Topic 2 (Part 2) - The Marketing Environment

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This article is a topic within the subject Marketing Fundamentals.

Contents

Required Reading

Armstrong G., Adam S., Denize, S. and Kotler P.(2012) Principles of Marketing, 5th Edition, Sydney, Pearson/Prentice Hall., pp. 74-100.

Definitions

The Micro – Environment refers to the actors close to the organisation that affect its ability to serve its customers, whilst the Macro – Environment is the larger societal forces that affect the organisation’s whole environment.

Micro – Environment

[1] Marketing management success depends relationship building with actors in the micro-environment - value delivery network.

  • The Company - Top management, finance, operations, accounting, R&D, purchasing departments
    • Marketing management must account for/consider these internal groups.
    • Top mgmt set missions, objectives & broad strategy – marketing strategies/plans must be within these bounds
    • Marketing Concept – all departments must ‘think’ consumer, must understand & deliver value to customers
  • Suppliers - Partner Relationship Management is importatnt. Aus Study found that strong supplier relationships contributed significantly to business performance
    • Important role in the external value delivery network, vital to the firm in producing goods & services to satisfy customers
    • Marketing managers must watch supply availability & costs
      • Shortages or delays can cost sales in the short run & damage long term customer satisfaction
      • Rising costs can harm sales volume or profitability
  • Marketing Intermediaries - Resellers, Physical Distribution Firms, Marketing Agencies, Financial Intermediaries
    • Help the firm to promote, sell & distribute its products to final buyers
    • Resellers are distribution channels that help the company find customers or make sales to them
      • Wholesalers & Retails – buy & sell merchandise
    • Physical Distribution Firms help to stock & move goods from their point of origin to their destinations
    • Marketing Services Agencies are research/advertising/consulting firms that help the firm promote its product to the right markets
    • Financial Intermediaries help to finance transactions &/or insure against risks from the buying/selling of G&S
  • Competitors
    • To be successful, the firm must provide greater customer value & satisfaction than its competitors do
    • Products must be positioned well against competitor’s offerings in consumer minds to gain a competitive adv.
    • Competitive marketing strategies should be based upon the firms size, industry position & market offering
  • Publics - Any group that has an actual or potential interest in or impact on a firm’s ability to achieve its objectives
    • Financial – influences ability to obtain funds - banks, investment houses & shareholders
    • Media – carries news, features & opinions - newspapers, magazines, radio & TV
    • Government – laws & other developments, the firm may need lawyers/advice on product safety, advertising.
    • Citizen Action – environmentalist or consumer groups may question the firms marketing activities – need PR
    • Local – local residents & community organisations
    • General – public image (attitude toward products needs monitoring)
    • Internal – employees - use newsletters to inform & motivate workers to cause positive externalities w.o.m
    • Marketing plans can generate goodwill from publics, favourable word of mouth, donations of time/money
    • Tremendous power to help/(damage) products beneficial/(harmful) to society (societal marketing concept)
  • Customers - Most Important, the value delivery system aims to serve target customers & create strong relationships
    • Markets - Consumer, Business (to use in production), Reseller, Government, International
    • All consumers are customers, but all customers are not consumers

Macro – Environment

[2] The company & all other actors operate in a larger macro-environment of forces that shape opportunities & pose threats.

  • Demographic - the study of human populations in terms of size, density, location, age, gender, race, occupation & other statistics. It is of interest as it involves people who make up markets & different lifestyles buy different goods
    • Population Growth, the population is growing at an explosive rate 8 billion by 2030
      • China’s 1 child policy - ‘Me Generation’ (pampered & embrace individuality)
    • Age Structure
      • Baby Boomers (1946-64) – 25% of population, 50% of the wealth - targeted by financial services to manage retirement + health & fitness (relate to project – more education in nutrition - publics)
      • Generation X (1965-76) – put family & experiences first
      • Millennials (Gen Y 1977-00) – love digital technology (way of life) TV, Iphones, Fbook etc.
    • Changing Family Structure
      • Proportion of 2 parent families is diminishing, no children families are increasing
      • More working women – consumption of women career attire, financial services, busier families
    • Geographic Shifts in Population
      • Rural - Metropolitan (greater variety of G&S, ‘high culture’, faster pace of living)
    • Education – Becoming more educated, white collar growth, increased demand for quality G&S Project  Natural & organic foods
    • Growing Ethnic Diversity (1/4 are born overseas – UK, NZ, China, India )
    • Specific wants & buying habits - Growth in Asian restaurants in AUS
  • Economic Environment - Factors that affect consumer purchasing power & spending patterns
    • Changes in Income & Spending Patterns
      • GFC – people to tighten budgets, deleveraging & cutting expensive items - ‘Value marketing’ (quality/fair price)
      • Income Inequality – tiered marketing i.e. Tiffany & Co - affluent, Kmart - Middle class
      • Personal Disposable Income – important for non required goods (i.e. not food, water etc.) discretionary spending
    • Economic Development
      • Industrial (rich, opportunistic markets), Developing (Opportunistic Mkts for some G&S), Subsistence (Little Opp.)
  • Natural Environment - The natural resources that are needed as inputs by marketers or are affected by marketing activities
    • Environmental Sustainability Focus + Resource Preservation by Government
    • Due to trend of increasing pollution worldwide + global warming
    • Companies need to take on more social responsibility
    • EPA – protects the environment + maintenance of emissions trading schemes
    • Shortage of Raw Materials - renewable resources, trees, food etc. Must be used wisely
    • Increased Cost of Energy
      • ‘Green’ Movement - marketers should help develop solutions to material & energy problems facing the world
    • Environmentally sustainable products, e.g. Suntech solar panels, biodegradable packaging
  • Technological Environment - forces that create new technologies, creating new products & market opportunities
    • Fast Pace of Change – dramatic & dynamic force, healthcare, electronics, internet & chemicals etc.
      • High R&D Budget - Adding marketers to R&D teams to become more market orientated. Need to commercialise
      • Concentration on Improvements - New Products Replace the Old!
      • Increased Regulation – Government needs to check if these ‘complex’ products are safe
  • Political, Legal & Social - Laws, govt. agencies & pressure groups that influence/limit organisations/individuals in society
    • Legislation Regulating Business - for the good of society as a whole e.g. misleading advertising, product safety, customs
      • ACCC - Protect companies from each other
      • GOV – Protects consumers from shoddy products etc. + Protects society – make firms account for social costs
    • Government Agency Enforcement – ACCC, Food Standards AUS & NZ (FSANZ), EPA
    • Emphasis on Ethics (return policies – Target, Socially Responsible Behaviour & Going ‘Green’
      • Cause Related Marketing – tying a product to a cause (e.g. Mt Franklin & Breast Cancer)
    • Globalisation & Trade Agreements
  • Cultural - Institutions & other forces that affect society’s basic values, perceptions, preferences & behaviours
    • Society/Culture shapes people’s values, perceptions, preferences, behaviours & beliefs as they grow up
      • Develops their world view that defines their relationship with others
    • Persistence of Cultural Values
      • Core Beliefs (high degree of persistence) – e.g. Australians believe in working, getting married, charity & honesty
        • Passed from parents to children & reinforced by institutions (schools, business, church, govt) PROJECT (health)
      • Secondary Beliefs (more open to change) – e.g. marrying early in life. Shifts in secondary values do occur

End

This is the end of this topic. Click Marketing Fundamentals to go back to the main subject page for Marketing Fundamentals

References

Textbook refers to Armstrong G., Adam S., Denize, S. and Kotler P.(2012) Principles of Marketing, 5th Edition, Sydney, Pearson/Prentice Hall.

  1. Armstrong G., Adam S., Denize, S. and Kotler P.(2012) Principles of Marketing, 5th Edition, Sydney, Pearson/Prentice Hall., pp. 76-79
  2. Armstrong G., Adam S., Denize, S. and Kotler P.(2012) Principles of Marketing, 5th Edition, Sydney, Pearson/Prentice Hall., pp. 79-100
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