Lt3 -analys externalenv

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Lt3 -analys externalenv

  1. 1. External Environment in the Asia Pacific Region Asia-Pacific Marketing Federation Certified Professional Marketer Copyright Marketing Institute of Singapore
  2. 2. Outline <ul><li>Introduction </li></ul><ul><li>The Company’s Microenvironment </li></ul><ul><li>The Company’s Macroenvironment </li></ul><ul><li>The Competitors </li></ul><ul><li>Porter's Five Forces Model </li></ul>
  3. 3. Introduction <ul><li>Definition: </li></ul><ul><li>The Company’s environment consists of &quot;the actors and forces outside marketing that affect marketing management's ability to develop and maintain successful transactions with its target customers&quot; Kotler et al, 1994 </li></ul>
  4. 4. Introduction (cont’d) <ul><li>Companies must evaluate both micro and macro-environment to identify </li></ul><ul><ul><li>any trends that may affect their marketing strategies, and </li></ul></ul><ul><ul><li>opportunities that can be developed into competitive advantages </li></ul></ul><ul><li>Porter's Five Forces model analyses market structures to determine market attractiveness taking into consideration the micro and macro environments in its construction </li></ul>
  5. 5. Company’s Microenvironment <ul><li>Relates to the internal forces or forces close to the company over which some control is possible </li></ul><ul><li>Top management </li></ul><ul><li>Other functions e.g. finance and accounting, R& D, manufacturing and purchasing </li></ul><ul><li>Suppliers </li></ul><ul><li>Marketing intermediaries (channel partners) </li></ul><ul><li>Customers </li></ul><ul><li>Competitors </li></ul><ul><li>Public </li></ul>
  6. 6. Company’s Macro-environment <ul><li>Relates to the larger forces having an impact on society as a whole </li></ul><ul><li>A company has little influence on these forces and therefore can only adapt its marketing mix to account for the resulting opportunities and threats </li></ul>
  7. 7. Major forces of the macro-environment <ul><li>Demographic </li></ul><ul><li>Economic </li></ul><ul><li>Natural </li></ul><ul><li>Technological </li></ul><ul><li>Cultural </li></ul><ul><li>Political/legal </li></ul>
  8. 8. Demographic Environment <ul><li>Demographic trends: </li></ul><ul><li>Changing age structure </li></ul><ul><li>Changing family structure </li></ul><ul><li>Geographic shifts in population </li></ul><ul><li>Higher education level & more white collar job holders </li></ul><ul><li>Increasing globalization of cities such as Singapore </li></ul>
  9. 9. Economic Environment <ul><li>Economic trends affecting consumers buying power and spending pattern </li></ul><ul><li>Change in per capital real income </li></ul><ul><ul><li>Disposable </li></ul></ul><ul><ul><li>Discretionary </li></ul></ul><ul><ul><li>Income distribution </li></ul></ul><ul><li>Savings & debt </li></ul><ul><li>Consumer expenditures </li></ul><ul><li>Change in interest rates and cost of living </li></ul>
  10. 10. Natural environment <ul><li>Natural trends include those natural resources used in production or those affected by marketing activities </li></ul><ul><li>Raw material shortages </li></ul><ul><li>Increase in energy cost </li></ul><ul><li>Increase pollution levels </li></ul><ul><li>Increase in Governmental intervention in natural resource management </li></ul>
  11. 11. Technological Environment <ul><li>Consists of forces that affect new technology, new product development and market opportunities </li></ul><ul><li>Faster pace of technological change </li></ul><ul><ul><li>Shorter PLC </li></ul></ul><ul><li>Higher R&D budgets </li></ul><ul><li>Concentration on minor improvements </li></ul><ul><li>Increased regulations </li></ul>
  12. 12. Cultural Environment <ul><li>Affect society's basic values, perceptions, preferences and behaviors </li></ul><ul><li>Core cultural values and beliefs </li></ul><ul><li>Secondary cultural values </li></ul><ul><li>Sub cultures </li></ul>
  13. 13. Legal and Political Environment <ul><li>Trends in the legal and political environment include </li></ul><ul><li>Increased legislation regulating business </li></ul><ul><ul><li>Singapore’s Fair Trading Act (impending) </li></ul></ul><ul><li>Changing government agency enforcement </li></ul><ul><li>Growth of public interest groups </li></ul><ul><li>Regional groupings </li></ul><ul><ul><li>ASEAN FTZ </li></ul></ul>
  14. 14. Competitive Analysis <ul><li>Who are your competitors? </li></ul><ul><li>Do you know about your close competitors’ strengths and weaknesses? </li></ul><ul><li>How detail should we analyze the competition? </li></ul><ul><ul><li>Use a systematic approach </li></ul></ul><ul><ul><li>Analysis competition at various levels (next slide) </li></ul></ul>
  15. 15. Levels of Competition Generic Competition Form Competition Industry Competition Brand Competition
  16. 16. Levels of Competition (cont’d) <ul><li>Generic competition—e.g. Honda against Silver Sea Cruise for the same consumer dollars </li></ul><ul><li>Form competition—e.g. Toyota against manufacturers of other vehicles that provide the same service such as Yamaha (motorcycle) </li></ul><ul><li>Industry competition—e.g. Honda against Mercedes, Lexus etc who make the same products or class of products (different prices) </li></ul><ul><li>Brand competition—e.g. Honda against Toyota, Nissan etc. who offer similar products and service to the same customers at similar prices </li></ul>
  17. 17. Industry Competition <ul><li>Different industries can sustain different levels of profitability; partly due to the difference in industry structure </li></ul><ul><li>Porter’s Model of Industry Competition, commonly know as Porter’s Five Forces provides a framework for analyzing the influence of the forces on the industry to determine the industry’s profitability and competitiveness </li></ul>
  18. 18. Porter’s Model of Industry Competition Industry degree of rivalry Buyers Suppliers Barriers to Entry Substitutes (Source: Aakers pp.8487)
  19. 19. Porter’s 5 Forces— Barriers to Entry <ul><li>Absolute cost advantages </li></ul><ul><li>Proprietary learning curve </li></ul><ul><li>Access to inputs </li></ul><ul><li>Government policy </li></ul><ul><li>Economies of scale </li></ul><ul><li>Capital requirements </li></ul><ul><li>Brand identity </li></ul><ul><li>Switching costs </li></ul><ul><li>Access to distribution </li></ul><ul><li>Expected retaliation </li></ul><ul><li>Proprietary products </li></ul>(Source: Michael Porter, “On Competition”)
  20. 20. Threats of Substitutes <ul><li>Switching costs </li></ul><ul><li>Buyer propensity to substitute </li></ul><ul><li>Relative price performance of substitutes </li></ul>(Source: Michael Porter, “On Competition”)
  21. 21. Buyer Power <ul><li>Bargaining leverage </li></ul><ul><li>Buyer volume </li></ul><ul><li>Buyer information </li></ul><ul><li>Brand identity </li></ul><ul><li>Price sensitivity </li></ul><ul><li>Threat of backward integration </li></ul><ul><li>Product differentiation </li></ul><ul><li>Buyer concentration vs. industry </li></ul><ul><li>Substitutes available </li></ul><ul><li>Buyers' incentives </li></ul>(Source: Michael Porter, “On Competition”)
  22. 22. Supplier Power <ul><li>Supplier concentration </li></ul><ul><li>Importance of volume to supplier </li></ul><ul><li>Differentiation of inputs </li></ul><ul><li>Impact of inputs on cost or differentiation </li></ul><ul><li>Switching costs of firms in the industry </li></ul><ul><li>Presence of substitute inputs </li></ul><ul><li>Threat of forward integration </li></ul><ul><li>Cost relative to total purchases in industry </li></ul>(Source: Michael Porter, “On Competition”)
  23. 23. Degree of Rivalry <ul><li>Exit barriers </li></ul><ul><li>Industry growth </li></ul><ul><li>Industry concentration ratio </li></ul><ul><li>Fixed costs/Value added </li></ul><ul><li>Product differentiation </li></ul><ul><li>Buyers' incentives </li></ul>(Source: Michael Porter, “On Competition”)

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