Chapter 2 The marketing environment

Learning objectives 1.Discuss the external environment of marketing and explain how it affects an organisation 2.Describe the sociocultural factors that affect marketing 3.Explain the importance to marketing managers of multiculturalism and growing ethnic markets 4.Identify consumer and market reactions to the state of the economy

Learning objectives (cont.) 5.Identify the impact of technology on an organisation 6.Discuss the political and legal environment of marketing 7.Explain the basics of foreign and domestic competition 8.Describe the role of ethics and ethical decisions in business 9.Discuss corporate social responsibility

1 Discuss the external environment of marketing and explain how it affects an organisation Learning objective

1External environment The internal environment is generally controllable, and is discussed in other parts of this text. The external environment are components that are not controlled by the marketing manager or the organisation.

1 External environment variables Economic Competitive Technological Political and legal. Sociocultural

1 Understanding the external environment Environmental scanning – the collection and interpretation of information about forces, events and relationships in the external environment that may affect the future of the organisation or the implementation of the marketing plan Environmental management – is where organisations implement strategies in an attempt to shape the external environment

1 Tools used to monitor external environment Organisations have a vast array of tools and techniques to monitor and measure the external environment. Tools include a swot analysis, IFE and EFC evaluation matrices.

2 Describe the sociocultural factors that affect marketing Learning objective

The social change is perhaps the most difficult external variable for marketing managers to forecast. Social factors include –Attitudes –Values –Lifestyle 2Sociocultural factors

2 Reviewing de socio-cultural environment by year born Four key groups –Baby boomers ( ) –Generation X (1965 – 81) –Generation Y (1981 – 2000) –Generation Z (2000 to present)

2 Marketing oriented values Major changes in the value, and all way of life People are more efficient in sourcing information, seeing something that they are interested and using this information. Growth in traditionalism, ethnicity and patriotism, while attributing personal success with consumerism and technological rationality.

2 Component lifestyles People are adopting a number of different lifestyle modes. –for example: a professional marketer, may be a connoisseur chef, who enjoys rally driving and going to live concerts.

3 Explain the importance of the marketing managers of multiculturalism and growing ethnic markets Learning objective

3 Demographic environment Two major factors influencing the demographic The changing character of families. Multiculturalism

3 The changing character of families The family structure of a father, mother and two children represents less 25% of Australian families. Increase in the number of dual career families. Greater reliance on home entertainment

3 Multiculturalism Multiculturalism recognises and celebrates cultural diversity. The changing profile of our population has seen changes in what we eat, what we do, and how we behave.

4 Identify consumer and market reaction to the state of the economy Learning objective

4 Economic environment Three economic areas of concern for most marketers include: The level of disposable income Inflation Recession

5 Identify the impact of technology on an organisation Learning objective

5 Technological environment Technology is one of the most revolutionary dimensions of the external environment Conversion of ideas to products The increased speed and capacity of the Internet, and The ever-increasing of electronic media devices, allowing for instant personal communication

6 Discuss the political and legal environment of marketing Learning objective

6 Political and legal environment Organisations need government regulations to provide protection and guidance in the marketplace All aspects of the internal environment is controlled by the laws and regulations. Identifying trends, and knowing the laws allows organisations to maximise their marketing effort. Organisations also need to be aware of laws and regulations, in other countries

7 Explain the basics of foreign and domestic competition Learning objective

7 Competitive environment Refers to a given industry category, the number of competitors, an organisation must face the relative size of the competition and the degree of interdependency within the industry.

7 Industry analysis Industry analysis considers the industry size trains demand characteristics and the emergence or existence of new segments. That could impact on the viability of your possession

7 Competition Discussion of the competitive forces faced by an organisation Types of market: –Local –Domestic –International –Global

7 Competitors Need to understand the practices and behaviour of the organisations competitors. Need to appreciate how they will react to a given situation

8 Describe the role of ethics and ethical decision in business Learning objective

8 Social and ethical behaviour Ethics refers to the moral principles or values that generally govern the conduct of an individual or organisation. Standard can be legal but not ethical and ethical but not legal. Morals are the rules people develop as a result of cultural values and norms. Morals can be considered as the foundation of ethical behaviour but are based on cultural values. In a multicultural society moral, ethic and legality can be evolving

8 Morality and business ethics Three approaches to review an act as being ethically and morally appropriate: –Examine the consequences of an act –Consider rules in the form of customs, laws, professional standards and common sense –Moral chartered within the individual: Preconventional morality Conventional morality Postconventional morality

8 Ethical business decision making Ethical business decision making; –Extent of ethical problem in the organisation –Top managements action on ethics –Potential size of consequence –Social consensus –Probability of a harmful outcome –Length of time between decision and the onset of consequences –Number of people to be affected

8 Ethical guidelines Many organisations developing a code of ethics A code of ethics needs to be clear but neither too detailed or too specific

9 Discuss corporate social responsibility Learning objective

9 Corporate and social responsibility Ethics and social responsibility are closely intertwined Corporate social responsibility = organisation’s concern for society’s welfare Usually on four fronts –Economic –Legal –Ethical –Philanthropic