The marketing environment

The marketing environment

1. Microenvironment

   • Customers
   • Competitors
   • Distributors
   • Suppliers

2. Macroenvironment

   • Ecological/physical
     • In a marketing context it concerns the relationship between people and the physical environment. Now is also important the environmental cost of production, not just the personal cost to the consumer.
     • Climate change
       • The Kyoto Protocol (KP) - an international agreement that focuses member countries on how to keep global temperature increases below 2°C. The members have committed themselves to the reduction by 2012 of 4 greenhouse gases (CO2, methane, nitrous oxide, sulfur hexafluoride) by 5%
         • => Companies have to alter their behaviour => strategy has to change
     • Pollution
       • Legal regulations
     • Energy and scarce resources conservation
     • Environmentally friendly ingredients and components
     • Use of recyclable and non-wasteful packaging
   • Political/legal
     • Can influence marketing decisions by setting the rules by which business is conducted
     • Complex factors to analyse and difficult to determine
     • European Union-wide laws
       • Preventing monopolistic and oligopolistic anti-competitive behaviour
       • Decreasing the reliance on state aid
         • Because it gives artificial competitive advantage to recipient firms, enabling them to charge lower prices than their unsupported rivals
           • => Payments should be 'one-offs'
     • National laws
       • Example: national laws governing advertising - toys ads are banned in Greece; tobacco advertising is illegal in Scandinavia, the UK and Italy
       • Self-regulation: industries themselves can also draw up codes of practice to protect consumer interests
   • Social/cultural
     • Demographic forces
       • World population growth
       • Age distribution
         • In Europe # older people increases, while # of young people decreases => companies may need to reposition their products
       • Household structure
         • Rise in one-person households, no-children households, and double-income families
     • Cultural forces
       • Subcultures
     • Consumerism
       • Definition: Organized action against business practices that are not in the interest of consumers
       • Corporate social responisbility
   • Economical
     • Economic growth and unemployment
       • Consumer behaviour changes in the different stages of the business cycle => changes in consumers' D affect the sales
         • Unemployment ∞ Consumer spending
     • Interest and exchange rates
       • Fluctuations in exchange rates means that the price a consumer in one country pays for a product and/or the money that a supplier in an overseas country receives for selling that product can change
         • Example: at £1 = €1, a German car manufacturer would receive €10 000 for a £10 000 car. If the exchange rate changed to £1 = €0.5, the German car manufacturer's receipts would fall to €5 000. To maintain euro receipts at €10 000, the UK price would have to rise to £20 000.
     • Cultural differences in the society, economy and politics of non-Western countries
   • Technological
     • Research and development
     • Information and data management
       • Accessibility of information can be a source of competitive advatage
     • Communications
     • Society (Social networks)

3. Environmental scanning

   • Provides information about current and potential future events in order to align the company's strategies, its organizational operations and the marketing environment. Marketing strategy should reflect the environment even if this means a fundamental reorganization of operations.
   • How to perform environmental scanning
     • 1. Define a feasible range of forces that require monitoring
     • 2. Define a system that provides a fast response to events (how and who to carry out the scan)
     • 3. Interpret data
   • Ways to develop an environment-scanning system
     • Line management (functional managers - e.g. sales, marketing procurement)
     • Strategic planner
     • Separate organization unit (costly)
     • Joint line/general management teams

4. Responses to environmental change

   • Ignorance
   • Delay (because of:)
     • Bureaucratic procedures
     • Unwillingness to change
     • Emotional attachment to current products/status quo
     • Marketing and technological myopia
   • Retrenchment (cost-cutting)
     • Tackles efficiency problems but ignores effectiveness issues
   • Gradual strategic repositioning
   • Radical strategic repositioning
     • Changing the direction of the entire business. Much riskier than gradual strategic repositioning)

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