Marketing environment

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  • 1. THE MARKETING ENVIRONMENTOBJECTIVES• Understand what makes up the “environment”• How various forces have influence on the firm• The definitions of micro and macro environments• Factors that comprise micro environment• Factors that comprise macro environment• Why the environment needs to be monitored BHO1171 - School of HTM - VU
  • 2. THE MARKETING ENVIRONMENTDecisions regarding the 4Ps of marketing cannot be made in isolation from the changing environment.• The business environment must be: Examined and Monitored on an ongoing basis.• What are the factors the company needs to monitor? BHO1171 - School of HTM - VU
  • 3. The Operating Environment• The marketing environment does not actually form part of the marketing process, however the environmental factors influence most aspects of the marketing process• Business firms are open systems, which means that outside factors impact on business operations BHO1171 - School of HTM - VU
  • 4. Definition• A Companys marketing environment consists of the actors and forces that are external to the marketing management function of the firm and that impinge on the marketing managements ability to develop and maintain successful transactions with its target customers. (Kotler).• Marketing Environment = Opportunities and threats.• Environment = Micro and Macro. BHO1171 - School of HTM - VU
  • 5. The Firm’s Environment• The environment of a company consists of a large range of factors and influences that may impact on its ability to serve its customers and survive in the long term.• Factors outside the control of the firm• Factors that are internal to the firm and on which the firm can exercise full control directly• Factors and influences on operations coming from independent organisations which can be “managed” by the marketing firm BHO1171 - School of HTM - VU
  • 6. The Firm’s Internal ResourcesThe firm’s micro environment includes:• Production• Financial capability• Human resources• Company’s location and image• Research and Development capabilityImportant to have coordination between marketing and these non-marketing resources BHO1171 - School of HTM - VU
  • 7. Actors in Microenvironment- figure 3.1 Company MarketingSuppliers Inter- Customers mediaries Competitors Publics BHO1171 - School of HTM - VU
  • 8. Internal Environment- Figure 3.2 Marketing Accounting Finance Senior ManagementManufacturing R & D Purchasing BHO1171 - School of HTM - VU
  • 9. Why are suppliers and buyers considered as micro factors?Suppliers• Provide resources and raw materials to run the business. Can impact on prices, costs, availability and qualityBuyers & Facilitating organisations• Those that distribute the firm’s output, like wholesalers and retailers (specialists in their field)• Organisations that provide transportation, warehousing an other support services like financing (publics)To what extent are these controllable by a firm? BHO1171 - School of HTM - VU
  • 10. Why are competitors and consumers considered as micro factors?• Competitors: Other firms in the same line of business, using the same or similar suppliers of raw materials, channels of distribution, and trying to attract the same customers. A firm’s activities may be constantly affected by actions of direct competitors.• Consumers: also have a constant impact on the activities of the firm and what a firm does is greatly influenced by its customers BHO1171 - School of HTM - VU
  • 11. Customers and Markets• Insert Fig 3.3 - describes the various types of markets• Insert Fig 3.4 -describes the role of “Publics”Eg Why are banks interested in how firm’s perform?Why would the media be interested?Why would the Government be interested (regulations) BHO1171 - School of HTM - VU
  • 12. Types of Customer Markets BHO1171 - School of HTM - VU
  • 13. Types of Publics BHO1171 - School of HTM - VU
  • 14. Macro-environmentMacro-environment consists of larger forces that influence the companys operations• Social & Cultural forces• Demographics• Technology• Economics• Political• Natural & Physical BHO1171 - School of HTM - VU
  • 15. Major Forces in the organisation’s Macro Environment BHO1171 - School of HTM - VU
  • 16. MACRO-ENVIRONMENTAL FORCES • Cannot be controlled • External forces influence organisational plans. • Often totally unpredictable. BHO1171 - School of HTM - VU
  • 17. MACRO-ENVIRONMENTAL FORCES CASE STUDY1 S11 and airlines and tourism 20012 Arnotts Biscuits - 1996 BHO1171 - School of HTM - VU
  • 18. Demographic Environment Growing Ethnic Age Diversity StructuresEducation Key Demographic Trends Changing Family Geographic Structure Shifts BHO1171 - School of HTM - VU
  • 19. DEMOGRAPHICSDescription of the population• Age structure of population• 37% of the population are aged 40-64• Aging population• Family Structure changing • Increasing age of those marrying • Delayed child bearing • Increasing two income families • Non-family households• Geographic population shifts• More education• Jobs in the services sector• Women in workforceBHO1171 - School of HTM - VU
  • 20. • Students will need to understand why marketers need to study the population(markets)• What are the implications of the changing age structure of the population?• Explain who the baby boomers are…their changing needs & wants• What are the implications of – changing household structure, – ethnic diversity? – Movement of population BHO1171 - School of HTM - VU
  • 21. Economic Environment Economic ChangesDevelopment in Income Key Economic Concerns for Marketers Changes in Consumer Spending Patterns BHO1171 - School of HTM - VU
  • 22. THE ECONOMIC ENVIRONMENT• Inflation and interest rates• Unemployment• Economic Cycle• Markets require purchasing power as well as people.• Purchasing Power = f (income, prices, savings, credit costs, etc.)• It is often unclear what impact the economy will have on a single industry. Good times do not necessarily help all businesses. BHO1171 - School of HTM - VU
  • 23. Natural Environment Shortage of Raw Materials Key AreasGovernment of Concern EnergyIntervention in the Natural Costs Environment Increased Pollution BHO1171 - School of HTM - VU
  • 24. THE NATURAL or PHYSICAL ENVIRONMENT• Marketers should be aware of the threats and opportunities with four trends in the natural environment:- (a) impending storage of raw materials (b) the increased cost of energy (c) the increased levels of pollution (d) the government intervention in natural resource management.• Others to be aware of are: – natural phenomena that affects their markets, – greenhouse effect, – solid waste problem (eg: McDonalds move away from polystyrene packaging), - School of HTM - VU BHO1171
  • 25. Technological Environment Fast Pace of High R & D Change Budgets Issues in the Technological Environment Focus on Minor Increased Improvements Regulation BHO1171 - School of HTM - VU
  • 26. THE TECHNOLOGICAL ENVIRONMENT• Determines the type of products that can be made available for the satisfaction of needs and wants.• Technology fosters opportunities to: • increase consumer satisfaction and • gain competitive edge.• Today we have many products not available a few years ago:• New developments - new markets but destroy existing ones.• Product development, prices, promotions, packaging and distribution are all directly influenced by technology. BHO1171 - School of HTM - VU
  • 27. Political EnvironmentLegislation Enforcement Key Trends in the Political Environment Greater Concern for Ethics BHO1171 - School of HTM - VU
  • 28. THE POLITICAL ENVIRONMENT (includes legal framework)• Inequities develop when the economic and social systems are left to their own devices. Government intervenes and represents the wants and needs of citizens and makes laws on their behalf.• Government regulation has two purposes - • (a) to protect companies from one another • (b) to protect individuals and society at large from unethical business practices. • EG Food Safety legislation BHO1171 - School of HTM - VU
  • 29. Shift in Secondary Cultural Values Of Oneself Of Of the Universe Others People’s Views Of Of Nature Organizations Of Society BHO1171 - School of HTM - VU
  • 30. SOCIAL & CULTURAL ENVIRONMENT• Beliefs, values, norms of behaviour• Cultural patterns are changing faster• Attitudes, perceptions and behaviour patterns• SubculturesSubcultures display different consumption behaviour: ethnic groups older generations women gay community children religious groups BHO1171 - School of HTM - VU
  • 31. COLLECTING DATA ON YOUR OPERATING ENVIRONMENT• Many companies collect data on the environment as a matter of course. Some areas of interest being • resource availability • recent and pending legislation • what competitors are doing • technological changes. BHO1171 - School of HTM - VU
  • 32. STATE AND FEDERAL LEGISLATION THAT AFFECT MARKETING• FEDERAL LEGISLATION • Trade Practices Act • Broadcasting and Television Act • Trade Descriptions Act • Customs Act • Insurance Act • Conciliation and Arbitration Act• STATE LEGISLATION • Consumer Affairs Act • Sale of Goods Act • Hire Purchase Act • Fair Prices Act • Companies Code • Motor Car Traders Act BHO1171 - School of HTM - VU •