Lecture 3

Marketing environment
(Macro-environment)
 MBA Marketing: Last week
Level 1
Marketing
Putting Marketing into a business context. an
Understanding it’s contribution to business and introduction
the extent of what it is, what it is not and what it (L1 & L2)
could be.

Level 2
Consumer
Marketing Marketing
behaviour &
What activity do we need to do and what environment research
STP
information do we need to collect before we (L3) (L4)
(L5)
can set marketing strategy?

Level 3
Marketing
strategy
What is marketing strategy (L6)
and how is developed?

Level 4
Marketing Price, place
How is marketing strategy Product & promotion Services Branding
mix and B2B (L10) (L11)
operationalised into activity to (L8) (L9)
(L7)
ensure the organisation benefits?
 MBA Marketing: Week 2
What is a market?
Market time, market place, marketing, market segment

Marketing’s influence
Different types of market?
on exchange
Markets, Business-to-Consumer (B2C)
supply and Business-to-Business (B2B)
Put simply to move markets to become
demand Not-for-Profit
more inelastic!
Government
Reseller and overseas
STP, growth options, offer, channels, brand
Influence this
Price elasticity Exchange through supply and demand

The change in the quantity demanded Equilibrium between supply, quantity demanded
in response to a change in price and price charged
 MBA Marketing: This week
Level 1
Marketing
Putting Marketing into a business context. an
Understanding it’s contribution to business and introduction
the extent of what it is, what it is not and what it (L1 & L2)
could be.

Level 2
Consumer
Marketing Marketing
behaviour &
What activity do we need to do and what environment research
STP
information do we need to collect before we (L3) (L4)
(L5)
can set marketing strategy?

Level 3
Marketing
strategy
What is marketing strategy (L6)
and how is developed?

Level 4
Marketing Price, place
How is marketing strategy Product & promotion Services Branding
mix and B2B (L10) (L11)
operationalised into activity to (L8) (L9)
(L7)
ensure the organisation benefits?
 MBA Marketing: Week 3: Marketing Environment
Why is it important?

Marketing
Micro-environment? Macro-environment?
environment

How to use the analysis?

What is the ‘environment’ and
why is it important?
The Environment
• Can be associated with ‘The environment’
• Green movement, conservation
• However
• Environment means
• “The surroundings or conditions in which a person, animal or plant lives or
operates” (Oxford Dictionary, 2001, p.418)
• “The circumstances, objects, or conditions by which somebody or something
is surrounded” (Allen, 2000, page unknown)
Why study the Environment?
• No organisation operates in isolation
• An understanding of what is happening around
the organisation allows the business to………
• Compete more effectively against its rivals
• Identify trends
• Plan more effectively
• A better understanding of the market
• Understand what their competitors are doing
• Identification of opportunities and threats
Speed of environmental change

THE CHANGING WORLD

“Crazy days
demand crazy
ways”
Tom Peters

Wilson and Gilligan

The marketing environment
Macro environment

Micro environment
Political Demographic

Competitors Customers

Economic Organisation Ethical

Internal Audit

Suppliers Intermediaries
Social Cultural Environmental
Stakeholders

Technological Legal
Sources of environmental information

• Company records • Company websites

• Market research reports • Customer and consumer
• Newspapers online communities/forums
• Trade magazine • News organisations
• Government reports and • Consultancy firms
statistics • Trade unions
• Trade organisations
• International bodies and
committees
 Deciding what is relevant information…
• How do you know what is relevant?
Monitor • Trends, issues and events
• Check your sources regularly

Identify • Factors, trends, issues, events that are significant

• Set and review criteria to determine whether they are significant

Evaluate • The impact of the identified factors upon the organisation’s

operation in current markets

Forecast • What is likely to happen next

• Examine possible future threats/opportunities

Assess • The impact of threats/opportunities on the firm’s strategies

The macro-environment?
Macro environment
• Macro environment: elements which affect all organisations within the industry
(Blythe, 2006)

• PEST analysis is a framework used to scan the marketing environment

• We love an acronym
• P.E.S.T.
• P.E.S.T.L.E.
• S.T.E.P.
• S.T.E.E.P.L.E.

• We will use P.E.S.T.E.L

PESTEL for Charlie Bighams
Technology : simple technology is available to track blood sugar levels and see the difference made in eating Bighams food as part of a low carb
diet

Implications: The direct benefits of eating Bighams food as part of a low carbohydrate diet can be immediately measured and seen
in reducing blood sugar levels.

Simple devices are available for individuals to regularly measure and track their blood sugar levels whether at home or on the move
(https://www.diabetes.co.uk/blood-glucose/blood-glucose-testing.html)

Changes in diet directly influence an individuals blood sugar levels which should be kept between 4 to 7 mmol/L prior to meals and
under 8.5mmol after meals ( https://www.diabetes.co.uk/diabetes_care/blood-sugar-level-ranges.html).
 Political factors
• Political environment “Laws, government agencies and pressure
groups that influence and limit various organisations and individuals in
a given society” (Kotler et al, 2013, p.93)
Future legislation
Stability of government
Bureaucracy
Corruption
Trade
Import restrictions
Tariffs
Trade control
• Funding, grants, initiatives
• War or conflict
Economic
• “Economic factors that affect consumer purchasing
power and spending patterns” (Kotler et al, 2013, p.86)
• Economic growth: growth, stagnate, decline
• Interest rates
• Exchange rates
• Export/Import
• Inflation
• Household disposable income
• Employment/Unemployment
• Taxes
• Government expenditure
Political and Economic : UK economic growth is sluggish but the yearly cost of treating type 2 diabetes is substantial. Reducing its rise in the
population is a priority as is reducing the cost of treating complications

Implications: There is a growing economic as well as a social need to address type 2 diabetes through a healthy diet of low
carbohydrate eating:

According to Diabetes UK (15.01.19) ‘The cost of diabetes to the NHS is over £1.5m an hour or 10% of the NHS budget for England
and Wales. This equates to over £25,000 being spent on diabetes every minute. In total, an estimated £14 billion pounds is spent a
year on treating diabetes and its complications, with the cost of treating complications representing the much higher cost.’.

The overall size of the UK economy(GDP) is due to increase by 4% in 2021, downgraded from last November’s forecast of 5.4%. 
Growth is expected to moderate to 1.7% in 2023, 1.6% in 2024 and 1.7% in 2025. (Office of Budget Responsibility, March 2021).

Pressure to increase spending on the NHS during 2021 and beyond are significant as is indicated by planned spending for the
department of Health and Social Care in England increasing to £201.7 billion in 2020/21, up from £148.8 billion in 2019/20.
This includes more than £50 billion of extra funding for the Department of Health and Social Care 2020/21 response to
the Covid-19 pandemic. Yet sources of funding for this from increased taxation and government borrowing are expected to be under
Increased pressure. (Kings Fund, March, 2021).
 Social Cultural
• Cultural environment: “Instructions and other forces that affect
society’s basic values, perceptions, preference and behaviour” (Kotler et al,
2013, p95)

• Social cultural
• Health consciousness
• Education
• Attitude to work, leisure, career
• Buying habits
• Religion and beliefs
• Attitude on imported goods
What use is culture?
• Provides a set of beliefs & standards
• What to do and how to do it correctly
• What is palatable, admissible, ethical, magical, religious, hygienic,
quality, etc.
• When it is time to sleep, to eat, to work, etc.
Interpreting symbols
• 7 bad luck in Kenya
• 7 good luck in the Czech Republic
• 7 magical in Benin, Africa
• 10 is bad luck in Korea
• 4 is related to death in Japan
• Red represents witchcraft and death in many African
countries, but is a positive in Denmark
• Avoid triangular shapes in Hong Kong, Korea & Taiwan
• It is a negative shape

SOURCE: Business America, July 12, 2003

7
• The root of most lucky numbers can be found in religion. God created the world in 7 days…
Seven also comes up repeatedly in ancient history. Until the 1800's, there were seven known
planets in the solar system, mathematician Pythagoreans considered seven to be the perfect
number and as any craps player can tell you, seven is the most desirable role on the dice. In
most major instances, seven is a lucky number from culture to culture. Seven is even the usual
number of spots on a ladybird. Ladybirds are considered good luck in their own right .

• www.chinatownconnection.com
4
• This number is bad luck in the far east. The pronunciation of
the number four in Japanese is very similar to the word death,
and because of this, four has been considered bad luck in
Japan, Korea and China. It is considered very bad luck to give a
gift that is made up of four pieces to someone. Many buildings
in heavily Asian areas do not have a fourth floor, much like the
way North American cultures treat the number 13.

www.chinatownconnection.com
•  The hysteria surrounding unlucky 13 in Western
culture has become so commonplace that an actual
sickness called triskaidekaphobia; the fear of the
number 13.
1. Culture is learned
2. Culture is forgotten
Hofstede’s analogy
• Your culture is like your nose:
• you do not see it properly yourself,
• but everybody else does and thinks it is peculiar if it
differs from theirs.
• In addition,
• you always go where it leads you, and
• it is always in the way.
• REMEMBER SELF REFERENCING CRITERIA?
Demographic
• Demographic
• Population growth rate
• Immigration & emigration
• Social classes
• Family size and structure
• Life expectancy
• Average disposable income
• Lifestyle
 UK Socioeconomic Groupings

A Upper middle class - 3% of population: Higher managerial, administrative,

professional

B Middle class- 14% of population: Intermediate managerial, administrative,

professional

C1 Lower Middle- 27% of population: Supervisory or clerical junior managerial.

C2 Skilled working- 25% of population: Skilled manual

D Working - 19% of population: Semi skilled and unskilled manual workers

E Lowest level of subsistence - 12% State pensioners or widows,

casual / lowest grade workers
Social trends : changing consumer preference for ready meals and limited forecasted market growth

Implications: Bighams sales growth is threatened by reducing market growth, an increasing wish to cook from fresh ingredients
but healthy fish and vegetable options offer an opportunity:

Home cooking remains the key competition for ready meals, 43% of buyers and eaters of ready meals or 
ready-to-cook foods saying that not cooking meals from scratch makes them feel guilty.*

Ready meals are seen as a nice treat by 53% of people who eat and buy ready meals/ready-to-cook foods. *

Fourth-biggest purchase driver for ready meals is health , cited by 44% of buyers, after taste, price and how
convenient it is.*

27% and 29% of eaters and buyers cite fish or chunks of vegetables as the main ingredients holds marked potential for
driving interest in ready meals/ready-to-cook foods.*

Ready meals are seen as a good route into trying new cuisines, with 50% of buyers of ready meals/ready-to-cook foods
buying them to do so.*

Limited forecasted growth in total market size for ready meals (by volume in millions of Kilograms) volume terms, for of ready meals
(2019: 109, 2020: 564, 2021: 574, 2022: 572, 2023: 568).*

* Source: Mintel Ready Meals and Ready-to-Cook Foods: Inc Impact of COVID-19 - UK - July 2020
Social trends : in the UK Type 2 diabetes is growing significantly in the general population each year

Implications: An opportunity for Bighams. People with type 2 diabetes have to eat very carefully, eating a specialised
low carbohydrate diet (fish, vegetables etc). The market is large. The opportunity is to make a low carb diet convenient and
accessable for those with or those who want to prevent type 2 diabetes.

One in ten over 40s now has Type 2 diabetes, and the number of people living with diabetes in all its forms
in the UK has reached 4.7 million. The number of people affected by diabetes is expected to reach 5.5 million by 2030 (25.02.19,
Diabetes UK).

Following a low carbohydrate diet is important if diagnosed with type 2 diabetes and helps prevent getting diabetes
in the first place (https://www.diabetes.org.uk/preventing-type-2-diabetes/ten-tips-for-healthy-eating).

To prevent type 2 diabetes or control it individuals should eat chicken and fish, plenty of vegatables (chickpeas, beans and lentals)
and minimise the intake processed meat, red meat, fatty foods etc (https://www.diabetes.org.uk/preventing-type-2-diabetes/
ten-tips-for-healthy-eating).

Example meals are difficult to source and cook from scratch: herby mackerel, spinach and corn fritters, chickpea and tuna salad,
minted aubergine with spinach and pine nuts green kale lentil soup (https://www.diabetes.org.uk/preventing-type-2-diabetes/
ten-tips-for-healthy-eating).

Tracking daily carbohydrates is a problem and is tricky. Bigham’s ready calculated meals are an alternative to having to plan, keep
Looking up and forecasting daily carbohydrate intake (www.carbsandcals.com ).
 Technological
• Technological environment “forces that create new technologies,
creating new product and market opportunities” (Kotler et al, 2013, p91)
• Infrastructure level
• Rate of technological change
• Internet
• Investment in technology
• Incentives for investment
 Legal
Legal: Covers every aspect of an organisation’s business ranging from
transparency to pricing (Baines et al, 2011, p53)
Product safety, packaging and labelling
Codes of practice in advertising
Laws:
Employment
Health and safety
Discrimination
Data protection
Patents, IP, Copyright
Legal : calls for the UK government to extend taxing and regulating the retailing of unhealthy food and drink

Implications: This is an opportunity for Bighams to demonstrate they are responding to government concerns by directly
helping individuals to work towards preventing or managing type 2 diabetes. Demonstating there is no need to regulate the industry.

The UK Sugar Tax: On 6th April 2018 the UK government introduced the Soft Drinks Industry Levy (UK Sugar Tax).
It has resulted in over 50% of manufacturers reducing the sugar content of their drinks (UK Treasury, March 2018).

Calls for the government to extend the sugar tax to unhealthy junk food and certain ready meals are coming from lobby organisatons
such as the national obesity forum (24th July, 2020).
IMPACT OF LEGISLATION
Contract
Patents
Consumer Credit Data Protection

Consumer Protection Sale of goods Act

Company Law BUSINESS Trademarks

Environmental
Trade descriptions
Protection

Restrictive Product liability

Practices Monopoly &
Merger
MACRO
• It challenges traditional business models
• It gives organisations access to a global market
• It offers new economics of information
• It gives virtually instant access
• It has created new networks of communication
• It has ‘cut out the middle man’
• It has encouraged affiliations
• It has led to transparent pricing
• It facilitates customer relationships

The Impact of
the Internet on
Business and
Marketing
Technology : simple technology is available to track blood sugar levels and see the difference made in eating Bighams food as part of a low carb
diet

Implications: The direct benefits of eating Bighams food as part of a low carbohydrate diet can be immediately measured and seen
in reducing blood sugar levels.

Simple devices are available for individuals to regularly measure and track their blood sugar levels whether at home or on the move
(https://www.diabetes.co.uk/blood-glucose/blood-glucose-testing.html)

Changes in diet directly influence an individuals blood sugar levels which should be kept between 4 to 7 mmol/L prior to meals and
under 8.5mmol after meals ( https://www.diabetes.co.uk/diabetes_care/blood-sugar-level-ranges.html).
 Environmental
• Environmental: The natural environment,
• Weather
• Climate change
• Pollution
• Recycling & waste management
 Greener marketing
Understand ecological efficiency
Products, services have
Incorporate into products.
modicum of respect for
Some social issues addressed
social, ethical, environment
Shareholders take precedence

Light green Dark green

Incorporate recycling policies

Fully integrated total
Understand, respond to
Environment quality programme
Some aspects ecological
Ethical, moral issues addressed
efficiency

Charter, Polonsky 1999

Environmental : all major commercial consumers of natural resources are under pressure to act sustainably

Implications: Bighams are responding in the location, design and operation of their new Somerset Factory. Indicating they can
address a new market opportunity within the context of an increasingly sustainable operation (https://www.bighams.com/giving-
back/)

There is increasing pressure to influence the environmental impact of food producers by taxing their carbon footprint.
The UK Health Alliance on Climate Change has called for a food carbon tax to be levied on all food producers according to the carbon
footprint of their products unless the food industry takes voluntary action to reduce the climate impact of food by 2025.
The alliance, which includes 10 royal colleges, the BMA, The BMJ, and the Lancet, gave recommendations to reduce the UK’s
food related greenhouse gas emissions (British Medical Journal, 5 th November 2020).
 MBA Marketing: Week 3: Marketing Environment
Why is it important?
The world changes, the business environment
changes, so a business must also change!

Marketing
Micro-environment? Macro-environment?
environment

Political
Economic
Social / Cultural
(including demographic)
Technical
How to use the analysis? Environmental
Legal
Avoided making a listing of un-related points.
Used each of the PESTEL and Micro sectionsin context.
Listed key and important evidence to support your case for change, growth etc.
Stated the positive / negative implications for the change, growth etc.
 Lecture 3B

Marketing environment
(Micro-environment)
The micro-environment?
Micro environment
• Micro environment: Elements within the environment that can affect
the firm and the industry but may not affect all firms (Blythe, 2006)
Micro-environment for Charlie Bighams
The marketing environment
Macro environment

Micro environment
Political Demographic

Competitors Customers

Economic Organisation Ethical

Internal Audit

Suppliers Intermediaries
Social Cultural Environmental
Stakeholders

Technological Legal
 Charlie Bighams: their performance, the challenge and an opportunity

Bighams in 2019/20 sold 6.1 Million Kilograms of ready meals, holding 1% market share.
Market Share The market is dominated by own supermarket own label brands, standing at 95% market
share (Mintel : Ready Meals and Ready-to-Cook Foods: Inc Impact of COVID-19 - UK - July 2020).

Charlie Bighams priority is to grow the businesses gross margin by increasing sales volume.
Challenge The challenge is how can the business grow when the forecasted market growth for
traditional ready meals is minimal? (Mintel : Ready Meals and Ready-to-Cook Foods: Inc
Impact of COVID-19 - UK - July 2020).

In the UK a substantial number of people are becoming type 2 diabetic or are already type 2
The opportunity diabetic. Diabetics need to follow a strict low carbohydrate diet. This is an opportunity for
Bighams to take the hassle out of this diet by preparing meals, keeping the carbohydrate conten
within daily limits and packaging meals so that customers can be confident in clearly seeing
they are eating responsibly.
 Customers
• Customers are the most important element in the micro environment
(Kotler et al, 2013)

• Without customers…………..
• Kotler et al (2013) suggest that there are five types of customer:
• Consumer markets
• Business markets
• Reseller markets
• Government markets
• International market
• Understanding the customer…………More on this in a few weeks time
Social trends : changing consumer preference for ready meals and limited forecasted market growth

Implications: Bighams sales growth is threatened by reducing market growth, an increasing wish to cook from fresh ingredients
but healthy fish and vegetable options offer an opportunity:

Home cooking remains the key competition for ready meals, 43% of buyers and eaters of ready meals or 
ready-to-cook foods saying that not cooking meals from scratch makes them feel guilty.*

Ready meals are seen as a nice treat by 53% of people who eat and buy ready meals/ready-to-cook foods. *

Fourth-biggest purchase driver for ready meals is health , cited by 44% of buyers, after taste, price and how
convenient it is.*

27% and 29% of eaters and buyers cite fish or chunks of vegetables as the main ingredients holds marked potential for
driving interest in ready meals/ready-to-cook foods.*

Ready meals are seen as a good route into trying new cuisines, with 50% of buyers of ready meals/ready-to-cook foods
buying them to do so.*

Limited forecasted growth in total market size for ready meals (by volume in millions of Kilograms) volume terms, for of ready meals
(2019: 109, 2020: 564, 2021: 574, 2022: 572, 2023: 568).*

* Source: Mintel Ready Meals and Ready-to-Cook Foods: Inc Impact of COVID-19 - UK - July 2020
Marketing intermediaries
• Marketing intermediaries: “Firms that help the company
to promote, sell and distribute its goods to final buyers”
(Kotler et al, 2013, p76)

• Resellers
• Retailers, wholesalers, agents,
• Physical distribution firms
• Marketing services agencies
• Ad agencies, media firms
• Financial intermediaries
• Banks, credit companies

• Important to have a good relationship with intermediaries

 Charlie Bighams : the marketing basics are right!

Bighams produce a range of 60 products spanning traditional british food (fish pie),
The range classic european (lasagne), curries (chicken tikka massala), vegetarian (sweet potatoe and
bean chilli), grains (moroccan chicken with bulgar wheat) and puddings (sticky toffee pudding).
(see https://www.bighams.com/products/).

Bighams products can be found only in the UK in: Waitrose, Sainsbury, Tesco, Asda, Booths,
Distribution Budgens, Ocado. (see https://www.bighams.com/where-to-buy/).

Pricing and Bighams pricing is at the premium end of the market. For example a main course for 2 is priced
positioning at £7.75 in Waitrose, with a meal deal of main course and dessert for £10. It is aligned
with Waitrose own ready meals at £6.99, but more expensive than say Asda at £5.

Communication Bighams marketing communications uses mainly traditional methods of TV, specialist press
and promotion mixed with social and digital (http://www.contagiouslondon.com/work/charlie-bighams/).
Spending £1.3m in 2019 out of a total for the industry of £22.3m ( Mintel : Ready Meals and
Ready-to-Cook Foods: Inc Impact of COVID-19 - UK - July 2020).
Suppliers
• Suppliers “provide the resources needed by the company to produce
its good and service” (Kotler et al, 2013, p.75)
• Outside the marketing remit????
• Working together
Supplier’s contribution to value
COMPONENTS SERVICES
Supplier’s contribution to value
COMPONENTS
 Multiple Value Chains

SUPPLIERS ORGANISATION Marketing Intermediary

VALUE/SUPPLY CHAIN

Strategically important to
manage the entire supply chain
vertical integration/marketing
(Piercy)
 Competition
• Competitors “Companies and products that compete with the focal
company, either by offering a similar product form, or indirectly by
satisfying a similar underlying need” (Palmer, 2012, p505)

• All competitors need to be accounted for so this means direct and

indirect competitors (Palmer, 2012; Kotler et al, 2013)
 Competitors
• Direct competition: competitor’s product offerings
similar to own product
• Close competition: competitor offers a similar product
that satisfies the same need
• Substitute competition: competitor’s product is different
from own company’s but satisfies need
• All of the above deliver similar benefits
• Indirect competition: competition in the widest
sense………………..
 Types of Competitor

MARKET LEADER
FIGHT TO DEFEND MARKETSHARE

CHALLENGERS
ATTACK TO GAIN MARKETSHARE

FOLLOWERS
COPY- STAY OUT OF TROUBLE

NICHERS
BIG FISH- SMALL POOL

SUPER-NICHERS Wilson & Gilligan

GOLDFISH BOWL
Charlie Bighams : traditional positioning in ready meals market: price v
quality
High Price
Charlie
Bighams

Waitrose
Marks and
Spencer

Sainsbury

Low Quality Tesco High Quality

Asda
Aldi

Lidle

Low Price
 Charlie Bighams : changed positioning for low carbohydrate prepared meals:
Certainty of low carbohydrates in meal v convenience of preparation and cooking.

High convenience

Eating out
Other ready Charlie
meals with Bighams LC
starchy range with right
Take away
carbohydrates carbohydrates
food

Low certainty High certainty

Preparing
own meal
from fresh

Low convenience
Drivers of competition

Porter’s Five
Forces
 Stakeholders
• Stakeholders, Publics, Interest Groups, not just one name
• Publics defined:
• “Any group that has an actual interest or impact on an organisation’s ability to
achieve its objectives” (Kotler et al, 2013 ,p.77)
• Stakeholder defined:
• “People with an interest, a ‘stake’, in the levels of profit an organisation
achieves, its environmental impact, and its ethical conduct in society” (Baines et al,
2011,p.744)
Stakeholders/Publics/Interest Groups
EXTERNAL

CONNECTED
INTERNAL
Managers and staff

Shareholders – Bankers
Customers – Distributors
Suppliers
Non-Customers – Competitors – Trade Bodies
Other Businesses – Interest/Pressure Groups
NGOs - Local Authority – Govt Agencies
Government
Stakeholder analysis
Identify who your stakeholders are and what effect that
could have on the organisation
• Who are they?
• Internal/connected/external
• What are their interests?
• Broad/specific issues
• Pro/anti… areas of commonality/conflict
• What is their level of impact?
• Potential to support/damage… strong/weak
Work with the pro/strong…
Counter the anti/strong
First steps: Situational analysis

ORGANISATION

S W
O T
Week 3 summary?
 MBA Marketing: Week 3: Marketing Environment
Why is it important?
The world changes, the business environment
changes, so a business must also change!

Marketing
Micro-environment? Macro-environment?
environment

Customers Political
Intermediaries Economic
Suppliers Social / Cultural
Competitors (including demographic)
Stakeholders Technical
How to use the analysis? Environmental
Legal
Avoided making a listing of un-related points.
Used each of the PESTEL and Micro sections in context.
Listed key and important evidence to support your case for change, growth etc.
Stated the positive / negative implications for the change, growth etc.