international legislation

regulatory bodies and processes

environmental regulations, employment law, consumer protection

industry-specific regulations, competitive regulations

Environmental: Ecological

environmental issues, environmental regulations

customer values, market values, stakeholder/ investor values

management style, staff attitudes, organizational culture, staff engagement

8/13/2019 POM 3b

37/38

It is possible to use the PESTLE analysis on projects aswell for organizations

It is not always needed, especially if the projects are

small If PESTLE analysis is used for a project, then the focus

should be on solving the “focal problem” and analyzehow the external environment is affecting the process of

solving the “focal problem”

PESTLE analysis and projects

8/13/2019 POM 3b

38/38

The main problem with these external PESTLE factors is thatthey are continuously changing

Therefore PESTLE analysis should include a thoroughanalysis of what is affecting the organization or a projectNow, and what is likely to affect it in the Future

The result of a PESTLE analysis is usually a list of positiveand negative factors that are likely to affect a project However, by themselves, theses factors they mean very little

It is important to bear in mind, that PESTLE analysis requires carefulApplication of results

Issues of concern

pom 3b

Documents