BHO1171 - School of HTM - VU

THE MARKETING ENVIRONMENT

OBJECTIVES
Understand what makes up the environment
How various forces have influence on the firm
The definitions of micro and macro environments
Factors that comprise micro environment
Factors that comprise macro environment
Why the environment needs to be monitored

BHO1171 - School of HTM - VU
THE MARKETING ENVIRONMENT
Decisions regarding the 4Ps of marketing cannot be made
in isolation from the changing environment.

The business environment must be:
Examined and Monitored
on an ongoing basis.
What are the factors the company needs to monitor?
BHO1171 - School of HTM - VU
The Operating Environment
The marketing environment does not actually
form part of the marketing process, however the
environmental factors influence most aspects of
the marketing process

Business firms are open systems, which means
that outside factors impact on business
operations
BHO1171 - School of HTM - VU
Definition
A Company's 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. (Kotler).

Marketing Environment = Opportunities and threats.
Environment = Micro and Macro.
BHO1171 - School of HTM - VU
The Firms Environment
The environment of a company consists of a large
range of factors and influences that may impact on its
ability to serve its customers and survive in the long
term.

Factors outside the control of the firm
Factors that are internal to the firm and on which the
firm can exercise full control directly
Factors and influences on operations coming from
independent organisations which can be managed by
the marketing firm

BHO1171 - School of HTM - VU
The Firms Internal Resources
The firms micro environment includes:
Production
Financial capability
Human resources
Companys location and image
Research and Development capability
Important to have coordination between marketing
and these non-marketing resources


BHO1171 - School of HTM - VU
Actors in Microenvironment- figure
3.1
Suppliers
Company
Competitors
Marketing
Inter-
mediaries
Customers
Publics
BHO1171 - School of HTM - VU
Internal Environment- Figure 3.2
Marketing
Manufacturing
Finance
R & D
Accounting
Purchasing
Senior
Management
BHO1171 - School of HTM - VU
Why are suppliers and buyers considered as
micro factors?
Suppliers
Provide resources and raw materials to run the business. Can
impact on prices, costs, availability and quality
Buyers & Facilitating organisations
Those that distribute the firms output, like wholesalers and
retailers (specialists in their field)
Organisations that provide transportation, warehousing an other
support services like financing (publics)
To what extent are these controllable by a firm?
BHO1171 - School of HTM - VU
Why are competitors and consumers considered as
micro factors?
Competitors: Other firms in the same line of business,
using the same or similar suppliers of raw materials,
channels of distribution, and trying to attract the same
customers. A firms activities may be constantly
affected by actions of direct competitors.
Consumers: also have a constant impact on the
activities of the firm and what a firm does is greatly
influenced by its customers
BHO1171 - School of HTM - VU
Customers and Markets
Insert Fig 3.3 - describes the various types of
markets

Insert Fig 3.4 -describes the role of Publics
Eg Why are banks interested in how firms perform?
Why would the media be interested?
Why would the Government be interested (regulations)
BHO1171 - School of HTM - VU
Types of Customer Markets
BHO1171 - School of HTM - VU
Types of Publics
BHO1171 - School of HTM - VU
Macro-environment
Macro-environment consists of larger forces that
influence the company's operations
Social & Cultural forces
Demographics
Technology
Economics
Political
Natural & Physical

BHO1171 - School of HTM - VU
Major Forces in the organisations
Macro Environment
BHO1171 - School of HTM - VU

MACRO-ENVIRONMENTAL FORCES


Cannot be controlled

External forces influence organisational plans.

Often totally unpredictable.

BHO1171 - School of HTM - VU
MACRO-ENVIRONMENTAL FORCES
CASE STUDY
1 S11 and airlines and tourism 2001

2 Arnotts Biscuits - 1996

BHO1171 - School of HTM - VU
Demographic Environment
Geographic
Shifts
Education
Growing
Ethnic
Diversity
Changing
Family
Structure
Age
Structures
Key
Demographic
Trends

BHO1171 - School of HTM - VU
DEMOGRAPHICS

Description of the population
Age structure of population
37% of the population are aged 40-64
Aging population
Family Structure changing
Increasing age of those marrying
Delayed child bearing
Increasing two income families
Non-family households
Geographic population shifts
More education
Jobs in the services sector
Women in workforce


BHO1171 - School of HTM - VU
Students will need to understand why marketers need to study
the population(markets)
What are the implications of the changing age structure of the
population?
Explain who the baby boomers aretheir changing needs &
wants
What are the implications of
changing household structure,
ethnic diversity?
Movement of population


BHO1171 - School of HTM - VU
Economic Environment


Changes
in Consumer
Spending Patterns

Economic
Development
Changes
in Income Key
Economic
Concerns for
Marketers
BHO1171 - School of HTM - VU
THE ECONOMIC ENVIRONMENT

Inflation and interest rates
Unemployment
Economic Cycle
Markets require purchasing power as well as people.

Purchasing Power = f (income, prices, savings, credit
costs, etc.)
It is often unclear what impact the economy will have
on a single industry. Good times do not necessarily
help all businesses.

BHO1171 - School of HTM - VU
Natural Environment
Key Areas
of Concern
in the Natural
Environment
Shortage of
Raw Materials
Increased
Pollution
Government
Intervention
Energy
Costs
BHO1171 - School of HTM - VU
THE NATURAL or PHYSICAL
ENVIRONMENT
Marketers should be aware of the threats and opportunities with
four trends in the natural environment:-
(a) impending storage of raw materials
(b) the increased cost of energy
(c) the increased levels of pollution
(d) the government intervention in natural resource
management.

Others to be aware of are:
natural phenomena that affects their markets,
greenhouse effect,
solid waste problem (eg: McDonald's move away from
polystyrene packaging),

BHO1171 - School of HTM - VU
Technological Environment
Fast Pace of
Change
High R & D
Budgets
Focus on Minor
Improvements
Increased
Regulation
Issues in the
Technological
Environment
BHO1171 - School of HTM - VU
THE TECHNOLOGICAL ENVIRONMENT
Determines the type of products that can be made
available for the satisfaction of needs and wants.
Technology fosters opportunities to:
increase consumer satisfaction and
gain competitive edge.
Today we have many products not available a few years
ago:
New developments - new markets but destroy existing
ones.
Product development, prices, promotions, packaging
and distribution are all directly influenced by
technology.

BHO1171 - School of HTM - VU
Political Environment


Greater
Concern for
Ethics

Legislation Enforcement
Key
Trends in the
Political
Environment
BHO1171 - School of HTM - VU
THE POLITICAL ENVIRONMENT
(includes legal framework)
Inequities develop when the economic and social
systems are left to their own devices. Government
intervenes and represents the wants and needs of
citizens and makes laws on their behalf.

Government regulation has two purposes -

(a) to protect companies from one another
(b) to protect individuals and society at large
from unethical business practices.
EG Food Safety legislation

BHO1171 - School of HTM - VU
Shift in Secondary Cultural Values
Of
Organizations
Of
Nature
Of
Oneself
Of
Society
Of
the Universe
Of
Others
Peoples
Views
BHO1171 - School of HTM - VU
SOCIAL & CULTURAL ENVIRONMENT
Beliefs, values, norms of behaviour
Cultural patterns are changing faster
Attitudes, perceptions and behaviour patterns
Subcultures
Subcultures display different consumption behaviour:
ethnic groups
older generations
women
gay community
children
religious groups
BHO1171 - School of HTM - VU
COLLECTING DATA ON YOUR OPERATING
ENVIRONMENT
Many companies collect data on the environment as a
matter of course. Some areas of interest being

resource availability

recent and pending legislation

what competitors are doing

technological changes.

BHO1171 - School of HTM - VU
STATE AND FEDERAL LEGISLATION THAT
AFFECT MARKETING
FEDERAL LEGISLATION
Trade Practices Act
Broadcasting and Television Act
Trade Descriptions Act
Customs Act
Insurance Act
Conciliation and Arbitration Act

STATE LEGISLATION
Consumer Affairs Act
Sale of Goods Act
Hire Purchase Act
Fair Prices Act
Companies Code
Motor Car Traders Act
Food Safety Act