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Archive for the ‘knowledge’ Category

Marketing Environment – Macro

Thursday, December 9th, 2010

What is the macro marketing environment?

The macro marketing environment takes into account all factors that can influence an organisation, but are outside of their control. There are six major macro marketing environment forces to deal with (PESTLE): political, economic, socio-cultural, technological, legal and environmental.

• The political environment includes all laws, government agencies and lobbying groups that influence or restrict individuals or organisations.

• The economic environment consists of all factors-such as salary levels, credit trends and pricing patterns that affect consumer spending habits and purchasing power.

• The socio-cultural environment includes institutions and other forces that affect the basic values, behaviours, and preferences of the society-all of which have an effect on consumer marketing decisions.

• The technological environment consists of those forces that affect the technology with which can create new products, new markets and new marketing opportunities.

• The legal environment also affects an organisation – even though a company cannot directly influence any laws – lobbying or becoming part of a trade organisation is widely accepted in helping to ‘shape’ particular legal decisions.

Marketing environments are continuously changing and businesses operating in such turbulent environments need to be flexible. Globalisation and lower barriers to entry now mean that there is an even greater threat of substitute products and new entrants to market.

Even though the marketer has no direct control over the macro external environment, a greater understanding and awareness of these changing market conditions can be achieved through external analysis. External analysis will help identify future events, uncover possible threats and realise potential opportunities.

Key steps in environmental analysis of the macro marketing environment;

1) Audit of environmental influences
2) Assessment of the nature of the environment
3) Identification of the key environmental forces
4) Identification of the competitive position
5) Identification of the principal opportunities and threats (SWOT)
6) Strategic position as a result

Tags: macro marketing, macro marketing environment, marketing environment, marketing environments, new marketing opportunities
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Marketing Environment – Micro

Friday, November 12th, 2010

Marketing Environment – Micro

The micro marketing environment consists of certain forces that are part of an organisations marketing process, but remain external to the organisation. This micro marketing environment that surrounds organisations can be complex by nature, however the company has an element of control over how it operates within this environment. Marketing helps you to manage and make sense of this complexity. The illustration above summarises the order of the immediate external marketing environment that businesses operate in.

Current and Potential Customers
Your customers are vital to the growth and sustainability of your company. In order to grow you must locate customers, understand their needs and then satisfy those needs both efficiently and profitably.

Competitors
Your competitors however have the same remit as you when it comes to sourcing and satisfying the needs of the customer. They will make it difficult to liaise with customer groups, as by definition they are largely pursuing the same sets of customers as you. As a marketer, you must therefore not only monitor what competitors are doing in the external marketing environment today, but to also anticipate their likely response to your campaigns and to predict what they will do tomorrow.

Intermediaries (Distributors/Wholesalers/Retailers)
Your business may require a network of wholesalers, distributors and/or retailer. These ‘intermediaries’ provide an invaluable service in getting your products to the customer. You must therefore think carefully about how best to distribute your goods and build relationships. This area can be fierce in competition as not everyone can get access to the channels of distribution that they want.

Suppliers
One other important area to consider in the external marketing environment is your suppliers. A key supplier can be an important part of your business and may even attribute to your competitive advantage. Losing important suppliers can interrupt production flow or your competitive edge and prevent you from getting your product to your customers. Choice of suppliers, negotiation of terms and relationship building all become important tasks of the marketer.

The wider marketing environment, discussed in a separate knowledge sheet, covers all other influences that might provide opportunities or threats to the organisation. These include technological development, legal constraints, the economic environment and sociocultural changes.

This brief overview of the world in which companies operate in demonstrates that there are many relationships that matter. These need to be managed if the company is to conduct its business successfully. The main responsibility for managing these relationships lies within the marketing department.

Tags: competitive advantage, external environment, external marketing, marketing environment, micro marketing
Posted in Marketing, Strategic Marketing, knowledge | 2 Comments »

SWOT Analysis

Tuesday, November 2nd, 2010

What is it?
The SWOT analysis model (strengths, weaknesses, opportunities and threats) is the most common marketing tool for structuring your marketing audits. The purpose of which is to then provide you with a critical analysis of your marketing strategy.

The strengths and weaknesses focus on the present and past activities, and also on other factors which are internally controlled, such as the 4 P’s, product, price, place, promotion.

The opportunities and threats tend to focus on the present and the future, taking a more strategic view. This results in a forecasted list of the likely externally controlled options that are available to the company.

When to use it?
If strengths and weaknesses represent ‘where we are now’ and opportunities and threats represent ‘where we want (or don’t want) to be’ or ‘where we could be’ then the gap, representing ‘what we have to do to get there’ has to be filled by managerial imagination. This will then be formalised in the body of a marketing plan.

What does it achieve?
The SWOT analysis helps to sort information systematically and to classify it. It however still needs further create interpretation to make sense of it all. It also helps with; • More effective decision making • Improved strategic planning process • Greater understanding of industry trends and performance drivers

Key steps
1. Compile a list of strengths, weaknesses, opportunities and threats; be creative and open minded. 2. Reduce the brainstorming session in step 1 down to a top five to ten ideas for each area of the SWOT analysis. 3. Look at each area in detail and discuss the potential implications they might have on the company. 4. Keep in mind that a SWOT analysis is compiled in order to give you a greater understanding of how your organisation can relate to its external environment. 5. Now look at the internal strengths and weaknesses of the company and see how they relate to the opportunities and threats which are external to the organisation.

Tags: critical analysis, marketing audits, marketing strategy, swot analysis
Posted in How To Do..., Strategic Marketing, knowledge | 1 Comment »

Promotional mix – Sales promotions

Wednesday, June 2nd, 2010

What is a sales promotion?
Sales promotions are tactical activities used as part of the overall promotional mix. They are intended to produce quick and short-term changes in consumer or business to business buying behaviours. This can range from money off vouchers, inviting you to buy today and save money off the normal list price, or, maybe buy one get one free offers which seem to be the ‘big box’ supermarket preferred offer of the moment.

Some sales promotions are also employed as loss leaders – barely breaking even and at times even making a loss for a particular product, used mainly in consumer sales with the sole purpose of increasing footfall through the door – as we write this piece on the run up to the World cup, Stella Artois can be purchased from Tesco at 6p per litre below cost!

Obviously these types of promotions cannot be sustained as part of a viable business model but they do serve a purpose.

Types of promotions in consumer, trade and business sales:
• Price discounts
• Bonus packs (30% extra free)
• Contests
• Sampling
• Loyalty programs
• Trialling in unusual application areas
• Extended credit terms

When to use sales promotions?
Sales promotion techniques are used to introduce new products into the market through educating people who may not have necessarily tried the product if no promotion existed. For current products, a sense of goodwill is created whilst new clients and accounts are attracted with the offer of discounting or gifts.

Whilst there are criticisms surrounding some sales promotions, most of them yield positive results such as customer satisfaction and jump starting low sales volumes through a stimulated demand, however as with all promotional activities these must be measured and planned out thoroughly as part of your overall marketing strategy.

Tags: loss leaders, loyalty programs, promotional mix, sales promotions
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The marketing mix

Tuesday, May 25th, 2010

What’s it all about?
The marketing mix, often referred to as the 4P’s is probably the most well known concept in marketing. It’s the set of marketing tools that a company uses to pursue its marketing objectives in a chosen target market. We call the elements of the marketing mix, tactical components of marketing, as they occur in your day-to-day short term plans.

The marketing mix consists of; Product, Price, Place and Promotion and all 4 elements, when balanced, offer an effective marketing tool for a variety of processes. The extended Marketing Mix or the 7P’s as they’re more commonly known expands the number of variables from the original 4P’s model to 7. This adds Physical Evidence, Processes and People and is used in service industries and knowledge intensive environments such as consultancy and programming.

The marketing mix consists of:

Product - For many, a product is simply the tangible, physical entity that they maybe buying or selling. You buy a new car and that’s the product.

Price – Of all the elements of the marketing mix, price is the one which creates the revenue, all others are costs. In theory, price can really only be determined by the discovery of what customers perceive is the value of the item on sale.

Place – What we mean by place is not the geographical location, it’s the methods of distribution used to get products and services to customers. Place is also defined as channel, distribution, or an intermediary. It’s the way in which goods and services are moved from the manufacturer or service provider to the user or consumer.

Promotion - This is normally what people ‘wrongly’ perceive marketing to be all about. The promotional mix consists of various tools available to the marketer such as; advertising, sales promotions, direct marketing, e-marketing, public relations; social media, exhibitions, sponsorship, point of sale, PR, etc.

Physical evidence – This is the element of the service mix which allows the consumer to make judgments on the organisation based on appearance and on the service that’s received.

Processes – Procedures, mechanisms and flow of activities by which services are consumed, and how they are received by the end user, are all essential elements of process strategies.

People – All people directly or indirectly involved in the consumption of a service are an important part of the extended marketing mix. Knowledge workers, employees, management and other consumers often add significant value to the total product or service offering.

When to use your marketing mix?

It’s not just a matter of having a brilliant product and hoping it will sell itself – and being the cheapest may not be enough either. Even with a world-beating product at just the right price, if people don’t know about it and can’t get hold of it you’ll never be able to make it a success.

The use of the marketing mix will apply at various different stages of your business, but the whole mix, whether this is the core or extended mix, should be fundamental to the marketing plan.

What does it achieve?

• Helps you to focus on a more limited (and achievable) set of objectives. It then becomes much clearer which elements of the marketing mix need to be used, and hence you achieve more profitable results from your marketing budget.
• Lower risk through improved forecast accuracy.
• Improve competitive advantage through greater flexibility.
• Easily calculate the effects of specific marketing tactics across business units, channels, geographies and product lines.
• Lower marketing expenses by more frequently predicting the performance of marketing campaigns at different levels.

Key steps:

• Define your customers and markets
• Look at your business and decide which of the market mix matters most to you
• Ensure that the main components complement and support one another – this is the only proven route to long-term business success.

Try asking “why” and “what if” questions to challenge your offer. For example, ask why your target audience needs a particular feature. What if you drop your price by 5%? What if you offer more colours? Why sell through wholesalers rather than direct channels? What if you improve PR rather than rely on TV advertising?

As a product moves through each life cycle then the marketing mix will change. An appropriate and individual marketing mix should be developed for each product and should always keep the target market and target segment in mind.