Week 3 | The Market Environment Flashcards
Macroenvironment
These are the large-scale, pervasive forces that are not controllable by the organisation. Changes in the macroenvironment may come gradually to shape opportunities or threats, and they may affect a company through microenvironmental factors. Among the uncontrollable variables are things like the economic, competitive, sociocultural, technological, political and legal environments.
Microenvironment
These are generally actors close to the company that affect its business ability, which typically interact with and/or are influenced by the company. Controllable variables, which are part of the microenvironment, include product, pricing, distribution and integrated marketing communications strategies.
Swot Analysis
- Strengths: Internal, positive capabilities that may help a company reach its objectives
- Weaknesses: Internal, negative limitations that may interfere with a company’s ability to reach its objectives
- Opportunities: External, positive factors that the company may exploit to its advantage
- Threats: External, negative current and emerging factors that may challenge a company’s performanc
Demographic
Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation etc. Demographic developments often move at a predictable pace but can have massive impacts on consumer and products. Trends in this area relate to age, family, geographic shifts, education and ethnic diversity.
Economic
The economic environment consists of factors that affect consumer buying power, as total buying power depends on current income, prices, savings and credit. Hence, marketers need to be aware of major trends in income and of changing consumer spending patterns.
The three economic areas that marketers need to be aware of include distribution of consumer income; inflation (i.e. where prices rise but wages don’t follow the same pattern, leading to a decrease in purchasing power) and recession, where economic activity slows down significantly and the demand for goods and services decline.
Natural
The natural environment involves all involves natural resources that are needed as inputs by marketers or that are affected by marketing activities. Examples of trends here include increasing shortages of raw materials, increased costs of pollution and energy, and government interventions in natural resource management.
Technological
The technological environment is possibly the one that has the most impact on the marketplace, as it has allowed for the development of new products and opportunities. However, these developments also come with a concern regarding safety of new products. Trends in this area include fast paced growth, high research and development budgets and increases in regulation.
Political
Marketing decisions are strongly affected by developments in the political environment which consists of laws, government agencies and pressure groups that influence and limit various organisations and individuals in a given society.
Cultural
The cultural environment is made up of institutions and other forces that affect society’s basic values, perceptions, preferences and behaviours, shaping their basic beliefs and values. There tends to be a high level of persistence in core values and belief relating to culture, but shifts in secondary values. Secondary cultural values relate to people’s views of themselves and others, as well as organisations, society and the universe as a whole.
DENT-PC
Demographic Economic Natural Technological Political Cultural
PESTAL
- Political
- Environmental
- Social
- Technological
- Economic
- Legal
Responding to the environment
Regardless of whether an organisation can influence the environmental trends that affect its operations, it is always essential for an organisation to be able to respond positively to changes. Organisations need to be well informed and flexible enough to adapt to an ever-changing environment.
SIP-CCC
Suppliers Intermediaries Publics Competitors Customers Company
Suppliers
Suppliers provide the resources needed by the company to produce its goods and services. From a marketing perspective, it is crucial to be aware of supply availability and price trends.
Intermediaries
Marketing intermediaries are the businesses partnering with a company to help promote, sell, and distribute its products. These include resellers, i.e. the businesses that actually sell a company’s products; distribution firms that work with stock and transporting goods.
