1. THE MARKETING ENVIRONMENT
Palmer: Introduction to Marketing
THE MARKETING ENVIRONMENT
Chapter 2

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
Macro tends to be long terms trends that impact upon an organisation
Micro can changes that impact on a day to day basis e.g. your competitors launch a superior product this could impact upon your sales very quickly.

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
It is important to research and monitor key stakeholders and note they their interest or influence can change over time.

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
This is more commonly expressed as PESTLE analysis. Note this is dynamic and changes over time which presents both opportunities and threats. For example, the recent recession has put a squeeze on consumer spending in supermarkets. However supermarkets have responded by offering more value products to an increasingly price sensitive customers. However they at the same time have been able to increase their range of own label products (they make more profit on these).

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?
Useful to include

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?
Useful to include

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?
Useful to include

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?
Useful to include

15. TECHNOLOGICAL ENVIRONMENT
How will new technology affect marketing?
new products?
new promotional media?
new distribution channels?
Useful to include

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
Useful to include

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.