Transcript Understanding the Micro and Macro Environment

Understanding the Macro
and Micro Environment
See Past Exam Papers for Sample
Questions
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Learning outcomes
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Elements of the marketing environment
Macro and Micro environmental analysis
Understanding Consumer Buyer
Behaviour
Understanding Industrial Buyer Behaviour
Defining and analysing competitive forces
The Macro
Marketing
Environment
Copyright: Southwestern
Publications 2006
1. The Competitive Environment
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Competitive Environment:
competitive products, substitute
products for one another, companies
competing for your consumer’s
purchasing power.
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Monopoly – examples in Ireland?
Deregulation movement - ex
Oligopoly - ex
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Direct
Competitive
Products
Which would you
buy?
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Indirectly Competitive Products
products than can be substituted for
one another
Plastic Containers vs. Glass vs. Tin vs.
Aluminum
Sugar vs. Artificial Sweeteners
Typewriter vs. PC
Ocean Liner Vs. Air Travel
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Developing a Competitive
Strategy
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Should we compete?
If so, in what markets should we
compete?
How should we compete?
Involves:
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Researching the market
Identifying current &potential
competitors
Anticipating competitive actions
2. Political-Legal Environment
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Component of the marketing
environment consisting of laws and
interpretations of laws that require
firms to operate under competitive
conditions and to protect consumer
rights.
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Deregulation –
Increases
Competitiveness
Regulatory Forces
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Controlling the PL
Environment
 Companies fight
Government :
Consumer Safety
unjust regulations
Commission, IFSRA,
 Regulations can
Environmental
present new
Protection Agency,
opportunities
Health and Safety etc
 Political lobbying
Consumer interest
groups
 Boycotts
 PETA
 Political action
Special-interest groups
committees
 ISME
Is Horticulture industry regulated?
Self-regulatory groups
 Advertising
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3. The Economic Environment
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Factors influencing consumer buying
power and strategies (stage of the
business cycle, inflation,
unemployment, resources, income
etc)
The Wealth effect
(Ireland)
The figures on the map show the level of
average new car prices in each market
compared to the average for all euro currency
markets. Index 100 represents the European
average
The Wealth
Effect
Fastest Growing Market for
New Car – Eastern Europe
(Latvia 49% increase on 2005)
During prosperous times car
manufacturers will add luxury
extras
Source: Fact
Finders 2006
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Inflation and Deflation
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Inflation: The devaluation of money by
reducing what it can buy through
continued price increases. (Ireland)
Deflation: Falling prices
* Lowest annual EU rates:
Netherlands
(3.0%/1.9%), Portugal (3.1%/-1.2%), Ireland
(3%/-2.4%). Highest rates: Latvia (15.6%/7.7%),
Lithuania (12.2%/6.9%).
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Unemployment
 The proportion
of people in
the economy
who do not
have jobs and
are actively
looking for
work.
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Income
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Discretionary income: the amount of
money people have to spend after
paying bills and necessities.
Resource Availability
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Demarketing: reducing consumer
demand for a good or service to a level
that the firm can supply.
4. The Technological Environment
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The technological
environment:
application of
knowledge in
science,
inventions, and
innovations to
solve problems
Heating
Technologies
Toyota Prius
Technology Advances Consumer Needs
Technology increases exponentially
 New technology as a key to long-term
competitive advantage
 create more efficient operation or better
products
 may render existing products obsolete
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5. The Social-Cultural Environment
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The relationship
between marketing
and society and its
culture
Issues:
 Obesity in
Children
 Negative Body
Images
 Video Games
 Healthy Eating
etc ..
Cultural Environment: Elements of
Culture
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Language
Manners & Customs
Technology & Material Culture
Social Institutions – business, family,
political- Latin America
5. Education –transmitting values, skills,
attitudes etc
6. Aesthetics – attitude toward beauty, art,
music etc
7. Religion
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World’s Religions
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Christianity - 2.0 billion followers
Islam - 1.2 billion followers
Hinduism - 860 million followers
Buddhism - 360 million followers
Confucianism - 150 million followers
Religion can affect marketing strategy
Social Environment: Role of
Families and Working Women
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Working women has had a greater effect
on marketing than any other social change
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Increases in females in the workforce
Purchasing power from dual-career
families
is rising
Cost is more important to women.
Quality is more important to men.
Population Considerations
Concerned with the study of the quantifiable
aspects of population structures,e.g., age,
gender, size, race, occupation and location.
Some factors to consider:
 falling birth-rates
 the rise of the “mature” market segment
 the “household of one”
Demographic Factors
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Generation Y: Born between 1979 and
1994, size = marketing impact, fickle and
skeptical group, techno’s
Generation X: Born between 1965 and
1978, time premium, majority have
children and houses, savvy and cynical
consumers
Baby Boomers: Born between 1946 and
1964
Younger Boomers (ages 41 to 49)
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Home is the castle, spend on kids
Older Boomers (ages 50 to 59)
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Spend on home upgrades & Holidays
Growing Ethnic and Community
Markets
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Irish population is becoming multicultural
society and workforce
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Growth in spending power in:
 Eastern European Populations
 African Populations
 Asian Populations
‘Pink
Pound’ ’Dorothy
Dollar’
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6. Natural Forces
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Conserve natural habitats,
resources, endangered species
Minimise environmental impact
Sustainable resource use
Recycle
Energy efficient products
‘The Polluter Pays Principle’
The Micro Environment
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Customers: needs, wants and providing benefits for
their customers. Failure = failed business strategy.
Employees: correct and motivated staff is essential to
strategic planning. Training and development, service
sector, competitive edge. (Cereality)
Suppliers: Price of raw material affect the marketing
mix. Closer supplier relationships benefit strategy.
Shareholders: inward investment for growth.
Satisfying shareholder needs can cause a change in
strategy. (Sharwoods+internet companies, Birds Eye)
Media: Positive or adverse attention. Consumer
programs
Consumer Buyer Behaviour
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Chapter 5 of book
Talk about 3 consumer roles – Consumer is a
user, a payer and a buyer;
User – concerned about product features and the
uses they can be put to (JML ads on TV)
Payer – concerned about price and credit deals
available (0% down, 0% until…)
Buyers – concerned with logistics of procuring the
product (order by certain date for delivery
before…)
Consumer Buyer Behaviour
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Consumer Needs & Wants
Needs are unsatisfactory conditions of the
consumer that prompt them to an action that will
make the condition better
Wants are desires to obtain more satisfaction
than is absolutely necessary
Food vs. Gourmet Food, Car vs. Porsche etc
Consumer Behaviour-Psychology
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The perception of a consumer about a certain
service/product is what matters.
Learning also features in consumer behaviour.
Especially for a complex purchase.
Motivation is defined as a state of drive that
impels behaviour towards a goal-object.
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Maslow’s Hierarchy of Needs
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Abraham Maslow described motivation as a
means of satisfying human needs.
Physiological Needs – Food, shelter
Safety & Security Needs – car safety, fire safety
Belongingness & Love Needs – Teenagers clothes
Esteem & Ego Needs – Self Gift Giving
Need for Self Actualization – Engage in self
improvement activities
Psychographics:Describing Consumer
Behaviour
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Psychographics is a facet of motivation and
explains how a person acts during the
consumption phase.
The way they act is guided by a person’s:
Values
Self Concept
Lifestyle
VALS – values & Lifestyles
Attitudes
Individual Consumer Decision Making process
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Step
Step
Step
Step
Step
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Chap 5 of Book
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1:
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5:
Problem Recognition
Information Search
Alternative Evaluation
Purchase
Post purchase Experience
Industrial Buyer Behaviour
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Who says that you will always market to an
individual??
‘The decision-making process by which formal
organisations establish the need for purchased
products and services, and identify, evaluate, and
choose among alternative brands and suppliers’
Kotler and Armstrong 1989
Industrial Buyer Behaviour
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The process can be summarised as follows
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Problem Recognition
Need Description
Product Specification
Supplier Search
Supplier Selection
Purchase Routine Specification
Performance Review
Analyzing Competitive Forces
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Check Chapter 4 of Book, from pg 117
Competitor Research
Auditing Current Competitors
Auditing Potential New Competitors
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See in chapter 4 a competitor Analysis Template