marketing environment
TRANSCRIPT
8/11/2009
1
Marketing Management
Marketing Environment
Marketing Environment
• The marketing environment consists of actors
and forces outside the organization that affect
management’s ability to build and maintain
relationships with target customers
• It consists of internal and external forces that
directly or indirectly influence an organization’s
marketing activities
8/11/2009
2
Marketing Environment
• Environment offers both opportunities and
threats.
• Marketing intelligence and research used to
collect information about the environment.
Why External Analysis?
External analysis allows firms to:
• discover threats and opportunities
• see if above normal profits are likely in an industry
• better understand the nature of competition in
an industry
• make more informed strategic choices
8/11/2009
3
• Includes:
– Micro environment: actors close to the company
that affect its ability to serve its customers.
– Macro environment: larger societal forces that
affect the microenvironment.
• Considered to be beyond the control of the
organization.
Marketing Environment
The Company’s Microenvironment
• Company’s Internal Environment:
– Areas inside a company.
– Affects the marketing department’s planning strategies.
– All departments must “think consumer” and work together to provide superior customer value and satisfaction.
8/11/2009
4
Actors in the Microenvironment
• Suppliers:
– Provide resources
needed to produce
goods and services.
– Important link in the
“value delivery system.”
– Most marketers treat
suppliers like partners.
The Company’s Microenvironment
8/11/2009
5
The Company’s Microenvironment
• Marketing Intermediaries:
– Help the company to promote, sell, and distribute its
goods to final buyers
• Resellers
• Physical distribution firms
• Marketing services agencies
• Financial intermediaries
Resellers
• Resellers are distribution channel firms that help the company find customers or make sales to them.
• wholesalers and retailers who buy and resell merchandise.
• Resellers often perform important functions more cheaply than the company can perform itself.
• However, seeking and working with resellers is not easy because of the power that some demand and use.
8/11/2009
6
Physical Distribution Firms
• Physical distribution firms help the company
to stock and move goods from their points of
origin to their destinations. Examples would
be warehouses (that store and protect goods
before they move to the next destination).
Marketing Services Agencies
• Marketing services agencies (such as
marketing research firms, advertising agencies,
media firms, etc.) help the company target and
promote its products to the right markets.
8/11/2009
7
Financial Intermediaries
• Financial intermediaries (such as banks, credit
companies, insurance companies, etc.) help
finance transactions and insure against risks
associated with buying and selling goods.
• Customers:
– Several types of
markets that
purchase a
company’s goods and
services
– Customer vs
consumer
8/11/2009
8
• Competitors:
– Those who serve a target market with products and
services that are viewed by consumers as being
reasonable substitutes
– Company must gain strategic advantage against these
organizations
• Publics:
– Group that has an interest in or impact on an
organization's ability to achieve its objectives
The Purpose of
Five-Forces Analysis
• The five forces are environmental forces
that impact on a company’s ability to
compete in a given market.
• The purpose of five-forces analysis is to
diagnose the principal competitive
pressures in a market and assess how
strong and important each one is.
8/11/2009
9
BuyersSuppliers
Substitute
products
Potential
entrants
Industry competitors
Rivalry among
existing firms
Threat of
new entrants
Bargaining power
of suppliersBargaining power
of buyers
Threat of
substitutes
Porter's Five Forces ModelPorter's Five Forces Model
Threat of New EntrantsThreat of New Entrants
Barriers to
Entry
Barriers to
Entry
Economies of ScaleEconomies of Scale
Product DifferentiationProduct Differentiation
Capital RequirementsCapital Requirements
Switching CostsSwitching Costs
Access to Distribution ChannelsAccess to Distribution Channels
Government PolicyGovernment Policy
8/11/2009
10
Bargaining Power of SuppliersBargaining Power of Suppliers
Suppliers exert power in
the industry by:
Suppliers exert power in
the industry by:
* Threatening to raise* Threatening to raise
prices or to reduce qualityprices or to reduce quality
Powerful suppliers can
squeeze industry
profitability if firms
are unable to recover
cost increases
Powerful suppliers can
squeeze industry
profitability if firms
are unable to recover
cost increases
Suppliers are likely to be powerful if:Suppliers are likely to be powerful if:
Supplier industry is dominated by a few firms
Suppliers’ products have few substitutes
Buyer is not an important customer to supplier
Suppliers’ product is an important input to buyers’ product
Suppliers’ products are differentiated
Suppliers’ products have high switching costs
Bargaining Power of BuyersBargaining Power of Buyers
Buyers compete with the
supplying industry by:
Buyers compete with the
supplying industry by:
* Bargaining down prices* Bargaining down prices
* Forcing higher quality* Forcing higher quality
* Playing firms off of* Playing firms off ofeach othereach other
Buyer groups are likely to be powerful if:Buyer groups are likely to be powerful if:
Buyers are concentrated or purchases are
large relative to seller’s sales
Purchase accounts for a significant fraction of supplier’s sales
Products are undifferentiated
Buyers face few switching costs
Buyer has full information
Buyer presents a credible threat of backward integration
8/11/2009
11
Threat of Substitute ProductsThreat of Substitute Products
Products Products
with similar with similar
function limit function limit
the prices the prices
firms can firms can
chargecharge
Products Products
with similar with similar
function limit function limit
the prices the prices
firms can firms can
chargecharge
Keys to evaluate substitute products:Keys to evaluate substitute products:
Products with improving Products with improving
price/performance tradeoffs price/performance tradeoffs
relative to present industry relative to present industry
productsproducts
Rivalry Among Existing CompetitorsRivalry Among Existing CompetitorsIntense rivalry often plays out in the following ways:Intense rivalry often plays out in the following ways:
Competing for strategic positionCompeting for strategic position
Using price competitionUsing price competition
Staging advertising battlesStaging advertising battles
Making new product introductionsMaking new product introductions
Increasing consumer warranties or serviceIncreasing consumer warranties or service
Occurs when a firm is pressured or sees an opportunityOccurs when a firm is pressured or sees an opportunity
Price competition often leaves the entire industry worse offPrice competition often leaves the entire industry worse off
Advertising battles may increase total industry demand, but Advertising battles may increase total industry demand, but
may be costly to smaller competitorsmay be costly to smaller competitors
8/11/2009
12
The Macroenvironment
• The company and all of the other actors
operate in a larger macroenvironment of
forces that shape opportunities and pose
threats to the company.
The Company’s Macroenvironment
8/11/2009
13
The Company’s Macroenvironment
• Demographic:
– The study of human populations in terms of size,
density, location, age, gender, race, occupation, and
other statistics.
– Marketers track changing age and family structures,
geographic population shifts, educational
characteristics, and population diversity.
Economic Environment
• Changes in Income
– 1980’s - 1990’s – 2000’s –
………………………………….
• Income Distribution
– Upper class
– Middle class
– Working class
– Underclass
Consists of factors that affect consumer purchasing power and spending patterns.
8/11/2009
14
Income Distribution
Walt Disney markets two distinct Pooh bears to match its two-tiered
market.
Natural Environment
• Involves the natural
resources that are
needed as inputs by
marketers or that are
affected by marketing
activities.
8/11/2009
15
Factors Impacting the Natural
Environment
Shortages of Raw Materials
Increased Pollution
Increased Government Intervention
Environmentally Sustainable Strategies
Technological Environment
• Most dramatic
force now
shaping our
destiny.
8/11/2009
16
Technological Environment
• Changes rapidly.
• Creates new markets and opportunities.
• Challenge is to make practical, affordable products.
• Safety regulations result in higher research costs and longer time between conceptualization and introduction of product.
Political Environment
Includes Laws,
Government
Agencies, and
Pressure Groups that
Influence or Limit
Various Organizations
and Individuals In a
Given Society.
Increasing Legislation
Changing Government
Agency Enforcement
Increased Emphasis on Ethics
& Socially Responsible Actions
8/11/2009
17
Cultural Environment
• The institutions and
other forces that
affect a society’s
basic values,
perceptions,
preference, and
behaviors.
Cultural Environment
• Core beliefs and values are passed on from
parents to children and are reinforced by
schools, churches, business, and government.
• Secondary beliefs and values are more open
to change.
8/11/2009
18
Themselves
Others
Organizations
Society
Nature
The Universe
Cultural Environment
Society’s Major Cultural Views
Are Expressed in People’s Views
of:
References : Marketing Management – Philip Kotler
Principles of Marketing – Philip Kotler, Gray Armstrong