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THE MARKETING ENVIRONMENT Chapter 2 Palmer: Introduction to Marketing.

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Presentation on theme: "THE MARKETING ENVIRONMENT Chapter 2 Palmer: Introduction to Marketing."— Presentation transcript:

1 THE MARKETING ENVIRONMENT Chapter 2 Palmer: Introduction to Marketing

2 SESSION OVERVIEW This session will: explore the external influences on marketing show how marketers must respond to a constantly changing social, economic, technical and political environment identify the internal environment of an organisation as crucial for the success of marketing plans

3 DEFINITION OF THE MARKETING ENVIRONMENT "... the individuals, organisations and forces external to the marketing management function of an organisation that impinge on the marketing management's ability to develop and maintain successful exchanges with its customers"

4 COMPONENTS OF THE MARKETING ENVIRONMENT Micro-environment Macro-environment Internal environment

5 THE MICRO-ENVIRONMENT Comprises all those organisations and individuals who directly or indirectly affect the activities of a company. It includes: –Customers –Intermediaries –Suppliers –Other stakeholders

6 STAKEHOLDERS OF ORGANISATIONS Stakeholders include: –Customers –employees –local communities –government –intermediaries –suppliers –financial community

7 THE VALUE CHAIN Raw materials are progressively transformed by members of the micro-environment into high value products Only the consumer can define value added

8 THE VALUE CHAIN A value chain for coffee

9 RELATIONSHIPS BETWEEN MEMBERS OF THE MICRO-ENVIRONMENT Organisations that make up a firm’s micro-environment are referred to as the “environmental set” Membership and relationships between them change over time

10 THE MACRO-ENVIRONMENT Comprises general forces and trends rather than specific organisations: –Macro-economic environment –Political environment –Social and cultural environment –Demographic environment –Technological environment –Ecological environment

11 MACRO-ECONOMIC ENVIRONMENT How much money do consumers have available to spend? How much will they have in the future? How fierce is competition in the market?

12 POLITICAL ENVIRONMENT What are politicians saying that might affect our customers and our marketing activities? Cuts in government spending?? New tax allowances?? What external pressures are influencing politicians?

13 SOCIAL AND CULTURAL ENVIRONMENT What will be the challenges and opportunities arising from greater cultural diversity? Cultural convergence or a greater need for cultural identity? Attitudes to 24/7 society?

14 DEMOGRAPHIC ENVIRONMENT More affluent, fit, elderly people in the population What other demographic trends have marketers reacted to? What changes should they be anticipating?

15 TECHNOLOGICAL ENVIRONMENT How will new technology affect marketing? new products? new promotional media? new distribution channels?

16 ECOLOGICAL ENVIRONMENT Growing concern about the ecological environment – e.g. global warming Ecological environment is a resource for business Good marketers need to be seen not to harm it

17 MONITORING AND RESPONDING TO ENVIRONMENTAL CHANGE Organisations that do not adapt may decline and die To avoid this, organisations must: –understand what is going on in their business environment –respond and adapt to this change Information about the environment is crucial, but won’t produce decisions

18 SWOT ANALYSIS A framework for understanding internal strengths and weaknesses These are matched against external opportunities and threats

19 THE INTERNAL ENVIRONMENT Other internal functions, e.g. finance, operations, personnel impinge on the marketing function Marketing is affected by: –organisational processes –the allocation of responsibilities within the organisation

20 DON’T FORGET THE WORKERS…. In many services companies, marketing plans will be difficult to implement by a “bad employer” Timpson is a highly rated employer - contributes to marketing success

21 THE FLEXIBLE ORGANISATION Flexibility is needed to respond to environmental change Requires flexible labour force The organisation should be able to rapidly downsize / expand capacity

22 SUMMARY OF KEY POINTS Value is created through interaction with other individuals and organizations that make up the marketing environment. The marketing environment cannot be neatly divided into distinct areas. A good marketer should understand the complex linkages between different parts of the environment. Micro-environment influences may demand urgent attention, but macro-environment influences can have a more profound long- term effect on an organization’s marketing.

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