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Understanding the Macro and Micro Environment See Past Exam Papers for Sample Questions 1 of 36
Learning outcomes <ul><li>Elements of the marketing environment </li></ul><ul><li>Macro and Micro environmental analysis <...
The Macro  Marketing Environment Copyright: Southwestern Publications 2006
1. The Competitive Environment <ul><li>Competitive Environment :  competitive products, substitute products for one anothe...
<ul><li>Direct Competitive Products </li></ul>Which would you buy?
<ul><ul><li>Indirectly Competitive Products </li></ul></ul><ul><ul><li>products than can be substituted for one another </...
<ul><li>Developing a Competitive Strategy </li></ul><ul><ul><li>Should we compete? </li></ul></ul><ul><ul><li>If so, in wh...
2. Political-Legal Environment <ul><li>Component of the marketing environment consisting of laws and interpretations of la...
<ul><li>Deregulation – Increases Competitiveness </li></ul>
Regulatory Forces <ul><li>Government :  Consumer Safety Commission, IFSRA, Environmental Protection Agency, Health and Saf...
3. The Economic Environment <ul><li>Factors influencing consumer buying power and strategies (stage of the business cycle,...
Source: Fact Finders 2006 Fastest Growing Market for New Car – Eastern Europe (Latvia 49% increase on 2005) During prosper...
<ul><li>Inflation and Deflation </li></ul><ul><ul><li>Inflation : The devaluation of money by reducing what it can buy thr...
<ul><li>Unemployment </li></ul><ul><ul><li>The proportion of people in the economy who do not have jobs and are actively l...
<ul><li>Income </li></ul><ul><ul><li>Discretionary income : the amount of money people have to spend after paying bills an...
4. The Technological Environment <ul><li>The technological environment: application of knowledge in science, inventions, a...
Toyota Prius Heating Technologies Technology Advances Consumer Needs
<ul><li>Technology increases exponentially  </li></ul><ul><li>New technology as a key to long-term competitive advantage <...
<ul><li>Issues:  </li></ul><ul><li>Obesity in Children </li></ul><ul><li>Negative Body Images </li></ul><ul><li>Video Game...
Cultural Environment: Elements of Culture <ul><li>1. Language </li></ul><ul><li>2. Manners & Customs </li></ul><ul><li>3. ...
World’s Religions <ul><li>Christianity - 2.0 billion followers </li></ul><ul><li>Islam - 1.2 billion followers </li></ul><...
Social Environment: Role of Families and Working Women <ul><li>Working women has had a greater effect on marketing than an...
Population Considerations <ul><li>Concerned with the study of the quantifiable aspects of population structures,e.g., age,...
<ul><li>Generation Y:  Born between 1979 and 1994, size = marketing impact, fickle and skeptical group, techno’s </li></ul...
Growing Ethnic and Community Markets <ul><li>Irish population is becoming multicultural society and workforce </li></ul><u...
6. Natural Forces <ul><li>Conserve natural habitats, resources, endangered species </li></ul><ul><li>Minimise environmenta...
The Micro Environment <ul><li>Customers :  needs,  wants and providing benefits for their customers. Failure = failed busi...
Consumer Buyer Behaviour <ul><li>Chapter 5 of book </li></ul><ul><li>Talk about 3 consumer roles – Consumer is a user, a p...
Consumer Buyer Behaviour <ul><li>Consumer Needs & Wants </li></ul><ul><li>Needs are unsatisfactory conditions of the consu...
Consumer Behaviour-Psychology <ul><li>The perception of a consumer about a certain service/product is what matters. </li><...
Maslow’s Hierarchy of Needs <ul><li>Abraham Maslow described motivation as a means of satisfying human needs. </li></ul><u...
Psychographics:Describing Consumer Behaviour <ul><li>Psychographics is a facet of motivation and explains how a person act...
Individual Consumer Decision Making process <ul><li>Step 1: Problem Recognition </li></ul><ul><li>Step 2: Information Sear...
Industrial Buyer Behaviour <ul><li>Who says that you will always market to an individual?? </li></ul><ul><li>‘ The decisio...
Industrial Buyer Behaviour <ul><li>The process can be summarised as follows - Problem Recognition - Need Description - Pro...
Analyzing Competitive Forces <ul><li>Check Chapter 4 of Book, from pg 117 Competitor Research Auditing Current Competitors...
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Marketing principles 0310_1

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Marketing principles 0310_1

  1. 1. Understanding the Macro and Micro Environment See Past Exam Papers for Sample Questions 1 of 36
  2. 2. Learning outcomes <ul><li>Elements of the marketing environment </li></ul><ul><li>Macro and Micro environmental analysis </li></ul><ul><li>Understanding Consumer Buyer Behaviour </li></ul><ul><li>Understanding Industrial Buyer Behaviour </li></ul><ul><li>Defining and analysing competitive forces </li></ul>
  3. 3. The Macro Marketing Environment Copyright: Southwestern Publications 2006
  4. 4. 1. The Competitive Environment <ul><li>Competitive Environment : competitive products, substitute products for one another, companies competing for your consumer’s purchasing power. </li></ul><ul><ul><li>Monopoly – examples in Ireland? </li></ul></ul><ul><ul><li>Deregulation movement - ex </li></ul></ul><ul><ul><li>Oligopoly - ex </li></ul></ul>
  5. 5. <ul><li>Direct Competitive Products </li></ul>Which would you buy?
  6. 6. <ul><ul><li>Indirectly Competitive Products </li></ul></ul><ul><ul><li>products than can be substituted for one another </li></ul></ul><ul><ul><li>Plastic Containers vs. Glass vs. Tin vs. Aluminum </li></ul></ul><ul><ul><li>Sugar vs. Artificial Sweeteners </li></ul></ul><ul><ul><li>Typewriter vs. PC </li></ul></ul><ul><ul><li>Ocean Liner Vs. Air Travel </li></ul></ul>
  7. 7. <ul><li>Developing a Competitive Strategy </li></ul><ul><ul><li>Should we compete? </li></ul></ul><ul><ul><li>If so, in what markets should we compete? </li></ul></ul><ul><ul><li>How should we compete? </li></ul></ul><ul><li>Involves: </li></ul><ul><ul><li>Researching the market </li></ul></ul><ul><ul><li>Identifying current &potential competitors </li></ul></ul><ul><ul><li>Anticipating competitive actions </li></ul></ul>
  8. 8. 2. Political-Legal Environment <ul><li>Component of the marketing environment consisting of laws and interpretations of laws that require firms to operate under competitive conditions and to protect consumer rights. </li></ul>
  9. 9. <ul><li>Deregulation – Increases Competitiveness </li></ul>
  10. 10. Regulatory Forces <ul><li>Government : Consumer Safety Commission, IFSRA, Environmental Protection Agency, Health and Safety etc </li></ul><ul><li>Consumer interest groups </li></ul><ul><ul><ul><li>PETA </li></ul></ul></ul><ul><li>Special-interest groups </li></ul><ul><ul><ul><li>ISME </li></ul></ul></ul><ul><li>Self-regulatory groups </li></ul><ul><ul><ul><li>Advertising </li></ul></ul></ul><ul><ul><li>Companies fight unjust regulations </li></ul></ul><ul><ul><li>Regulations can present new opportunities </li></ul></ul><ul><ul><li>Political lobbying </li></ul></ul><ul><li>Boycotts </li></ul><ul><ul><li>Political action committees </li></ul></ul>Controlling the PL Environment Is Horticulture industry regulated? 10 of 36
  11. 11. 3. The Economic Environment <ul><li>Factors influencing consumer buying power and strategies (stage of the business cycle, inflation, unemployment, resources, income etc) </li></ul><ul><li>The Wealth effect </li></ul><ul><li>(Ireland) </li></ul>
  12. 12. Source: Fact Finders 2006 Fastest Growing Market for New Car – Eastern Europe (Latvia 49% increase on 2005) During prosperous times car manufacturers will add luxury extras The Wealth Effect The figures on the map show the level of average new car prices in each market compared to the average for all euro currency markets. Index 100 represents the European average
  13. 13. <ul><li>Inflation and Deflation </li></ul><ul><ul><li>Inflation : The devaluation of money by reducing what it can buy through continued price increases. (Ireland) </li></ul></ul><ul><ul><li>Deflation : Falling prices </li></ul></ul><ul><li>* Lowest annual EU rates: Netherlands (3.0%/1.9%), Portugal (3.1%/-1.2%), Ireland (3%/-2.4%). Highest rates: Latvia (15.6%/7.7%), Lithuania ( 12.2%/6.9%). </li></ul>
  14. 14. <ul><li>Unemployment </li></ul><ul><ul><li>The proportion of people in the economy who do not have jobs and are actively looking for work. </li></ul></ul>
  15. 15. <ul><li>Income </li></ul><ul><ul><li>Discretionary income : the amount of money people have to spend after paying bills and necessities. </li></ul></ul><ul><li>Resource Availability </li></ul><ul><ul><li>Demarketing : reducing consumer demand for a good or service to a level that the firm can supply. </li></ul></ul>
  16. 16. 4. The Technological Environment <ul><li>The technological environment: application of knowledge in science, inventions, and innovations to solve problems </li></ul>
  17. 17. Toyota Prius Heating Technologies Technology Advances Consumer Needs
  18. 18. <ul><li>Technology increases exponentially </li></ul><ul><li>New technology as a key to long-term competitive advantage </li></ul><ul><ul><li>create more efficient operation or better products </li></ul></ul><ul><ul><li>may render existing products obsolete </li></ul></ul>6
  19. 19. <ul><li>Issues: </li></ul><ul><li>Obesity in Children </li></ul><ul><li>Negative Body Images </li></ul><ul><li>Video Games </li></ul><ul><li>Healthy Eating etc .. </li></ul>5. The Social-Cultural Environment <ul><li>The relationship between marketing and society and its culture </li></ul>
  20. 20. Cultural Environment: Elements of Culture <ul><li>1. Language </li></ul><ul><li>2. Manners & Customs </li></ul><ul><li>3. Technology & Material Culture </li></ul><ul><li>4. Social Institutions – business, family, political- Latin America </li></ul><ul><li>5. Education –transmitting values, skills, attitudes etc </li></ul><ul><li>6. Aesthetics – attitude toward beauty, art, music etc </li></ul><ul><li>7. Religion </li></ul>20 of 36
  21. 21. World’s Religions <ul><li>Christianity - 2.0 billion followers </li></ul><ul><li>Islam - 1.2 billion followers </li></ul><ul><li>Hinduism - 860 million followers </li></ul><ul><li>Buddhism - 360 million followers </li></ul><ul><li>Confucianism - 150 million followers </li></ul><ul><li>Religion can affect marketing strategy </li></ul>
  22. 22. Social Environment: Role of Families and Working Women <ul><li>Working women has had a greater effect on marketing than any other social change </li></ul><ul><ul><li>Increases in females in the workforce </li></ul></ul><ul><ul><li>Purchasing power from dual-career families is rising </li></ul></ul><ul><ul><li>Cost is more important to women. Quality is more important to men. </li></ul></ul>2
  23. 23. Population Considerations <ul><li>Concerned with the study of the quantifiable aspects of population structures,e.g., age, gender, size, race, occupation and location. Some factors to consider: </li></ul><ul><li>falling birth-rates </li></ul><ul><li>the rise of the “mature” market segment </li></ul><ul><li>the “household of one” </li></ul>
  24. 24. <ul><li>Generation Y: Born between 1979 and 1994, size = marketing impact, fickle and skeptical group, techno’s </li></ul><ul><li>Generation X: Born between 1965 and 1978, time premium, majority have children and houses, savvy and cynical consumers </li></ul><ul><li>Baby Boomers: Born between 1946 and 1964 </li></ul><ul><li>Younger Boomers (ages 41 to 49) </li></ul><ul><ul><li>Home is the castle, spend on kids </li></ul></ul><ul><li>Older Boomers (ages 50 to 59) </li></ul><ul><ul><li>Spend on home upgrades & Holidays </li></ul></ul>Demographic Factors 3
  25. 25. Growing Ethnic and Community Markets <ul><li>Irish population is becoming multicultural society and workforce </li></ul><ul><li>Growth in spending power in: </li></ul><ul><ul><li>Eastern European Populations </li></ul></ul><ul><ul><li>African Populations </li></ul></ul><ul><ul><li>Asian Populations </li></ul></ul>4 ‘ Pink Pound’ -’Dorothy Dollar’
  26. 26. 6. Natural Forces <ul><li>Conserve natural habitats, resources, endangered species </li></ul><ul><li>Minimise environmental impact </li></ul><ul><li>Sustainable resource use </li></ul><ul><li>Recycle </li></ul><ul><li>Energy efficient products </li></ul><ul><li>‘ The Polluter Pays Principle’ </li></ul>
  27. 27. The Micro Environment <ul><li>Customers : needs,  wants and providing benefits for their customers. Failure = failed business strategy. </li></ul><ul><li>Employees : correct and motivated staff is essential to strategic planning. Training and development, service sector, competitive edge. (Cereality) </li></ul><ul><li>Suppliers : Price of raw material affect the marketing mix. Closer supplier relationships benefit strategy. </li></ul><ul><li>Shareholders : inward investment for growth. Satisfying shareholder needs can cause a change in strategy. (Sharwoods+internet companies, Birds Eye) </li></ul><ul><li>Media : Positive or adverse attention. Consumer programs </li></ul><ul><li>  </li></ul>
  28. 28. Consumer Buyer Behaviour <ul><li>Chapter 5 of book </li></ul><ul><li>Talk about 3 consumer roles – Consumer is a user, a payer and a buyer; User – concerned about product features and the uses they can be put to (JML ads on TV) Payer – concerned about price and credit deals available (0% down, 0% until…) Buyers – concerned with logistics of procuring the product (order by certain date for delivery before…) </li></ul>
  29. 29. Consumer Buyer Behaviour <ul><li>Consumer Needs & Wants </li></ul><ul><li>Needs are unsatisfactory conditions of the consumer that prompt them to an action that will make the condition better </li></ul><ul><li>Wants are desires to obtain more satisfaction than is absolutely necessary </li></ul><ul><li>Food vs. Gourmet Food, Car vs. Porsche etc </li></ul>
  30. 30. Consumer Behaviour-Psychology <ul><li>The perception of a consumer about a certain service/product is what matters. </li></ul><ul><li>Learning also features in consumer behaviour. Especially for a complex purchase. </li></ul><ul><li>Motivation is defined as a state of drive that impels behaviour towards a goal-object. </li></ul>30 of 36
  31. 31. Maslow’s Hierarchy of Needs <ul><li>Abraham Maslow described motivation as a means of satisfying human needs. </li></ul><ul><li>Physiological Needs – Food, shelter </li></ul><ul><li>Safety & Security Needs – car safety, fire safety </li></ul><ul><li>Belongingness & Love Needs – Teenagers clothes </li></ul><ul><li>Esteem & Ego Needs – Self Gift Giving </li></ul><ul><li>Need for Self Actualization – Engage in self improvement activities </li></ul>
  32. 32. Psychographics:Describing Consumer Behaviour <ul><li>Psychographics is a facet of motivation and explains how a person acts during the consumption phase. </li></ul><ul><li>The way they act is guided by a person’s: Values Self Concept Lifestyle VALS – values & Lifestyles Attitudes </li></ul>
  33. 33. Individual Consumer Decision Making process <ul><li>Step 1: Problem Recognition </li></ul><ul><li>Step 2: Information Search </li></ul><ul><li>Step 3: Alternative Evaluation </li></ul><ul><li>Step 4: Purchase </li></ul><ul><li>Step 5: Post purchase Experience </li></ul><ul><li>Chap 5 of Book </li></ul>
  34. 34. Industrial Buyer Behaviour <ul><li>Who says that you will always market to an individual?? </li></ul><ul><li>‘ The decision-making process by which formal organisations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers’ </li></ul><ul><li>Kotler and Armstrong 1989 </li></ul>
  35. 35. Industrial Buyer Behaviour <ul><li>The process can be summarised as follows - Problem Recognition - Need Description - Product Specification - Supplier Search </li></ul><ul><li>- Supplier Selection </li></ul><ul><li>- Purchase Routine Specification </li></ul><ul><li>- Performance Review </li></ul>
  36. 36. Analyzing Competitive Forces <ul><li>Check Chapter 4 of Book, from pg 117 Competitor Research Auditing Current Competitors Auditing Potential New Competitors </li></ul><ul><li>See in chapter 4 a competitor Analysis Template </li></ul>

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