Presentation title runs here
Principles of Marketing
Analysing the market environment
Chapter 3
Learning outcomes
After studying this chapter, students should be able to:
2
•
Describe the environmental forces that affect the
firm’s ability to serve its customers
•
Explain how changes in the demographic and
economic environments affect marketing decisions
•
Identify the major trends in the firm’s natural and
technological environments
•
Explain the key changes in the political and cultural
environments
•
Discuss how firms can react to the marketing
environment.
Chapter 3: Analysing the marketing environment
Key topics
3
1.
The marketing environment
2.
The firm’s micro-environment
3.
The macro-environment of the business
4.
Responding to the marketing environment
Chapter 3: Analysing the marketing environment
The market environment
Marketing does not operate in a vacuum
•
It operates in a complex and changing marketing
environment with various forces at work.
Marketing environment: The actors and forces
outside marketing that affect marketing
management’s ability to build and maintain successful
relationships.
4
•
Marketers can use marketing research and
intelligence to collect information about the marketing
environment.
•
Successful firms constantly watch and adapt to the
changing marketing environment.
Chapter 3: Analysing the marketing environment
The firm’s micro-environment
Micro-environment: the actors close to the firm that
affect its ability to serve its customers.
Actor
The firm
Suppliers
5
Role
Ideal outcome
Other groups or departments of the
firm (outside of the marketing
All departments
department).
must ‘think
For example – finance, operations,
consumer’.
R&D, accounting.
Provide the resources the firm needs
to produce its goods and services.
For example – a restaurant’s
suppliers include wine cellars and
kitchen equipment manufacturers.
Chapter 3: Analysing the marketing environment
Marketers should
treat suppliers as
partners in creating
and delivering
customer value.
The firm’s micro-environment
Actor
Marketing
intermediaries
Competitors
6
Role
Ideal outcome
Help the firm to promote, sell and
distribute its products to final buyers.
For example – for a butchery, these
include:
• Resellers, e.g. Spar stores
• Physical distribution enterprises,
e.g. refrigerated transport vans
• Marketing service agencies, e.g.
the advertising agency that creates
pamphlets for the store
• Financial intermediaries, e.g. the
bank where the business owners took
out a business loan.
Marketers must
partner with
intermediaries to
optimise the
performance of the
entire system.
Firms that provide the same target
market with value and satisfaction.
For example – BMW and Mercedes both
focus on the market for sophisticated,
luxury vehicles.
Marketers should
consider the firm’s
size and industry
position compared
to competitors.
Chapter 3: Analysing the marketing environment
The firm’s micro-environment
Actor
Customers
7
Role
Depends on the type of customer market
and their motivation for buying goods
and services:
• Consumer markets are individuals
and households that buy for personal
use, e.g. all of us.
• Business markets buy for further
processing or for their own production
process, e.g. a bakery buying eggs.
• Reseller markets buy to resell at a
profit, e.g. Shoprite.
• Government markets buy to produce
public services or to transfer to the
needy, e.g. a government department
buying paint for road markings.
• International markets can be any of
the above markets outside of South
Africa.
Chapter 3: Analysing the marketing environment
Ideal outcome
Marketers must
study the
characteristics
of each customer
market.
The firm’s micro-environment
Actor
Publics
8
Role
Ideal outcome
Any group that has an actual or potential
interest in or impact on an organisation’s
ability to achieve its objectives:
• Financial publics, e.g. banks, the
firm’s stockholders
• Media publics, e.g. newspapers,
magazines, radio and TV stations
• Government publics, e.g. regulatory
bodies
• Citizen-action publics, e.g. minority
groups, consumer organisations
• Local publics, e.g. community
organisations
• General public
• Internal publics, e.g. employees and
volunteers.
Marketers should
prepare
attractive
market offers to
different publics.
Chapter 3: Analysing the marketing environment
The macro-environment of
the business
Macro-environment: The larger societal forces that
affect the micro-environment.
1.
Demographic environment
Demography: The study of human populations in
terms of size, density, location, age, gender, race,
occupation and other statistics.
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•
This is important because it involves people, and people
make up markets.
•
For example – China’s one-child policy led to the ‘Me
generation’ and a rapidly ageing population.
Chapter 3: Analysing the marketing environment
The macro-environment of
the business
1.
Demographic environment
Trends in South Africa:
•
Changing age structure and population has led to
distinctive generational groups (according to birth dates).
Baby boomers
Generation X
Generation Y
People born between
World War II (1946)
and the early 1960s
People born between
1965 and 1976 in the
‘birth dearth’ following
the baby boom
Children of the baby
boomers, born between
1977 and 1994
Most affluent market
and one of the most
powerful forces
shaping the market
environment
Cautious economic
outlook, sceptical, less
materialistic, prize
experience over
acquisition
Impatient, no brand
loyalty, most
demanding customers,
digitally savvy, get
bored easily
10 Chapter 3: Analysing the marketing environment
The macro-environment of
the business
1.
Demographic environment
Trends in South Africa:
•
The changing South African family – ‘non-traditional’
households with distinctive needs and buying habits are
much more common.
o
For example – single-parent families and same-sex
relationships; an increase in women who work.
•
Geographic shifts in population, especially movement
from rural to ‘micropolitan areas’ (small cities located
beyond congested metropolitan areas).
•
Increasing diversity in terms of language, culture and
sexuality.
11 Chapter 3: Analysing the marketing environment
The macro-environment of
the business
2.
Economic environment
Economic environment: Factors that affect
consumer buying power and spending patterns.
Major economic trends in South Africa:
•
Changes in income
o
o
o
The ‘squeezed consumer’ carries increased financial
burdens.
For example – repaying debt acquired during earlier
spending sprees, increased household and family expenses.
Marketers need to offer value (quality and good service at
a fair price) to these consumers and pay attention to
income distribution and average income.
12 Chapter 3: Analysing the marketing environment
The macro-environment of
the business
Major economic trends in South Africa:
•
Changing consumer spending patterns.
o
o
Consumers at different income levels have different
spending patterns.
Changes in major economic variables (e.g. income, cost
of living and interest rates) have a significant impact on the
marketplace.
Engel’s laws: Differences in how people shift their
spending across food, housing, transportation, healthcare
and other goods/services as income rises
(for example, as income rises, spending on food declines,
spending on housing remains constant and spending on
all other categories – including saving – increases.)
13 Chapter 3: Analysing the marketing environment
The macro-environment of
the business
3.
Natural environment
Natural environment: Natural sources that are
needed as inputs by marketers or that are affected by
marketing activities.
Major environmental trends:
•
Shortages of raw materials, especially air and water.
o
o
•
The use of non-renewable resources such as oil and
minerals especially pose a serious threat.
For example – water restrictions in South Africa.
Increased pollution.
o
For example – disposal of chemicals and nuclear waste.
14 Chapter 3: Analysing the marketing environment
The macro-environment of
the business
3.
Natural environment
Major environmental trends:
•
Increased government intervention in natural
resource management.
o
•
For example – imposing fines for littering.
Many firms are developing environmentally
sustainable strategies and practices.
o
For example – biodegradable packaging.
15 Chapter 3: Analysing the marketing environment
The macro-environment of
the business
4.
Technological environment
Technological environment: Forces that create new
technologies, creating new product and market
opportunities.
•
This is the most dramatic force shaping our destiny.
•
Innovation in research and development is crucial.
•
Every new technology replaces an old one (for example,
digital photography replaced film cameras) – firms must
keep up with this ever-changing technology to
identify new product and market opportunities.
•
The challenge is to make practical, affordable products.
16 Chapter 3: Analysing the marketing environment
The macro-environment of
the business
5.
Political environment
Political environment: Laws, government agencies
and pressure groups that influence and limit various
organisations and individuals in a given society.
•
An increase in legislation regulating business:
o
o
o
This legislation aims to protect the interest of society,
protect businesses against each other, and protect
consumers from unfair business practices.
For example – the Consumer Protection Act 68 of 2008
that stipulates certain marketing standards.
Marketers must know and understand the content and
implications of the relevant legislation.
17 Chapter 3: Analysing the marketing environment
The macro-environment of
the business
5.
Political environment
•
An increased emphasis on ethics and socially
responsible actions.
o
o
o
o
Industries are developing their own standards of behaviour
through self-regulation, for example the Advertising
Standards Authority of South Africa (ASASA).
Companies are motivated to ‘do the right thing’ by
seeking to protect consumers, the market and environment.
marketing is a key focus point of ethical issues, for
example concerns about online privacy.
Many firms are linking themselves to a worthwhile cause
through cause-related marketing (for example the
MySchool card), but there are concerns that this may a
strategy for selling rather than giving.
18 Chapter 3: Analysing the marketing environment
The macro-environment of
the business
6.
Cultural environment
Cultural environment: Institutions and other forces
that affect a society’s basic values, perceptions,
preferences and behaviours.
•
Core values and beliefs, for example that children
should be home-schooled, are carried over from
generation to generation and are hard to change.
•
Secondary values, for example that children should be
home-schooled by their mother, can be changed.
19 Chapter 3: Analysing the marketing environment
The macro-environment of
the business
6.
Cultural environment
•
Shifts in secondary cultural values:
o
o
o
People’s view of themselves – people use products,
brands and services as a means of self-expression.
For example, adrenaline junkies looking for dangerous
activities.
People’s view of others.
For example, the ‘cocooning’ trend of staying home instead
of going out with others.
People’s view of organisations – different attitudes
towards businesses, government institutions, trade unions
and universities.
For example, employees viewing their employer only as a
source for their salary.
20 Chapter 3: Analysing the marketing environment
The macro-environment of
the business
6.
Cultural environment
•
Shifts in secondary cultural values:
o
o
o
People’s view of society – influences their consumption
patterns and attitudes towards the marketplace.
For example, patriotic people that defend society.
People’s views of nature – increased recognition that
nature is finite and fragile has created ‘lifestyles of health
and sustainability’ (LOHAS).
For example, the increasing popularity of organic foods.
People’s view of the universe – the origin of the universe
and our place in it.
For example, the renewed interest in spirituality.
21 Chapter 3: Analysing the marketing environment
Responding to the marketing
environment
Marketers can respond in one of two ways to the
marketing environment:
•
Some firms follow a react and adapt approach.
o
•
They passively accept the marketing environment and do
not try to change it.
Some firms follow a proactive approach.
o
o
o
They take aggressive actions to affect the publics and
forces in their marketing environment.
Taking action can enable firms to overcome seemingly
uncontrollable environmental events.
For example – if a firm is victim to the online spread of
rumours, they can minimise damage by responding
appropriately, taking corrective action if necessary and
setting policies in place to avoid a similar incident in future.
22 Chapter 3: Analysing the marketing environment