The Changing Market Environment

1
The Changing Market Environment
class
4
2
The marketing environment

• Competitive environment (Micro-environment)
• - company
• - competitors
• - customers
• Macro-environment
• - social
• - political
• - economic

3
Understanding Industries

• Environmental Analysis
• To provide useful information for the strategy
  process
• To provide information on emerging issues and
  trends
• -To develop networks and partnerships among the
  scanners and their organization
• -To educate participants about the scanning
  function and about specific issue and trend

4
Environmental Analysis

• Microenvironment
• Macroenvironment

5
Linking of Macro and Micro Environmental Forces
6
Linkage between Environmental Analysis and
Marketing
7
Impact of the Micro and Macro Environment Forces
on the Firms Marketing Mix
8
Microenvironment

• Company
• Supplier
• Marketing Intermediaries
• Customer
• Competitor
• Public

9
Microenvironment

• Unique to industry and that have directly affect
  how company does business
• Company Internal factors (Strengths and
  Weaknesses)
• Suppliers Company that provide material ,human
  ,financial, information to other companies

10
Microenvironment

• Marketing Intermediaries
• Between company to customer
• Between company to employee
• Customer should monitoring customers changing
  want / need is critical to business success.

11
Microenvironment

• Competitor Company in the same industry that
  sell similar product to customers.
• In order to do Competitive Analysis
• Deciding who your competitors are, anticipating
  competitors move, and determining competitors
  strengths and weaknesses.

12
Microenvironment

• Public
• Group of concerned citizens who band together to
  try to influence the business practices of
  specific industries.

13
Analysis the Macroenvironment

• What are the forces at work outside the
  organization which must be considered?
• All events outside a company that have potential
  to influence or affect it (Have indirectly affect
  all organizations)

14
Layers of the business environment
15
PESTEL Analysis

• A systematic way of looking at the external
  factors which potentially impact the organization
• Political
• Economic
• Socio-Cultural
• Technology
• Environmental
• Legal

16
Figure 3.1 PEST analysis of the macro-environment
17
PESTEL

• Political Global , Regional, National
• Tax Politics
• Labor Market Politics
• Development in trade and industry
• Agricultural Politics
• Public Interference
• Trade Political Conditions
• Foreign Trade Regulations
• Social Welfare Policies

18
PESTEL

• Economic
• Business cycles
• Gross national product (GNP) and GNP / CAPITAL
• Interest rates
• Money supply
• Inflation rates
• Unemployment
• Disposable income
• Private consumption and available income
• Other costs
• Development of the rate of exchange

19
Figure 3.2 The economic and political environment
20
Economic and political pressures on organization

• Competition policy
• Public-private funding initiatives
• Reduce waste

21
PESTEL

• Socio-Cultural
• Demographic conditions
• Change in values / attitudes
• Change in lifestyle
• Attitudes toward work / spare time
• Education conditions
• Work environment conditions
• Health conditions
• Change in income distribution
• Social mobility
• Consumerism
• Levels of education

22
Figure 3.3 The social and cultural environment
23
Social and cultural on organizations

• Customers are becoming increasingly demanding of
  products and services they buy.
• Customers are less prepared to pay a substantial
  premium for products or services that do not
  offer demonstrably greater value.
• A further social/cultural change has been in
  attitudes to the physical environment

24
PESTEL

• Technological
• Spreading of and breakthrough in new technology
• Public (EU) supported RD projects
• Development in RD
• New patents and products
• Knowledge tool and technique used to transform
  input (Raw Material, Information) into output
  (Product and Service)
• Speed of technology transfer
• Government spending on research
• New discoveries and development
• Rates of obsolescence

25
Technological pressures on organizations

• Technology continues to develop at a bewildering
  pace
• - affecting not just the High Tech industries
• - also other industries that make use of new
  technologies

26
PESTEL

• Environmental
• Ecology
• Pollution conditions
• Green Energy
• Energy conservation
• Waste handling
• Environmental protection laws

27
PESTEL

• Legal
• Development in price and competitive legislation
• Labor market legislation
• Product safety and approvals
• Competition laws
• Employment laws
• Product safety

28
Changes in marketing infrastructure and practices

• The marketing function has a major role to
  play in keeping the company up to date with
  changes in its broader environment and the
  competitive environment

29
New strategies for changing environments

• Global positioning
• -globalization and focus on core competencies
• The master brand
• -brand identity that links all part of business
• The integrated enterprise and end-user focus
• -the challenge of managing people, processes and
  infrastructure to deliver value to an end-user

30
New strategies for changing environments

• Best in class processes
• -meet world class standards
• Mass customization
• -imperative to achieve scale economies
• Breakthrough technology
• -new technology will underpin every aspect of
  the marketing process

31
Figure 3.4 The shift in strategy for delivering
shareholder value Source Adapted from Sheth
(1994)
32
Market based strategy

• Markets shape business strategy
• -the dominant force shaping how business
• Networks of interlinked product markets
• -traditional boundaries based on conventional
  product markets will blur and become irrelevant
• The move from functions to processes
• -increasingly focus on the process of going to
  market
• Strategic alliance
• -will be one of collaboration and partnership
• The balance scorecard
• -keeping score involves evaluating the benefits
  we deliver to all the stakeholders in the
  organization

33
Key Aspects of PESTEL Analysis

• Not just a list of influences
• Need to understand key drivers of change
• Drivers of change have differential impact on
  industries, markets, and organisations
• Focus is on future impact of environmental
  factors
• Combined effect of some of the factors likely to
  be most important

34
Making Sense of changing Environments

• Environmental Scanning
• Searching environment that might affect
  organization
• Interpreting Environmental Factors
• As either threats or opportunities
• As Threats take steps to protect company from
  further harm
• As Opportunities consider strategic alternatives
  for taking advantage of these events
• Acting on Threats and Opportunities
• Decide how to response to these environmental
  factors

35
Strategy-Formulation Analytical Framework
External Factor EvaluationMatrix (EFE)
The Input Stage
Internal Factor EvaluationMatrix (IFE)
Competitive Profile Matrix(CPM)
36
External Strategic Marketing Management Audit

• -- Environmental Scanning
• -- Industry Analysis

37
External Strategic Marketing Management Audit

• Purpose of External Audit
• Identify
• Opportunities
• Threats

38
External Audit

• Gather competitive intelligence
• Social
• Cultural
• Demographic
• Environmental
• Governmental
• Legal
• Technological

39
Opportunities Threats

• Basic Tenet of Strategic Marketing Management

Take advantage of External Opportunities
Strategy Formulation
Avoid/minimize impact of External Threats
40
Key External Forces (PESTEL)

• Political, governmental
• Economic forces
• Social, cultural, demographic environmental
  forces
• Technological forces
• Legal forces
• Competitive forces

41
External Audit Sources of Information

• Internet
• Libraries
• Suppliers
• Distributors
• Customers
• Competition

42
Performing External Audit -- Variables

• Market share
• Breadth of competing products
• World economies
• Foreign affiliates
• Proprietary account advantages

43
Industry Analysis The External Factor Evaluation
(EFE) Matrix
Summarize Evaluate
44
Industry Analysis EFE
Important --

• Understanding the factors used in the EFE Matrix
  is more important than the actual weights and
  ratings assigned.

45
Industry Analysis EFE

• Total weighted score of 4.0
• Organization response is outstanding to threats
  and weaknesses

• Total weighted score of 1.0
• Firms strategies not capitalizing on
  opportunities or avoiding threats

46
Example
47
Example