Week2a Environment 121005000839 Phpapp02

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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

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Week2a Environment 121005000839 Phpapp02

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