marketing environment Topic 2 marketing environment

learning objectives_1 Importance of the external environment to marketing decision-making Scanning the environment as a means of early identification of opportunities and threats 2-2 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

learning objectives_2 The European marketing environment Factors that affect the marketing environment Influences at work within each of those categories and their implications for marketing 2-3 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Marketing environment Comprised of actors and forces affecting marketing management’s ability to develop and maintain successful relationships with its target customers. 2-4 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Environmental Scanning Defined Environmental Scanning is the collection and evaluation of information from the wider marketing environment that might affect the organisation and its strategic marketing activities 2-5 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

COMPONENTS OF THE MARKETING ENVIRONMENT (pg. 16/7 Textbook) Micro-environment Macro-environment Internal environment 2-6 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

2-7 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Figure 1.2 The Micro Environment Suppliers Our organisation Competition Intermediaries Customers The Marketing Environment 2-8 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

THE MICRO-ENVIRONMENT Organisations and individuals who directly or indirectly affect the activities of a company. It includes: Customers Intermediaries Suppliers Competitors Other stakeholders (next slide) 2-9 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

STAKEHOLDERS OF ORGANISATIONS Other Stakeholders include: employees local communities government financial community 2-10 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

An INTEGRATIVE BUSINESS FUNCTION? (Textbook pg. 18/9) The role of marketing in bringing (departmental) functions together in emphasing the customer focus? - marketing the GLUE? 2-11 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

STEP analysis Organisations do not operate in a vacuum. They need to look outwards at the following factors: Socio-cultural. Technological. Economic and competitive. Political and regulatory. 2-12 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Figure 2.1 Elements of the External Environment Sociocultural Technological Our Firm & Marketing Mix Political/ regulatory Economic/ Competitive 2-13 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Elements of the external environment 2-14 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

MONITORING AND RESPONDING TO ENVIRONMENTAL CHANGE Organisations that do not adapt may decline and die To avoid this, organisations must: understand what is going on in their business environment respond and adapt to this change Information about the environment is crucial, but won’t produce decisions 2-15 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

The Sociocultural Environment Demographics Sociocultural influences Lifestyle expectations Attitudes 2-16 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Macroenvironment: Demography “..the study of the size, composition, and distribution of the human population in relation to social factors such as geographic boundaries.” See: www.census.gov 2-17 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007 9

Demographics Today’s population of approx 6.3 billion is expected to increase to 8.9 billion by 2050. Ageing population and increased life expectancy in first world countries. Low birth rate in first world countries. Changing family patterns, increased amount of working women and single women. Rising number of educated people Increasing diversity Changing consumer spending patterns 2-18 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

World Population Growth 1987 5 billion Billions of people 1820 1 billion 1930 2 billion 2-19 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Changes in European Union Population Percentage Age Groups 2-20 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007 5

2-21 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

CHANGING SOCIAL TRENDS RESULT IN NEW PATTERNS OF DEMAND More affluent, working mothers has led to growth in kindergartens What other social trends have marketers reacted to? What changes should they be anticipating? 2-22 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Changes in Leisurely Activities Earlier retirements Desire for travel abroad Active holiday agendas Source: © Saga Holidays http://www.holidays.saga.co.uk 2-23 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Issues to Consider Population distribution Household patterns (e.g., average number of occupants per household, expenditures across product categories Available disposable income Changes in consumer preferences 2-24 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Figure 2.2. How might societal attitudes influence marketing? Business ethics Environmental issues Marketing strategy Animal welfare Personal ethics Health and safety 2-25 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Environmental Issues (Precious Woods) 2-26 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Animal Welfare 2-27 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Health Concerns (Heinz’s health agenda) 2-28 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

The Technological Environment Products Materials/ components Production processes Administration/ distribution Marketing/ customers 2-29 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Examples of Technological Advances Production Computer aided design (CAD) Computer aided manufacturing (CAM) Quality assurance/ control (QA) Materials handling Marketing Market research Databases Advertising media Online ordering Sales force support 2-30 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

The Economic/Competitive Environment Macro Micro 2-31 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Figure 2.3 Macroeconomic Influences 2-32 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

The Microeconomic Environment Monopoly Oligopoly Monopolistic Competition Perfect Competition 2-33 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Political/Regulatory National and local government EU Regulatory bodies Trade associations 2-34 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

eg Cadbury’s Dairy Milk 2-35 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Influences on Political/ Regulatory Environment Sociocultural factors Public opinion Media Lobbyists 2-36 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

The Internal Organisation Finance R & D, Engineering Purchasing Organisation Production 2-37 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Corporate and social responsibility (CSR) - Societal and ethical marketing An emergent and growing marketing philosophy. As companies strive to find effective ways to attract and retain customers. Importance of handling marketing responsibly in a way that contributes to the well being of society. Links between good ethics, market share and profitability. Not only consider its customers and its profitability but also the good of the wider community (local and globally). 2-38 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

Sustainable Marketing Defined Sustainable marketing is the establishment, maintenance, and enhancement of customer relationships so that the objectives of the parties involved are met without compromising the ability of future generations to achieve their own objectives. 2-39 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

UK report ‘Who are the Ethical consumers?’ The potential for ethical products and services in the UK could be as high as 30% of consumer markets. 52% of consumers had recommended companies because of the companies’ responsible reputation. 44% of consumers had avoided a product or service because of a company’s behaviour. 2-40 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007

CSR and its impact on the marketing process Internalisation of costs (making the polluters pay). Green taxes. Legislation. Support for cleaner technology. Redesigned products for recycling. Reverse distribution channels to receive products for recycling. Consumer education on sustainability. 2-41 Brassington & Pettitt, Essentials of Marketing 2e, © Pearson Education 2007