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Chapter 3 Micro Environment

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Chapter 3- slide 1 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three The Marketing Environment Micro Environment
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Page 1: Chapter 3 Micro Environment

Chapter 3- slide 1Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

Chapter Three

The Marketing Environment –

Micro Environment

Page 2: Chapter 3 Micro Environment

Chapter 3- slide 2Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

The Marketing Environment

The marketing environment includes the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers

Page 3: Chapter 3 Micro Environment

Chapter 3- slide 3Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

The Marketing Environment

Microenvironment consists of the actors close to the company that affect its ability to serve its customers -- the company, suppliers, marketing intermediaries, customer markets, competitors, and publics

Page 4: Chapter 3 Micro Environment

Chapter 3- slide 4Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

The Company’s Microenvironment

• Top management

• Finance

• R&D

• Purchasing

• Operations

• Accounting

The Company

Page 5: Chapter 3 Micro Environment

Chapter 3- slide 5Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

The Company’s Microenvironment

• Provide the resources to produce goods and services

• Treated as partners to provide customer value

Suppliers

Page 6: Chapter 3 Micro Environment

Chapter 3- slide 6Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

The Company’s Microenvironment

• Help the company to promote, sell and distribute its products to final buyers

Marketing Intermediaries

Page 7: Chapter 3 Micro Environment

Chapter 3- slide 7Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

The Company’s MicroenvironmentTypes of Marketing Intermediaries

Page 8: Chapter 3 Micro Environment

Chapter 3- slide 8Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

•Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers.

•Physical distribution firms help the company to stock and move goods from their points of origin to their destinations.

•Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets.

•Financial intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods.

Page 9: Chapter 3 Micro Environment

Chapter 3- slide 9Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

The Company’s Microenvironment

• Firms must gain strategic advantage by positioning their offerings against competitors’ offerings

Competitors

Page 10: Chapter 3 Micro Environment

Chapter 3- slide 10Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

The Company’s Microenvironment

• Consumer markets

• Business markets

• Reseller markets

• Government markets

• International markets

Customer

Page 11: Chapter 3 Micro Environment

Chapter 3- slide 11Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

•Consumer markets: individuals and households that buy goods and services for personal consumption.

•Business markets: buy goods and services for further processing or for use in their production process.

•Reseller markets: buy goods and services to resell at a profit.

•Government markets: made up of government agencies that buy goods and services to produce public services.

International markets: buyers in other countries, including consumers, producers, resellers, and governments.

Page 12: Chapter 3 Micro Environment

Chapter 3- slide 12Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

The Company’s Microenvironment

• Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives– Financial publics– Media publics– Government publics– Citizen-action publics– Local publics– General public– Internal publics

Publics

Page 13: Chapter 3 Micro Environment

Chapter 3- slide 13Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

• Financial publics influence the company’s ability to obtain funds.

• Media publics carry news, features, and editorial opinion.

• Government publics. Management must take government developments into account.

• Citizen-action publics. A company’s marketing decisions may be questioned by consumer organizations, environmental groups, etc.

Page 14: Chapter 3 Micro Environment

Chapter 3- slide 14Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

• Local publics include neighborhood residents and community organizations.

• General public. The general public’s image of the company affects its buying.

• Internal publics include workers, managers, volunteers, and the board of directors.

Page 15: Chapter 3 Micro Environment

Chapter 3- slide 15Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Market structures

• Monopoly.

• Oligopoly.

• Monopolistic competition.

• Perfect competition.

Page 16: Chapter 3 Micro Environment

Chapter 3- slide 16Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Market structures (1 of 4)

Monopoly:

• Where one supplier has sole control over a market and there is no competition.

• Where there is a captive market with no alternative source of supply.

• A strong positive image, good customer service, and fair pricing are essential.

Page 17: Chapter 3 Micro Environment

Chapter 3- slide 17Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Market structures (2 of 4)

Oligopoly:

• Where a small number of companies account for a large share of the market.

• Where a certain amount of interdependence exists between the key players.

• Oligopolists spend time watching each other.

• example: telecommunication, gas / fuel, water/electrical

Page 18: Chapter 3 Micro Environment

Chapter 3- slide 18Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Market structures (3 of 4)

Monopolistic competition:

• Many competitors in market.

• Each has differentiated products (ie. the products are substitutes, but are not exactly alike).

• examples include the markets for restaurants, cereal, clothing, shoes and service industries in large cities

Page 19: Chapter 3 Micro Environment

Chapter 3- slide 19Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Market structures (4 of 4)

Perfect competition:

• Involves many small producers all supplying identical products that can be substituted for each other.

• Producers do not influence or determine price.

• There are no barriers to market entry or exit.

• Buyers and sellers have complete information about what is happening.

Page 20: Chapter 3 Micro Environment

Chapter 3- slide 20Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

SWOT analysis

• Internal strengths and weaknesses of the organisation and compare these with the external opportunities and threats.

Page 21: Chapter 3 Micro Environment

Chapter 3- slide 21Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Page 22: Chapter 3 Micro Environment

Chapter 3- slide 22Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Scanning business environment

• SWOT analysis– SWOT analysis is a tool for auditing an

organisation and its environment– It is the first stage of planning and helps markets

to focus on key issues– SWOT stands for strengths, weaknesses,

opportunities, and threats.

– Strengths and weaknesses are internal factors.– Opportunities and threats are external factors.

Page 23: Chapter 3 Micro Environment

Chapter 3- slide 23Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Swot analysis

Internal

Page 24: Chapter 3 Micro Environment

Chapter 3- slide 24Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Swot analysis• The internal analysis is a comprehensive evaluation of the internal

environment’s potential strengths and weaknesses.

– Company culture– Company image– Organisational structure– Key staff– Access to natural resources– Position on the experiences curve– Operational efficiency– Operational capacity– Brand awareness– Market share– Financial resources– Exclusive contracts– Patents and trade secrets

Page 25: Chapter 3 Micro Environment

Chapter 3- slide 25Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Swot analysis

• For example:– Strength could be..

• Your specialist marketing expertise• A new, innovative product or services• Location of your business• Quality processes• Any other aspect of your business that adds

value to your product or services.

Page 26: Chapter 3 Micro Environment

Chapter 3- slide 26Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Swot analysis

• For example:– weaknesses could be..

• Lack of marketing expertise• Undifferentiated products or services (in

relations to your competitors)• Location of your business• Poor quality goods and services• Damaged reputation

Page 27: Chapter 3 Micro Environment

Chapter 3- slide 27Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Swot analysis

External

Page 28: Chapter 3 Micro Environment

Chapter 3- slide 28Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Swot analysis

• An opportunity is the chance to introduce a new product or service that can generate superior returns.

• Opportunities can arise when changes occur in the external environment.

• Many of these changes can be perceived as threats to the market position of existing products.

Page 29: Chapter 3 Micro Environment

Chapter 3- slide 29Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Swot analysis• Changes in the external environment may be related

to:– Customers– Competitors– Market trends– Suppliers– Partners– Social changes– New technology– Economic environment– Political and regulatory environment

Page 30: Chapter 3 Micro Environment

Chapter 3- slide 30Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Swot analysis

• For example:– Opportunities could be:

• A developing market such as the internet.• Mergers, joint ventures or strategic alliances• Moving into new market segments that offer

improved profits• A new international market• A market vacated by an ineffective competitor

Page 31: Chapter 3 Micro Environment

Chapter 3- slide 31Copyright © 2010 Pearson Education, Inc.  Publishing as Prentice Hall

Swot analysis

• For example:– Threats could be:

• A new competitor in your home market• Price wars with competitors• A competitor has a new, innovative product or

service• Competitors have superior access to channels of

distribution• Taxation is introduced on your product or

services


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