Understanding the Macro

and Micro Environment

See Past Exam Papers for Sample
Questions
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Learning outcomes
Elements of the marketing environment
Macro and Micro environmental analysis
Understanding Consumer Buyer
Behaviour
Understanding Industrial Buyer Behaviour
Defining and analysing competitive forces
The Macro
Marketing
Environment
Copyright: Southwestern
Publications 2006
1. The Competitive Environment
Competitive Environment:
competitive products, substitute
products for one another, companies
competing for your consumers
purchasing power.
Monopoly examples in Ireland?
Deregulation movement - ex
Oligopoly - ex
Direct
Competitive
Products
Which would you
buy?
Indirectly Competitive Products
products than can be substituted for
one another

Plastic Containers vs. Glass vs. Tin vs.
Aluminum
Sugar vs. Artificial Sweeteners
Typewriter vs. PC
Ocean Liner Vs. Air Travel
Developing a Competitive
Strategy
Should we compete?
If so, in what markets should we
compete?
How should we compete?
Involves:
Researching the market
Identifying current &potential
competitors
Anticipating competitive actions

2. Political-Legal Environment
Component of the marketing
environment consisting of laws and
interpretations of laws that require
firms to operate under competitive
conditions and to protect consumer
rights.
Deregulation
Increases
Competitiveness
Regulatory Forces
Government :
Consumer Safety
Commission, IFSRA,
Environmental
Protection Agency,
Health and Safety etc
Consumer interest
groups
PETA
Special-interest groups
ISME
Self-regulatory groups
Advertising



Companies fight
unjust regulations
Regulations can
present new
opportunities
Political lobbying
Boycotts
Political action
committees

Controlling the PL
Environment
Is Horticulture industry regulated?
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3. The Economic Environment

Factors influencing consumer buying
power and strategies (stage of the
business cycle, inflation,
unemployment, resources, income
etc)

The Wealth effect
(Ireland)
The figures on the map show the level of
average new car prices in each market
compared to the average for all euro currency
markets. Index 100 represents the European
average
Source: Fact
Finders 2006
Fastest Growing Market for
New Car Eastern Europe
(Latvia 49% increase on 2005)

During prosperous times car
manufacturers will add luxury
extras
The Wealth
Effect
Inflation and Deflation

Inflation: The devaluation of money by
reducing what it can buy through
continued price increases. (Ireland)
Deflation: Falling prices

* Lowest annual EU rates: Netherlands
(3.0%/1.9%), Portugal (3.1%/-1.2%), Ireland
(3%/-2.4%). Highest rates: Latvia (15.6%/7.7%),
Lithuania (12.2%/6.9%).
Unemployment
The proportion
of people in
the economy
who do not
have jobs and
are actively
looking for
work.

Income
Discretionary income: the amount of
money people have to spend after
paying bills and necessities.

Resource Availability
Demarketing: reducing consumer
demand for a good or service to a level
that the firm can supply.

4. The Technological Environment

The technological
environment:
application of
knowledge in
science,
inventions, and
innovations to
solve problems
Toyota Prius
Heating
Technologies
Technology Advances Consumer Needs
Technology increases exponentially
New technology as a key to long-term
competitive advantage
create more efficient operation or better
products
may render existing products obsolete
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5. The Social-Cultural Environment

The relationship
between marketing
and society and its
culture


Issues:
Obesity in
Children
Negative Body
Images
Video Games
Healthy Eating
etc ..
Cultural Environment: Elements of
Culture
1. Language
2. Manners & Customs
3. Technology & Material Culture
4. Social Institutions business, family,
political- Latin America
5. Education transmitting values, skills,
attitudes etc
6. Aesthetics attitude toward beauty, art,
music etc
7. Religion


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Worlds Religions
Christianity - 2.0 billion followers
Islam - 1.2 billion followers
Hinduism - 860 million followers
Buddhism - 360 million followers
Confucianism - 150 million followers

Religion can affect marketing strategy


Social Environment: Role of
Families and Working Women
Working women has had a greater effect
on marketing than any other social change

Increases in females in the workforce

Purchasing power from dual-career
families
is rising

Cost is more important to women.
Quality is more important to men.
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Population Considerations
Concerned with the study of the quantifiable
aspects of population structures,e.g., age,
gender, size, race, occupation and location.
Some factors to consider:
falling birth-rates
the rise of the mature market segment
the household of one

Demographic Factors
3

Generation Y: Born between 1979 and
1994, size = marketing impact, fickle and
skeptical group, technos
Generation X: Born between 1965 and
1978, time premium, majority have
children and houses, savvy and cynical
consumers
Baby Boomers: Born between 1946 and
1964
Younger Boomers (ages 41 to 49)
Home is the castle, spend on kids
Older Boomers (ages 50 to 59)
Spend on home upgrades & Holidays


Growing Ethnic and Community
Markets
Irish population is becoming multicultural
society and workforce
Growth in spending power in:
Eastern European Populations
African Populations
Asian Populations


4
Pink
Pound -
Dorothy
Dollar
6. Natural Forces
Conserve natural habitats,
resources, endangered species
Minimise environmental impact
Sustainable resource use
Recycle
Energy efficient products
The Polluter Pays Principle


The Micro Environment
Customers: needs, wants and providing benefits for
their customers. Failure = failed business strategy.
Employees: correct and motivated staff is essential to
strategic planning. Training and development, service
sector, competitive edge. (Cereality)
Suppliers: Price of raw material affect the marketing
mix. Closer supplier relationships benefit strategy.
Shareholders: inward investment for growth.
Satisfying shareholder needs can cause a change in
strategy. (Sharwoods+internet companies, Birds Eye)
Media: Positive or adverse attention. Consumer
programs


Consumer Buyer Behaviour
Chapter 5 of book
Talk about 3 consumer roles Consumer is a
user, a payer and a buyer;

User concerned about product features and the
uses they can be put to (JML ads on TV)
Payer concerned about price and credit deals
available (0% down, 0% until)
Buyers concerned with logistics of procuring the
product (order by certain date for delivery
before)

Consumer Buyer Behaviour
Consumer Needs & Wants

Needs are unsatisfactory conditions of the
consumer that prompt them to an action that will
make the condition better
Wants are desires to obtain more satisfaction
than is absolutely necessary

Food vs. Gourmet Food, Car vs. Porsche etc

Consumer Behaviour-Psychology
The perception of a consumer about a certain
service/product is what matters.
Learning also features in consumer behaviour.
Especially for a complex purchase.
Motivation is defined as a state of drive that
impels behaviour towards a goal-object.
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Maslows Hierarchy of Needs
Abraham Maslow described motivation as a
means of satisfying human needs.

1. Physiological Needs Food, shelter
2. Safety & Security Needs car safety, fire safety
3. Belongingness & Love Needs Teenagers clothes
4. Esteem & Ego Needs Self Gift Giving
5. Need for Self Actualization Engage in self
improvement activities
Psychographics:Describing Consumer
Behaviour
Psychographics is a facet of motivation and
explains how a person acts during the
consumption phase.

The way they act is guided by a persons:
Values
Self Concept
Lifestyle
VALS values & Lifestyles
Attitudes

Individual Consumer Decision Making process
Step 1: Problem Recognition
Step 2: Information Search
Step 3: Alternative Evaluation
Step 4: Purchase
Step 5: Post purchase Experience

Chap 5 of Book
Industrial Buyer Behaviour
Who says that you will always market to an
individual??

The decision-making process by which formal
organisations establish the need for purchased
products and services, and identify, evaluate, and
choose among alternative brands and suppliers

Kotler and Armstrong 1989
Industrial Buyer Behaviour
The process can be summarised as follows

- Problem Recognition
- Need Description
- Product Specification
- Supplier Search
- Supplier Selection
- Purchase Routine Specification
- Performance Review
Analyzing Competitive Forces
Check Chapter 4 of Book, from pg 117

Competitor Research
Auditing Current Competitors
Auditing Potential New Competitors

See in chapter 4 a competitor Analysis Template