MK7246 Marketing in the Digital Age Marketing Environment Dr. Rula Al Abdulrazak Royal Docks School of Business and Law University of East London

Today Understand the marketing environment Analyse marketing environment Discuss global market challenges

Global Market Challenges 3 Diverse and multi-cultural markets Widespread and fragmented markets Data difficult to obtain and often expensive Political risks as regimes vary in stability Government regulations trade and FDI Varying levels of economic development and unstable currencies Many differing finance systems and regulatory bodies Diverse & unfamiliar commercial and host country stakeholders Diverse and culturally influenced business rules Difficult to control & coordinate business across markets Economic shift between the west and the east BRIC Changing economic integrations and trade agreements

Marketing Environment 4 Comprised of actors and forces affecting marketing management’s ability to develop and maintain successful relationships with their target customers. The micro-environment incorporates the forces close to the company that affect its ability to serve its customers The macro-environment includes the larger societal forces

The Organisation’s Marketing Environment 5 The marketing environment consists of the actors and forces that affect a company’s capability to operate effectively in providing products and services to its customers.

How to examine the Environment 6 Micro Structure of the industry What business should we be in? How should we compete? Macro Political, economic, socio-cultural, technological

Micro- Environment 7 - SWOT - Porter on Business Strategy and beyond Five competitive forces Intensity of industry competition Bargaining power of buyers Bargaining power of sellers Degree of substitutes Entry/exit barriers Porter, Competitive Strategy (1980)

(2)Strategic Market Analysis 8 What do we do well? What do others see as our strengths ? What advantages do we have over our competitors ? E.g. great project management skills What do we do well? What do others see as our strengths ? What advantages do we have over our competitors ? E.g. great project management skills What are your competitors doing? What obstacles face your business? E.g. Speed of technological advances What are your competitors doing? What obstacles face your business? E.g. Speed of technological advances Customer lifestyle changes Technology E.g. emerging markets, new distribution channels, communication technologies – consumer experience, etc. Customer lifestyle changes Technology E.g. emerging markets, new distribution channels, communication technologies – consumer experience, etc. What causes problems or complaints ? Do we have skilful members of staff to create value ? What should be avoided? E.g. Few project management skills What causes problems or complaints ? Do we have skilful members of staff to create value ? What should be avoided? E.g. Few project management skills

Industry Analysis: Porter’s Five Forces 9 Porter explaining the Five ForcesPorter explaining the Five Forces video Porter’s five forces (1980):

Co-opetition 10 It is not enough to succeed. Others must fail War is used as a metaphor for business You don’t have to blow out the other fellow’s lights to let your own shine Relationship Marketing (Brandenburger and Nalebuff, 1996)

Macro (PEST) Factors 11 Political ‘ Globalization of markets’ and anti-globalization protests Regional blocs Laws Consumer protection legislation Self-regulation Economic –‘National’ economic conditions of development and growth –GDP per capita

PEST Socio-cultural Aging population Family (re)structuring Safety Workforce changes Wealth accumulation Environmentalism Technological - Making products - Creates new products and Opportunities - Communication and sales outlets 12

Is language Easily Translated? Japanese hotel notice to hotel guests: “You are invited to take advantage of the chambermaid”. Acapulco hotel notice regarding drinking water: “The manager has personally passed all the water served here” Visitors to a zoo in Budapest were asked: “Not to feed the animals. If you have any suitable food, give it to the guard on duty” A Bangkok dry cleaner to potential customers: “Drop your trousers here for best results” An Italian laundry innocently suggested: “Ladies leave your clothes here and spend the afternoon having a good time” 29

What is Culture? 15 “The collective programming of the mind which distinguishes the members of one human group from another…Culture, in a sense, includes systems of values; and values are among the building blocks of culture” Hofstede (1980) “The sum total of learned beliefs, values and customs that serve to direct customer behaviour in a particular country market” Doole and Lowe (2008)

The Interaction of Culture and Consumer Behaviour 15

Value 16 Achievement & success Efficiency & practicality Progress Material comfort Individualism External conformity Youthfulness Features Relevance to behaviour Cultural Values & their Relevance to Consumer Behaviour

Cultural Values & their Relevance to Consumer Behaviour Source: Schiffman, L.G. & Kanuk, L. L. (2000) ValueFeaturesRelevance to behaviour Achievement & successSuccess flows from hard workJustification for acquisition of goods Efficiency & practicality Progress Material comfort Individualism External conformity Youthfulness 17

Cultural Values & their Relevance to Consumer Behaviour Individualism External conformity Youthfulness The ‘good life’ Being oneself Uniformity of observable behaviour State of mind that stresses Source: Schiffman, L.G. & Kanuk, L. L. (2000) ValueFeaturesRelevance to behaviour Achievement & successSuccess flows from hard workJustification for acquisition of goods Efficiency & practicality Progress Material comfortMaterial comfort Admiration of things that solve problems People can improve themselves being young at heart 18

Cultural Values & their Relevance to Consumer Behaviour Material comfortMaterial comfort Individualism External conformity Youthfulness The ‘good life’ Being oneself Uniformity of observable behaviour State of mind that stresses Ready acceptance of ‘new’/‘improved’ products Fosters acceptance of convenience/ luxury products Stimulates acceptance of customised or unique products Stimulates interest in products used by others Stimulates acceptance of products that Source: Schiffman, L.G. & Kanuk, L. L. (2000) ValueFeaturesRelevance to behaviour Achievement & successSuccess flows from hard workJustification for acquisition of goods Efficiency & practicality Progress Admiration of things that solve problems People can improve themselves Stimulates purchase of well functioning products being young at heartpromote youthfulness 19

The Contextual Continuum of Cultures 20 Hall (1959) Cultural Dimension, High Context vs. Low Context

Sensuality and touch culture in Saudi Arabian versus European advertising Drakkar Noir: Sensuality and touch culture in Europe and Saudi Arabia Source: Field (1986)

Company and Market Fit Marketing environments and cultures are dynamics and changes can be gradual or sudden. Regular scanning of the environment is essential to provide managers with accurate information for more effective decisions. Ignorance or delay in response can affect the sustainability of the business. Do you remember AOL? Superficial reaction (e.g. retrenchment) is about efficiency and not effectiveness. They are short-term techniques that may delay failure but do not achieve growth. Response to change whether gradual or radical need to be strategic, that is it reflects the change and plan not just to survive but to grow in the long term with clear strategic direction. Being proactive and able to predict future changes or lead them is what iconic brands can achieve and change lifestyle and cultures e.g. McDonald.

Case study analysis Read the case study of Coca Cola v. Pepsi Think about the answers Discuss with your group Report your responses to the class and discuss