MBA
Marketing Management
MKT 600
Marketing Environment
Marketing Competitive Environment and The
Marketing Process
Lecture Overview
 Introduction
 Micro Environment:



Company
Markets
Stakeholders
 Macro Environment:




P Political
E Economic
S Social
T Technological
 Marketing Process
 Marketing Mix
 Summary
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INTRODUCTION
It has been said that the only constant in life is change. Organisations exist
today in far more complex business environments than ever before, which
has increased the importance of the marketing function.
Environmental influences might be friendly or hostile and pose varied threats
and opportunities. Marketing needs to understand the changing business
environment in which its organisation operates so it can make informed,
appropriate and timely decisions.
The marketing system as shown in your first lesson notes is itself
encapsulated by what's generically called the marketing environment.
Remember, marketing is essentially an externally focused function which
seeks to identify and take action against threats and opportunities. However,
it also has to recognise the organisations strengths and weaknesses if it is to
avoid the threats and take advantage of opportunities . As such, marketing
needs to understand its environment both at a macro and at a micro level.
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MARKETING ENVIRONMENTS
MACRO
MICRO
(Uncontrollable variables)
(Controllable variables)
Political
Economic
Social
Technological
Company (marketing activities and
plans)
Markets (customers/competitors)
Stakeholders
(customers/competitors,
shareholders, suppliers, banks,
retailers, creditors, employees,
government etc)
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MICRO ENVIRONMENT
In this environment the company has some control of the various forces or players.
Company: Marketers need to develop close working relationships with other
organisational functions, like accounting, engineering, design, production, purchasing, R&D
etc in order to assess the strengths and weaknesses of the organisation.
Markets: A company’s customer – can include consumers, wholesalers, retailers, agents,
local authorities, charities etc. Each market is different and so will have a different make up
of customers with different needs.
Competitors will also differ dependent on the customers needs to be served as
shown below: - A typology of markets
Consumer markets
Products
Domestic
Services
International
Industrial markets
Intermediary markets
Institutional markets
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Stakeholder System:
As the name implies, a company operates when the context of a network of interest
groups each of which has a particular relationship with the organisation and often
conflicting interests and motivations (see below a hypothetical company working
within the prescription and medical field).
Competitors
Suppliers/Creditors
Customers/debtors
Shareholders
Banks&financial advisors
Company
Employee unions
Hospital authorities
Research contractors
Retailers/wholesalers
Professional bodies
Medical control bodies
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Government
MACRO ENVIRONMENT
In this environment the company has very little control of the various
forces involved. There are various acronyms given to the macro forces
such as DEPICTS, SLEPT, but the most common is called PEST and is
shown below:
POLITICAL
ECONOMIC
SOCIAL
TECHNOLOGICAL
Macro Environmental forces/ (factors or variables). Further variables
such as demographics, culture, law, investment, competition are
included in some of the other acronyms.
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MACRO ENVIRONMENT

Political (includes legal) - self regulation aside, most governments
have developed a body of legislation and enforcement frameworks in
respect of industry trade and consumer rights. For example –
a)
b)
c)
d)
Legislation in respect of monopoly and competition standards re:
Office of Fair Trading, Resale Price Maintenance Act, 1977,
Competition Act 1979 etc.
EC membership means UK firms are also subject to Community
provisions in respect of Article 85 of the Treaty of Rome .
Measures to protect consumers in terms of advice and guidance,
food, drugs etc. Much of this is covered in the Laws of Contract,
Trade Description Act 1973 and the Food and Drugs Act 1955,
Lotteries and Amusement Act 1976 Act 1976.
In addition to government and regulating bodies, there are also
consumer watchdogs such as the Consumer’s Association Bureau
European des Union de Consummateurs, Friends of the Earth and
Greenpeace etc.
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MACRO ENVIRONMENT
• Economic – income distribution and changes in purchasing power globally,
upheavals in technology and communications have brought about a shift in the
balance of economic power. From the West (UK, USA, Europe) to the expanding
economies of the Pacific Rim. WTO figures suggest by 2010 purchasing power
income per head in countries like Singapore, South Korea and parts of China will
exceed the USA. In western countries where consumer purchasing power is
reduced, as in economic recession, value for money becomes a key purchasing
criterion. Changing consumer spending patterns – older population means more
spent on leisure, alcohol and health.
 Increased cost of energy
 Inflation, recession and recovery
 Government fiscal policy
 General agreement on tariffs and Trade GATT
 Social – This force can normally be divided into 2 headings,
demographical and cultural.
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MACRO ENVIRONMENT
 Demographics
Summary of key demographic variables shown below:
UK Population
Size and growth
Growth rate
Age structure
Birth/death rates
Sex distribution
Life expectancy
Density
Location
Geographic/
regional shifts
Data Trends and
Household size
Projection
Family size
Single non family households
Marriage/divorce statistics
Income and wealth
distribution
Working
populations
Education and
participation
Socioencomic
groups
Occupational
groups
Ethnic
composition
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MACRO ENVIRONMENT

Demographics
Population and age distribution – many western countries birth rates are
declining. Nil population growth rate at present but is expected to go into
decline from 2020 onwards. More than 25% of the population will be
retired by 2010.
Household/family composition – people marrying later. Younger people
staying at home with parents. Workforce participation among married
women is increasing significantly. Career couples with no children now
commonplace especially among indigenous white population.
Geographical shifts – many post-industrial societies in the UK and US
have witnessed major decline in population numbers and employment.
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MACRO ENVIRONMENT
 Culture – standardisation of cultural values continues within the EU, but lifestyles differ
across individual country markets. Social class structures as demonstrated by socioeconomic
groupings is not always relevant.
Socioeconomic
group
Social class
Type of occupation
Example
A
Upper class
Middle class
Higher managerial professional
Surgeon, director of
large company
B
Middle class
Intermediate managerial
professional, admin
Bank manager, head
teacher, surveyor
C1
Lower middle
class
Supervisory, junior managerial, or
admin, clerical
Bank clerk, nurse,
teacher, estate agent,
police
C2
Skilled
working class
Skilled manual workers
Joiner, welder,
foreman
D
Working class
Semi-skilled and unskilled
Driver, postman,
cleaner, shop worker
E
Those at
lowest level of
subsidence
Low paid/unemployed
Casual worker, state
pensioners,
unemployed,
students
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MACRO ENVIRONMENT
• Technology – probably the most dramatic force now shaping our
destiny which can create whole new markets and destroy others. Factors
include;
Pace of technological change – many of today's common products were
not available 100 years ago (e.g. TV's, Cars, homes freezers, computers,
satellites, aeroplanes and mobile phones). The pace of technological
development and therefore the product life cycles is getting shorter.
High R&D budgets – technology and innovations require heavy
investment in R & D leading to more collaborative arrangements with
suppliers.
Concentration on minor improvements
Increased regulations – as products become more complex they need to
know they are safe. Such regulations can add significantly to product
costs.
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MARKETING PROCESS
Where are we at?
i.e. Opportunities and threats
assessment of environment
Deciding where to go
setting of objectives
Determine which way is best
Deciding strategies (i.e. who/what market to
target with what – positioning)
How do we set about achieving?
Planning marketing programmes: 4 P’S
Product
Price
Target Market
Promotion
Place
Organising the marketing effort
Marketing plan – resource planning,
implementation
Reappraise through control
Rapid changes in the environment means each
P needs to be reassessed periodically and its
effectiveness checked via a marketing audit.
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PRINCIPLES AND PRACTICE OF
MARKETING
The marketing management process within an organisation’s operations
Opportunity/Threat Analysis
Organisation Resources
Organisational Objectives
Development of Marketing strategy
Identification of target market/
determination of marketing mix
Implementation of Marketing
Strategy
Monitoring and control of
marketing activity
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MARKETING RELATIONSHIPS
Economic
Demographic
Technological
Intermediaries
Product
Suppliers
Promotions
Target
Customers
Price
Publics
Place
Political
Legal
Competition
Social
Cultural
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THE MARKETING ENVIRONMENT AND
THE MARKETING PROCESS
A marketing strategy within an
environmental system
Macro Environment
POTENTIAL
INFLUENCES
ECONOMIC
INFLUENCES
PRODUCT
PRICE
DEMOGRAPHIC
&
SOCIAL
INFLUENCES
PLACE
COMPETITION
PROMOTION
LEGAL
INFLUENCES
TECHNOLOGICAL
INFLUENCES
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SUMMARY
The marketing environment and the marketing process shapes the
marketing strategy. Targeted customers stand in the centre of the
organisation and the company must focus its efforts at satisfying
them.
The company develops a marketing mix made up of the resources
under its control (4 or 7P’s).
The diagram on the next slide demonstrates the relationship
between the environment, the market, the company and its target
customers in enabling the organisation to adapts its micro
environment in order to take advantage of the opportunities or
avoid the threats in its macro environment.
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