Section2

ANALYZING THE MARKETING ENVIRONMENT

Agenda
• 3.1 Microenvironment
• 3.2 SWOT, TOWS analysis
• 3.3 Macroenvironment
• 3.4 PEST analysis
• 3.5 Responding to the Marketing environment
MARKETING
ENVIRONMENT
The actors and forces outside marketing that affect marketing management’s
abilityto:
• Providevalues
• Build and maintain successful relationships with target customers.

• Microenvironment: Actors close to the company

• Macroenvironment: The larger societal forces
TheMicroenvironment
The microenvironment contains 6 major actors thathave
important relationships to form the value delivery network.
• The Company
• Suppliers
• Marketing Intermediaries The company , Suppliers,
• Competitors Marketing intermediates,
• Publics Competitors, Publics,
• Customers Customers...
Value delivery network
In making andmarketing just one of its manymodels, the Ford Escape hybrid—Ford manages a huge
network of people within Ford plus thousand of suppliers anddealers outside the company who
work together to give final customers “the most fuel-efficient SUV on the market.
3.1.1 The company
• Company resources and departments have impacts on the
marketing activities and department

• Such as management, finance, HR, R&D, purchasing, operations,

technology, accounting and corporate culture.
3.1.2 The Suppliers
• Provide resources needed to produce goods and services for company.
• Are an important link in the company’s overall customer “value delivery
network”

• Helpto create anddeliver customervalue andmustbe treated as partners

 Q.3.1: Discuss the effects of supplier actors on the
operation and marketing ability of company in normal
situation and in covid 19pandemic?
Regarding to global supply chain
3.1.3 Marketing Intermediaries
o Firms that help the company promote, sell, anddistribute its
products to final buyers.
o Marketing intermediaries are important partners to performance
optimization.

o 4 types of intermediates: Resellers (wholesalers & Retailer),

Physical distribution firms, Marketing service agencies, and
Financial intermediaries.
3.1.4Competitors
• Companies must gain a strategic advantage by positioning their
offerings strongly against competitors’ offerings in the minds of
consumers.
• Firms consider its ownsize andindustry position in comparison to
others.

• Conductingcompetitor analysisis criticalfor success

3.1.5Publics
• Any group that has an actual or potential interest in or impact on an
organization’s ability to achieve its objectives. 7 types of publics:

o Financial Publics –Influences ability to obtain funds

o Media Publics –Carries news, features, and editorial opinion.
o Government Publics –Government developments or laws
o Citizen-action Publics –Mayquestion marketing decisions
o Local Publics –Local and community organizations andpeople
o General Publics –All the people of an area, their image of the company
is important to buying.
o Internal Publics –Company people whose influence mayspill over to
the external.
3.1.6 Customermarket
• The most actors in the microenvironment. 5 types of customer market:
o Consumer Markets –Individuals/households that buy goods and
services for personal consumption.
o Business Markets –Buy goods/services for further processing or
for production.

o Reseller Markets –Buy goods/services to resell at a profit.

o Government Markets –government agencies that buy
goods/services for public services or for transferring.
o International Markets –Buyers in other countries, including all the
previous markets.
Activity: Analyzing Microenvironment
Choose acompanyand work together to analyze their current
microenvironment actors.

• Work in group of 5-7 (on class)

• Highlight the mainactors that mayhave the strong and significant

impacts on the company’s operation and marketing ability.

• Summarize and submit (next class section)

3.2 SWOT
ANALYSIS
Positive Negative • Acronym of Strengths, Weaknesses,
Threats and Opportunities
• Created by Albert Humphrey –leader of Stanford
Internal

Strengths Weaknesses University’s project research in the decade of

1970s

• Popular used in strategic business and project

planning.

• Analyze corporate's internal and external

External

Oppotunities Threats environment and resources.

3.2.1 Internal v/s External
• Strengths and Weaknesses

o Are the corporate’s internal factors (HR, Capital, fixed assets,

technologies..)

o Mostly related to current situation

• Opportunities and threats

o Are the corporate’s external factors

o Related to the impacts from the external environments (competitors,

government policies, consumers’ behaviors, partners and market)
Q.3.1: Mayinternal factors be opportunities andthreats?
3.2.2 Why do we need SWOT analysis?
• Help decision maker and strategic planner understand clearly about
corporate’s internal/external situation
• Analyze the issues/problems which maylead to success/failure.
• Prevent costly mistakes

3.2.3 When do we need SWOT analysis?

• Changing business direction/perspective

• New product launching/new market entering

• Decision making
• Competition re-evaluation

• New business strategic planning

3.2.4 Strengths

• Things you/your business is good at

• Provide aclear competitive advantagesover rivals (competitors)

• Distinctive/core competencies and resources

• Should be protected and built upon.

• Possible strengths: Market share, Technology, Economies of scale,

Leadership, Brand reputation and loyalty, High quality, Financial
resources, R&D..
To identify the strengths, ask…

• What advantages does your company have?

• What do you do better than anyone else?

• What unique or lowest-cost resources do you have access to?

• What do people in your market see as your strengths?

• What factors meanthat you "get thesale"?

Q.3.2: In case, your company does not have anystrength, what
should youdo?
3.2.5Weaknesses

• Things you/your business lacks or does poorly

• A source of competitive disadvantage Places the business at a

disadvantage

• Mayhinder or constrain the business in achieving proposed

objectives

• Should seek ways to reduce or eliminate weaknesses before

exploiting further competition

• Possible weaknesses: Low market share, undifferentiated, outdated

technology, poor quality, lack of innovation, aweak brand name,
High costs…
To identify the weaknesess, ask…

• What could you improve?

• What should you avoid?

• What are people in your market likely to see as weaknesses?

• What factors lose you sales?

3.2.6Opportunities
• Things that create the chance to make greater profits or get better
business results.
• Arises when an organization maytake benefits from the external
environment.
• Should be recognize the opportunities to improve the business
situation.

• Opportunities always coming along with the risks

• Possible opportunities: Technology, higher economic innovation
growth, new demand, new market, trade liberalization, market
growth/diversification, social or lifestyle change, government spending
programs.
To identify the opportunities, ask…

• Where are the good opportunities facing you?

• What are the interesting trends you are aware of?

Q.3.2: In case, your company does not have anystrength, what
should youdo?
3.2.7Threats
• Things mayharmsor trouble you/yourbusiness

• Any external factors that mayhinder or prevent you/ your business

from achieving proposed objectives or place the business at risks.

• Threats are not controllable

• Possible threats: New market entrants , economic downturn,

change in consuming behaviors, the rise of low cost tastes or needs
production abroad, higher or unstable input sources/prices, new
regulations, competitive pressure
To identify the threats, ask…

• What obstacles do you face?

• What are your competitors doing?

• Are quality standards or specifications for your job, products or

services changing?

• Is changing technology threatening your position?

• Do you have bad debt or cash-flow problems?

• Could any of your weaknesses seriously threaten your business?

3.2.8 SWOT Analysislayouts

Strengths Weaknesses
•… •…
•… •…

Opportunities Threats
• … • …
• … • …
3.2.9 Common mistakes of SWOT analysis
• An unclear goal

• Developing long lists.

• Labeling items "strengths” even if you aren’t any better than the competition.

• Conducting biased assessments.

• Confusing strategies and opportunities. A strategy is an action. An opportunity is an event or

condition that exists independent of your actions.

• Ignoring the internal and external environment factors identified when evaluating strategies
3.2.9 Tips for SWOT analysis
• Be realistic

• Be specific and fair in evaluation.

• Keep your SWOT analysis short and simple. Avoid thecomplexity

• Distinguish between where your organization is today and where it could be in the future
Activity: SWOT Analysis
Based on the microenvironment actors analysis, draft
the SWOT analysis for company with aspecific
product/service in aspecificmarket.

• Work in group of 5-7 (on class)

• 20 minutes allowed

• Summarize and submit (next class section)

3.2.10 SWOT  TOWS
• By analyzing the external environment (threats and opportunities), and your internal environment (weaknesses
andstrengths), youcan use these techniques to thinkaboutthe strategy of your whole organization

• Think about aprocess, amarketing campaign, or even your own skills and experience
• Use TWOS analysis to answer these following questions:
o Make the most of your strengths?
o Circumvent your weaknesses
o Capitalize on your opportunities?
o Manage your threats?
3.2.11 Formulate strategies from SWOT
• SO strategy: Strengths and Opportunities –Use Strengths to take
advantages of opportunities

• WO strategy: Weaknesses and opportunities –Over come

weaknesses by taking advantages of opportunities

• WT strategy: Weaknesses and Threats: Minimize the Weaknesses

and avoid Threats

• ST strategy : Strengths and Threats –Use strengths to avoidthreats

3.2.12 TOWS Analysislayouts
External Opportunities (O) External Threats (T)
1. 1.
2. 2.
3. 3.

Internal Strengths (S)

1. SO "Maxi-Maxi" Strategy ST "Maxi-Mini" Strategy
2. Strategies that use strengths to Strategies that use strengths to
3. maximizeopportunities. minimizethreats.

Internal Weaknesses (W)

1. WO WT "Mini-Mini" Strategy
2. "Mini-Maxi" Strategy Strategies that minimize weaknesses
3. and avoid threats.
Strategies that minimize weaknesses by
taking advantage of opportunities
Activity: TOWS Analysis
Based on the SWOT analysis, draft the TOWS matrix for
companywith

• Work in group of 5-7 (on class)

• 20 minutes allowed

• Summarize and submit (next class section)

The Macroenvironment
There are six major forces in the company’s macro environment of forces that
shape opportunities and pose threats:

• Demographic
• Economic
• Natural
• Technological
• Political
• Cultural
3.3.1 DemographicalEnvironment
• Demography: the study of humanpopulations in terms of size, density, location, age,
gender, race, occupation, and otherstatistics.
o Demographic environment is important because it involves people, and people
make upmarkets

o Any population contains several generational groups.

o Demographic trends include family structure, geographic population shifts,
educational characteristics, and population growth anddiversity

o Segmenting by generational groups helps to develop effective marketing strategies

3.3.2 EconomicalEnvironment
• Economic factors that affect consumer purchasing power and
spending patterns

• Consumers now spend carefully and desire greater value

• “Back to basics frugality” –Consumers tend to buy less and look for
greater value in the things they do and buy.
• “Value marketing”: Ways to offer financially cautious buyers greater
value - the right combination of quality and service at afair price
• Nations vary in levels anddistribution of oncome –such as industrial
economies, subsistence economies, and developingeconomies.
Engel’s Laws
• Proposed by Ernst Engel (German Economist). As family
income rises:

• The percentage spent on food declines

• The percentage spent on housing remains aboutconstant
(except utilities which decrease)
• The percentage spent on savings, insurance and most other
categoriesincreases
3.3.3 Natural & EnvironmentalEnvironment
• Natural Resources that are needed as inputs by marketers or that are
affected by marketing activities.

• Environmentalconcerns havegrown steadily withseveral notable trends:

o Growing Shortages of RawMaterials –Air, food, water, and
renewable andnon-renewable resources.
o Increased Pollution –Industry damages quality of the natural
environment, through disposal and littering.
o Increased Government Intervention –The government tends to
pursue environmental quality by requesting social responsibility.
o Environmental Sustainability –Developing strategies and practices
that create a world economy that the planet can support indefinitely.
3.3.4 Technological Environment
• Forces that create new technologies, creating new product, and market
opportunities.

• Most dramatic force in changing the marketplace

• Has released wonders, horrors, and mixedblessings.
o Offers new opportunities for marketers to provide advantages,such
as tracking technology (RFID) through various points in the distribution
channel, usage, and eventual disposal.
o New technologies replace old technologies and maycause certain
businesses to decline if they do not keep up.
o Research is carried out by research teams –products should be technical
andcommercial so thattheycan be practical andaffordable.
Q.3.3 What have you seen in technology
movements in the past five years that may
significant impact on business, society and
MARKETING?
Q.3.4 Changes in Technological environment have
creates both opportunities and
challenges for companies?
3.3.5 Political & SocialEnvironment
• Consists of laws, government agencies, and pressure groups that influence or limit
various organizations and individuals in a given society

• Increasing legislation regulating business

o Public Policy - Free market economies require some degree of regulation for
encouraging competition and ensuring fair markets.
o Increasing Legislation –Protects companies from each other, protects
consumers from unfair business practices, and protects the interest of society
against unrestrained business behavior.
o Changing Government Agency Enforcement –Regulations enforce trade
policies and regulations. (municipal, provincial, national, and internationallaws.
o Increasing emphasis on ethics (socially responsible behavior & cause-related
marketing)
3.3.6 CulturalEnvironment
• Consists of institutions and other forces that affect a society’s basic
values, perceptions, preferences, and behaviors. The Persistence of
Cultural Values:
o Core beliefs and values have a high degree of persistence –these
include cultural diversity, democracy, sustainable development,
universal health care, alove of nature, hard work, and being honest.
 Core Beliefs and Values – Passed on from parents to children
and reinforced bysocial institutions.

o Secondary Beliefs and Values –More open to change.

Q.3.5 Cultural environments shape the customer
minds, perception and behaviors
Shifts in Secondary Cultural Values
• People’s Views of Themselves –People view themselves differently and buy
products/services based on such views.
• People’s Views of Others –Attitudes toward others has shifted “me” to “we”
and want to buy similar products.
• People’s Views of Organizations –People are willing to work for major
organizations and buy from themexpecting.
• People’s Views of Society –People vary in this regard though national pride
and patriotic products and promotions are often major.
• People’s Views of Nature –some feel ruled by it, others feel in harmony with
it, and some seek to master it.

• People’s Views of the Universe –Renew interest in religion and spirituality

3.4 PESTANALYSIS

Harvard professor Francis Aguilar is the creator of PEST Analysis. He included a

scanning tool called ETPS
This helps you understand the "big picture" forces of change that you're exposed
to, and, from this, take advantage of the opportunities that they
3.4.1 Why do we need PEST analysis?

• Helps you to spot business or personal opportunities

• Gives you advanced warning of significant threats.
• Helps you to shape what you're doing, so that you work with change,
rather than against it.

• Helps you to avoid starting projects that are likely to fail

• It can help you break free of unconscious assumptions when you enter a
new country, region, or market; because it helps you develop an objective
view of this new environment.
3.4.2 Other versions of PEST
There are variations of PEST Analysis that bring other factors into
consideration:
• PESTLE/PESTEL: Political, Economic, Socio-Cultural,
Technological, Legal, Environmental.
• PESTLIED: Political, Economic, Socio-Cultural, Technological,
Legal, International, Environmental, Demographic.
• STEEPLE: Social/Demographic, Technological, Economic,
Environmental, Political, Legal, Ethical.

• SLEPT: Socio-Cultural, Legal, Economic, Political, Technological.

• LONGPESTLE: Local, National, and Global versions of PESTLE.
(These are best used for understanding change in multinational
organizations.)
Activity: Country analysis
• Work in group (at home)

• Make the report about your selected country’s pestle analysis

• Submit next week

3.5 Responding to the Marketing environment
There are three kinds of companies: those who make things happen,
those who watch things happen, and those who wonder what’s
happened
• Manycompanies view the marketing environment as an
uncontrollable element to which they must react and adapt.
They passively accept the marketing environment and do not
try to change it.
• Other companies take a proactive stance toward the marketing
environment. these firms develop strategies to change the
environment.

• smart marketing managers will take a proactive rather than

reactive approach to the marketing environment