12/01/2024
MKT301E Lecture 2
Marketing environment
Principles of marketing
Contact
Lecture 2 - Agenda
Part 1. Macro Environmental Factors
Part 2. Micro Environmental Factors
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Definition of marketing environment
The marketing environment
includes the actors and forces
outside marketing that affect
marketing management’s ability to
build and maintain successful
relationships with customers.
Categories of Environmental Factors
Macro-environmental
– Large-scale, pervasive forces that are not typically
controllable by the organisation
– Changes may come gradually to shape
opportunities or threats
Micro-environmental
– Actors close to the company that affect its
business ability
– Typically may interact and/or be influenced by the
company
Where would you find Macro- and Micro-environment
analysis on the Marketing Process flowchart?
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Understanding the marketing environment
Environmental scanning: Collection and interpretation of information about
forces, events and relationships in the marketing environment that may affect
the future of an organisation or implementation of a marketing plan
Understanding the external environment involves understanding:
Current customers
What drives customer decisions
The most valuable customers and their needs
The competition
The Environment Analysis
(Situation Analysis)
The first step in developing the Marketing
Plan is to conduct an Environment
Analysis
In the business surrounding:
– what are the trends,
– how will they impact upon my customers,
– what anticipatory actions can I plan to take to
address threats and create opportunities for
my brand?
Analysis framework - SWOT
Source: Kotler & Armstrong (2018)
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Part 1. Macro: DENT-PC
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The macroenvironment consists of the larger
societal forces that affect the
microenvironment.
– Demographic
– Economic
– Natural
– Technological
– Political
– Cultural
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Demographics
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Demographic factor
Demography is the study of human
populations in terms of size, density,
location, age, gender, race, occupation etc.
Demographic developments often move at
a predictable pace but can have massive
impacts on consumer and products
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Key demographic changes
Growing
Ethnic Age
Diversity Structures
Education Key
Demographic
Trends
Changing
Family
Geographic Structure
Shifts
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The demographic environment:
the changing character of families
Growth in the number of working women
Increase in dual-career families
Greater household incomes
Increasingly time-poor
Greater reliance on home entertainment
Family members’ roles, responsibilities and purchasing
patterns are changing
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Marketing by generation
Baby boomers Born 1943–1963
Generation X Born 1964–1981
Generation Y Born 1981–2000
Generation Z or
Born 2000–present
iGeneration
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Demographic factors will influence
target market attractiveness*
*That is; “How attractive as a market for our product is this group of
consumers?”
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Economic
Environment
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Economic environment
The economic environment consists of
factors that affect consumer buying
power.
Total buying power depends on current
income, prices, savings and credit.
Marketers should be aware of major
trends in income and of changing
consumer spending patterns.
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LO6
The economic environment
The three economic areas of greatest concern to
most marketers, include:
Distribution of
Inflation Recession
consumer income
As disposable (or A general rise in A period of economic
after-tax) incomes prices, without a activity when income,
rise, families and corresponding production and
individuals have more increase in wages, employment tend to
money to spend on resulting in decreased fall, reducing demand
non-essential items purchasing power for goods and services
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Economic environment
Changes in income
Over the past several
decades, the rich have
grown richer faster than
have the poor grown less
poor. Consequently,
income inequality has
widened.
Industrial economies are
richer markets
Typically richer markets
have more expensive
labour costs
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Natural
environment
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Natural environment
The natural environment
involves natural resources
that are needed as inputs by
marketers or that are
affected by marketing
activities.
Trends
– Shortages of raw material
– Increased cost of energy
– Increased pollution
– Government intervention in
natural resource
management
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Technological
environment
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Technological environment
The technological environment is
perhaps the most dramatic force
that is changing the marketplace.
Technology has allowed for the
development of new products and
new opportunities.
There is also a concern regarding
the safety of new products
Trends
– Fast pace of technological
growth
– High R&D budgets
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– Increased regulation
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LO7
The technological environment
A nation’s ability to maintain and build wealth depends, in large
part, on the speed and effectiveness with which machines that lift
productivity can be invented and adopted
Technology is driven by research and development
Primary research Applied research
Pure research that aims Attempts to develop new
to confirm an existing or improved products
theory or to learn more
about a concept or
phenomenon
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Political
Environment
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Political environment
Marketing decisions
are strongly affected
by developments in
the political
environment which
consists of laws,
government agencies
and pressure groups
that influence and limit
various organisations
and individuals in a
given society.
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The political and legal environment
Every aspect of the marketing mix is subject to laws and
restrictions. It is the duty of marketing managers and their legal
advisers to understand these laws and conform to them.
Legislation
Law on Consumer Protection 2023; Law on Competition
2018, Commercial Law 2005, Law on Advertising 2012, etc.
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Cultural
environment 32
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Cultural environment
Institutions and other forces that affect society’s basic values,
perceptions, preferences and behaviours.
Shapes their basic beliefs and values.
Absorption of worldviews that defines their relationships between
themselves and others.
The following cultural characteristics can affect marketing decisions:
– Persistence of cultural values
– Subcultures
– Shifts in secondary cultural values
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Cultural environment
Persistence in cultural values
– People in a given society hold many beliefs and
values.
– Their core beliefs and values have a high degree of
persistence.
Shifts in secondary cultural values; People’s view
of
– themselves
– others
– organisations
– society
– nature
– the universe
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Case study: Starbucks
Selling coffee in the land of tea
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You need to analyse one of these DENT-PC macro-
environmental factors
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Part 2: Micro-environment
SIP-CCC
you will also need to analyse one of these SIP-CCC micro-
environmental factors
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The microenvironment consists of
the actors close to the company
that affect its ability to serve its
customers: the company, suppliers,
marketing intermediaries, customer
markets, competitors, and publics.
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The company’s micro-environment
The company
Marketers need to coordinate the work of the
other Company departments to implement
the Marketing Strategy, which is to create
customer value and relationships.
– Top management
– Finance
– Research and development
– Purchasing
– Operations
– Accounting
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The company’s micro-environment
Suppliers
Suppliers provide the
resources needed by the
company to produce its goods
and services.
Marketing managers must
watch supply availability—
supply shortages or delays,
labor strikes, and other events
that can cost sales in the short
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satisfaction in the long run. Way We Make Things
Marketing managers must also
monitor the price trends
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The company’s micro-environment
Marketing intermediaries
Marketing intermediaries
help the company to
promote, sell, and distribute
its products to final buyers.
Resellers are distribution
channels firms that help the
organisation find customers
or make sales to them.
Physical distribution firms
help the organisation stock
and move goods from their
points of origin to their
destinations such as
transportation firms.
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The company’s micro-environment
Marketing intermediaries
Marketing service agencies are the
marketing research firms, advertising
agencies, media firms, and marketing
consulting firms that help the company
target and promote its products to the
right markets.
Financial intermediaries include
banks, credit companies, insurance
companies, and other businesses that
help finance transactions or insure
against the risks associated with the
buying and selling of goods.
Marketers recognize the importance of
working with their intermediaries as
partners rather than simply as channels
through which they sell their products. 14
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The company’s micro-environment
Competitors
Every organisation faces a wide
range of competitors.
The marketing concept states that,
to be successful, an organisation
must provide greater customer
value and satisfaction than its
competitors.
No single competitive marketing
strategy is best for all organisations.
Each marketer should consider its
own size and industry position
compared with those of its
competitors.
Organisations are facing
competition from international
competitors as well as opportunities
in international markets.
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The company’s micro-environment
Publics
A ‘public’ is any group that has an
actual or potential interest in, or
impact on, an organisation’s
ability to achieve its objectives.
Every organisation is involved with
seven types of publics:
– Financial publics
– Media publics
– Government publics
– Citizen-action publics
– Local publics
– General publics
– Internal publics 15
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The company’s micro-environment
Customers
The marketing
organisation must study its
customer markets closely.
There are at least three
types of customer markets:
– Consumer markets
– Business markets
– Reseller markets
Different motivations lead
to different behaviour
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segments/about-values-segments
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Summary
Marketing environment includes the actors and
forces outside marketing that affect the company
Macro-environment consists of the larger societal
forces: Demographic, Economic, Natural,
Technological, Political and Cultural
Micro-environment consists of the actors close to
the company that affect its ability to serve its
customers: the company, suppliers, marketing
intermediaries, customer markets, competitors, and
publics.
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