The Marketing Environment
(including Chapter 2 and 3 in Kolter and Keller)
Today’s Lecture
•The External Environment
–Definition, Significance, Techniques
(PEST)
•Strategic Marketing
–Definition, Benefits, Stages,
Techniques (SWOT, Five Force
Model)
•Market and Marketing Research
–Definition and significance (Ch 4)
Kotler on
Marketing
Today you have
to run faster
to stay in
place.
Marketing Environment
Definition
A company’s marketing environment
consists of the task environment of
actors and the broad environment that
affect the company’s ability to develop
and maintain successful transactions
with its target customers.
Kotler (2000)
Analyzing Needs and Trends in the
Macroenvironment
• Trend: a direction or sequence of events that
has some momentum and durability
• Fad: unpredictable, short-lived, and without
social, economic, and political significance
• Megatrends: large social, economic, political
and technological changes that had grate
influences for some longer time
Figure 6-1:
Colgate-Palmolive’s
Total Global Branding
Strategy
Colgate-Palmolive has
had global success
with its Colgate line of
tooth-care products.
The products and their
packaging design do
not vary from country
to country; the only
thing that changes is
the language on the
packages.
Forces (Macro) & Actors (Micro)
Broad Forces
Political/Legal
Technological
Task Actors
Customers
Competitors
Publics/Stakeh
olders
Suppliers
Company
Intermediaries
Economic
Social/Cultural
Marketing Environments
• Opportunities from Macro Environments
• Social security
• Telecommunication
CCTV or security
systems
Mobile phones
(3G)
Marketing Environments
• Challenges from Macro Environments
Decrease in birth rate
Recruitment of
private schools
Improvement of
technology
Short Product Life Cycle
Dynamic strategic planning
The PEST Analysis
• Political
• Economic
• Societal
• Technological
Political Environment
Increased
Legislation
PoliticalLegal
Environment
SpecialInterest
Groups
Economic Environment
Income
Distribution
Subsistence economies
Raw-material-exporting
economies
Industrializing economies
Industrial economies
Savings, Debt, &
Credit Availability
Changes in incomes
Cost of living
Interest rates
Saving and borrowing patterns
The Social/Cultural Environment
- Demographic Change
• World-wide population growth
but in developed countries
getting married later, having
less children
• Living longer - ageing
population - Baby boomers
1946-64, Generation X 19651976 and Generation Y 19771994
• Geographical shifts multicultural societies
• Household changes. Diverse or
non-traditional households.
Meeting Family Size Needs
• Folger’s Coffee
addresses an important
need by allowing single
people to brew one cup
of coffee at a time.
The “Sandwich Generation”
• This insurance ad reminds us that people in the
“sandwich generation” often must care for their parents
in addition to their children.
Cultural Values
Two Brides
Women Manage Many Tasks
• Women often manage
many tasks within the
family that pull them
in many directions.
Attitudes & Lifestyle
Of
Oneself
Of
the Universe
Of
Nature
Views
That Express
Values
Of
Others
Of
Organizations
Of
Society
Status Symbols are Always in Flux
• At one time, having very
pale skin was the mark of
an upper social class
because it indicated that the
person did not have to work
in the fields. Today, a
suntan is equated with
leisure time and consumers
go to great lengths to get
one naturally or with
“help.”
Technological Environment
Accelerating Pace
of Change
Unlimited Opportunities
for Innovation
Issues in the Technological
Environment
Varying
R & D Budgets
Increased
Regulation
Figure 6-2: Virtual Reality Applications in Marketing
Virtual Reality technology lets users interact with computergenerated worlds through sight, sound, and touch.
Example PEST Analysis
• Political
– Privatisation of national carriers
• Economic
– Low interest rates on debt leading to
increased penetration of credit cards
• Social
– Increase in demand for overseas
destinations
– Increasing consumer knowledge and
confidence
• Technological
– Increasing affordability and penetration
of technology such as the internet and
mobile phones.
Strategic Marketing Planning
(SMP)
The managerial process of developing
and maintaining a viable fit between
the organisations objectives, skills, and
resources and its changing market
opportunities. The aim of strategic
planning is to shape the company’s
businesses and products so that they
yield target profits and growth.
Kotler (2001)
Strategic Marketing Planning (SMP)
Business Mission
Marketing planning
and control at
corporate/business
level
Marketing Audit - Internal and
External Analysis
SWOT Analysis
Where are we now?
How did we get
here?
Where are we
heading?
(Re) evaluation of Mission
Strategic Options
Marketing planning
at product level
Where would we like to be?
Marketing Objectives
Tactical Plans & Mixes (4Ps)
Evaluation & Control
How do we get there?
Are we on course?
SWOT Analysis
SOURCE
Internal Controllable
Strengths
External Uncontrollable
Opportunities
Weaknesses
Threats
Internal Factors include: Marketing activity: Financial
situation; Manufacturing operations; Organisational style
and structure. See Kotler (2000) pg 78
SWOT Analysis of Easy Jet
Strengths
Weaknesses
Established brand name
Reputation for unreliability
Flies out of central airports
Limited UK coverage
Has flexible staff contracts
supporting low cost proposition
Has charismatic CEO
Opportunities
Threats
Increasing mobile phone usage
Increased competition from other
airlines
Interactive television
Ageing population
Post Sept 11th flying fears
Competition from other forms of
transport
Drawing a Conclusion
• Formulate strategic options that:
– Minimise weaknesses and threats
– Maximise strengths and opportunities
• For example:
– Threat: Increased competition and limited UK
coverage
– Strategy: Take over competitor increasing
coverage of UK market
Competitive Forces
Five Forces Determining Segment Structural
Attractiveness
Threats of:
1. intense segment
rivalry
2. new entrants
3. substitute products
 buyers’ growing
bargaining power
 suppliers’ growing
bargaining
power
Identifying Competitors
• Industry Concept of Competition
• Industry
– Number of Sellers and
Degree of Differentiation
• Pure monopoly
• Oligopoly
– Pure oligopoly
– Differentiated oligopoly
• Monopolistic competition
• Pure competition
Identifying Competitors
– Entry, Mobility, Exit Barriers
• Entry barriers
• Mobility barriers
• Exit barriers
– Cost Structure
– Degree of Vertical Integration
• Vertical integration
– Degree of Globalization
• Market Concept of Competition
Designing Competitive Strategies
Figure 9-6:
Hypothetical
Market Structure
(Kolter, 2003)
Benefits of SMP
• Forces organisation to critically evaluate its current situation
in light of current and future environmental trends
• Prompts firm to identify its strengths and weaknesses
• Increases awareness of opportunities and threats
• Encourages organisations to adapt
• Stimulates achievement
• Promotes search for competitive advantage
However there are also problems:
• How confident are we in identifying and predicting trends?
• By selecting certain options are we restricting ourselves and
losing flexibility/stifling creativity?
Summary
• There are two components of the marketing
environment - the broad forces and the task actors
• PEST is a technique used to evaluate the forces in the
marketing environment
• SMP is used to “fit” the organisation to its
environment and a key tool is a SWOT analysis
• There are both benefits and problems of SMP
• Market and Marketing Research are important in
linking the firm to the marketing environment