The Marketing Environment (including Chapter 2 and 3 in Kolter and Keller)

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The Marketing Environment (including Chapter 2
and 3 in Kolter and Keller)

• Todays Lecture
• The External Environment
• Definition, Significance, Techniques (PEST)
• Strategic Marketing
• Definition, Benefits, Stages, Techniques (SWOT,
  Five Force Model)
• Market and Marketing Research
• Definition and significance (Ch 4)

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Kotler on Marketing

• Today you have to run faster to stay in place.

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Marketing Environment Definition
A companys marketing environment consists of the
task environment of actors and the broad
environment that affect the companys ability to
develop and maintain successful transactions with
its target customers. Kotler (2000)
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Analyzing Needs and Trends in the Macroenvironment

• Trend a direction or sequence of events that has
  some momentum and durability
• Fad unpredictable, short-lived, and without
  social, economic, and political significance
• Megatrends large social, economic, political and
  technological changes that had grate influences
  for some longer time

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Figure 6-1 Colgate-Palmolives Total Global
Branding StrategyColgate-Palmolive has had
global success with its Colgate line of
tooth-care products. The products and their
packaging design do not vary from country to
country the only thing that changes is the
language on the packages.
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Forces (Macro) Actors (Micro)
Broad Forces
Political/Legal
Technological
Task Actors
Customers Competitors Publics/Stakeholders
Suppliers Intermediaries
Company
Economic
Social/Cultural
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Marketing Environments

• Opportunities from Macro Environments
• Social security
• Telecommunication

CCTV or security systems
Mobile phones (3G)
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Marketing Environments

• Challenges from Macro Environments
• Decrease in birth rate
• Improvement of
• technology

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The PEST Analysis

• Political
• Economic
• Societal
• Technological

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Political Environment
Increased Legislation
Special- Interest Groups
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Economic Environment
Income Distribution
Savings, Debt, Credit Availability
Subsistence economies Raw-material-exporting
economies Industrializing economies Industrial
economies
Changes in incomes Cost of living Interest
rates Saving and borrowing patterns
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The Social/Cultural Environment- Demographic
Change

• World-wide population growth but in developed
  countries getting married later, having less
  children
• Living longer - ageing population - Baby boomers
  1946-64, Generation X 1965-1976 and Generation Y
  1977-1994
• Geographical shifts - multicultural societies
• Household changes. Diverse or non-traditional
  households.

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Meeting Family Size Needs

• Folgers Coffee addresses an important need by
  allowing single people to brew one cup of coffee
  at a time.

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The Sandwich Generation

• This insurance ad reminds us that people in the
  sandwich generation often must care for their
  parents in addition to their children.

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Cultural Values
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Two Brides
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Women Manage Many Tasks

• Women often manage many tasks within the family
  that pull them in many directions.

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Attitudes Lifestyle
Of Oneself
Of Others
Of the Universe
Views That Express Values
Of Organizations
Of Nature
Of Society
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Status Symbols are Always in Flux

• At one time, having very pale skin was the mark
  of an upper social class because it indicated
  that the person did not have to work in the
  fields. Today, a suntan is equated with leisure
  time and consumers go to great lengths to get one
  naturally or with help.

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Technological Environment
Issues in the Technological Environment
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Figure 6-2 Virtual Reality Applications in
MarketingVirtual Reality technology
lets users interact with computer-generated
worlds through sight, sound, and touch.
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Example PEST Analysis

• Political
• Privatisation of national carriers
• Economic
• Low interest rates on debt leading to increased
  penetration of credit cards
• Social
• Increase in demand for overseas destinations
• Increasing consumer knowledge and confidence
• Technological
• Increasing affordability and penetration of
  technology such as the internet and mobile phones.

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Strategic Marketing Planning(SMP)
The managerial process of developing and
maintaining a viable fit between the
organisations objectives, skills, and resources
and its changing market opportunities. The aim of
strategic planning is to shape the companys
businesses and products so that they yield target
profits and growth. Kotler (2001)
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Strategic Marketing Planning (SMP)
Business Mission
Where are we now? How did we get here? Where are
we heading?
Marketing planning and control at
corporate/business level
Marketing Audit - Internal and External Analysis
SWOT Analysis
(Re) evaluation of Mission
Strategic Options
Where would we like to be?
Marketing planning at product level
Marketing Objectives
Tactical Plans Mixes (4Ps)
How do we get there?
Evaluation Control
Are we on course?
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SWOT Analysis
SOURCE
Internal - Controllable
Strengths
Weaknesses
Threats
Opportunities
External - Uncontrollable
Internal Factors include Marketing activity
Financial situation Manufacturing operations
Organisational style and structure. See Kotler
(2000) pg 78
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SWOT Analysis of Easy Jet
Strengths Established brand name Flies out of
central airports Has flexible staff contracts
supporting low cost proposition Has charismatic
CEO
Weaknesses Reputation for unreliability Limited
UK coverage
Opportunities Increasing mobile phone
usage Interactive television Ageing population
Threats Increased competition from other
airlines Post Sept 11th flying fears Competition
from other forms of transport
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Drawing a Conclusion

• Formulate strategic options that
• Minimise weaknesses and threats
• Maximise strengths and opportunities
• For example
• Threat Increased competition and limited UK
  coverage
• Strategy Take over competitor increasing
  coverage of UK market

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Five Forces Determining Segment Structural
Attractiveness
Competitive Forces

• Threats of
• intense segment rivalry
• new entrants
• substitute products
• buyers growing bargaining power
• suppliers growing bargaining power

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Identifying Competitors

• Industry Concept of Competition
• Industry
• Number of Sellers and Degree of Differentiation
• Pure monopoly
• Oligopoly
• Pure oligopoly
• Differentiated oligopoly
• Monopolistic competition
• Pure competition

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Identifying Competitors

• Entry, Mobility, Exit Barriers
• Entry barriers
• Mobility barriers
• Exit barriers
• Cost Structure
• Degree of Vertical Integration
• Vertical integration
• Degree of Globalization
• Market Concept of Competition

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Figure 9-6 Hypothetical Market
Structure(Kolter, 2003)
Designing Competitive Strategies
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Benefits of SMP

• Forces organisation to critically evaluate its
  current situation in light of current and future
  environmental trends
• Prompts firm to identify its strengths and
  weaknesses
• Increases awareness of opportunities and threats
• Encourages organisations to adapt
• Stimulates achievement
• Promotes search for competitive advantage
• However there are also problems
• How confident are we in identifying and
  predicting trends?
• By selecting certain options are we restricting
  ourselves and losing flexibility/stifling
  creativity?

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Summary

• There are two components of the marketing
  environment - the broad forces and the task
  actors
• PEST is a technique used to evaluate the forces
  in the marketing environment
• SMP is used to fit the organisation to its
  environment and a key tool is a SWOT analysis
• There are both benefits and problems of SMP
• Market and Marketing Research are important in
  linking the firm to the marketing environment