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Marketing Environment

Marketing Environment. Definition. “ The actors and forces outside marketing that affect marketing mgt’s ability to build and maintain successful relationships with target customers” – Kotler

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Marketing Environment

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  1. Marketing Environment

  2. Definition • “The actors and forces outside marketing that affect marketing mgt’s ability to build and maintain successful relationships with target customers” – Kotler Today's markets change rapidly and marketers need to adopt their strategies and to meet new challenges and opportunities

  3. The Environmental forces Marketing Environment -Macro- Legal factors Technological factors Marketing Environment -Micro- The Internal Environment COMPANY PESTLE Consumer PESTLE Supplier Political factors Economic factors Stakeholder Environmental factors Socio- Cultural factors The Marketing Environment

  4. Micro Environment • The actors close to the company that affect its ability to serve its customers • Macro Environment • The larger societal forces that affect the micro environment

  5. Exercise :Internal Environment • Men • Money • Material • Machinery • Markets (Analyzing in the context of Sri Lankan Airlines)

  6. Micro Environment- Key Stakeholders (Intermediaries)

  7. Porters 5 Forces Potential Entrant (Threat of Mobility) Supplier (Supplier Power) Industry Rivalry Buyer (Buyer Power) Substitutes (Threat of Substitutes)

  8. Industry Rivalry • Sustainable competitive advantage through innovation • Competition between online and offline companies • Level of advertising expense • Powerful competitive strategy Apple vsAnroid

  9. Bargaining Power of Suppliers • Supplier switching costs relative to firm switching costs • Degree of differentiation of inputs • Impact of inputs on cost or differentiation • Presence of substitute inputs • Strength of distribution channel • Supplier concentration to firm concentration ratio • Employee solidarity (e.g. labor unions) • Supplier competition – ability to forward vertically integrate and cut out the BUYER

  10. Bargaining Power of Buyers • Buyer concentration to firm concentration ratio • Degree of dependency upon existing channels of distribution • Bargaining leverage, particularly in industries with high fixed costs • Buyer switching costs relative to firm switching costs • Buyer information availability • Availability of existing substitute products • Buyer price sensitivity • Differential advantage (uniqueness) of industry products Key Accounts Chains

  11. Threat of Substitutes • Buyer propensity to substitute • Relative price performance of substitute • Buyer switching costs • Perceived level of product differentiation • Number of substitute products available in the market • Ease of substitution • Substandard product • Quality depreciation Water vs Cola

  12. Threat of New Competition • The existence of barriers to entry (patents, rights, etc.) • Economies of product differences • Brand equity • Switching costs • Capital requirements • Access to distribution • Customer loyalty to established brand • Absolute cost • Industry profitability; the more profitable the industry the more attractive it will be to new competitors.

  13. Analyzing the Macro Environment P E S T L E Political Economic Social Technological Legal Environmental

  14. Political factors • Main concern for business is for stability in political decision making, a dependable planning horizon and a positive climate • Alert management to impending legislation • Mobilize efforts to represent stakeholder interest to the legislators • Develop awareness of the intentions of those public bodies that can make decisions affecting business operations • Identify changes out of electoral shifts • Implications of Political manifestos and philosophies of the party

  15. Economic factors • Business cycle • Inflation • GDP • Economic policies • Employment levels • Disposable income

  16. Social factors • Trends in population • Dependency ratio • Population structure • Occupational structure • Regional distribution • Marital status and household structure (Case: BMW)

  17. Technological factors • Technology is a primary driving force for social change • Computer, mobile media and telecommunications are converging • Credit transfers rather than cash based society • Rise of the knowledge worker • Rising proportion of IT and tele communications ownership • (Case: Nike)

  18. Ecological factors • What are the issues that will directly and indirectly impact the business • How will the business mitigate this challenge? • Assess stakeholder impact • Can the environmental issues be used to ones advantage? • What should be our strategic positioning? (Case: Marks & Spencer)

  19. Legal factors • Legislation governing business • Legislation governing trade practices • Laws governing packaging • Price ceiling

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