Post on 03-Jun-2018
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BHO1171 - School of HTM - VU
THE MARKETING ENVIRONMENT
OBJECTIVES
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
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The Operating Environment
The marketing environment does not actuallyform part of the marketing process, however theenvironmental factors influence most aspects of
the marketing process
Business firms are open systems, which means
that outside factors impact on businessoperations
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Definition
A Company's marketing environment consists of theactors and forces that are external to the marketingmanagement function of the firm and that impinge onthe marketing managements' ability to develop andmaintain successful transactions with its target
customers. (Kotler).
Marketing Environment = Opportunities and threats.
Environment = Micro and Macro.
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The Firms Environment
The environment of a company consists of a large
range of factors and influences that may impact on itsability to serve its customers and survive in the longterm.
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 bythe marketing firm
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The Firms Internal Resources
The firms micro environment includes:
Production
Financial capability
Human resources Companys location and image
Research and Development capability
Important to have coordination between marketing
and these non-marketing resources
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Actors in Microenvironment- figure
3.1
Suppliers
Company
Competitors
Marketing
Inter-
mediaries
Customers
Publics
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Internal Environment- Figure 3.2Marketing
Manufacturing
Finance
R & D
Accounting
Purchasing
SeniorManagement
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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 quality
Buyers & Facilitating organisations Those that distribute the firms 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 controll able by a firm?
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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 firms activities may be constantlyaffected 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
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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 firms perform?
Why would the media be interested?
Why would the Government be interested (regulations)
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Types of Customer Markets
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Types of Publics
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Macro-environment
Macro-environment consists of larger forces thatinfluence the company's operations
Social & Cultural forces
Demographics
Technology Economics
Political
Natural & Physical
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Major Forces in the organisations
Macro Environment
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MACRO-ENVIRONMENTAL FORCES
Cannot be controlled
External forces influence organisational plans.
Often totally unpredictable.
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MACRO-ENVIRONMENTAL FORCES
CASE STUDY
1 S11 and airlines and tourism 2001
2 Arnotts Biscuits - 1996
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Demographic Environment
GeographicShifts
Education
GrowingEthnicDiversity
ChangingFamily
Structure
AgeStructures
KeyDemographicTrends
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DEMOGRAPHICS
Description 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 workforce
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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 aretheir changing needs &
wants
What are the implications of
changing household structure,
ethnic diversity?
Movement of population
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THE ECONOMIC ENVIRONMENT
Inflation and interest rates
Unemployment
Economic Cycle
Markets require purchasing power as well as people.
Purchasing Power = f (income, prices, savings, creditcosts, etc.)
It is often unclear what impact the economy will have
on a single industry. Good times do not necessarilyhelp all businesses.
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Natural Environment
Key Areas
of Concernin the NaturalEnvironment
Shortage ofRaw Materials
IncreasedPollution
GovernmentIntervention
EnergyCosts
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THE NATURAL or PHYSICAL
ENVIRONMENT
Marketers should be aware of the threats and opportunities withfour 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 resourcemanagement.
Others to be aware of are:
natural phenomena that affects their markets, greenhouse effect,
solid waste problem (eg: McDonald's move away frompolystyrene packaging),
h l i l i
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Technological Environment
Fast Pace of
Change
High R & D
Budgets
Focus on MinorImprovements
IncreasedRegulation
Issues in the
TechnologicalEnvironment
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THE TECHNOLOGICAL ENVIRONMENT
Determines the type of products that can be madeavailable 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 yearsago:
New developments - new markets but destroy existingones.
Product development, prices, promotions, packagingand distribution are all directly influenced bytechnology.
Political Environment
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Political Environment
Greater
Concern for
Ethics
Legislation EnforcementKey
Trends in thePolitical
Environment
O CA O
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THE POLITICAL ENVIRONMENT
(includes legal framework) Inequities develop when the economic and social
systems are left to their own devices. Governmentintervenes and represents the wants and needs ofcitizens 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
Shift i S d C lt l V l
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Shift in Secondary Cultural Values
Of
Organizations
Of
Nature
OfOneself
OfSociety
Of
the Universe
Of
Others
PeoplesViews
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SOCIAL & CULTURAL ENVIRONMENT
Beliefs, values, norms of behaviour
Cultural patterns are changing faster
Attitudes, perceptions and behaviour patterns
Subcultures
Subcultures display different consumption behaviour:ethnic groups
older generations
women
gay communitychildren
religious groups
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COLLECTING DATA ON YOUR OPERATING
ENVIRONMENT
Many companies collect data on the environment as amatter of course. Some areas of interest being
resource availability
recent and pending legislation
what competitors are doing
technological changes.
STATE AND FEDERAL LEGISLATION THAT
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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
Food Safet Act