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 Marketing Environment

Copyright: Southwestern Publications 2006

substitute products for one another. The Competitive Environment  Competitive Environment Environment: competitive products.ex . companies competing for your consumer¶s purchasing power.ex Oligopoly .1.    Monopoly ± examples in Ireland? Deregulation movement .

 Direct Competitive Products Which would you buy? .

  Indirectly Competitive Products products than can be substituted for one another Plastic Containers vs. Glass vs. Aluminum Sugar vs. Air Travel     . PC Ocean Liner Vs. Artificial Sweeteners Typewriter vs. Tin vs.

in what markets should we compete? How should we compete? Researching the market Identifying current &potential competitors Anticipating competitive actions  Involves:    . Developing a Competitive Strategy    Should we compete? If so.

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. .2.

 Deregulation ± Increases Competitiveness .

IFSRA.Regulatory Forces  Controlling the PL Environment     Companies fight Government : Consumer Safety unjust regulations Commission. opportunities Health and Safety etc  Political lobbying Consumer interest groups  Boycotts  PETA  Political action Special-interest groups committees  ISME Is Horticulture industry regulated? Self-regulatory groups  Advertising 10 of 36 .  Regulations can Environmental present new Protection Agency.

3. unemployment. The Economic Environment  Factors influencing consumer buying power and strategies (stage of the business cycle. inflation. income etc) The Wealth effect (Ireland)   . resources.

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 The Wealth Effect Fastest Growing Market for New Car ± Eastern Europe (Latvia 49% increase on 2005) During prosperous times car manufacturers will add luxury extras Source: Fact Finders 2006 .

Netherlands (3.9%). Highest rates: Latvia (15. Ireland (3%/-2. .9%).2%).1%/-1. (Ireland) Deflation: Falling prices * Lowest annual EU rates: Lithuania (12. Portugal (3.4%).7%).0%/1.2%/6.6%/7. Inflation and Deflation   Inflation: The devaluation of money by reducing what it can buy through continued price increases.

 Unemployment  The proportion of people in the economy who do not have jobs and are actively looking for work. .

 Resource Availability  Demarketing: reducing consumer demand for a good or service to a level that the firm can supply. Income  Discretionary income: the amount of money people have to spend after paying bills and necessities. .

inventions. and innovations to solve problems . The Technological Environment  The technological environment: application of knowledge in science.4.

Heating Technologies Toyota Prius 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  6 .

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 . ..5.

music etc 7. Education ±transmitting values. attitudes etc 6. skills. 4. Aesthetics ± attitude toward beauty. 2.Latin America 5. family. art. 3. political. Religion 20 of 36 .Cultural Environment: Elements of Culture 1. Language Manners & Customs Technology & Material Culture Social Institutions ± business.

360 million followers Confucianism .World¶s Religions      Christianity .0 billion followers Islam .1.2.860 million followers Buddhism .2 billion followers Hinduism .150 million followers Religion can affect marketing strategy .

 2 . Quality is more important to men.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.

Some factors to consider:  falling birth-rates  the rise of the ³mature´ market segment  the ³household of one´ .e. age.Population Considerations Concerned with the study of the quantifiable aspects of population structures. race. gender.. occupation and location.g. size.

majority have children and houses. size = marketing impact.Demographic Factors    Generation Y: Born between 1979 and 1994. fickle and skeptical group. savvy and cynical consumers Baby Boomers: Born between 1946 and 1964 Younger Boomers (ages 41 to 49)  Home is the castle. spend on kids Spend on home upgrades & Holidays Older Boomers (ages 50 to 59) 3  . time premium. techno¶s Generation X: Born between 1965 and 1978.

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  µPink Pound¶ ¶Dorothy Dollar¶ 4 .

endangered species Minimise environmental impact Sustainable resource use Recycle Energy efficient products µThe Polluter Pays Principle¶ .6. Natural Forces       Conserve natural habitats. resources.

Employees: correct and motivated staff is essential to strategic planning. competitive edge. Shareholders: inward investment for growth. Satisfying shareholder needs can cause a change in strategy. Birds Eye) Media: Positive or adverse attention. (Sharwoods+internet companies. Consumer programs . Training and development. Closer supplier relationships benefit strategy. Failure = failed business strategy. service sector. wants and providing benefits for their customers.The Micro Environment      Customers: needs. (Cereality) Suppliers: Price of raw material affect the marketing mix.

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.Consumer Buyer Behaviour   Chapter 5 of book Talk about 3 consumer roles ± Consumer is a user. 0% until«) Buyers ± concerned with logistics of procuring the product (order by certain date for delivery before«) .

Car vs.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. Porsche etc    .

30 of 36 . Especially for a complex purchase.Consumer Behaviour-Psychology    The perception of a consumer about a certain service/product is what matters. Learning also features in consumer behaviour. Motivation is defined as a state of drive that impels behaviour towards a goal-object.

3. 4. fire safety Belongingness & Love Needs ± Teenagers clothes Esteem & Ego Needs ± Self Gift Giving Need for Self Actualization ± Engage in self improvement activities 1. 5. .Maslow¶s Hierarchy of Needs  Abraham Maslow described motivation as a means of satisfying human needs. shelter Safety & Security Needs ± car safety. 2. Physiological Needs ± Food.

The way they act is guided by a person¶s: Values Self Concept Lifestyle VALS ± values & Lifestyles Attitudes  .Psychographics:Describing Consumer Behaviour  Psychographics is a facet of motivation and explains how a person acts during the consumption phase.

Individual Consumer Decision Making process      Step Step Step Step Step 1: 2: 3: 4: 5: Problem Recognition Information Search Alternative Evaluation Purchase Post purchase Experience  Chap 5 of Book .

and choose among alternative brands and suppliers¶ Kotler and Armstrong 1989 . and identify.Industrial Buyer Behaviour  Who says that you will always market to an individual?? µThe decision-making process by which formal organisations establish the need for purchased products and services. evaluate.

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 Research Auditing Current Competitors Auditing Potential New Competitors  See in chapter 4 a competitor Analysis Template .