LECTURE 3 ANALYZING MARKETING ENVIRONMENT
The Marketing Environment Adapted from D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Company Microenvironment Macroenvironment Legal Political Technological Social Economic Suppliers Customers Distributors Competitors VMV S W O T
WHY scan the environment? “ Assessing the potential impact of likely changes in the environment offers organisations an advantage over their competitors by enabling decision-makers to narrow their range of options. It is clear that, in a dynamic & complex business environment, attempting to forecast sometimes discontinuous trends is fraught with difficulty….. Scanning the environment
However, to do nothing is even more dangerous for an organisation, as is over-reliance on internal sources of information, rather than external channels”
Model 1 - Using PEST/PESTEL analysis to scan the “MACRO” environment ORGANISATION Legal Political Social Ecological Technological Economic
Some possible PEST factors International trade policy Joint Ventures legislation Population demographics (household size, no of cars) Level of environmental concern Attitudes to work & leisure Interest rates / inflation Raw materials availability Govt spending on research Speed of take-up of new technology Note: EXAMPLES ONLY!
Merging of “ unrelated” sectors e.g. banks & telecomms
Model 2 – Using 5 Forces analysis to scan the “MICRO” environment Industry Competitors Intensity of Rivalry Buyers Suppliers New Entrants Substitutes Threat of New Entrants Threat of Substitutes Bargaining Power of Suppliers Bargaining Power of Buyers
5 Forces example: BT Cellnet MM02(phones) Strong Vodaphone Orange One-to-one Weak Cost of licence High barrier to entry Huge cost to 3G New functions? Strong Customers have many competing offers, some including airtime, some not. Cheap deals through Internet Weak Nokia Motorola Ericsson Competing strongly For share of Mature market Medium Customers returning to land lines Convergence with PDAs Location technology
Basic information we need Who could they/should they be? How are their needs/expectations met? How do they rate the company – product/price/service How do they rate the company in relation to the competition? What relevant broad macro changes are taking place? Who are they and what are their objectives? Are they likely to change? What is happening to market share? Can we compare our profitability with their profitability? What are their strengths and weaknesses? How do customers rate the competition in relation to our company? CUSTOMERS COMPETITORS
What will provoke the biggest retaliation from the competition?
Internal analysis What are our internal strengths?
What are our internal weaknesses?
Use the preceding steps to help complete the SWOT. SWOT should come at end of Marketing Audit and summarize it. Highlight the key issues from the SWOT, - summary of the issues and implications for the company. Should provide a succinct, interesting and readable summary of the state of the business and the external factors and trends impacting on it. Beware! Inherent simplicity of the technique is often its undoing Can become vague, confused, irrelevant, lacking in direction Bringing Macro/Micro/Internal information together - Marketing Audit Summary – Model 3 - SWOT
A strength is only a truly a strength if you are stronger than your competitors on that attribute
An example of a SWOT Strong market research teams Strong financial resources Deregulated markets for utilities Competitors prices rising due to currency fluctuation Strategic alliance possibilities Admin costs 20% higher in UK than elsewhere Major competitors more innovative Little synergy between divisions EC widening may bring in low cost competitors
Business activity in world economy starting to slow
Effective use of SWOT STRENGTHS WEAKNESSES OPPORTUNITIES THREATS Matching Strategies Conversion Strategies Conversion Strategies
Model 4 - The Marketing Plan Corporate objectives Marketing audit SWOT Marketing objectives/strategies Alternative plans/ mix Programmes Measure/review Assumptions Estimate results FEEDBACK
10 benefits for you from Marketing Planning Hitting the best customer targets Keeping abreast of market developments Using resources to best advantage Improving internal communications Minimising threats to Reduce risk and surprise It looks like hard work – why bother?
Identifying company strengths and weaknesses
So where have we reached? Marketing – anticipating, satisfying customer requirements at a profit Customer focus – at the centre of a company’s universe Market driven will be + profitable than product driven Company values dictate orientation Companies exist within an environment We can influence the micro but not the macro We must take great care with our competition Internal resources must match strategies The marketing plan – bringing it together
Marketing planning keeps us ahead