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Understanding the Macroand Micro Environment
See Past Exam Papers for SampleQuestions
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Learning outcomes
Elements of the marketing environment
Macro and Micro environmental analysis
Understanding Consumer BuyerBehaviour
Understanding Industrial Buyer Behaviour
Defining and analysing competitive forces
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The Macro
Marketing
Environment
Copyright: SouthwesternPublications 2006
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1. The Competitive Environment
Competitive EnvironmentCompetitive Environment:competitive products, substituteproducts for one another, companies
competing for your consumerspurchasing power.Monopoly examples in Ireland?
Deregulation movement - exOligopoly - ex
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DirectCompetitiveProducts
Which would you
buy?
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Indirectly Competitive Products
products than can be substituted forone another
Plastic Containers vs. Glass vs. Tin vs.Aluminum
Sugar vs. Artificial Sweeteners Typewriter vs. PC
Ocean Liner Vs. Air Travel
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Developing a CompetitiveDeveloping a Competitive
StrategyStrategyShould we compete?
If so, in what markets should wecompete?
How should we compete?
Involves:Researching the market
Identifying current &potentialcompetitors
Anticipating competitive actions
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2. Political-Legal Environment
Component of the marketingenvironment consisting of laws andinterpretations of laws that require
firms to operate under competitiveconditions and to protect consumerrights.
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Deregulation
IncreasesCompetitiveness
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Regulatory Forces
Government :Consumer SafetyCommission, IFSRA,Environmental
Protection Agency,Health and Safety etc
Consumer interestgroups
PETA
Special-interest groups ISME
Self-regulatory groups Advertising
Companies fightunjust regulations
Regulations canpresent new
opportunities Political lobbying
Boycotts
Political actioncommittees
Controlling the PL
Environment
Is Horticulture industry regulated?
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3. The Economic Environment
Factors influencing consumer buyingpower and strategies (stage of thebusiness cycle, inflation,
unemployment, resources, incomeetc)
The Wealth effect (Ireland)
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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 Europeanaverage
Source: Fact
Finders 2006
Fastest Growing Market for
New Car Eastern Europe
(Latvia 49% increase on 2005)
During prosperous times carmanufacturers will add luxury
extras
The Wealth
Effect
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Inflation and DeflationInflation and Deflation
Inflation: The devaluation of money byreducing what it can buy throughcontinued price increases. (Ireland)
Deflation: Falling prices
* 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%).
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UnemploymentUnemployment
The proportionof people in
the economywho do nothave jobs andare activelylooking forwork.
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IncomeIncomeDiscretionary income: the amount of
money people have to spend after
paying bills and necessities.
Resource AvailabilityResource AvailabilityDemarketing: reducing consumer
demand for a good or service to a levelthat the firm can supply.
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4. The Technological Environment
The technologicalenvironment:application of
knowledge inscience,inventions, andinnovations to
solve problems
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Toyota PriusHeating
Technologies
Technology Advances Consumer Needs
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Technology increases exponentially
New technology as a key to long-termcompetitive advantage
create more efficient operation or betterproducts
may render existing products obsolete
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5. The Social-Cultural Environment
The relationshipbetween marketingand society and its
culture
Issues:
Obesity inChildren
Negative Body
Images Video Games
Healthy Eatingetc ..
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Cultural Environment: Elements of
Culture
1. Language
2. Manners & Customs
3. Technology & Material Culture
4. Social Institutions business, family,political- Latin America
5. Education transmitting values, skills,attitudes etc
6. Aesthetics attitude toward beauty, art,music etc
7. Religion
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Worlds Religions
Christianity - 2.0 billion followers
Islam - 1.2 billion followers
Hinduism - 860 million followers
Buddhism - 360 million followers
Confucianism - 150 million followers
Religion can affect marketing strategy
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Social Environment: Role of Families
and Working Women
Working women has had a greater effecton marketing than any other social change
Increases in females in the workforce
Purchasing power from dual-careerfamiliesis rising
Cost is more important to women.Quality is more important to men.
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Population Considerations
Concerned with the study of the quantifiableaspects of population structures,e.g., age,gender, size, race, occupation and location.
Some factors to consider: falling birth-rates
the rise of the mature market segment
the household of one
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Demographic Factors
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Generation Y: Born between 1979 and1994, size = marketing impact, fickle andskeptical group, technos
Generation X: Born between 1965 and1978, time premium, majority havechildren and houses, savvy and cynicalconsumers
Baby Boomers: Born between 1946 and1964
Younger Boomers (ages 41 to 49)Home is the castle, spend on kids
Older Boomers (ages 50 to 59)
Spend on home upgrades & Holidays
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Growing Ethnic and Community
Markets
Irish population is becoming multiculturalsociety and workforce
Growth in spending power in: Eastern European PopulationsAfrican PopulationsAsian Populations
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PinkPound
-Dorothy
Dollar
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6. Natural Forces
Conserve natural habitats,resources, endangered species
Minimise environmental impact Sustainable resource use
Recycle
Energy efficient productsThe Polluter Pays Principle
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The Micro Environment
Customers: needs, wants and providing benefits fortheir customers. Failure = failed business strategy.
Employees: correct and motivated staff is essential tostrategic planning. Training and development, service
sector, competitive edge. (Cereality) Suppliers: Price of raw material affect the marketing
mix. Closer supplier relationships benefit strategy. Shareholders: inward investment for growth.
Satisfying shareholder needs can cause a change in
strategy. (Sharwoods+internet companies, Birds Eye) Media: Positive or adverse attention. Consumer
programs
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Consumer Buyer Behaviour
Chapter 5 of book Talk about 3 consumer roles Consumer is a
user, a payer and a buyer;
User concerned about product features and theuses they can be put to (JML ads on TV)Payer concerned about price and credit dealsavailable (0% down, 0% until)Buyers concerned with logistics of procuring the
product (order by certain date for deliverybefore)
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Consumer Buyer Behaviour
Consumer Needs & Wants
Needs are unsatisfactory conditions of theconsumer that prompt them to an action that willmake the condition better
Wants are desires to obtain more satisfactionthan is absolutely necessary
Food vs. Gourmet Food, Car vs. Porsche etc
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Consumer Behaviour-Psychology
The perception of a consumer about a certainservice/product is what matters.
Learning also features in consumer behaviour.Especially for a complex purchase.
Motivation is defined as a state of drive thatimpels behaviour towards a goal-object.
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Maslows Hierarchy of Needs
Abraham Maslow described motivation as ameans of satisfying human needs.
1. Physiological Needs Food, shelter
2. Safety & Security Needs car safety, fire safety
3. Belongingness & Love Needs Teenagers clothes
4. Esteem & Ego Needs Self Gift Giving
5. Need for Self Actualization Engage in self
improvement activities
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Psychographics:Describing Consumer
Behaviour
Psychographics is a facet of motivation andexplains how a person acts during theconsumption phase.
The way they act is guided by a persons:ValuesSelf ConceptLifestyleVALS values & Lifestyles
Attitudes
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Individual Consumer Decision Making process
Step 1: Problem Recognition Step 2: Information Search Step 3: Alternative Evaluation
Step 4: Purchase Step 5: Post purchase Experience
Chap 5 of Book
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Industrial Buyer Behaviour
Who says that you will always market to anindividual??
The decision-making process by which formal
organisations establish the need for purchasedproducts and services, and identify, evaluate, andchoose among alternative brands and suppliers
Kotler and Armstrong 1989
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Industrial Buyer Behaviour
The process can be summarised as follows
- Problem Recognition- Need Description
- Product Specification- Supplier Search
- Supplier Selection - Purchase Routine Specification - Performance Review
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Analyzing Competitive Forces
Check Chapter 4 of Book, from pg 117
Competitor ResearchAuditing Current Competitors
Auditing Potential New Competitors
See in chapter 4 a competitor Analysis Template