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The Marketing Environment: The external or 'macro' environment…
The Marketing Environment: The external or 'macro' environment
External factors that can affect an organisation’s business - STEEPLE or PESTLE
social, technological, economic, environmental, political, legal and ethical. They are often referred to by the acronym STEEPLE (or sometimes PESTLE – which omits the 'E' for 'ethical')
Social: Societal changes present opportunities for innovation. e.g. Hello Fresh
Technological - e.g. 3D printer
Economic factors, responding to different economic conditions
Environmental factors: can present challenges and encourage innovation
Political factors: changes in political parties, governing political figures or membership of key trading groups can also change the macro environment and present opportunities as well as threats for organisations.
Legal factors: Changes in legislation and regulation can create strategic windows for organisations with the resources to take advantage of them.
Ethical factors: Consumers’ heightened awareness of the social and environmental impact of some business activities and offerings creates opportunities for organisations to meet demand for ethical offerings.
Competitive advantage: some form of distinct superior value to offer over competitors that matters to customers
strategies for achieving competitive advantage Michael Porter (2004)
Cost leadership – being the lowest-cost provider through economies of scale and sizeable market share (for example, the low-cost airline Ryanair)
Differentiation – distinguishing an offering from competitors in some way that is important to customers, e.g. Lush (ethical products)
Focus – specialising to serve a niche market segment. Two forms of focus strategy: a niche focus on cost <restricts profits> and a niche focus on differentiation <supports higher prices (Porter, 2008)>
Competitive positions and differential advantage
Michael Porter’s (1979 and 2008) ‘Five Forces’ model helps to uncover the most influential forces in an organisation’s competitive environment and to assess an organisation’s strengths and weakness in relation to rivals, new entrants, buyers/customers, supplier and substitutes (Porter, 2008)
Porter (2008, p. 78) argues that ‘awareness of the five forces can help a company understand the structure of its industry and stake out a position that is more profitable and less vulnerable to attack’ Competition is driven by industry structure and profitability
organisations also need to analyse their competitors’ objectives, strategies, strengths and weaknesses and their likely reactions to the organisations’ own strategies and marketing programmes and determine whether to compete against, avoid or ignore each competitor (Wong, cited in Dibb et al., 2016)
Differential advantage is ‘an attribute of a brand, product, service or marketing mix that is desired by the targeted customer and provided by only one supplier: it is a unique edge over rivals in satisfying this customer’ (Dibb et al., 2016, p. 60) suggest the following steps to identify differential advantage:
Determine which of these attributes the organisation’s competitors offer
Consider what customers perceive competitors’ genuine strengths to be
Determine which of these attributes the organisation offers
Identify any gaps between customers’ expectations for the offering and their perceptions of competitors’ marketing programmes
Ascertain whether the organisation can fill any of these gaps to achieve differential advantage
Assess whether the organisation can emphasise this differential advantage through its marketing programmes
Consider whether the organisation can sustain this differential advantage or whether competitors could readily copy it
If there are no current gaps, explore whether any differential advantage could be developed
Pinpoint any changes the organisation needs to make to its research and development, engineering or marketing activities to make the most of any identified existing or potential differential advantage
Establish the offering’s desired and demanded attributes for each customer segment
Identify the offering’s market segments
Strategic objectives and strategic focus
Ansoff growth matrix: A tool for helping to decide upon competitive strategy to support strategic objectives
market penetration (present product, present market)
market development (present product, new market)
product development (new product, present market)
diversification (new product, new market)