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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
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Marketing audits – PESTLE

Saturday, November 6th, 2010

What is a marketing audit?

The first stage of the marketing audit process is the external analysis. It is a systematic approach to create information necessary to an organisation in order to identity the key issues it will need to create a successful marketing strategy.

Marketing, by nature, is an outward looking process and is the interface between a company and the outside world. A marketer must scan the environment, both internally and externally, in order to identify opportunities and threats. The company’s position and resources can then be adjusted based on the outcome of the analysis.

In order to understand the needs of its customers and to keep marketing at the heart of the business, the marketer must analyse the external environment as part of the marketing audit in order to identify future needs and to develop its marketing mix.

Although the external environment consists of a wide variety of factors and influences it is possible to group them under 5 broad headings:

Political/Legal:-
National government, local government, trade associations, the EU, regulatory bodies.

Economic/competitive:-
Market structure, government policy, trading bodies, taxation, interest rates, trading blocs.

Sociocultural:-
Demographics, culture, attitudes, current issues.

Technological – innovation effecting:-
Products, materials/components, processes, distribution, marketing/administration.

Environmental:-
Waste disposal, conservation, natural resources.

When to use PESTLE external analysis?

Use PESTLE environmental analysis to understand the key factors that are likely to drive change in your business environment. The aim is to then establish how these factors affect your industry in general and more importantly your organisation in particular.

What do marketing audits achieve?

Through a comprehensive, systematic and independent examination of your companies external environment you will be able to identify problem areas, future events and trends that may have an effect on your company. You may not have any influence over these events but by understanding the affects they may have on your business you will be able to recommend a plan of action to improve the company’s marketing performance.

Tags: marketing audits, marketing mix, marketing strategy, pestle
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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 »

Push, Pull & Profile Strategies

Saturday, May 8th, 2010

What are they?
Push, Pull and Profile are the 3 P’s in an organisations marketing communications strategy.

A Push strategy promotes a product to retailers/distributors in order to force the product down into the distribution channel.

A Pull strategy involves communicating with the end customer or consumer to attract them to the retailer/distributor in order to purchase the product.

The strategy used to satisfy an organisation’s corporate promotional goals are developed through what is referred to as a Profile strategy. This third component of an overall communication strategy is all about satisfying the needs of the stakeholders.

When to use it?
Push Strategy:
The main aim of the Push strategy is to get the product into the hands of buyers with little of no advertising. This strategy involves personal selling to acquire a customer. Trade shows are a good place for many Push marketing strategies as there’re plenty of opportunities to “sell” to interested industry related people these types of events.

Characteristics of push strategies;
• Product categories where there’s low brand loyalty
• Where many acceptable substitutes are available in the market
• Relatively new products are to be launched
• The product purchase is unplanned or on impulse
• The consumer is familiar and has reasonably adequate knowledge about the
product

Pull Strategy
With Pull strategies, marketing efforts are ultimately directed at the consumer or end user and are loaded with a lot of promotional offers to support the campaign such as; contests, coupons, free samples etc. If companies add on advertising into this strategy then the cost of marketing associated with this approach can usually be quite high.

Characteristics of a Pull strategy;
• The product demand as high
• Its possible to differentiate the product on the basis of real or emotional features
• Brand consumers show a high degree of involvement in the product purchase
• There is reasonably high brand loyalty
• Consumers make brand choice decision before they go to the store

Characteristics of Profile strategy is to build awareness, perception, attitudes and reputation using;
• Public relations
• Sponsorship
• Corporate advertising

In some international markets the nature of the market structure that already exists may determine the degree to which push, pull and profile strategies are used. This is likely to mean adopting different strategies for different markets – some are highly fragmented while others are concentrated.

What do these strategies achieve?
A “pull” selling strategy is one that requires high spending on advertising and promotion to build up consumer demand for a product. If the strategy is successful consumers will ask their retailers for the product, the retailers will ask the distributors and the distributors will ask the manufacturers if they can stock their products.

A “push” promotional strategy makes use of a company’s sales force and trade promotion activities to create consumer demand for a product. The producer promotes the product to distributors, the distributor promotes it to retailers, and the retailers promote it to consumers.

Key steps:
• Decide overall marketing objectives
• Create Push/pull strategy (identify marketing communications, channel management
etc)
• Communicate the message to all channel partners
• Evaluate the outputs

Top Tips:
Having just one strategy may not give you as good of a return as wish for. You might need to balance both strategies to create a satisfactory marketing mix that entices customers to buy your products. Some customers react to one type or the other depending on their stage in the decision making process. The bargain hunters might react to the pull marketing tactics while the socially-aware buyers might respond to the push marketing. If you have a product that requires a lot of convincing to buy then mixing the strategies up will help to ensure that consumers can’t resist your offer.