understanding the macro and micro environment see past exam papers for sample questions 1 of 36
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Understanding the Macro and Micro Environment
See Past Exam Papers for Sample Questions
1 of 36
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 MarketingEnvironment
Copyright: Southwestern Publications 2006
1. The Competitive Environment
Competitive EnvironmentCompetitive Environment: competitive products, substitute products for one another, companies competing for your consumer’s 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 Developing a Competitive StrategyStrategy Should we compete? If so, in what markets should we
compete? How should we compete?
Involves: Researching the market Identifying current &potential
competitors Anticipating competitive actions
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 Government : Consumer
Safety Commission, IFSRA, Environmental Protection Agency, Health and Safety etc
Consumer interest groups
PETA Special-interest groups
ISME Self-regulatory groups
Advertising
Companies fight unjust regulations
Regulations can present new opportunities
Political lobbying Boycotts
Political action committees
Controlling the PL Environment
Is Horticulture industry regulated?
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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
Source: Fact Finders 2006
Fastest Growing Market for New Car – Eastern Europe (Latvia 49% increase on 2005)
During prosperous times car manufacturers will add luxury extras
The Wealth Effect
Inflation and DeflationInflation 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: Netherlands (3.0%/1.9%), Portugal (3.1%/-1.2%), Ireland (3%/-2.4%). Highest rates: Latvia (15.6%/7.7%),
Lithuania (12.2%/6.9%).
UnemploymentUnemployment The proportion
of people in the economy who do not have jobs and are actively looking for work.
IncomeIncome Discretionary income: the amount of
money people have to spend after paying bills and necessities.
Resource AvailabilityResource 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
Toyota PriusHeating Technologies
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
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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. Language2. Manners & Customs3. Technology & Material Culture4. Social Institutions – business, family,
political- Latin America 5. Education –transmitting values, skills,
attitudes etc6. Aesthetics – attitude toward beauty, art,
music etc 7. Religion
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World’s 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.
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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
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Generation Y: Born between 1979 and 1994, size = marketing impact, fickle and skeptical group, techno’s
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
Older Boomers (ages 50 to 59) Spend on home upgrades & Holidays
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
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‘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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Maslow’s Hierarchy of Needs
Abraham Maslow described motivation as a means of satisfying human needs.
1. Physiological Needs – Food, shelter2. Safety & Security Needs – car safety, fire safety3. Belongingness & Love Needs – Teenagers clothes4. Esteem & Ego Needs – Self Gift Giving5. Need for Self Actualization – Engage in self
improvement activities
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 person’s:ValuesSelf ConceptLifestyleVALS – values & LifestylesAttitudes
Individual Consumer Decision Making process
Step 1: Problem Recognition Step 2: Information Search Step 3: Alternative Evaluation Step 4: Purchase Step 5: 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 ResearchAuditing Current CompetitorsAuditing Potential New Competitors
See in chapter 4 a competitor Analysis Template