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The Marketing Environment (Macro enviroment (Environmental factors (EG -…
The Marketing Environment
Key points
Split into different environments
Micro
Key stakeholders or audiences
Macro
Range of external forces
STEEPLE
Marketers analyse through
Market research
Data the organisation collects about the particular market
Marketing intelligence
Publicly available information about the marketing environment
Micro environment
Background
The groups of stakeholders & audiences in an organisations immediate environment
Affect its activities and success
Customers
Most important group in the micro environment
Kotler & Armstrong (2016) 5 types of customer markets
Consumer markets
Goods & services purchased by individuals & households for personal consumption
Business markets
Goods & services purchased by businesses for the use in their operations or manufacturing
Reseller markets
Goods & services purchased for reselling at a profit
Government markets
Goods & services purchased by governments for the delivery of public services
International markets
Goods & services purchased by buyers in other countries who may be any of the four types of buyers above
Marketing intermediaries
Help by distributing, selling or promoting an organisations goods/services to customers
Physical distributors
Haulers
Re sellers (wholesalers)
Retailers
Agents
Dealers
Brokers
Marketing consultants
Advertising
Media
Market research agencies
They assist an organisation in delivering value to its customers is reflected in their being regarded as an organisations partners
Suppliers
Supply organisation with the resources
Raw materials
Components
Finished goods
Relationships are vital as any disruption in the flow of supplies can affect the organisations ability to satisfy its customers
Treated like partners
Relationships can be tested
Power imbalances
Cost increases
Disruptions
Shortages
Publics
Def - any group that has an actual or potential impact o an organisations ability to achieve its objectives
Include
Financial
Media reporting a businesses activities
TV
Radio
Newspapers
Government who may intervene with business affairs
Citizen-action
Local (neighbourhood)
General
Internal (employees)
Consumer groups or activists
Competitors
Direct Competitors
Offer similar goods and services
Substitutes
Satisfy customer needs through alternatives means
New entrants
New competitors who may offer some enhanced goods or services
Macro enviroment
Economic factors
Changes in the economic conditions that stimulate innovation
EG - Xercise4Less
Responds to economic changes by minimising consumers' expenditure and financial commitments
Responds to social changes in which people are battling obesity
Environmental factors
Factors can present challenges as well as encourage innovation
EG - Complying with increasing expectations that products are recyclable
EG - Automotive manufactures
Researching ways to...
Improve fuel efficiency
Enhance product safety
Recycling of components
Political factors
Can change the macro environment and present opportunities as well as threats for organisations
Examples
Changes in political parties
Changes in governing political figures
Changes in membership of key trading groups
EG Tony Blair's encouragement of PPPs to improve public services
Legal factors
Changes in legislation and regulation can create strategic windows for organisations with resources to take advantage of them
EG - Date Protection Act 1998
Provided opportunities for companies offering data protection services to help businesses meet their obligations
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
Includes a range of products that carry various types of ethical certification
Examples
Soil Association
Fair trade Labelling Organisation (FLO)
Forest Stewardship Council (FSC)
Social factors
Societal changes present opportunities for innovation & met with innovate solutions
Examples
Pressures of work
Lack of time
Lack of awareness of the impact of unhealthy convenience foods
Technological factors
Offer potential for organisations to take advantage of strategic windows
EG - 3D printing
Market resrach predicted that applications would be first focused in the automotive, medial and aerospace industries for customised products in small volumes and less price sensitive
And then to longer term and transforming manufacturing as a whole
Competitive advantage
To compete successfully businesses/organisations must have competitive advantage
Some form of distinct superior value to offer over competitors that matter to customers
Porter (2004)
(See Book 1, p 24)
Cost leadership
Being the lowest cost provider
Through EOS
Through sizeable market share
EG Ryan Air
Differentiation
Distinguishing an offering from competitors in some way that is important to customers
Examples
Offering superior customer service
Technological innovation
Alluring branding
Inventive distribution channels
EG Lush (ethical products)
EG Virgin Airlines (inexpensive fares, full service flights etc)
Focus
Specialising to serve a niche market segment
EG developing expertise in a particular area to meet the particular needs of a target group most closely
Niche focus on cost
Niche focus on differentiation (EG Aston Martin)
Evaluation points
Organisations may combine two of these strategies but are unlikely to be able to pursue all three
Usually, only one organisation can occupy the position of lowest-cost leader, and economies of scale can be hard to accomplish for a focused strategy.
Competing purely on price restricts profits, whereas competing on some form of differentiation of value to customers
Competitive positions & differential advantage
Competitive advantage involves an organisation positioning itself in relation to its competitors
Knowing who competitors are is key
Consider direct competitors, new entrants, substitutes & other competitive forces of customers and suppliers.
Porters Five Forces (1979/2008)
Helps uncover the most influential forces in an organisation’s competitive environment
Helps assess an organisation’s strengths and weakness
Threat of new entrants
New entrants that diversify into in organisation’s market from other markets are well-positioned to use their existing capabilities and resources to stir up competition.
Bargaining power of suppliers
Suppliers of materials or labour can exert power in industries that are unable to raise prices to accommodate cost increases.
Threat of substitutes
Prices can also be limited by threats posed by substitutes, unless an organisation can differentiate itself in a meaningful way, such as superior product performance or marketing.
Bargaining power of customers
Buyers or customers can exert power
if they can shop around easily for the best price, which can also constrain an organisation’s ability to raise prices.
(See Book 1 p 25)
Discusses how the five competitive forces can dampen an organisation’s prospects for making a profit :
Industry rivalry
Intense rivalry between direct competitors can also restrict profitability.
‘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’
Evaluation points
Industries differ in the way the five forces
are configured, with some forces being more or less threatening than others in different industries
The strongest competitive force, which determine an industry’s profitability, may not be the most obvious one
Take a broad view of competitors and also consider who customers perceive as competitors, so that none is overlooked
Differential advantage
Def - 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) steps to identify differential advantage
Identify the offering’s market segments
Establish the offering’s desired and demanded attributes for each customer segment
Determine which of these attributes the organisation offers
Determine which of these attributes the organisation’s competitors offer
Consider what customers perceive competitors’ genuine strengths to be
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
Strategic objectives & strategic focus
Ansoffs growth matrix
(See Book 1, p 27)
Helps an organisation decide upon its competitive strategy to support its strategic objectives
4 categories with different combinations of current/additional products/markets
Market penetration
Growth through increased market share for present market products
Product development
Creation of new products in existing market
Market development
Seeking new markets for existing products
Diversification
Creating new products for new markets
Helps an organisation to achieve growth