School of International Business

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School of International Business BA (HONS)
Business Studies with Specialisms MKT301 LECTURER
Edel Griffin OFFICE International Business
Centre Tel [phone] Email
e.griffin_at_ulster.ac.uk
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School of International Business BA (HONS)
Business Studies with Specialisms MKT301 LECTURE
2 the marketing environment
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• Intended Learning Outcomes
• By the end of this lecture you should be able to
• Identify and Illustrate the Marketing
  Environment
• Define Environmental Scanning and Analysis
• Explain Macro Environment each of its Forces
• Explain Micro Environment each of its Actors
• Discuss the Strategic Opportunities that can
  arise from the Marketing Environment

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The Marketing Environment
A companys marketing environment consists of the
actors and forces that are external to the
marketing management function of the firm and
that impinge on the marketing managements
ability to develop and maintain
successful transactions with its target
customers. The marketing environment represents
the sets of uncontrollable forces to which the
company must adapt its marketing mix.
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• The marketing environment consists of various
  external
• forces that directly or indirectly influence an
  organisations
• acquisition of inputs and generation of outputs.
• These forces are typically divided into two
  categories the macro forces and the micro
  forces of the marketing environment.
• These influences can create opportunities and
  adversities.
• How marketing management monitors and reacts to
  the external forces is crucial to organisational
  survival.

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Environmental scanning and analysis Marketers
must use environmental scanning and analysis
to monitor changes in the marketing environment
Environmental scanning is the process of
collecting information about the forces in the
marketing environment. Environmental analysis
involves assessing and interpreting the
information gathered through environmental
scanning. This process of evaluation monitors
changes that present opportunities or potential
threats/problems for an organisation.
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Responding to environmental forces Two possible
responses to environmental forces are to accept
them as uncontrollable or to confront and
mould them. a. The reactive approach views
environmental forces as uncontrollable and
hard to predict and the organisation as
passive and reactive. b. The proactive
approach attempts to shape environmental forces
to the needs of the organisation.
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Marketing Environment (Kotler Micro/Macro)

• Macro
• consists of uncontrollable forces
• Political Forces
• Economic Forces
• Societal Forces
• Technological Forces
• Natural Forces
• Cultural Forces

• Micro
• consists of actors
• Suppliers
• Business/Company
• Competitors
• Marketing Intermediaries
• Customers
• Publics

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The forces of the macro marketing environment are
the very broad external forces of the trading
environment that have an impact on all businesses
(and often consumers) operating in a particular
marketplace. The micro marketing environment
forces are more company-specific forces
reflecting the nature of the business, its
suppliers, marketing intermediaries
(channel members), buyers, all types of
competitors and publics.
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• Macro Environment Forces
• Shape opportunities and pose threats
• Are continually affecting the companys
  micro-environment actors and thus subsequently
  affecting the marketing mix.

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• Macro Environment Forces
• Political Forces
• Political, legal and regulatory forces are
  closely interrelated
• because political forces influence the following
• Enactment of legislation
• Interpretations of legal decisions by the courts
• Creation and effectiveness of regulatory agencies
  

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• Macro Environment
• Political Forces
• How government and political officials view
  companies and
• industries is important.
• If political officials view a company or industry
  favourably,
• they are less likely to create or enforce
  laws and regulations unfavourable to the company
  or industry they may also influence government
  purchases from this company.
• Political officials can play a key role in
  helping organisations secure foreign markets.
• Some companies attempt to influence political
  elements by helping to elect certain individuals
  to office through campaign contributions.

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• Macro Environment Forces
• Legal Forces
• A number of laws influence marketing decisions
  and
• activities.
• Pro-competitive legislation is enacted to
  preserve
• competition and end various practices deemed
  unacceptable
• by society.
• Monopolies and mergers
• Financial Services Act (1986)
• Anti-competitive practices
• Restrictive Trade Practices Act (1976)
• European Union

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• Legal Forces
• Consumer protection legislation
• The mid-1960s and early 1970s saw tremendous
  growth in
• consumer protection legislation.
• Private organisations such as the Consumers
  Association work
• to further laws governing product safety and
  information disclosure.
• Consumer protection laws include the following
  
• The Fair Trading Act (1973)
• The Food Act (1984
• The Prices Act (1974)
• The Consumer Protection Act (1987)

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• Legal Forces
• Interpreting laws
• Laws and regulations affecting marketing are
  stated in vague terms.
• Some companies may operate in a legally
  questionable way to see how much they can get
  away with.
• Other organisations may interpret a law very
  conservatively to ensure that they are not
  violating that law.
• Recent court decisions are analysed by marketers
  to understand the
• law better and to gain a clearer sense of how the
  courts will interpret
• an issue in the future.

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• Macro Environment Forces
• Regulatory Forces
• Some regulatory agencies are created and
  administered by governmental units and others by
  non-governmental sources.
• Government (Similar administrative bodies exist
  in most countries.)
• The Ministry of Agriculture, Fisheries and Food
• The Department of Employment and Learning
• The Department of Environment
• The Department of Education
• The Department of Enterprise, Trade and
  Investment
• The Department of Health, Social Services
  Public Safety

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Regulatory Forces C. Local authorities (Similar
administrative bodies exist in most countries.)
- UK local authorities have far reaching
functions, some primary and others discretionary
- County councils are responsible for matters
requiring planning and administration over wide
areas needing substantial resources, including
transport planning, highways, traffic regulation,
local education, consumer protection, refuse
disposal, police, the fire service, libraries
and personal social services. - District
councils administer functions of local
significance, including environmental health,
housing decisions, most planning applications
and refuse collection.
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Regulatory Forces C. Local authorities (Similar
administrative bodies exist in most countries.)
- Most countries in Europe have a similar
structure - The European Union aims to
establish commonly accepted parameters for
planning, service provision and regulation, and a
framework to assist in inter- and intra-country
disputes
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• Regulatory Forces
• D. Non-governmental regulatory forces
• Self-regulatory programmes operate in the absence
  of government
• regulations and in an attempt to prevent
  government interference e.g.
• ITC Code of Advertising Standards and Practice
• Deregulation
• Governments can drastically alter the environment
  for companies.
• Privatisation of the public utilities in the UK
  created new terms and
• conditions for their suppliers and
  sub-contractors.

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• Macro Environment Forces
• Economic Forces
• 1. General economic conditions
• These conditions change because of fluctuations
  in the economy that follow a general pattern
  referred to as the business cycle, which consists
  of four stages
• Prosperity
• Recession
• Depression
• Recovery

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• Macro Environment Forces
• Economic Forces
• Consumer demand and spending behaviour
• Buying power refers to the resources such as
  goods and services and financial holdings that
  can be traded in an exchange situation.
• The major financial sources of buying power are
  income, credit and wealth.
• Income
• Disposable income
• Discretionary income
• Credit
• Wealth

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• Macro Environment Forces
• Economic Forces
• 3. Consumers willingness to spend is affected by
  several factors
• The products absolute price and its price
  relative to the prices of substitute products
• The amount of satisfaction that an individual
  currently receives or expects in the future from
  a product already owned
• An individuals expectations about future
  employment, income level, prices, family size and
  general economic conditions

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• Macro Environment Forces
• Economic Forces
• Consumer spending patterns indicate the relative
  proportion of annual family expenditures or the
  actual amount of money spent on certain kinds of
  goods and services.
• Comprehensive spending patterns
• Product-specific spending patterns

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Macro Environment Forces Economic
Forces Assessment of Competitive Forces 1. For a
business, competition is any company that markets
products that are similar to, or can be
substituted for, its products in the same
geographic area. 2. Types of competitive
structure include monopoly, oligopoly, monopolist
ic competition and perfect competition
3. Competitive tools influence the level of
competition and are used to deal with competitive
economic forces. E.g. price, specific market
segmentation, product features, promotional
methods, distribution channels, store locations
and service.
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Macro Environment Forces Economic
Forces Assessment of Competitive Forces 4.
Monitoring competition is essential because
marketers in an organisation need to be
aware of the actions of major competitors. E.g.
Competitive monitoring allows businesses to
determine what specific strategies competitors
are following and how those strategies affect
their own
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• Macro Environment Forces
• Economic Forces
• Clearly influences the main features of a
  market
• Market population
• Disposition
• Ability to Pay
• Note Important factors income distribution,
  unemployed, wealthy, middle class.

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• Macro Environment Forces
• Technology is the knowledge of how to accomplish
  tasks)
• The effects of technology are broad in scope and
  today exert a tremendous influence on everyones
  lives.
• Technology results from scientific research
  performed by
• businesses, universities and not-for-profit
  organisations.
• The rapid technological growth of the last
  several decades is expected to continue in the
  new millennium.

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Technology Forces The impact of technology
Effects of technology on society -
Technological developments have improved
standards of living. Effects of technology on
marketing - Technological changes in
communications affect how marketers reach
customers (e.g. facsimile machines and the
Internet). - Technological advances in
transport have enabled consumers to travel
farther and more often to shop at a larger
number of stores.
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• Technology Forces
• The Adoption and use of technology
• Through technology assessment, managers try to
  foresee the
• effects of new products and processes on a
  companys operations, other business
  organisations and society in general
• 2. Companies whose products and product changes
  grow out of
• recent technology strive to gather and use
  technological
• information.
• 3. The use of technology is sometimes affected by
  whether companies in an industry use it as a
  competitive tool.
• 4. The use of technology can also depend on the
  extent to which a
• company can protect inventions resulting from
  technological
• information
•  

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• Technology Forces
• Accelerating the pace of technological change
  (SWOT)
• Opportunities New Products
• Threats Technology Redundant
• The impact of the micro chip pervading all
  aspects of life
• Technology is an exponential race and who-ever is
  the leader is continually pulling further and
  further away from the others.

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• Macro Environment Forces
• Societal/Green Forces
• Living Standards and Quality of Life
• Consumer Movement Forces
• Societal/green forces comprise the structure and
  dynamics
• Of individuals and groups and the issues that
  engage them.

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• Societal/Green Forces
• Society expects marketers to provide a high
  standard of living with
• many goods and services.
• People also desire a high degree of quality in
  their lives.
• Consumers have become increasingly concerned
  about
• environmental issues such as pollution, waste
  disposal and the
• greenhouse effect.
• Marketers have a responsibility to help provide
  what societal
• members want and to minimise what they do not
  want.

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• Societal/Green Forces
• Consumer movement forces
• The consumer movement is a diverse collection of
  independent
• individuals, groups and organisations who seek
  to protect the rights of consumers.
• 2. Major consumer movement issues are
  environmental protection, product performance and
  safety, and information disclosure.
• 3. Major forces of the consumer movement are
  individual consumer advocates, consumer
  organisations and other interest groups, consumer
  education and consumer laws.

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• Societal/Green Forces
• Natural Environment
• Must be aware of the threats and opportunities
  associated with impending shortages, increased
  cost for energy, increased levels of pollution.
• Environmentally friendly products Public
  opinion
• Prices of oil increasing an non renewable
• Using Ireland as the green island e.g.
  Ballygowan.

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• Demographics
• Changing Age Structure
• Slow down in birth rates
• Increase in life expectancy
• What does this mean for marketers
• ?

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• Demographics
• In Europe..
• Ageing Population
• Labour Shortages
• Implications
• Children (decline)
• Youth (decline)
• Early Middle Age (Boom)
• Retirees (Boom and longer life expectancy)

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• Demographics
• More Working Women
• Higher Quality Goods
• Day Nursery Services
• Home Cleaning Services
• More TV Dinners
• Advertising directed towards women
• Smaller families

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• Demographics
• Average Household Size Declining
• Youths leaving home earlier
• Increased demand household goods
• Smaller apartments
• Inexpensive smaller appliances

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• Demographics
• Geographic Shifts
• Holiday houses sun area across Europe
• Switch to greener activity based holidays
• Quality of Life
• Boom in sale of Irish Cottages
• Emigration, college leavers etc 18-26
• Rural to urban

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• Culture
• More than any other function of a business
  marketing is
• perhaps the most susceptible to cultural error.
  Since
• marketing by definition requires contact with the
  people of the
• market/country concerned.
• Beware of stereotyped notions of cultures as
  this can be expensive!!!!

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The Marketing Environment Micro
Environment Consists of the actors in the
companys immediate environment that effect its
ability to serve its customers. Macro
Environment Consists of the larger societal
forces that affect all the actors on the
companys micro environment.
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• The Micro Marketing Environment
• The Business
• Suppliers
• Marketing Intermediaries
• Buyers
• Competitors
• Publics

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• Micro Environment
• Business Must be aware of constraints and
  directions
• (objectives/policies) as well as the interactions
  with other
• functional departments within the company.
• Internal Environment - top management, finance,
  research and development, purchasing,
  manufacturing, sales and marketing, logistics.
• Senior management corporate goals and
  colleagues views, inputs, concerns and
  abilities to implement the desired marketing
  plan must all be taken into account.

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• Micro Environment
• Suppliers Provide the resources needed by the
  company
• and competitors and is influenced by
• Price Trends
• Shortages and delivery promises
• Vendor Specifications J.I.T Stock Management
• E.D.I.
• Quality
• Power of Suppliers (Preference for multi-sources)
• Without the understanding and co-operation of
  these
• other organisations, a business would fail to
  deliver a
• quality product or service.

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• Micro Environment
• Marketing Intermediaries/Channels
• Aid the company in promoting, selling and
  distributing goods to the final customers.
• Access to distribution systems
• Expertise and knowledge
• Problems.Large middlemen chains could
  effectively freeze out your product
• If you dont come to their terms

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• Micro Environment
• 4. Competitors
• Marketers must strive to satisfy target customers
  in a manner that differentiates their product,
  brand and overall proposition from competing
  companies marketing mixes.
• It is essential that marketers understand their
  competitive arena
• Competition stems not only from like-for-like or
  direct rivals (e.g.Sainsburys versus Tesco), but
  also from substitute products (e.g.tunneling
  moles removing the need for JCB backhoe loader
  diggers) or new entrants (e.g. Daewoos sudden
  emergence into the European small and medium car
  market).

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• Micro Environment
• Customers/Buyers
• Customers are fickle and their needs and
  perceptions must be
• continually surveyed.
• As customers needs evolve, different businesses
  will be placed
• differently in terms of resources, skills,
  marketing mix
• programmes and products to satisfy such changing
  customer
• requirements.
• Consumer Markets
• Industrial Markets
• Reseller Markets
• Government/Non-Profit

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Micro Environment Publics The micro marketing
environment also includes any grouppublicthat
does or could impact on a businesss ability to
satisfy its targeted customers and achieve its
corporate objectives. These could include
financial bodies, communications and media
outlets, government bodies, consumer and pressure
groups, neighbourhood publics, the general public
and internal publics such as the workforce.
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Marketing Environment Strategic
Opportunities Changes in the marketing
environment can trigger major developments that,
if large enough, are called strategic windows or
paradigm shifts. If market leaders fail to
monitor the marketing environment and do not spot
or react quickly enough to an underlying
opportunity or evolutionary change, competitors
may gain an advantage.
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• Marketing Environment and Strategic Opportunities
• Strategic windows occur because of many issues in
  the
• marketing environment, including six broad
  causes
• New Technology
• New Markets
• New Distribution Channels
• Market Re-definition
• New Legislation and Regulation
• Financial and Political Shocks

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• Marketing Environment and Strategic Opportunities
• The marketing environmentmacro and micro forces
  must be
• continually monitored in order to maximise
  marketing
• opportunities and fend off competitors actions.

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• Lecture Outline
• Overview of the Marketing Environment
• Definition
• Environmental Scanning and Analysis
• Macro Environment its Forces
• Micro Environment its Actors
• Strategic Opportunities
• Summary