Chapter 2 The Marketing Environment © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-1

Our Changing World Changing attitudes to New gender and family roles Work Leisure Lifestyle New gender and family roles Communication revolution Tougher market conditions © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-2

External Macro-Environment Economic conditions Demo- graphics Competition COMPANY’S MARKETING PROGRAM Social and cultural forces Technology Political and legal forces © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-3

SIX INTERRELATED MACROENVIRONMENTAL FORCES CAN AFFECT AN ORGANISATION’S MARKETING PROGRAM: Demographics Economics conditions Competition Social and cultural forces Political and legal forces Technology © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-4

Demographics Ageing population—Baby boomers (pre-1965) The statistical study of human population and its distribution. Eg age, gender, income, religion. Ageing population—Baby boomers (pre-1965) Generation ‘X’—(mid 1960s–1970s) Single people Two-person household. Increasing cultural diversity © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-5

Economics conditions In order for an economy to exist there must be a ‘market’. A ‘market’ exists where consumers have money to spend and are willing to spend it. The economic environment is a significant force that affects the marketing of any organisation: eg unemployment, inflation, interest rates. also influences business cycles such as: prosperity recession recovery. These impact on what people buy, when and how. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-6

Competition Companies face competition from three main sources: Brand—from manufacturers of similar products. Substitute products—dissimilar products satisfying the same needs. Indirect—other firms trying to win customers purchasing power. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-7

Competition Increasing pressures of international competition competitors often enjoy the benefits of lower wages, better productivity or favourable exchange rates Activity in world markets firms opt to expand to overseas markets. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-8

Competition A marketing program is influenced by four types of competitive structures. Pure competition. Monopolistic Competition. Oligopoly. Monopoly. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-9

Pure competition A market structure where a large number of sellers sell an undifferentiated product. Pure competition is rarely, if ever, attained in the real world. It is a theoretical concept. An ideal. eg: some agricultural products (fruits, etc) © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-10

Monopolistic Competition Marketers attempt to gain differential advantage over its competitors. Marketer aims to get the buyer to perceive an attractive difference in their offerings. Marketers have more control over products and price due to perceived differences. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-11

Oligopoly A market structure in which only a few large sellers, marketing essentially similar products, account for almost all of an industry’s sales. eg air travel, beer, cigarettes. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-12

Monopoly A market structure where there is only one supplier of a product, for which there no close substitutes. eg: CSR (sugar refining), electricity and gas suppliers (usually government owned). monopolies are becoming rare in Australia (eg: even Telstra now has competition). sometimes patent protection can provide firms with something close to a monopoly. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-13

Social and cultural forces Marketers are faced with changing socio-cultural patterns, lifestyles, social values and beliefs. Changes that have significant marketing implications: Emphasis on quality of life. Changing gender roles. Attitudes towards health, nutrition and well-being. Impulse buying. Desire for convenience and a premium on time. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-14

Political and legal forces The five categories affecting political–legal influences on marketing: Monetary and fiscal policies. Social legislation and regulations. Government relationships with individual industries. Legislation specifically related to marketing. The provision of information and the purchase of products. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-15

Technology Technology has had an impact on our lifestyles, work, leisure, consumption patterns and economic well-being. Technology is a mixed blessing: it may improve our lives in one area while creating environmental and social problems in another. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-16

Monitoring the environment Marketing intelligence Monitor business trends and, new developments. Study population growth models (ABS). Review of government publications, industry periodicals, news releases. Attending conferences and exhibitions. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-17

External micro environment Micro forces that are external to the firm of which it has direct involvement. The firm’s market. Its producer-suppliers. Its marketing intermediaries. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-18

External micro environment Marketing inter- mediaries Marketing inter- mediaries COMPANY’S MARKETING PROGRAM The market Suppliers © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-19 Copyright © 1997 by The McGraw-Hill Companies, Inc.

The firm’s market Definition—A place where buyers and sellers meet, products or services are offered for sale, and transfer of ownership occurs. Demand made by a group of potential buyers for a product or service. Market demand factors: People or firms with needs and wants. Their purchasing power. Their buying behaviour. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-20

Producer-suppliers Organisations which provide the firm with the items it needs to conduct business. Producer-suppliers are critical to the success of any marketing organisations. Shortages highlight the importance of co-operative relationships with suppliers. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-21

Marketing intermediaries Defined as independent business organisations that directly assist the flow of products and services between a marketing organisation and its markets. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-22

Marketing intermediaries Resellers—wholesalers and retailers: the middlemen. Facilitating organisations that provide transportation, warehousing, financing and other supportive services needed to complete the exchange between buyer and sellers. They complete the trade or channels of distribution. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-23

Internal environment The micro-environmental forces within a firm. The relationship between the different functions in a firm. The environment and resources within the marketing department. © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-24

Internal and non-marketing resources Financial resources resources Human Production facilities COMPANY’S NONMARKETING RESOURCES Company image Location Research and development © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-25

The firm’s entire environment and marketing program © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 2-26