1. UNIT 4: Marketing Principles Micro and Macro Environment1

2. Internal and External Forces Micro & Macro Environment
The aim of today’s lecture is to view how internal and external influencers could affect a business and its overall strategic development. 2

3. Internal and External Forces Micro & Macro Environment
By the end of this learning sessions, all students should be able to:-
Explain what is a SWOT Analysis, and its purpose within a business.
Explain and identify key areas of a Pestel Analysis, and its key function to a business. 3

4. Internal and External Forces Micro & Macro Environment
Explain the key differences between Micro and Macro Environment, and which External Force is currently present within the UK.
To explain SWOT and PESTEL Analysis through group discussion and presentation in reference to a given company – (e.g. Argos). 4

5. Definition of Marketing Environment
“the factors and forces external to the marketing management function of the firm that impinge on the marketing management’s ability to develop and maintain successful transactions with its customers” (Kotler 1997) 5

6. Components of the Marketing Environment
Micro-environment - Internal
Macro-environment - External 6

7. Internal Environment SWOT ANALYSIS
Positive
Internal Factors
Negative
STRENGTHS
WEAKNESSES
External Factors
Opportunities
Threats 7

8. SWOT ANALYSIS TESCO Supermarket
Activity: (Pairs)
To carry out a SWOT Analysis in reference to the above company.
(See handout also– page 4)
(15 Min) 8

9. Swot Analysis Internal Tool
Strengths
Technological skills
Leading Brands
Reputation
Production quality
Management
Weaknesses
Lack of skills
Weak brands
Accessibility/ distribution
Low customer retention
Management 9

10. Swot Analysis Cont Opportunities New Market Changing customer tastes
Change in population age structure
Technological advances
Changes in government policies
New distribution channels
Threats
Changing in customer tastes
Closing of geographic market
Technological advance
Tax increases
Changes in government politics
New distribution channels 10

11. The Macro-Environment
Comprises general forces and trends rather than specific to organisations.
Macro-economic environment
Political environment
Social and cultural environment
Demographic environment
Technological environment 11

12. PESTEL ANALYSIS (Tool)
Political
Economical
Social
Technological
Environmental
Legislation 12

13. 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? 13

14. 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? 14

15. Economical Environment
Increase interest rates
this makes it more
expensive for both
industrialists and
consumers to borrow money
What is the current state of the UK economy and the effect on consumers and businesses?

16. 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? 16

17. Social Environment Cont DEMOGRAPHIC ENVIRONMENT
More affluent, fit, elderly people in the population
What other demographic trends have marketers reacted to?
What changes should they be anticipating? 17

18. TECHNOLOGICAL ENVIRONMENT
How will new technology affect marketing?
new products?
new promotional media?
new distribution channels? 18

19. 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 19

20. Monitoring and Responding to Environmental Change
Organisations that do not adapt may decline and dies….
To avoid this, organisations must:-
Understand what is going on in their business environment
Respond and adapt to this change 20

21. Monitoring and Responding to Environmental Change
Information about the environment is crucial, but will not produce decisions. 21

22. Stakeholder Analysis 22

23. For further reading, refer to PowerPoint on Stakeholder Perspective
Stakeholder Analysis
For further reading, refer to PowerPoint on Stakeholder Perspective

24. Porter’s Five Forces Assessing the Balance of Power in a Business Situation
The Porter's Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps you understand both the strength of your current competitive position, and the strength of a position you're considering moving into.
With a clear understanding of where power lies, you can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps. This makes it an important part of your planning toolkit.
Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable. However it can be very illuminating when used to understand the balance of power in other situations.

25. Porter’s Five (Cont)
Supplier Power Here the company will need to assess how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another, and so on. The fewer the supplier choices the company has, the more they need suppliers' help, the more powerful their suppliers are.

26. 2. Buyer Power - Here you ask yourself how easy it is for buyers to drive prices down
3. Competitive Rivalry - What is important here is the number and capability of the organisation competitors, i.e. supermarkets.
4. Threat of Substitution - This is affected by the ability of your competitors to find a different way of doing what you do.
5. Threat of New Entry - Power is also affected by the ability of other companies to enter your market.

27. Porter’s Five Forces - Model

28. Relationships Between Members of the Micro-Environment
Organisations that make up a company’s micro-environment are referred to as the “environmental set”.
Membership and relationships between them change over time.
Palmer (2001) Principles of Marketing. England: Oxford University Press 28

29. Bibliography
KOTLER, P. ET AL (2001) Principles of Marketing. 3rd European Edition; Harlow: Prentice Hall.
PALMER, A. (2001) Principles of Marketing. England: Oxford University Press 29