Chapter 3

Marketing, the environment

and market analysis
 Learning objectives
3.1 provide an overview of marketing, the marketing process,
and the exchange of value
3.2 describe the marketing environment and the purpose of
environmental analysis
3.3 explain the factors at work in the organisation’s internal
environment
3.4 understand the importance of the different micro-
environmental factors
3.5 outline the different types of macro-environmental forces
3.6 understand the components of marketing planning
LO 3.1 What is Marketing?

Consumer Behaviour
Lecture 1
 Definition of marketing
• ‘… the activity, set of institutions, and
processes for creating, communicating,
delivering and exchanging offerings that have
value for customers, clients, partners and
society at large.’
(American Marketing Association, July 2013)
Definition Explained

Figure 3.1
 The marketing evolution
• Over the past 100 years marketing evolved through the stages:
From Exchange – Production oriented – Sales oriented – Market
oriented – Societal market orientation.
Marketing – what comes next

The Service elements & Co-creation of value

 Marketing — a way of doing
business
Marketing is used by:
• small businesses and large multinational
corporations
• businesses selling goods and businesses selling
services
• for-profit and not-for-profit organisations
• private and public organisations, including
governments.
Marketing — a Science & an Art
Left Brain! Right Brain!
• Marketers need to learn • Marketers are
what customers, clients, creative to develop
partners and society new ideas
want. • The best marketers
• Marketers use offer something that
information to maintain is unique or special to
their understanding consumers.
 The marketing process
Understanding the market to create, communicate and
deliver an offering for exchange. Figure 3.3
The exchange of value

• Exchange involves the “mutually beneficial transfer

of offerings of value between the buyer and seller.”

• What sort of things are exchanged?

 Goods  Information

 Service  Status

 Money  Feelings
11
Value – a perception
 Value – additional perceptions
• Value evolves continually and is unique for each
individual.

• The lifetime value of the client – Q: what should the

firm offer in exchange for loyalty?
 The market
A market is a group of customers with heterogeneous
needs and wants – Examples: geographic market,
product market and demographic market
 Different Market Groups
• Customers purchase goods and services for their
own or other people’s use.
• Consumers use the good or service.
• Clients are ‘customers’ of the products of not-for-
profit organisations.
• Partners are all organisations or individuals who are
involved in the activities of the exchange process.
• Society is a body of individuals living as members of
a community.
LO 3.2
The marketing environment
The marketing environment
• All of the internal and external forces that affect a
marketer’s ability to create, communicate, deliver
and exchange offerings of value.
Environmental analysis
• A process that involves breaking the marketing
environment into smaller parts in order to gain a
better understanding of it.
The marketing environment
LO 3.3
Internal environment

• The parts of the organisation, the people and the

processes used to create, communicate, deliver and
exchange offerings that have value.
• The organisation can directly control its internal
environment.
• Allows marketers to understand the organisation’s
strengths and weaknesses.
 Internal Marketing
• Achieving alignment between marketing strategy
and front-line staff.
• Informs, educates, develops and motivates staff to
serve external clients more effectively.
• Includes internal communications, internal research
and training.
 External environment
• The people and processes that are outside the
organisation and cannot be directly controlled.
Marketers can only seek to influence external
environment.
• Outsourcing: transferring an internal function to an
external provider.
• Opportunities and threats: external factors that
positively and negatively affect the organisation’s ability
to serve the market.
LO 3.4
The micro-environment
• The forces within an organisation’s industry that
affect its ability to serve its customers and clients
— target markets, partners and competitors.
• The micro-environment is not directly controllable
by the organisation.
• The micro-environment consists of customers &
clients, partners and competitors.
 The micro-environment
Customers and clients
•Marketers must understand the current and future
needs and wants of their target market:
• understand what their customers value now
• identify changes in customer preferences
• be willing and able to respond to changes
• anticipate how needs and wants might change
• be able to influence customer preferences.
 The micro-environment
Partners include:
• logistics firms — storage and transport
• financiers — banking, loans, insurance and
electronic payment infrastructure
• advertising agencies
• retailers
• wholesalers — storage and distribution
• suppliers.
 The micro-environment
Competitors
• Marketers must ensure their offerings provide
their target market with greater value than their
competitors’ offerings.
• Marketers seek to understand their competitors’
marketing mix, sales volumes, sales trends,
market share, staffing, sales per employee and
employment trends.
Types of competition
Levels of competition
LO 3.5 The macro-environment
• The macro-environmental framework has been
called the PESTEL framework.
• Political forces
• Economic forces
• Sociocultural forces
• Technological forces
• Environmental
• Legal forces.
 The macro-environment
• Political forces
– The influence of politics on marketing decisions.
– Politics is directly relevant through:
• lobbying for favourable treatment at the hands of
the government
• lobbying for favourable regulation
• the very large market that the government and its
bureaucracy comprise
• the effect of political issues on international
marketing.
 The macro-environment
• Economic forces
– Factors that affect how much people and
organisations can spend and how they choose to
spend it.
– Economic forces include income, prices, the level
of savings, the level of debt and the availability of
credit.
 The macro-environment
• Sociocultural forces
– The social and cultural factors that affect people’s
attitudes, beliefs, behaviours, preferences, customs
and lifestyles.
• Demographics
– Statistics about a population: age, gender, race,
ethnicity, educational attainment, marital status,
parental status and so on.
– The natural environment is an example of a
sociocultural theme that has emerged recently.
 The macro-environment
• Technological forces
– Technology allows a better way of doing things.
– Technology changes the expectations and
behaviours of customers and clients and can have
huge effects on how suppliers work.
• Environmental forces
– Natural disasters, weather and climate change.
– Growing ecological awareness and social changes
influence how firms will operate.
 The macro-environment
• Legal forces
- Laws - Legislation enacted by elected officials.
- Regulations
– Rules made under authority delegated by legislation.
– Laws and regulations govern what marketing
organisations can and cannot legally do.
– Laws and regulations fall into the following categories:
privacy, fair trading, consumer safety, prices, contract
terms and intellectual property.
LO 3.6 Situation analysis, organisational
objectives and the marketing plan
• Marketing planning
– An ongoing process that combines organisational
objectives and situational analyses to formulate
and maintain a marketing plan that moves the
organisation from where it currently is to where it
wants to be.
The situation analysis
 SWOT analysis
• Analysis that identifies the internal strengths and
weaknesses and the external opportunities and threats
in relation to an organisation.
• Strengths: those attributes of the organisation that help
it achieve its objectives.
• Weaknesses: attributes of the organisation that hinder it
in trying to achieve its objectives.
• Strengths and weaknesses are internal factors, directly
controllable by the organisation.
 SWOT analysis
– Opportunities
• External factors that are potentially helpful to achieving
the organisation’s objectives.
– Threats
• External factors that are potentially harmful to the
organisation’s efforts to achieve its objectives.
• Threats and opportunities are beyond the organisation’s
direct control.
A potential framework for a SWOT analysis
Marketing metrics
 The Marketing Plan Figure 3.12

• Executive summary (a brief overview of the document)

• Introduction (brief details of organisation – size, revenue…)
• Situation analysis (micro and macro environments – SWOT)
• Objectives (where do we want to be - SMART)
• Target market (who are we after)
• Marketing mix strategy (what are we offering them)
• Budget (what is the cost)
• Implementation (how will we do it)
• Evaluation (marketing metrics)
• Conclusion/future recommendation
The end