Environmental marketing

By
Dr. Raafat Youssef
 Exam hint
 The new assessment is exam only (there is no
longer an assignment option).

 The exam will consist of eight compulsory questions,

five short questions (each worth 8 marks) and three
long questions (each worth 20 marks). All will be
based to some extent on the mini-case, which will
be issued in advance. Overall weighting within
questions is: 40 per cent for theory and 60 per cent
for evaluation, application and format.
 Session 1
Introduction to organization
“The management process
which identifies, anticipates
and satisfies customer
needs profitably.”
 Introduction to organization
Organization:
a. Social arrangement

b. Common objectives

c. Formal control system

d. Preoccupied with performance

e. A framework of written or tacit rules (e.g. articles of

association)

f. A decision-making hierarchy (e.g. Board of Directors)

 The financial and business capacity of some
multinationals is so powerful that the world-
wide annual turnover of some such as Exxon
(Esso) and Toyota is said to exceed the
gross domestic product of many of the
smaller Western European countries.
 The Organisation’s Marketing
Environment
The Macro environment

The Micro environment

The Internal
Political Environment Customers Economic
legal forces
Suppliers Production,
forces
Finance, R & D
Personnel
Other
stakeholders Competitors
Social
Cultural
forces Intermediaries

Technological
forces
Micro-environment:
The factors that the organization will have an
influence over

Macro-environment:
The factors that will have an impact on the
organization but the organization can not control
Ways of classifying organizations
1-Size : small & large
2-Legal status :
Sole trader
partnership
limited
public limited
3-Ownership :
private
public
co-operatives
Ways of classifying organizations
4-Profit : profit oriented & non profit oriented

5-Activity : manufactures & retailers

6-Accountability: shareholders & government

 Organization size
SME = Small & Medium Enterprises

Def of SME:
Organizations with less than 250 employees
 Advantages of small companies
1-Less bureaucracy quick response to
customers

2-Owners close to customers

3-Rapid development of innovative products

4-Personalized approach to customers

5-Overheads: less cost

cost saving low price for products
Advantages of large companies

1-Large resources

2-Economy of scale

3-Wide geographical coverage

 Types of organizations
1- Formal:
Social unit constructed to seek specific goals

2- informal:
Social group who interact with each other
without a designed manner from the
organization
Formal Informal
Formal constitution Spontaneous
Planned division of Loose structure
responsibility
Defined communication Flexibility
channels
Controlled by power No control
 Authority, responsibility,
accountability & delegation
Authority
-It is the right to do something
Responsibility
-It is the formal obligation to do something
Accountability
-The individual duty to inform his superior how he
has fulfilled his responsibilities
Delegation
-It is the process in which a superior gives a
subordinate the authority to carry out a given
aspect of his own task
 Legal status
1- Sole traders

2- Partnership

3- Limited companies

4- Public limited companies

 Sole trader
-He owns &runs a business & earns profits
e.g.Plumbers

Strengths:

1-No set up procedures

2-All profits
3-Closeness to employees and customers
4-Flexibility
5-Personal supervision over business
 Sole trader
Limitations:

1-Unlimited liability

2-Limited individual skills

3-Lack of economy of scale

4-Difficult fund raising

 Partnership
-2 or more individuals carrying a business
on an agreed basis e.g. accountancy

Strengths:

1-Expansion of capital resources

2-Wide range of skills
3-Spread of financial and operating
responsibilities
 Partnership
Limitations:

1-Unlimited liability

2-Need for other experiences

3-Disputes may arise

 Limited companies

- Limited liability

- Separate ownership & control

- Shareholders provide capital not

management
 Limited companies
Strengths:

1-Limited liability

2-Seperation of business from owners

3-More professional appearance

4-High resources
 Limited companies
Limitations:

1-Greater formalities

2-Less response to customers

3-Less flexible

4-Larger overhead costs

5-Longer decision time

 Public companies
-Organizations controlled directly & or indirectly & or funded
by central & or local government

-Public organizations are either

a- Commercial :postal service
b-Non commercial : army

-Trends in public sector:

a-Privatization
b-Outsourcing
c-Management by autonomous exclusive agencies
Public companies
Strengths:

1-Economy of scale

2-Ready finance by tax payer

3-More efficient

4-Allocate resources fairly

 Public companies
Limitations:

1-Political considerations affecting decision making

2-Bureaucratic culture

3-Lack of profit motivation

 Private companies
Strengths:

1-Profit objectives provide focus

2-Customer orientation

3-Effectiveness in improving customer services

4-Employment contribute to increase performance

 Private companies
Limitations:

1-High cost of products and services

2-Conflict between profit and social objectives

3-Less attention to social responsibilities

4-Less likely to volunteers

 Holding Company
 Many companies in fact hold shares in other
enterprises which they may have formed or
acquired.

 However, if any one company exceeds more

than 50 per cent of the voting rights within
another company, that company is then
referred to as a holding company.
 QUANGOs

-It is a quasi- autonomous non government organization

-It is a non government organization that implement

government policies

-Any administrative body that is nominally independent

but relies on government funding; for example, the
British Council
 Co-operatives
- Worker co-operatives among farmers and
craft workers were generally established in
times of recession or rapid structural decline
in the industries concerned.
- These co-operatives have also encountered
much difficulty in raising capital for large-
scale ventures.
- The Scott Bader Commonwealth, a chemical
concern
 Co-operatives
 Traditionally, and nowadays, co-operatives are still
most prevalent in agriculture and retailing.
 They are governed by relevant legislation.
 Workers usually retain the ownership and control of
co-operatives.
 Each member of a co-operative is allocated a vote.
 Co-operatives favour self-help rather than profit
maximization.
 Co-operatives usually operate through a
management committee.
 Co-operatives favour the equitable distribution of
dividends if and when a surplus is achieved.
 Co-operatives benefit from limited liability
 Franchise
-It belongs to the private sector
-The owner of the product is called Franchisor sells the right
to distribute the product to another one called Franchisee
e.g. KFC , McDonald’s

Advantages of Franchises:
1-Easier to raise capital as using known name
2-Avoid administrative set up costs
3-Avoid initial marketing costs
4-Can use franchisor’s marketing resources
 Non commercial organizations
1- Trade unions

2- Voluntary organizations e.g. charity (Oxfam)

 Non commercial organizations
Strengths:

1. Trusted by users
2. Dedicated staff
3. No conflict between profit and social objectives
4. Answer social needs
 Non commercial organizations
Limitations:

1. Lack of clear objectives

2. Competition for funds
3. Difficulty in measuring efficiency
4. Lack of marketing experience
 Formal and informal economy
Formal economy:
The activities of the public and private sectors and
their combined output is measured by GDP

Informal economy:
-Garment workers working from their homes
-Domestic labor such as childcare and cooking
-Do it yourself activities like gardening ,
maintenance and repair
 Economy
An economy is made up of three parts:

the public sector, the private sector and the

informal economy
Key drivers for organizational change

Internal reasons:
1- Type of organization

2- Resources available

3- Major shareholders

4- The attitudes & personal

values of senior managers
Key drivers for organizational change

External reasons:
1- Competitor activity

2- Customer needs

3- External environment in general

4- Nature of the market

 Economy of scale
Definition:
Getting discounts for buying materials and services
of bulk

Types:
1- Internal economy of scale
2- External economy of scale
 Internal economy of scale

-Technical

-Commercial (marketing)

-Financial
Organizations (6/99)
A-Using a representative explain the strengths and
weaknesses of one of the followings
1-A voluntary sector organization
2-A private sector organization (10 marks)

B-Explain the potential marketing advantages

possessed by a small business compared to a
public limited company (10 marks)
 Session 2
Organization as systems
At Microsoft, we work to help people and businesses
throughout the world realize their full potential. This
is our mission. Everything we do reflects this mission
and the values that make it possible.
 Mission

It is the rationale of existence

of any organization, its long
term strategic direction,values
,basic function
 Mission
It includes (PSVP)

-Purpose
-Strategy
-Value
-Policies
 Mission
Our Mission
By connecting people, we help fulfill a
fundamental human need for social
connections and contact. Nokia builds bridges
between people – both when they are far apart
and face-to-face – and also bridges the gap
between people and the information they need
 Mission Statement Examples
 Microsoft: “Help people & businesses throughout
the world realize their full potential.”

 Honda: “Maintaining a global viewpoint, we are

dedicated to supplying products of the highest
quality at a reasonable price for worldwide customer
satisfaction.”

 P&G: “Provide branded products & services of

superior quality & value, that improve the lives of
the world’s consumers. As a result, consumers will
reward us with leadership sales, profit & value
creation, allowing our people, our shareholders &
the communities in which we live & work to
prosper.”
 Mission Statement Examples
 Vodafone: “To be the world’s mobile
communication leader, enriching customers’ lives &
helping individuals, businesses & communities be
more connected in a mobile world.”

 MobiNil: “To be the leading mobile service provider

in Egypt, providing the best quality service for our
customers, the best working environment for our
employees, top value for our shareholders & proudly
contributing to the development of our community.”

 AUC: “Provide high-quality educational

opportunities to students from all segments of the
Egyptian society as well as from other countries,
and to contribute to Egypt’s cultural & intellectual
life.”
 Mission
Problems

- Ignorance with practice

- Public relations

- Generalized mission
Criteria of good mission statement
-Brief & easy to understand

-Clear

-Should differentiate the organization from others

developing its uniqueness

-Focused on a limited number of goals

-Stresses the company’s major policies and values

 Bill Gates

“A PC with windows
software on every
desk”
 Vision
It is the future state of the organization

(how the company foresees the future)

Mission Vision
- Here & now - Future

- Realistic - Unrealistic

- Relevant - Out of date

- Continual - Renewed if achieved

 Objectives

-Quantified statement of what to achieve over a

period of time

-Classification
Primary versus secondary

Strategic,functional & operational

 Objectives
Strategic:
-Set by senior management
-Broad and long term
-Example: (To achieve and maintain the position of leadership)
Tactical:
-Set by middle managers
-Example: (Open 10 new stores this year)
Operational:
-Set by first line managers
-Short term
-Example: (Daily production target)
 Objectives
SMART

S --------- Specific
M--------- Measurable
A --------- Achievable
R --------- Relevant
T --------- Timed
 Objectives
- Profit and profit maximization
- Survival
- Market share
- ROI , ROCE
- EPS
- Growth
- Quality
- Added value
 Profitability
-Profit = revenue – cost

-Malcolm Glazer ”Owner of

Manchester united” plans
to raise ticket prices by
more than 50 %over the
period to 2010
Profit maximization
 Profit maximization
Methods:

1-Supplying those goods that consumers most wish to

buy

2-Cost reduction

3-Innovative products
 Survival ( Drucker)
-This is the basic drive in all businesses
-Japanese people accept cuts in their salaries

- Survival:
To survive provide the market with economic product
To survive you have to innovate
To survive your business must be profitable
To survive you have to predict the market social climate
 Growth

-It is in the interests of management

-Growth may lead to diseconomies of scale
-Growth is attractive why ???
=Resolve conflict between stakeholders
=Opportunities for promotion
=Company power
 Market share
-Share of the organization versus the total market

-There is a positive correlation between market

share and profit but to a certain limit after that
extra share may only be bought at the expense
of profit
ROI – ROCE( Ansoff)
Return on investment
Return on capital employed

EPS
Earning per share
 Influences on objectives
Internal External
- Senior management -Key stakeholder
- Resources -Competitive environment
- Key shareholder -Change in government
- Past successes -Technology
- The degree of risk
System approach to organizations
- It is a complex consisting of many
interdependent parts

- Types
Closed
Semi-closed
Open
 Stakeholder
-People with interest in the activities of the
organization

- Types
=Internal
=External
=Connected
 System reaction to environmental
changes

-Short term adjustments

-Long term structural alterations
-Example:
Tobacco company
 Business process re-engineering
- Introduction of radical changes in business
processes to achieve breakthrough results
in the form of high performance with low
cost
 Value of system approach
-Focus on customer needs

-Dynamic nature of business

-Interrelation between marketing & other departments

-Feedback essential for adaptation

-Scenario thinking
Marketing & business orientation
1- Functional (production) orientation

2- Sales orientation

3- Marketing orientation
 Virtual organization
-Connection between different employees located at
different locations

-This is facilitated through the use of technology

 Session 3
Marketing environment & change
 Environmental complexity

It is the uncertainties which impact upon an

organization
 Environmental dynamism
-It is the ability of the economy to grow
rapidly without the need to intervention

-Factors enhancing dynamism

1-Increased global demand
2-Increased use of information technology
 Turbulence
- It is the degree of of instability of the environment

- Factors leading to turbulence are:

=Political
=IT revolution
=Regional balances of power
=Exchange rate
=Globalization
=Terrorism
- Dimensions of turbulence are complexity & dynamism
 4 sources of turbulence in the U.K car
industry
-Change in legislation governing relationship
with dealers
-High value of sterling
-Change on taxation on cars
-Recycling requirements
 Turbulence
The marketing environment is often characterized by
turbulence and uncertainty

1-Explain the term environmental turbulence in this

context (4 marks)
2-Identify with justification 4 potential sources of
turbulence in an in industry of your own choice (12
marks)
 Change
Resistance to change
-Self interest in the present status
-Fear of the unknown
-Loss of confidence
-Work overload
-Lack of purpose
-Misunderstanding to the benefits of change
-Distrust
-Low tolerance for change
 Change
Reactions to change

-Acceptance
-Indifference
-Passive resistance
-Active resistance
 Coping with change
1. Environmental intelligence

2. Forecasting change

3. Organizing for change

4. Marketing change

5. Promoting a culture for change

 Social responsibility
- Definition
- Types:
=Profit
=Stakeholders
=Society
-Advantages
-Costs
- e.g Avon
 Social responsibility (6/2000)

Define social responsibility and consider

either its costs or its benefits in marketing
terms (8 marks)
 Answer guidelines
 Definition of social responsibility
 Types
 Consumer rights (short hint)
 Examples
 Benefits
 Costs
 Session 4
The Micro-environment
 Demand
Factors determining demand:

=Product price
=Other products prices
=Income
=Tastes , fashion
=Customer expectations
 Substitutes versus complements

- Substitutes = Coca-Cola & Pepsi

- Complements = Computer & printer

 Supply
Factors affecting product quantity supply:

-Price
-Production cost
-Changes in technology
-Natural factors
-Prices of other goods
 Data , information & knowledge
- Data classification
Primary data Secondary data
Data collected for Data already exist
specific purpose

Specific Non specific

Recent , relevant Old

Expensive Low cost
 Published statistics
1-Governmental

2- Non governmental:
-Professional institutions
-Libraries
-Year books
-Trade journals
-Market research journals
 Ideal data
Criteria
-Recent
-Complete
-Documented
-Credible
-Relevant
-Cost effective
 Field research techniques
1-Observation

2-Experimentation

3-Survey
 Sources of data about micro-
environment
Internal
-Sales reports ,customer complaints ,minutes of
meetings ,newsletters & intranet

External
-Internet ,published data ,governmental statistics
,exhibitions , newspapers & trade journals
 Market intelligence
(Environmental auditing)
-It is a way of analyzing & auditing the market
-Sources
=Academic journals
=Conferences & exhibitions
=Newspapers
=Sales force feedback
=Monitoring competitors
 Competitor intelligence system
Data sources:

-Customers
-Suppliers
-Competitors former employees
-Mystery shopping
Session 5
Stakeholders
Stakeholders

-People who affect or being affected by the

organizational activities

-Classification:
Internal
Connected (SSCC)
External
Stakeholder mapping (Mendelow)

A B
(taxpayer) (local residents)

C D
(government) (quality assessors)
Implications of stakeholder mapping
1-Stakeholder power & interest must be recognized
& put in consideration

2- Reposition can be made according to the

attitudes of stakeholders
Employees
Looking for:

1. Organizational continuation and growth

2. Job security
3. Career development
4. Training
5. Comfortable working environment
 Employees
If dissatisfied:
1. Absenteeism
2. Low productivity
3. Low morale
4. Leak to press
5. Staff turnover
Board of directories
-Executive & non executive

-They are delegated power by shareholders

-They expect high performance

-They include internal & connected stakeholers

Shareholders
-They look for ROI

-If dissatisfied they may sell their shares

Bankers

- Looking for recollection of their money

- If dissatisfied
=Limit or withdraw credit facilities
=Change the interest rate
Suppliers
-They look for
=Regular supply schedule
=Timely payment

-Unsatisfied supplier
=low quality products
=reduce priority
=supply competitors
=Forward integration
Distributors

-They make the product available for customers

- They look for

=Reliable supply
=Support in promotion

-Dissatisfied distributor
=Stock competing products
=Delay payment
=Backward integration
Consumers
-Pay money for value
-The main customer needs are QSP
-Customer value equation
-Factors limiting the customer bargaining power
=limited knowledge , limited competition
=binding contract
=innovation
Customers
-They look for ???????????

-Unsatisfied customer
=reduce purchase
=go to the competition
=complaining
=press for legislation
Microsoft believes in leading the market by
following the customer
External stakeholders
1-Government
Government bodies are interested in the activities
of commercial organizations :

=Spending pattern of companies on capital equipment can

affect macro-economics

=Use the private sector support to relieve their burden

=Successful business leads to high tax collection

2- Local authorities

3-Professional bodies

4-Pressure groups
Some definitions
Capitalism (free market economy)
-It is the economic system predominated by
supply & demand and not by the state
Remuneration
-It is paying for effort
Redress
-Compensation for loss or injury
 Stakeholders
For an organization of your choice
A-identify the main stakeholders of that
organization and briefly explain their significance
(12 marks)

B- select 2 of these stakeholders groups and outline

the methods the organization can use to
communicate with them effectively (8 marks)
 Answer guidelines
-Definition of stakeholders
-industry example : car , banking , tourism ….
-diagram
-stakeholder discussion
-Aim of communication (DRIP)
-2 stakeholders (customers and employees)
-communication with customers (methods)
-communication with employees (methods)
Session 6
Pressure groups
Pressure groups
-Organized group that seeks to influence the
government policy or legislation without putting
up candidates for election

-Characteristics :
=Defend certain interests
=Exert pressure for their own purposes
=Influence government decisions
=No political participation
Pressure Groups
 Can be categorised as sectional (interest) or
promotion/cause
 Have specific common interests or attitudes
 Exert pressure on people, organizations or
government for their own specific purpose
 Seek to influence the context of government
decisions
 Do not seek election and are not political
parties
 Exercise pressure to secure favorable
decisions and prevent undesirable ones
 Pressure group classification
Interest Promotional (issue)
-Section of society -Promote certain issue

-Benefit for the group -Benefit for the society

-Example: -Example:
Royal college of physicians Animal rights
Other classification
1-Insider groups

2- Outsider groups

3-Both insiders and outsiders

Pressure group actions
1-Action through the government

2-Action through Parliament

3-Action through public campaign

4-Direct action
Reactions of businesses towards pressure groups

1-Ignorance

2-Neotiation

3-Accommodation of the pressure group

point of view
Consumerism

Increased importance & Power of consumers

Consumer rights
 Right of safety
 Right to be
informed
 Right to be
heard
 Right to choose
 Session 7
The industry environment
 Porter’s 5 Forces
RESPONSE TO THE COMPETITIVE FORCES ACTING ON AN INDUSTRY

Threat
of new
Entrants

Threat INDUSTRY Intensity of

of PROFITS Competition
Substitutes Rivalry

Power Power
of of
Suppliers Customers
 The threat of new entrant
-They will bring extra-capacity
- They have to make an investment to break the
market

-The threat of the new entrant depends on 2

factors :
=Strength of entry barriers
=Response of existing competitors
What are the barriers to entry in the
industry?
n Economies of scale
n Product, brand & service differentiation
n Capital requirements
n Cost of switching
n Access to distribution channels
n Patents
n knowledge
n Brand loyalty
n Know how
The threat of substitute
- Indirect competition
- Similar products used in other “industries
- Advances in technology allows companies to
develop substitute
- Video versus CDs
The bargaining power of customers
-Volume & importance of purchase
-Switching cost
-Existence of substitute
-Threat of backward integration
-Nature of products
-Customer knowledge
-Product quality
The bargaining power of suppliers
-Number of suppliers
-Threat of new supplier
-If the suppliers products are vital or not
-If the suppliers products are well differentiated
-Number of customers relative to suppliers
Rivalry among current competitors
Strength of competition depends on the followings
-Large number of equally balanced competitors
-The rate of industry growth
-High fixed cost
-Exit barriers
Competitive strategies(3 strategies)
1-Cost leadership

2-Differentiation

3-Focus (niching)
Cost leadership
-Price competition

-High sales volume

-Entry barriers

-Walamrt
Differentiation
-Building competitive edge

-Differentiation how ?????

-IBM
Focus
-Concentrate on one or more segment

-For example the firm will focus on a

particular type of buyer
 Competitive edge (competitive advantage)
-Anything which gives an organization or any product
an edge over competitors
-Selling points
-C.E of a product :nature ,quality or price
-Significance of C.E to the marketer:
=C.E must be relevant to customer needs
=Must know the competitors C.E
=Not to focus on single C.E
 5 forces model
You are asked to provide a report on the subject of
Michael Porter’s five force structural analysis

A-Explain the relation between the five forces and

long run profitability in the market (14 marks)

B-Recommend one strategy that could help maintain

profitability in the face of these five forces (6
marks)
 Answer guidelines
 Porter’s five forces
 Diagram
 Elaboration for each force
 Examples when possible
 Selection of one the competitive strategies e.g.
differentiation
 Causes of selection of that strategy
 How that strategy can deal with each force of them
 Monopolistic competition
-Here there are many sellers who compete for buyers
in a market
-Each firm offers a slightly different product and
each has only a small share of the market
-In this type of the market many shoe manufacturer
including Nike , Reebok , and Adidas compete with
one another to offer consumers some unique
benefits
-
Industry structure
Monopoly Oligopoly Pure competition

Only one firm Few companies Many

provides a certain producing the competitors
product same product offer the same
commodity
Electricity Cell phone Grocery
Railways
Industry structure
-large number of small firms---- Fragmented industry

-Small number of large firms--- concentrated industry

-Firms of great uncertainties ---- emerging industry

Fragmented industries
-Large number of small & medium sized firms with
no market leader

-Perfect competition
Large number of firms
Each with very small market share
Homogenous product
Free information exchange
Free entry
Free exit
Concentrated industry
It is dominated by small number of large firms
which are able to influence the market as whole
-It arises where the largest 4 or 5 firms account for
perhaps 70%of the total sales of the market

Oligopoly
-The market is dominated by few suppliers
-One firm can not set price without considering
other competitors
-Collusion is an attractive option
-Oligopolists tend to avoid the use of price as a
competitive weapon

-The most common rival reaction would be not to

follow a price increase but always to follow a
price cut
(both ways the ways the firm will lose profits)
-Economy of scale tend to be significant
-Dominant market leaders may emerge e.g.
Microsoft or Nokia
Industry structure
Fragmented Concentrated (oligopoly)
(perfect competition)
-large number of small -small number of large
firms firms
-low entry barriers -high entry barriers
-no market leader -dominant market leader
-monitoring competition -monitoring competition
is not important is very crucial
Price discrimination
-Selling the same product at different prices in
different markets
Types
1-By place
2-By person
3-By time

-Effective price discrimination:

=Monopoly
=Different classes of buyers
=The firm is able to prevent resale of the goods
Emerging industry
-It is a new or reformed industry
-It can be created by technological innovation by
social &economic changes
-Example :Electronic publishing
 Cartel
-It is the association of suppliers.
-They cooperate to fix prices or quantity supplied
e.g. Price cartel by taxi drivers
-Cartel success depends on:
=If it consists of most or all of the producers
=The presence of close substitute
=Price elasticity of demand
=New suppliers outside the cartel
=If suppliers can agree on their individual shares
Weaknesses of cartel
-Prices may be higher to consumers in the presence of
a cartel than in its absence
-Cartel can be unstable if conflict occurs

Strengths of a cartel
-Faster growth of the industry
-Maintaining quality standards
Examples:
OPEC ……….. Oil (Organization of the Petroleum Exporting Countries)
IATA …………..Airlines (international air transport association)
De Beers ……..Diamond
Regulation of competition
1-Competition act 1998(U.K)

2-European competition law

1-Competition act 1998(U.K)
-Government through legislation can influence the
relations between different firms
-Competition act prohibits anti-competitive
practices behavior by companies (esp. oligopoly)

-The act introduced 2 basic prohibitions:

1-Prohibition of anti-competitive agreements
2-Prohibition of abuse of a dominant position in a
market
2-European competition law
-European rules prohibit procedures like prevention,
restriction or distortion of competition within the
common market

Mergers must be notified to commission when

-The combined turnover exceeds certain limits
-The company will have over 25% of the national
market
-The merger will have adverse effects of competition
Monitoring competition: Auditing competitors
-To know how the competitor behave
-To use the competitor as external benchmark

-Sources of information about the competitor

+suppliers + Customer
+Mystery shopping +Field force
+Competitor previous employee
Competitor analysis:
-Who is the competitor
-Their goals , tactics and strategy
-Competitors advantages over us
-Products
-Strengths , Weaknesses
-Management , team
-Resources
 Micro-environment and market
structure (6/1999)
A-Define the micro-environment of an organization of
your choice (4 marks)

B-your product manager requires an analysis of the

market structure you are asked to :
1-Suggest 2 alternative approaches to the analysis
2-Briefly outline the main features of each
3-Identify the key sources of information to consult
(16 marks)
 Answer guidelines

-Definition of micro-environment
-Diagram
-Example
-Approaches: SWOT – 5 forces model
-Sources (internal and external)
 Session 8
The Macro-environment
Macro-environment : PESTEL

P Political
E Economic
S Socio-cultural
T Technological
E Ecological
L Legal
Sources of environmental information
-They are either
1- External

or

2- Internal
 Macro-environment frame:
Area Factors
Sociological demography-lifestyle-education-social class-
attitudes-reference groups
Legal Competition law – employment law –customer
protection law –environmental protection law –
contract law
Economic Business cycles –exchange rate –interest rate –
inflation rate –GNP trends
Political Taxation –pressure group –political orientation –
trade union strength
Technological Technological advances

Cultural Language-dress- working hours

 Session 9
Social & cultural environment
 Demography
-It is the study of population size & other criteria
-Other criteria are:
age
gender
marital status
regional distribution
ethnicity
population structure
 Dependency ratio
This is the ratio of the number of
dependents in the population relative
to working population
 Population size
-Population growth
=birth rate-death rate+ net migration

-Importance of population size:

+Small population --- import labour
+Large population ---- excessive demand for
essential products
 Gender
-Male & females have different purchasing powers

-Females ------ part time work

-Females ------time saving applianances

-Females -------One stop shopping

-Females dominate in many service industries like health

-Females needs at work

 Marital status
 This is undergoing considerable change in many
societies due to later marriage, rising divorce rates
and remarriages, making the traditional marketer’s
assumption of two adults plus two children the
exception rather than the norm.

 Additionally partners living together and sharing

households without being married is becoming
increasingly popular in many countries such as the
UK
 Age structure of population
-The ratio between old people +children versus
working people

-The needs of each segment are different

-Implications for marketing of an ageing population
=increased demand for cruise holiday
=durability may replace fashionability
=home delivery distribution
Guideline for Effective Advertising to the
Elderly

Keep Language Simple

Use Clear, Bright Pictures

Use Action to Attract Attention

Speak Clearly, and Keep Word Count Low

Use Single Sales Message

Avoid Extraneous Stimuli

 Geographic distribution
-Where most of people locate

-It is important for the marketer to identify where

target population reside
 Ethnicity
-Homogenous societies are few

-Ethnicity ----- different need pattern

-e.g. Coffee -Mate

 Family life cycle: FLC
FLC=
age+ marital status+ career status +if have children
FLC
1-Single adulthood

2-Young married couples with no children

3-Married with dependent children

4-Empty nesters
 Social class
-Class A ---- upper middle class
-Class B ---- middle class
-Class C1 ---- lower middle
-Class C2----- skilled workers
-Class D ----- unskilled workers
-Class E ----- unemployed & pensions

+ Criticisms of social class

 UK socioeconomic classification scheme
Class name Social status Occupation of head of % of
household population
A Upper middle Higher managerial, 3
administrative or professional
B Middle Intermediate managerial, 14
administrative or professional
C1 Lower middle Supervisors or clerical, junior
managerial, administrative or 27
professional
C2 Skilled working Skilled manual workers 25

D Working Semiskilled and unskilled 19

workers
E Those at lowest levels of Pensioners, widows, casual or 12
subsistence lower-grade workers
 Culture
-It is the sum of beliefs , customs , norms ,
knowledge to which people are exposed in their
social conditioning

BEHAVIOUR
ARTEFACTS Observable
RITUALS

VALUES &
BELIEFS Non
observable
 Culture
1-Beliefs & values
-The way we feel anything

2-Customs
-e.g. division of labour in a household

3-Mores
-Customs with strong moral overtone e.g.
prostitution

4-conventions
-Norms regarding every day conduct e.g.
etiquette
 Culture

5-Artefacts
-Physical tools e.g. dress codes , logo

6-Rituals
-Symbolic meaning e.g. greeting behaviors

7-Heros
- e.g. Bill Gates
 Subcultures
Culture is subdivided into subcultures according to:

1-Social class
2-Ethnic group
3-Religion
4-Geography
5-Age
6-Sex
7-Work
 Socio-cultural environment
During the 1994 soccer world cup both
McDonald’s and Coca-Cola made a mistake of
reprinting the Saudi Arabian flag (which includes
sacred words from the Koran ) on disposable
packaging used in promotions
 Understanding culture
1-Marketers should adapt products

2-Plan to participate in the teaching process

3-HR have to handle cultural differences in recruitment

 Cultural
environment
-In 1970 P&G introduced Pampers
diapers in Japan
-Although successful in USA this
product did not sell well in Japan
because P&G neglected some
important cultural differences
between American and Japanese
parents
-The Japanese mom changes her
baby’s diaper about 14 times a day
twice as often as her American
counterpart
-Pampers were too expensive for a
Japanese mother to use so many
 Examples of corporate cultures
1-Risk taking culture

2-Profit centered culture

3-People centered culture

Cultural environment

McDonald’s sells a
vegetarian Maharaja
Mac instead of Big Mac
in India
 Lifestyle
-It is the pattern in which people live and spend
their time and money

e.g. hobbies –club membership

-It is measured by analysts using attitude ,

interests and opinions (AIO)
 Lifestyle
Examples for recent lifestyles:

-Healthy lifestyle
-Islamic movement
-Veilation
-Need for fast products
-Clothing has become more casual, especially at work
-Time spent watching television has declined
-Money rich time poor
-Coastal areas
 Lifestyle
 According to the University of Cambridge,
one lifestyle choice that could add 11 years to
the life expectancy of thousands of people
involves giving up smoking while eating five
portions of fruit and vegetables a day and
taking moderate daily exercise. Every bit of
positive activity has a measurable impact on
health so even McDonald’s is making a
contribution following its new emphasis on
‘healthy eating’. Sales are up between seven
and nine per cent in the United States and
Europe as a result of its new strategy,
although it still sells eight double
cheeseburgers for every salad.
 Reference groups
Conformity:

-Adjusting one behavior to align with the norms of

the group

- Conformity ----------- reference group

Reference groups : Types
1-Primary:Informal
Reference groups : Types
2-Secondary:Formal
Reference groups : Types
3-Aspirational
Reference groups : Types
3-Aspirational
 Reference groups :Coca-Cola
-Coca-Cola signed the biggest marketing
promotion in history (so far!) when it paid
£95 million for the right to use the Harry
Potter logo on its cans.
-Already translated into 47 languages with
sales of over £110 million in 200 countries
 Socialization
-It is the process by which we acquire sufficient
knowledge of a society

-It is a learning process with the following means:

1-Instrumental conditioning
2-Cognitive learning
3-Imitation of observed behavior
4-Identification
5-Roleplay
 Session 10

Economic & international

environment
 Consumer Demand and Spending Behavior

 Buying power: Resources such as goods,

services and financial holdings that can be
traded in an exchange situation.
 Income: The amount of money received
through wages, rents, investments,
pensions and subsidy payments for a given
period.
 Disposable income: After-tax income, which
is used for spending or saving.
 Discretionary income: Disposable income that
is available for spending and saving after an
individual has purchased the basic necessities
of food, clothing and shelter.

 Wealth: The accumulation of past income,

natural resources and financial resources.
 Consumer spending patterns: Information
indicating the relative proportions of annual
family expenditures or the actual amount of
money spent on certain goods and services.

 Product-specific spending patterns: The

annual monetary amounts families spend for
specific products from within a general
product class.
 Economic indicators
-They are important for businesses in
determining their future marketing plans
and policies
-Also, government use them to decide on
policy changes
-Key indicators:
GDP –GNP – National income
Economic growth
Unemployment rates
Exchange rates
 GDP
-It is the value of all final goods & services produced in
a country during a year

- Types: Nominal GDP & real GDP

- GDP= C+I+G+X

- Ways to measure GDP

=Flow of products approach
=Sum of earning approach
 GDP =C+I+G+X
-How to improve GDP( from the equation)

-Problems of GDP (GDP controversy) :

+No account for externalities e.g. emissions & waste

+Increased GDP may be due to increased female participation

+An increase in I or X will not increase current living standards

 Gross national product ( GNP)
GDP GNP
-Money value of final Money value of final
goods produced by: goods produced by

1-Residents holding the Citizens holding the

nationality of the country nationality of the country
2-Foriegners inside the 1- inside the country
country 2-Outside the country

During certain year During certain year

 National income: NI

-It is the sum of all incomes of residents of certain

country which arise as a result of economic activity
that is from production of goods & services
 The effect of savings

Savings (S)

Households

Income (Y)
(C) Consumption

Firms
 Economic objectives

1-Suatainable economic growth

2-To control price inflation

3-To achieve full employment

4-Blance between exports & imports

 Other objectives (subsidiary )
 Competitive exchange rate

 Equal distribution of income

 Restricting the budget deficit

 Balanced regional development, resource

conservation and concern or the environment
 Economic growth
- It may be measured by increases in the real GNP
per capita

- Types: Actual growth & Potential growth

- Factors needed for sustained growth:

+Natural resources
+Technological progress
+Improvement in terms of trade
 Economic growth:

Advantages of growth:
+ Raises the standard of living
+ Economic welfare

Disadvantages of growth:
+ Faster use of resources
+ Pollution
 Unemployment
Types:

1- Frictional

2- Seasonal

3- Structural

4- Technological

5- Cyclic
 Unemployment
Results of unemployment
-Loss of output
-Loss of human capital (skills)
-Increase inequality in the income distribution
-Social impacts

Government actions to reduce unemployment

1-Spending more money on jobs
2-Encouraging growth in private sector
3-Encouraging training in job skills
 Inflation
-It is a general increase in average prices

Deflation (Deflationary gaps)

-Occurs when prices decline (-ve inflation)
-Arises from better technology or increased competition

Hyperinflation
-A rise in the price level of a thousand or a million
percent a year
 Types (causes) of inflation

1-Demand pull inflation

2-Cost push inflation

3-Import cost push inflation

4-Expectational inflation
 Results of inflation
1- Fall of value of money
2- Uncertainty about future prices
3- Redistribution of income wealth
4- Consumers will be price sensitive
5- Taxation rises
6- Frequent price changes
e.g continuous adjustment to packaging----
customer upset
7- Price war
 Control of inflation
1-Demand pull inflation
-Higher taxation ---- cuts consumer spending
-Higher interest rates
2-Cost push inflation
-Deregulate labor market
-Encourage greater productivity
-Control over wages & prices
3-Import cost push inflation
-Reduce quantities or price of imports
4-Expectational inflation
-Clear policies
 Stages of the Business Cycle
Activity
level Upper turning point

Boom
Trend line
Recovery Downturn

Recession Recession

Lower turning
point
0 Time
 General Economic Conditions
 Business cycle: fluctuations in the economy
that follow the general pattern of prosperity,
recession, depression and recovery.
 Prosperity: A period during which
unemployment is low and total income is
relatively high.
 Recession: A period during which
unemployment rises and total buying power
declines.
 Depression: A period during which
unemployment is extremely high, wages are
very low, total disposable income is at a
minimum and consumers lack confidence in
the economy.
 Recovery: The stage of the business cycle
in which the economy moves from
depression or recession to prosperity.
 Economic policies
1-Fiscal policies

2-Monetary policies

3-Supply side policies

4-Physical policies

5-Trade policies
 Fiscal policy
1-Taxation
-Direct taxes
-Indirect taxes

2-Government expenditures
-Government purchases – goods , services ,
construction of roads

-This policy influence the economy by

Spending money (expenditures)
Collecting money (taxation)
 Marketing implications of fiscal policy
-Overall level of taxation affects the level of aggregate
demand

-Taxation of specific groups may affect the spending

power of particular market segment

-Taxation of specific products

 Monetary policy

-It is a policy conducted by the central bank

High interest rate -------- low investment & GDP

Low interest rate -------- high economic activities
 Supply side economic policies
-It aims to improve the supply of goods & services
-Its vision --- supply creates its own demand

Methods
-Training to improve jobs
-Stimulation of innovation
-Privatization
 International environment
-Comparative advantage

-Reasons for international trade

-Advantages of international trade

-Methods
 Trade blocs
-Group of countries which come together to make
trade easier within each of them

NAFTA European Union

 Exchange rate
-It is the price of currency expressed in terms of
another currency

-It depends on supply and demand

- Fixed exchange rate

- Floating exchange rate

Session 11
Political environment
 How can the state influence economic activity
-Taxation

-Interest rates

-Exchange rate

-Public spending on goods & services

-Regulation (Legislation)

-Gathering feedback from interest groups

Causes for state intervention in the economy:
1-Equity:
Fair distribution of resources

2-Market failure:
The state ensures healthy competition to prevent market
failure
Political party
It is an organization whose members
-Have some shared values or interests
-Have a vision about the best way to run the society
-Work as a team to ensure that they achieve control
over policy making
-They aim to take over the whole government

+Deregulation:
It is the removal of rules and requirements restricting
competition
 Political framework
Political systems are:
Totalarianism (Autocracy) – Democracy

Totalarianism
Single leader
One ruling party
Official ideology rules
Opposition parties repressed
Power is concentrated
Minorities persecuted
Democracy
Universal suffrage
Periodic free elections
Freedom of speech/media
Open political competition
Power spread throughout
society
Pressure groups free to
lobby between elections
Impact of Legislation
Contract
Patents
Consumer Credit Data Protection

Consumer Protection Sale of goods

Company Law
BUSINESS Trademarks

Environmental
Protection
Trade descriptions

Restrictive Monopoly & Product liability

Practices Merger
Lobbyists & media
Lobbying may be defined as influencing members of a
relevant legislature & soliciting their votes

Consumer lobby
It is individuals or groups who exert their social
,economic and moral pressures on organizations with
a view of changing their behaviors in ways favourable
to the consumer
Objectives of Consumer lobby

-influence organizations to produce products that

are acceptable to the large society
-stimulate the government to formulate policies to
protect consumers
-influence the organization to stop producing
ecologically unfriendly products
-create platform for customer complaints
-check organizational activities
Contract law
-Contract is a legally binding agreement that defines a
relationship between parties
Essentials of a contract
1-Offer
2-Acceptance
3-Intention to create a legally binding relationship
4-Consideration
5-Capacity
6-Legality
Law of tort (negligence)
-It affects all dealings with others not just those
linked by contractual relations
-Personal injury or damage
-To succeed in an action for negligence the plaintiff
must prove 3 things:
=The defendant owed him a duty of care
=There was a breach of the duty by the defendant
=There is an injury ,damage or financial loss
Product liability (duty of care)
-Company’s responsibility to all users & others
come in contact with its product
e.g. company selling toys (dangerous toys)
Law of agency
-It is a mutual relation between Principal & agent
-Agent is a person authorized to act for another and bring that
other person into a legal relation with a third party
Duties of agent:
-Act in good faith
-Supply principal with all information
Duties of principal:
- Act in good faith
-Supply agent with all information
-Notify agent if volume of commercial transactions will be
lower than expected
Trade description
-It requires business to describe what they sell
accurately & fairly
Constitutes of trade description
-Quantity and size of goods
-Methods of manufacture
-Composition
-Fitness for purpose
-Testing by any person
-Approval by any person
-Date and place of production
Intellectual property
Patency:
The governmental grants an exclusive property
right to produce, use or sell an invention for a
limited period of time normally 20 years

Trademark:
Words, symbols, name or mark attached to a
brand name

Copyright :
Protection of the authors ,artists from being
deprived of their rewards by unauthorized
copying of their works
Quasi law (voluntary code of conduct)
-It is a statement of standards of practice set by
group of organizations
-The codes do not have the force of law
-They help raising the industry standards
-They offer quicker and cheaper means to resolve
disputes
-The organizations are willing to follow it why????
Impacts of legislation on business
Negative impacts
-Extra-cost : training staff , reporting

-Conforming to safety standards: testing required on a new

pharmaceutical product

-Conforming to legal requirements e.g. tighter emission standards

-Complicated regulatory procedures

-Insurance cost
Impacts of legislation on business
Positive impacts
-Correct market failure through regulation of
competition

-Facilitates desirable social changes e.g. increasing

female participation in the labor force , equal pay

-Encourage further knowledge :new environmental

standards provide opportunities and rewards and
so encourage research into problems like the
greenhouse and ozone
Marketers roles towards legal environment
-Monitor Politicians to understand hidden agenda
-Anticipates policy shifts
-Be aware of the government priorities
-Lobbying: to influence legislators
-Feedback
-Develop awareness of intentions of pressure groups
Session 12
Natural environment
Causes of increased concern about environment
1-People seeking a better quality of life
2-Notable disasters
3-Expansion of media coverage
4-Greater scientific knowledge
5-Cultural shifts
6-Activities of environmental and green parties
Ecology
It is the study of plants and animals & their
interaction with each other & the environment as
a whole
Social responsibility
-Definition
-Types
-Advantages & drawbacks

Enlightened self interest

-In the short term social responsibility will be good for the
image of the company
-In the long term it will safeguard the interests of the business
Ethics
Study of right & wrong actions.

Ethical but illegal Ethical & legal

(e.g., publishing stolen but revealing documents (e.g., the Body Shop)
about government mismanagement)
Unethical and illegal Unethical but legal
(e.g., employing child labor)
 Ethics in marketing
Product issues: Safety, quality, value, provide adequate
information, product recall (e.g.,Perrier)

Promotion issues: Clear message, accurate data & ethical use of

advertising tools.

Pricing issues:
Price discrimination( place, person & time)
Active collusion among suppliers to fix prices.
Predatory pricing (established suppliers utilise their cash reserves
& economies of scale to sell at prices the newcomer cannot
match & still make a profit)
Social cost ,private cost
Private cost
-It measures the cost to the firm of the resources it uses to
produce a good
Social cost
-It measures the cost to society as a whole of the resources
that a firm uses
Private benefit
-It measures the benefit obtained directly by a supplier or a
consumer
Social benefit
-It measures the total benefit obtained both directly by a
supplier or a consumer & indirectly to other suppliers or
consumers
+ Externality: It is the difference between the private &social
cost or benefits arising from an activity
Public goods e.g. defence or justice
-It is a good whose benefits can not be restricted to particular
customers
-Consumption of a good is non rivalrous meaning that
consumption by one person does not deprive others of the
good
Merit goods e.g. education
-They are considered to be worth providing in greater volume
than would be purchased in a free market because higher
consumption is in the long term public interest
Demerit goods e.g. Tobacco
Governments want to see less consumption of certain demerit
goods
Pollution strategies
Green tax:
It is the tax paid by organizations to compensate the society for
pollution produced

Government fees:
Fee paid by firms charging for waste disposed materials

Government regulations:

Tradable permits:
The government issues pollution permits to each company for
a certain price
Every company will try to reduce its pollution to decrease cost
paid to permits
Advantages of green marketing
1-It became a major marketing tool

2-Avoid bad publicity

3-Better public relations

4-Improved ability to attract staff

Barriers to green marketing
1-Extra costs

2-Technical e.g. employee training

3-Conflict between objectives

4-Lack of visibility

5-Timescale
Impact of car industry on the environment
1-Ecological environment
-Global warming
-Pollution
-Effect on certain animal species
-Depletion of natural resources

2-Social environment
-Motor car increases the level of division within society with
car owners having more life opportunities open than non
car owners
-Shopping is difficult for non car owners
Impact of car industry on the environment
3-Economic
-New car sales account for a significant proportion of GDP

4-Political
-Car supporters link cars to social freedom of choice
 Session 13
Technical environment
Technology
-Apparatus : Tools & machines

-Technique :Skills & procedures

-Organization : social arrangement

Technology and growth
Production possibility curve
Social consequences of recent technological change
1- Home working

2-Certain types of skills will be valuable e.g. data

interpretation

3-Increased manufacturing productivity

Diffusion model of innovation technology
Adoption: The decision of an individual to become a regular
user of a product
-Innovators (2.5%)
Eager to try new ideas & products
Higher income
Self confident
-Early adopters (13.5%)
Reliant on group norms
Oriented to the local community
Opinion leaders
-Early majority (34%)
Deliberate more carefully
Process of adoption takes longer
Positioned between earlier &late adopters
-Late majority (34%)
Pressure to conform
Sceptical
Below average income & education
-Laggards (16%)
Independent
Tradition bound
Lowest socio-economic status
Diffusion and marketing strategy
-Marketers seek to ensure a rapid diffusion &
adoption of a new product to gain more market
share
-Penetration policy is helpful here
-Sometimes you have to use skimming policy

Marketer role
-To convince customers with the new technology
-Enhancing rapid adoption of the technology
-Use the proper marketing mix
The effect of technology on the marketing mix
Product
-CAD
Price
-Customers may pay more for a new innovation
Place
-E –commerce
-EPOS
Promotion
-Databases
-Internet & intranet
-Extranet
 Developments in technology
1. Internet, intranet & extranet
2. EDI = Electronic data interchange
3. Web site – E mail - voice mail
4. Call centers- V. Rep (virtual rep )
5. WAP = Wireless application protocol
6. EPOS=Electronic point of sale – RFID (Radio-frequency identification)
7. EFTPOS =Electronic fund transfer at the point of sale
8. Databases
9. Internet fridge
10. Toilet
11. Mobile communications
12. PDA = Personal digital assistant
13. Digital TV
14. Video-conferences
EPOS & EFTPOS
EPOS
-Large retails
-Barcodes
- e.g. P&G

EFTPOS
-Used for electronic transfer of funds at the point of
sale
-Plastic cards
EDI=Electronic data interchange
-It is a form of computer to computer data
interchange and so another form of electronic
mail
-It will save resources like paper
Difficulties of EDI
-Expensive
-2 specific computers
-Time differences
Internet
Current uses of the net
-Dissemination of information
-Product development through test marketing
-Transaction processing
-Relationship enhancement between stakeholder
-Recruitment
-Entertainment
Website
-A site is a collection of web pages providing information
Features of effective website
-Speedily downloading
-Rapid response
-Continuous updating
-24 hours
-Attractive
-Easy visiting
-Interactive & easily customized
-Good use of sound & vision media
-Links to related sites
Drawbacks of website
-Some websites are not personalized
-Navigation of site being difficult
-Too much loading time
-Lack of focus on developing customer relations
-Lack of website address on products
Intranet
-Internal internet
-It is used to link company departments ,
employees and databases
-Resources
-No space occupying like bulky paper documents
-Easy update
Extranet
-External internet
-External link with suppliers , customers….etc
-It is similar to EDI with some differences
Commercial use of the internet
Marketing
-Product awareness
-Prices comparison

Sales
-E-commerce

Distribution
-used to get certain products directly into people’s home
Problems of the internet
1-Cost
2-Weak infrastructure
3-Security issues
4-Viruses
E-mail = Electronic mail
-Substitute for letters or faxes
-Sender has a documentary evidence
-No disturbance to the receiver
-Password
Voice mail
-System that enables caller’s message to be
recorded at the recipients voice mail box
-It requires only a telephone
Fax
-Recent changes to fax machines
-Pc with fax modem
Computer telephony integration CTI
- CTI are systems used to gather information about
callers such as their telephone number &
customer account number or demographic
information

- The information is stored on a customer database

& sent to the screen of the person dealing with
the call
Mobile communications
Mobile services are:
-Message services
-Call handling services e.g. conference call , call divert
-Internet access
 Exam question
Discuss how the new advances in technology
affect the 5 force model of Porter ???

(5 marks)
Technology & Porter 5 force model
New entrant
-IT increases entry costs
Bargaining power of suppliers
-Supplier power may be eroded
Bargaining power of customers
-IT increases customer power
Substitutes
-IT may be the substitute
-IT adds value to the existing goods
Rivalry
-IT can be used to differentiate products
-IT can be used to support cost leadership
 Technological diffusion process
Factors which determine if the rate is rapid or slow are
1-Profitability
2-Deterrence :consequences of not adapting the new
technology
3-Market structure : oligopoly
4-Characteristics of the new product
5-Enviromental acceptability
6-Scale of investment :the higher investment the
slower the diffusion
 Session 14
Environmental challenges
Changes in the micro-environment
Social changes
-Rising standards of living
-Society’s attitude to business --- increased
tendency towards social responsibility
-Workforce: decline in blue collar & increase in
management proportion
Technological change & organizational activities
-Type of products sold e.g. computers , compact dishes
-The way in which products are made
-the way in which services are provided --- EPOS
-The way in which market is identified e.g. database
Changes in the employment pattern
1. Flexible working hours
2. Increased use of part timers
3. Increase in temps
4. Home working
5. Self employment
6. Knowledge workers
Home working (Tele-working)
Advantages to the organization
-Cost saving
-The concept itself attracts a large pool of applicants
-No need to pay sick & holiday pay

Advantages to the individual

-No time is wasted commuting to the office
-Work organized flexibly
-Easier to concentrate on work at home
-Easier employment in remote areas
Problems of home working to the organization
-Difficult to monitor
-Difficult team working

Problems of home working to the individual

-Isolation
-Intrusions : interruption
-Adequate space
-Fewer employment rights
E-commerce ( Electronic commerce)
-It is defined as in addition to providing information
to visitors about the company , products…..
or the site offers to transact or facilitate the
selling of products
Companies strategies towards E-commerce
1. No selling of the products absolutely
2. Leave the internet business to resellers
3. Restrict internet sales exclusively to itself
4. Open the internet sales to everyone
Types of E-commerce
- B2B

- B2C

- C2B

- C2C

- P2P
Problems of E-commerce
1. Difficult management of E-commerce
2. Lack of trust
3. Fear of privacy invasion
4. Fear of the abuse of credit cards
Single European market
It leads to :
1. Removal of physical barriers
2. Creation of technical standards
3. Absence of governmental discrimination
4. Increased use of tele- communication
5. Free financial services in any country
6. Free movement of the capital
7. Unified matters for consumer protection
 Single European market
Obstacles

-Company taxation

-Differences in workforce skills

-Differences in infrastructure
 European monetary union (EMU)
Monetary union:

-It is a single currency area which will require a

monetary policy for the area as a whole

Economic union
-It is unrestricted common market for trade with
some economic policy coordination between
different regions in the union
 EMU
It leads to :

1. Common currency

2. European central bank

3. Generalized monetary policy

 Single currency
Advantages

-Easier trade & less exportation barrier

-Lowe interest rate

-Economic policy stability

-Expanding marketing opportunities

 Globalization

It is the transformation of domestic product

into global product
 Factors enforcing globalization

1. Economy of scale
2. Saturation of national markets
3. Counteract seasonal national variation
4. Economic cooperation
5. Elimination of physical elements
6. Some organizations e.g. WTO
7. Economic convergence
8. Intense competition in the local markets
9. Extension of product life cycle
Strategies to enter the global market
-Export

-Licensing

-Joint – ventures

-Direct investment
 Session 15
Marketing information system
Data

Information

Knowledge
 Marketing research
It is the systematic gathering , recording
and analysis of data about problems
relating to the marketing of goods and
services
 Marketing research
1-Market
2-Product
3-Price
4-Promotion
5-Distrutition
 Research process
DODCAR

1. Define the problem

2. Objectives
3. Design of the research
4. Collecting the data
5. Analyzing the data
6. Reporting
 Marketing research
Data sources:
Primary or secondary
Types of data
Quantitative versus qualitative
Continuous versus ad hoc
Methods
Observation , experimentation and survey
Tools
Interview , questionnaires & mechanical
Classification
Research is either: exploratory or conclusive

Conclusive is either : descriptive or causal

Descriptive is either :cross sectional or longitudinal

Sources of information
1- Primary:

2-Secondary:
-Existing data at the organization
-Published information
-Bought in market research information
-internet
Internet
-Go directly to the site

-Directory or portal

-Search engines
Primary versus secondary data

- Advantages

- Disadvantages
Customer databases
-It is a manual or computerized source of data
relevant to marketing decision making about an
organization’s customers

-Databases can support the followings:

Direct marketing
CRM
Customer research
Customer databases
1. Contact
2. Professional
3. Personal
4. Transaction
5. Credit payment
6. Call – contact history
 Internal
Reporting
System

Int.

Marketing Marketing
Ext. Ext.
Intelligence Research
System Decision System
Making

Ext.

Analytical Marketing
Decision Support System
Marketing information system
1-Internal records
2-Marketing intelligence system
3-Marketing research system
4-Analytical marketing systems
 Session 16
Information system & change
Scenario & forecasts (3/2003)
Scenario is a view of the future based on a
group of determinants

Forecasts is statistical prediction of the most

likely probability
 Scenarios Forecasts
Nature Possibility Prediction

Consists of List of qualitative Quantified most likely

factors outcome based on
certain assumptions
Limitations Individual scenarios Assumptions made be
are not a complete incorrect
view of all that might
happen
Use in decision Information to help Indicator of likely
making decision between success of particular
various courses of course of action
action
 USES OF SALES FORECASTS

A sales forecast is the estimated dollar or

unit sales for a specific future time period
based on a proposed marketing plan and an
assumed market environment.
A sales forecast is important for at least five reasons:

1. A sales forecast becomes a basis for setting and

maintaining a production schedule – manufacturing.
2. It determines the quantity and timing of needs for labor,
equipment, tools, parts, and raw materials – purchasing,
personnel.
3. It influences the amount of borrowed capital needed to
finance the production and the necessary cash flow to
operate the business – controller.
4. It provides a basis for sales quota assignments to various
segments of the sales force – sales management.
5. It is the overall base that determines the company’s
business and marketing plans, which are further broken
down into specific goals – marketing officer.
 THE FORECASTING PROCESS

The forecasting process refers to a series of

procedures used to forecast.
 Forecasting methods
Survey Methods Mathematical Methods

Executive User’s
Opinion Expectation Test Market Regression

Naive Trend
Sales Force Build-to-
Composite Order
Moving Exponential
Average Smoothing
 SALES FORECASTING
METHODS
Two categories of sales forecasting methods exist:

• Survey methods
are qualitative and include executive opinion, sales
force composite, and customer’s intention surveys.
• Mathematical methods
are test markets, market factors, naïve models,
trend analysis, and correlation analysis.
SURVEY FORECASTING METHODS

Four basic survey methods are

• Executive Opinion
• Sales Force Composite
• User’s Expectations
• Build-to-Order
1-Executive Opinion:

A-Executive forecasting:
A qualitative sales –forecasting method done by an
individual

B-Delphi Method
Administering a series of questionnaires to panels of
experts.
2-Sales Force Composite

Obtaining the opinions of sales

personnel concerning future sales.
3-User’s Expectations

Consumer and industrial companies often

poll their actual or potential customers.
 4-Build-to-Order

Companies build final products only after

firm orders are placed.
e.g. Dell has decided to build final products only after firm”s orders
are placed
MATHEMATICAL FORECASTING METHODS:

1-Test markets

2-Time series projections:

-Naïve method
-Moving average
-Exponential smoothing

3-Regression analysis
 Test markets
-Test markets are a popular method of measuring consumer
acceptance of new products

-In Texas Colgate and Palmolive had used local advertising to

assess forecasting units for six months until they reached a
conclusion which is stoppage of the products as profit
generated is limited
Time Series Projections

Time series methods use chronologically

ordered raw data.
 Naïve Method

Next Year’s Sales = This Year’s Sales X This Year’s Sales

Last Year’s Sales

-This method is based on the assumption that what

happened in the immediate past will continue to
occur in the immediate future
 Moving Average

Moving averages are used to allow for

marketplace factors changing at different rates
and at different times.
 Moving average forecasting

SALES SALES FOR THREE-YEAR

PERIOD VOLUME THREE-YEAR PERIOD MOVING AVERAGE

1 200

2 250
3 300 750
4 350 900 300
5 450 1100 ( 3) = 366.6
6 ?
Period 6 Forecast =
366.6
 Exponential Smoothing

Exponential smoothing is similar to the moving-

average forecasting method. It allows
consideration of all past data, but less weight is
placed on data as it ages.

Next Year’s Sales = a (This Year’s Sales) + (1-a) (This Year’s Forecast)
- A is weighting factor and is selected arbitrary usually between 0.1 to 0.5 not less
than zero and not more than 1
 Regression Analysis

Regression analysis is a statistical method used to

incorporate independent factors that are thought to
influence sales into the forecasting procedure.
 REGRESSION ANALYSIS
Linear Relationship Curvilinear Relationship
Sales

0 Sales
0
Population Population
(A) (B)
 GUIDE TO FORECASTING
FORCASTING MATHEMATICAL COMPUTER
METHOD TIME SPAN SOPHISTICATION NEED ACCURACY

Executive Opinion Short to medium Minimal Not essential Limited

Delphi Method Medium to long Minimal Not essential Limited; good in dynamic
conditions
Sales Force Short to medium Minimal Not essential Accurate under dynamic
Composite conditions
User’s Expectations Short to medium Minimal Not essential Limited

Test Markets Medium Needed Needed Accurate

Naïve Method Present to Minimal Not essential Limited

medium
Moving Average Short to long Minimal Helpful Accurate under stable conditions

Exponential Short to medium Minimal Helpful Accurate under stable conditions

Smoothing

Regression Analysis Short to Medium Needed Essential Accurate if variable relationships

stable
Marketing audits
-It is a comprehensive systematic periodic
examination of the company’s micro and
macro environment, objectives , strategies
and activities

-It should be
Periodic
Comprehensive
Systematic
SWOT
Strengths

Weaknesses

Opportunities

Threats
Impact analysis(12/2003)
-It is used to analyze the effect of future
environmental factors on the business

-Types
1-Competitor analysis
2-Business impact analysis
3-Trend impact analysis
4-Cross analysis