The Marketing Environment

Session 2

21st Century Marketing

Objectives of the session

Recap from previous session The importance of the external

environment to marketing decision making

Scanning the environment to identify opportunities and threats

Diverse nature of the marketing environment

Understand the influences at work in the marketing environment

Marketing defined

Marketing is the management process responsible for identifying, anticipating, and satisfying customer requirements profitably. (CIM, 2001)

Marketing activities/tasks

• Identifying customer needs and motives - bringing you products/services you want now and in the future.

• Offering products at prices you can afford.

• Providing information to make informed choices.

• Satisfying consumer choices and giving value.

Marketing defined

Marketing is to establish, maintain and enhance relationships with customers and other partners, at a profit, so that the objectives of the parties involved are met. This is achieved by mutual exchange and fulfilment of promises.

Grönroos 1997

Corporate and social responsibility (CSR) -

Societal and ethical marketing

• An emergent and growing marketing philosophy.

• Companies continually strive to find effective ways to attract and retain customers.

• Importance of handling marketing responsibly in a way that contributes to the well being of society.

• Links between good ethics, market share and profitability.

• Companies not only consider its customers and its profitability but also the good of the wider community (local and globally).

UK report ‘Who are the Ethical consumers?’

(Roger Cowe and Co-operative Bank’s head of corporate affairs) as quoted by Mason, 2000

The potential for ethical products and services in the UK could be as high as 30% of consumer markets.

52% of consumers had recommended companies because of the companies’ responsible reputation.

44% of consumers had avoided a product or service because of a company’s behaviour.

The external organisational environment

Marketing as an interface

The basic marketing mix (4Ps)

The extended marketing mix (7Ps)

• Price.

• Product.

• Place.

• Promotion.

• People.

• Processes.

• Physical evidence.

STEP analysis

Organisations do not operate in a vacuum. They need to look outwards at the following factors:

• Socio-cultural.

• Technological.

• Economic and competitive.

• Political and legal.

Elements of the external environment

Environmental scanning

The collection and evaluation of information from the wider marketing environment that might affect the organisation and its strategic marketing activities.

An important task but often a difficult one.

Information sources

• Previous experiences.

• Personal contacts.

• Published research studies.

• Government statistics.

• Trade sources.

• Specially commissioned market research.

Socio-cultural environment

Demographics: Age Gender Race Lifestyle Family life-cycle Occupation

Example – ‘The grey market’

In the past 8 years pensioners incomes have risen faster than average earnings

As much as 40% (£260bn) of the total UK annual consumer spending can be attributed to the over 50s

People aged 50-65 spend twice as much on leisure and entertainment than under 30s

The over 50s buy 80% for all the top of the range cars, 50% of skin-care products and 80% of leisure cruises

56% of the over 50s have a home PC or laptop and 44% like the idea of using the internet

70% have a mobile phone and 46% already have digital TV

Source: http://www.ageconcern.org.uk

Impact of societal attitudes on marketing strategy

Technological environment

• Fast moving and changing environment.

• An environment with far reaching effects on businesses and their products/services.

• Technological advances can affect materials, components and products, manufacturing business processes, administration and distribution systems.

The technological advances

• Technology developed for other purposes, e.g. academic, medical or military use.

• Market driven technological advances, e.g. companies R&D departments searching for specific solutions to marketing problems.

Technology and materials – an example

Elite sports people want to maximise their performance and look to sports clothing manufacturers to provide sports wear that provides that added edge.

Speedo the swim wear manufacturer has its shark’s skin suits that it claims reduces drag and enhances a swimmers performance in the water.

The Italian swim wear company Diana (and the official supplier to the UK swimming team) has its own developed fabric which does not absorb water as other fabrics do.

Technology helping the dialogue between a company and its customers

• Technology has helped market research - complex sets of data can be input and analysed quickly and safely.

• Database technology allows the storage, retrieval and maintenance of detailed customer profiles and the creation of personalised customer marketing offers.

• Information sharing and communication between company and customers.

• Means of ordering goods and services.

Macroeconomic influences on the flow of goods and services

Economic impact examples

• Rates of VAT vary across Europe - this had led to ‘unofficial markets’ e.g. illegal imports of tobacco and alcohol.

• Interest rate rises can influence the amount of cash a consumer has available to purchase luxury items, for example.

• Exchange rates - for example strong exchange rates mean that imports become cheaper, exports however become more expensive.

• International trading blocs for example EU trade agreements, General Agreement on Tariffs and Trade (GATT), etc.

Market structures• Monopoly.

• Oligopoly.

• Monopolistic competition.

• Perfect competition.

Monopoly

• Where one supplier has sole control over a market and there is no competition.

• Where there is a captive market with no alternative source of supply.

• A strong positive image, good customer service, and fair pricing are essential.

Oligopoly

• Where a small number of companies account for a large share of the market.

• Where a certain amount of interdependence exists between the key players.

• Oligopolists spend time watching each other.

Monopolistic Competition

• Many competitors in market.

• Each has differentiated products.

Perfect Competition

• Involves many small producers all supplying identical products that can be substituted for each other.

• Producers do not influence or determine price.

• There are no barriers to market entry or exit.

• Buyers and sellers have complete information about what is happening.

The political and regulatory environment

• National and local governments - determine and maintain the legislative framework within which organisations do business. Examples include contract law, consumer protection, competition and trading policies.

• The European Union - guidelines and directives which aim to achieve consistency across member states.

• Regulatory bodies – e.g. Office of Fair Trading, Advertising Standards Agency, Competition Commission, etc. These bodies are there to monitor and regulate commerce.

Activity

Working in pairs, choose an organisation or market sector of your choice and carry out a STEP analysis. What are the main influences affecting its marketing environment