Microenvironmental Forces Suppliers . Suppliers are the firms and persons that provide the resources needed by the company and competitors to produce goods and services. Company . Marketing plans must accommodate the needs of other functional areas of the firm to coordinate product/service delivery effectively (See following CTR and notes. Competitors . Competitors are usually considered those companies also serving a target market with similar products and services, although broader definitions may apply. Publics . Publics consist of any group that perceives itself having an interest in the actions of the firm. Publics can have positive as well as negative influences on the company's objectives. Intermediaries . Intermediaries include various middlemen and distribution firms as well as marketing service agencies and financial institutions. Customers . Customers consist of consumer, industrial, reseller, government, and international markets.
Customer Markets This CTR corresponds to Figure 3-2 on p. 73 and relates to the material on p. 72. Types of Customer Markets The company is concerned with five types of customer markets, including: Consumer Markets. These consist of individuals and households that buy goods and services for personal consumption. Business Markets. These buy goods and services for further processing or for use in their production process. Reseller Markets. Resellers buy goods and services for repackaging and reselling at a profit. Discussion Note: Students may have heard that these “middlemen” raise costs to end-users. You might point out that in most cases, resellers actually lower costs by performing marketing functions less expensively than could manufacturers. Government Markets. Governments buy goods and services to produce public services or to transfer them to needy constituents. International Markets. A growing concern for almost all marketers, these consist of those various types of buyers located in other countries.
The Macroenvironment This CTR corresponds to Figure 3-4 on p. 75 and relates to the material on pp. 74-92. Teaching Tip: This CTR overviews the major forces in the company’s macroenvironment. You might use it as an introduction before exploring each area in detail. Each of the six major forces is covered in greater detail on subsequent CTRs. Macroenvironmental Forces Demographic. The demographic environment monitors population characteristics on such items as size, density, age, location. Economic. The economic environment includes income and spending pattern concerns. Natural . The natural environment addresses pollution concerns, energy costs, raw materials availability, and growing government roles in resource management. Technological. The technological environment includes such issues as the fast pace of change, emerging product forms, and high R&D. Political . The political environment addresses the role of government and policy in the regulation of business. Cultural . The cultural environment recognizes the influence of values and beliefs of a society on purchase decisions and consumption patterns.
Economic Environment This CTR relates to the material on pp. 79-82. The Economic Environment The Economic Environment consists of factors that affect consumer purchasing power and spending patterns. Key considerations include: Economic Development . Nations vary greatly in their levels of and distribution of income, often as a result of their stage of economic development. Typical distinctions include: Subsistence Economies. These consume most of their own agricultural and industrial output. These countries are poor targets for most products. Industrial Economies. These offer rich markets for many different kinds of goods. Changes in Income . Rising incomes for most consumers have only kept pace with inflation. As a result, consumers are more sensitive to Value Marketing - the careful promotion of a high degree of quality and performance for the price. Income distribution is also of key importance: Upper-class consumers are not affected by current economic events. Middle-class consumers can afford the “good life” most of the time, but are careful about spending. Working-class consumers must budget carefully. Underclass consumers are often unable to participate fully in the marketing system. Changing Consumer Spending Patterns . Knowledge of Engel’s Laws remains important: As income rises, the percentage spent on food declines, the percentage spent on housing remains constant, and the percentage spent on savings and other categories increases.
Natural Environment There are several areas affecting marketing that stem from the natural environment. Shortages of Raw Materials. Shortages both increase demand and sprout counter-movements aimed at conservation. Discussion Note: Both sides of the &quot;green&quot; movement utilize sophisticated database marketing and lobbying techniques. Energy Costs. The cost of energy makes long-term growth of high energy industries and goods difficult to predict. Increased Pollution . Industrial growth almost always damages the natural environment. The so-called “green movement” seeks to operate businesses in such a way so as not to damage the natural environment. The varying political power of “greens” in different countries is a consideration in global marketing efforts. Government Intervention in Natural Resource Management. Changing philosophies on the role of government in managing natural resources also blends into the legal environment. Marketers must take care in identifying natural environmental trends. Discussion Note: You might further expand this discussion by pointing out that even agencies like the EPA vary greatly in the amount of environmental regulation they perform depending upon funding and the agenda of whoever occupies the White House.
Technological Environment This CTR relates to the material on pp. 83-84. Technological Environment Key forces operating in the technological environment include: Fast Pace of Technological Change . Anyone trying to learn all the features of their current software programs before they are updated and outdated understands this force. Teaching Tip: You might point out to students raised on Star Trek and Star Wars how much of yesterday's sci-fi is already coming true. Cellular phones as Star Trek-type communicators might get class discussion going. High R&D Budgets . The United States spends more on research and development than any other country. Placing marketing personnel on research teams can help focus research efforts on consumer needs and practical applications. Focus on Minor Improvements . Risk factors associated with high costs of development often lead to minor improvements over substantive product changes. Discussion Note: While minor improvements help keep products &quot;fresh&quot; to the market, marketers must anticipate that changing consumer needs will limit the competitiveness of too little innovation. Increased Government Regulation . Faster introduction of increasingly complex products often leads to greater regulation as consumers seek assurances that products are tested and safe.
Political Environment This CTR relates to the material on pp. 84-87. Political Environment The political macroenvironmental forces consist of laws, government agencies, and interest groups that seek regulation of business activities to forward their own interests. Business in general, more than other groups, uses lobbying efforts to try and obtain legislation favorable to their competitive interests. Key considerations include: Legislation. Laws generally attempt to protect companies from each other to create more competition that in turn creates more value for the consumer. Laws also aim at protecting consumers from unfair and sometimes dangerous business practices. Laws sometimes seek to protect society as a whole from practices that endanger whole communities or other publicly owned resources such as rivers, forests, and parks. Enforcement . The effect of laws depends upon the emphasis given to enforcing them within the regulatory agency responsible for administering the law. Regulation varies in intensity with political agendas of sitting presidents and budget allocations. Public interest groups too affect the degree of legislative activity and administrative enforcement. Increased Emphasis on Ethics . At both the grassroots and corporate level, more US companies are showing a greater concern for more ethical conduct and more socially responsible action. Discussion Note: Ethical companies often enjoy better consumer relations and public image. Bottom line contributions can be defensive. For example, when Johnson & Johnson behaved responsibly after the Tylenol poisonings, they did not suffer expensive lawsuits and were able to recapture all of their original market share when the product was re-introduced.
Technological Environment This CTR relates to the material on pp. 87-92. Cultural Environment The key elements of the cultural macroenvironment include: Persistence of Cultural Values. Core beliefs and values are relatively enduring and must be considered by marketers positioning products. For example, product innovations that conflict with core values are unlikely to be adopted. Shifts in Secondary Values. These change over time and change more often than core values and may provide positioning opportunities. Cultural values are expressed in people’s views on the following: View of Themselves. People vary in their emphasis on how important serving themselves is compared to serving others. Personal ambition and materialism have increased significantly over time in the US. View of Others. Recently, there has been a trend toward more altruistic behavior, at least among some segments of the population. Discussion Note: You might link ambition and altruism to baby boomers and baby busters, respectively. It wont’ hold up forever, but might generate class participation. View of Organizations. Most people are willing to work for large companies but also believe that the companies are out for themselves. View of Society. Trends like “Buy American” are reflects of this view. View of Nature. This trend has changed over the last few decades from dominate and control to coexist and preserve. View of Universe. Linked in the US to religious observance, this trend has seen an overall decline among most and a simultaneous passionate activism among a small, but powerful group, usually called the “religious right.”
18647056 Marketing Management
Marketing Management “ We must learn to do before we learn by doing”
How to measure an Organisations SUCCESS ???? <ul><li>Customer Satisfaction ?? </li></ul><ul><li>Employee Satisfaction ?? </li></ul><ul><li>Societal Satisfaction ?? </li></ul><ul><li>Financially led objectives Vs Market led objectives </li></ul>
Coca Cola – as a Product <ul><li>What is the market for this product? </li></ul><ul><li>• Who is the producer? </li></ul><ul><li>• How many sales were there? (How many returns?) </li></ul><ul><li>• What are the substitutes for this product? </li></ul><ul><li>• What is the cost of buying this product? </li></ul><ul><li>• What are consumers needs? </li></ul><ul><li>• How could the producer identify consumers’ needs & wants? </li></ul>
Things that you need to learn… <ul><li>Introduction to marketing / overview of basic issues / core concepts </li></ul><ul><li>• How do you make a product more attractive to consumers? </li></ul><ul><li>• Methods for gathering market information </li></ul><ul><li>• How do consumers decide what to buy?; What motivates them to choose one product over another?; What are some “secret strategies to fool with people’s minds and make them buy stuff”? </li></ul><ul><li>• What effect does advertising have on consumers? </li></ul><ul><li>• How do you determine the right price? </li></ul><ul><li>• Using the web as a marketing tool </li></ul><ul><li>• How do I choose the right location for a store? </li></ul>
How business and marketing are changing <ul><li>Changing technology (i.e. internet) </li></ul><ul><li>Globalization (i.e. chinese products) </li></ul><ul><li>Deregulation (i.e. fly market) </li></ul><ul><li>Privatization (i.e. Poste Italiane) </li></ul><ul><li>Customer empowerment (i.e. associations, laws, green number) </li></ul><ul><li>Customization (taylor made product and message) </li></ul>
How business and marketing are changing <ul><li>HEIGHTENED COMPETITION – domestic and foreign brands / owerful retailers </li></ul><ul><li>INDUSTRY CONVERGENCE – mergers </li></ul><ul><li>RETAIL TRANSFORMATION – giant retailers and “category killers” </li></ul><ul><li>DISINTERMEDIATION – Amazon, eBay, E’Trade, etc. </li></ul>
Core Marketing Concepts Needs, wants, and demands Products and services Value, satisfaction, and quality Exchange, transactions, and relationships Markets
Does the product provide what customers want???
What is Marketing? <ul><li>Personal Selling? </li></ul><ul><li>Advertising? </li></ul><ul><li>Making products available in stores? </li></ul><ul><li>Maintaining inventories? </li></ul>1 All of the above, plus much more!
What is Marketing? 1 plus A Philosophy An Attitude A Perspective A Management Orientation A Set of Activities, including: Products Pricing Promotion Distribution (Place)
What is Marketing ??? <ul><li>“ identifying and satisfying consumer needs” </li></ul><ul><li>“ art of selling” </li></ul><ul><li>• What needs do the following products fulfill? </li></ul><ul><li>Sachets: </li></ul><ul><li>Rice: </li></ul><ul><li>Energy drinks : </li></ul><ul><li>Diamond Jewellery: </li></ul><ul><li>Chocolate Bars : </li></ul>
Marketing - Definition <ul><li>“ Marketing is an organisational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organisation and the stakeholders” </li></ul><ul><li>American Marketing Association </li></ul><ul><li>“ Marketing is the management process that identifies, anticipates and satisfies CUSTOMER REQUIREMENTS profitably” </li></ul><ul><li> The Chartered Institute of Marketing </li></ul>
<ul><li>“ The Right product , in the right place, at the right time and at the right price” </li></ul><ul><li>Adcock et al </li></ul><ul><li>Marketing is the human activity directed at satisfying human needs and wants through an exchange process </li></ul><ul><li>Kotler 1980 </li></ul>
‘ Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others’ Kotler 1991
Implications of marketing <ul><li>Who are our existing / potential customers? </li></ul><ul><li>What are their current / future needs? </li></ul><ul><li>How can we satisfy these needs? </li></ul><ul><ul><ul><li>Can we offer a product/ service that the customer would value? </li></ul></ul></ul><ul><ul><ul><li>Can we communicate with our customers? </li></ul></ul></ul><ul><ul><ul><li>Can we deliver a competitive product of service? </li></ul></ul></ul><ul><li>Why should customers buy from us? </li></ul>
Nature, Scope & Importance <ul><li>The process begins with identification of customer needs and ends with satisfying them. </li></ul><ul><li>ALL Pervasive </li></ul><ul><li>Involves EXCHANGE </li></ul><ul><li>Vital for Organisations Success </li></ul><ul><li>Marketing focuses on the satisfaction of customer needs, wants and requirements. </li></ul><ul><li>The philosophy of marketing needs to be owned by everyone from within the organization. </li></ul>
<ul><li>Future needs have to be identified and anticipated. </li></ul><ul><li>There is normally a focus upon profitability, especially in the corporate sector. However, as public sector organizations and not-for-profit organizations adopt the concept of marketing, this need not always be the case. </li></ul><ul><li>More recent definitions recognize the influence of marketing upon society. </li></ul>
Scope of Marketing……What is Marketed? <ul><li>Goods </li></ul><ul><li>Services </li></ul><ul><li>Events </li></ul><ul><li>Experiences </li></ul><ul><li>Persons </li></ul><ul><li>Places </li></ul><ul><li>Properties </li></ul><ul><li>Organizations </li></ul><ul><li>Information </li></ul><ul><li>Ideas </li></ul>
What is Marketed? Goods Services Events & Experiences Persons Places & Properties Organizations Information Ideas
Importance <ul><li>Value creating and value delivering process </li></ul><ul><li>Enhances the standard of living </li></ul><ul><li>Generates Employment </li></ul><ul><li>Greater success through customer focus </li></ul>
To sum up……. <ul><li>Marketing is managing profitable customer relationships. </li></ul><ul><li>Goals: </li></ul><ul><li>Attract new customers by promising superior value. </li></ul><ul><li>Keep and grow current customers by delivering satisfaction. </li></ul>
Simple Marketing System Goods/services Money Industry (a collection of sellers) Market (a collection of Buyers) Communication Information
Modern Marketing System Suppliers End User Market Marketing Intermediaries Competitors Company (Marketer) Environment Environment
Marketing at Wendy’s <ul><li>“ At Wendy's®, we're unrivaled in our passion for giving people what they want — and uncompromising in giving people what they deserve” </li></ul>
Wendy’s <ul><li>At Wendy's®, we won't cut corners on anything. Not on fresh, quality ingredients. Not on how we treat people. Not on giving back. And certainly not on being the defender of good taste for people everywhere </li></ul>
Reebok <ul><li>Rbk ‘s new strategy – “To be seen is to sell” </li></ul>
Reebok – as a fashion brand <ul><li>Leading the entertainment change </li></ul><ul><li>Taking the plunge into Celebrity marketing and fashion culture </li></ul><ul><li>Hollywood style of marketing: Woo celebrities to your brand and everyone else will follow </li></ul>
Selling is only the tip of the iceberg “ There will always be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed is to make the product or service available.” Peter Drucker
Marketing Management Philosophies Production Concept Product Concept Selling Concept Marketing Concept Societal Marketing Concept <ul><li>Consumers favor products that are </li></ul><ul><li>available and highly affordable. </li></ul><ul><li>Improve production and distribution. </li></ul><ul><li>Consumers favor products that offer </li></ul><ul><li>the most quality, performance, and </li></ul><ul><li>innovative features. </li></ul><ul><li>Consumers will buy products only if </li></ul><ul><li>the company promotes/ sells these </li></ul><ul><li>products. </li></ul><ul><li>Focuses on needs/ wants of target </li></ul><ul><li>markets & delivering satisfaction </li></ul><ul><li>better than competitors. </li></ul><ul><li>Focuses on needs/ wants of target </li></ul><ul><li>markets & delivering superior value. </li></ul>
Marketing Myopia <ul><li>Sellers pay more attention to the specific products they offer than to the benefits and experiences produced by the products. </li></ul><ul><li>They focus on the “wants” and lose sight of the “needs.” </li></ul>
Marketing Environment <ul><li>The actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful transactions and relationships with its target customers. </li></ul>
Marketing Environment <ul><li>Includes: </li></ul><ul><ul><li>Microenvironment: factors close to the company that affect its ability to serve its customers. </li></ul></ul><ul><ul><li>Macroenvironment: larger societal forces that affect the microenvironment. </li></ul></ul><ul><ul><ul><li>Considered to be beyond the control of the organization. </li></ul></ul></ul>
The Marketing Environment Company Demographic Economic Natural Technological Political Cultural Company Customers Intermediaries Suppliers Competitors Publics
The Company’s Microenvironment <ul><li>The forces close to the company that affect its ability to serve its customers - the company, market channel firms, customer markets, competitors and publics, which combine to make up the firm’s value delivery system. </li></ul>
The Microenvironment Company Customers Publics Suppliers Competitors Intermediaries Forces Affecting a Company’s Ability to Serve Customers
The Company’s Microenvironment <ul><li>Company’s Internal Environment- functional areas such as top management, finance, and manufacturing, etc. </li></ul><ul><li>Suppliers - provide the resources needed to produce goods and services. </li></ul><ul><li>Marketing Intermediaries - help the company to promote, sell, and distribute its goods to final buyers. </li></ul>
The Company’s Microenvironment <ul><li>Customers - five types of markets that purchase a company’s goods and services. </li></ul><ul><li>Competitors - those who serve a target market with similar products and services. </li></ul><ul><li>Publics - any group that perceives itself having an interest in a company’s ability to achieve its objectives. </li></ul>
Customer Markets Company Consumer Markets International Markets Government Markets Business Markets Reseller Markets
The Company’s Macroenvironment <ul><li>The larger societal forces that affect the whole microenvironment - demographic, economic, natural, technological, political and cultural forces. </li></ul><ul><li>The company and all of the other actors operate in a larger macroenvironment of forces that shape opportunities and pose threats to the company. </li></ul>
The Macroenvironment Demographic Technological Cultural Economic Political Natural Forces that Shape Opportunities and Pose Threats to a Company
The Company’s Macroenvironment <ul><li>Demographic - monitors population in terms of age, sex, race, occupation, location and other statistics. </li></ul><ul><li>Economic - factors that affect consumer buying power and patterns. </li></ul><ul><li>Natural - natural resources needed as inputs by marketers or that are affected by marketing activities. </li></ul>
Economic Environment Changes in Consumer Spending Patterns Economic Development Changes in Income Key Economic Concerns for Marketers
Natural Environment Factors Affecting the Natural Environment More Government Intervention Shortages of Raw Material Increased Costs of Energy Higher Pollution Levels
The Company’s Macroenvironment <ul><li>Technological - forces that create new product and market opportunities. </li></ul><ul><li>Political - laws, agencies and groups that influence or limit marketing actions. </li></ul><ul><li>Cultural - forces that affect a society’s basic values, perceptions, preferences, and behaviors. </li></ul>
Technological Environment Rapid Pace of Change High R & D Budgets Focus on Minor Improvements Increased Regulation Issues in the Technological Environment
Political Environment Greater Concern for Ethics Increased Legislation Changing Enforcement Key Trends in the Political Environment
Cultural Environment Of Organizations Of Nature Of Oneself Of Society Of the Universe Of Others Views That Express Values