Understanding the Macro and Micro Environment

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Learning outcomes

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

Competitive Environment: competitive products, substitute products for one another, companies competing for your consumers purchasing power.

Monopoly examples in Ireland? Deregulation movement - ex Oligopoly - ex

Direct Competitive Products

Which would you buy?

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

Developing a Competitive Strategy

Should we compete? If so, in what markets should we compete? How should we compete? Researching the market Identifying current &potential competitors Anticipating competitive actions

Involves:

2. Political-Legal Environment

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.

Deregulation Increases Competitiveness

Regulatory Forces

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

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

Inflation and Deflation

Inflation: The devaluation of money by reducing what it can buy through continued price increases. (Ireland) Deflation: Falling prices

* Lowest annual EU rates:

Lithuania (12.2%/6.9%).

Netherlands (3.0%/1.9%), Portugal (3.1%/-1.2%), Ireland (3%/-2.4%). Highest rates: Latvia (15.6%/7.7%),

Unemployment The proportion of people in the economy who do not have jobs and are actively looking for work.

Income

Discretionary income: the amount of money people have to spend after paying bills and necessities.

Resource Availability

Demarketing: reducing consumer demand for a good or service to a level that the firm can supply.

4. The Technological Environment

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

5. The Social-Cultural Environment

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

1. 2. 3. 4. 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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Worlds Religions

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

Working women has had a greater effect on marketing than any other social change

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

Generation Y: Born between 1979 and 1994, size = marketing impact, fickle and skeptical group, technos 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)

Home is the castle, spend on kids Spend on home upgrades & Holidays

Older Boomers (ages 50 to 59)

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Growing Ethnic and Community Markets

Irish population is becoming multicultural society and workforce Growth in spending power in: Eastern European Populations African Populations Asian Populations

Pink Pound Dorothy Dollar

6. Natural Forces

Conserve natural habitats, resources, endangered species Minimise environmental impact Sustainable resource use Recycle Energy efficient products The Polluter Pays Principle

The Micro Environment

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

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

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

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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Maslows Hierarchy of Needs

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

1. 2.

3.
4. 5.

Psychographics:Describing Consumer Behaviour

Psychographics is a facet of motivation and explains how a person acts during the consumption phase. The way they act is guided by a persons: Values Self Concept Lifestyle VALS values & Lifestyles Attitudes

Individual Consumer Decision Making process

Step Step Step Step Step

1: 2: 3: 4: 5:

Problem Recognition Information Search Alternative Evaluation Purchase Post purchase Experience

Chap 5 of Book

Industrial Buyer Behaviour

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

The process can be summarised as follows Problem Recognition Need Description Product Specification Supplier Search Supplier Selection Purchase Routine Specification Performance Review

Analyzing Competitive Forces

Check Chapter 4 of Book, from pg 117 Competitor Research Auditing Current Competitors Auditing Potential New Competitors

See in chapter 4 a competitor Analysis Template