Scanning Mkting Environment

8/8/2019 Scanning Mkting Environment

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Scanning the Marketing EnvironmentScanning the Marketing Environment


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Needs, Trends & Fads in the Macro environmentNeeds, Trends & Fads in the Macro environment

Companies recognize and respond to the unmet needs & trends in theMacro environment

Trends

Is a direction or sequence of events that has some momentum anddurability.

Have staying power, they take longer to build, and their effects may befelt for years, even decades.

Arise from the culture and contain the essence of a people.

They are more predictable and durable than fads

Fads

Are unpredictable, short-lived and without social, economic and politicalsignificance.

Are fast-moving and cross international and cultural boundaries easily.Mega trends

Are large social, economic, political and technological changes that areslow to form and once in place they influence us for some time,7 10years or longer.

Trends and mega trends merit close attention.


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Identifying the Major ForcesIdentifying the Major Forces

The 6 major non controllables which a company, suppliers,

competition

must monitor and to which it must respond as they

shape opportunities and pose threats.

1. Demographic

2. Economic3. Natural/Physical

4. Technological

5. Political-legal

6. Social-cultural

Egs: Opening of major new markets: China, India, Arabic

countries

Rapid propagation of global lifestyles resulting from the growth of

global communications


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All forces into beingAll forces into being

Increasing population growth (demographics) leads

to more resource depletion & pollution (natural)

which leads consumers to call for more laws

(political/legal). The restrictions stimulate more technological

solutions & pdts (technology) which if they are

affordable (economic) may actually change peoples

attitudes & behavior (social/cultural)


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Demographic EnvironmentDemographic Environment

Demographic trends are highly reliable for the short

and intermediate run

Worldwide population growth

Population age mix Ethnic markets

Educational groups

Household patterns

Geographical shifts in population


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Worldwide Population Growth

The main demographic force is population.

Resources need to support increased population growth

Population growth is highest in countries/communities that can least

afford it

Growing population = growing human needs # growing markets

unless these mkts have sufficient purchasing power

If population demands too hard against the available resources,

costs will shoot up & profit margins will decline

Eg: China & regulation of 1 child per family.entry of Lego & Mattel

into the chinese market


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Population Age Mix

The population can be divided into 6 age groups:Preschool, School-age children, Teens, Young adults (25 40), Middle-

age adults (40 65), Older adults (>65)

For marketers this age mix signals the kinds of products & services that

will be in high demand

Eg: Increase in the segment of older adults.increased demand for

assisted living communities, medical aid, healthier food options.

Stores catering to senior citizens will have larger print signs, safe

restrooms


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Ethnic and racial makeup

Need to careful of over generalising about ethnic groups and

note that diversity goes beyond ethnic and racial groups. As even within each ethnic group, there are consumers who are

as different from each other

Educational Groups

There are 5 educational groups:

Illiterates

High school dropouts

High school diplomas

College degrees Professional degrees

Higher the number of educated people calls for a high demand of

quality books, magazine, travel


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Household Patterns

The change from the traditional household (joint families) todifferent household patterns each with a distinctive set of needs

and buying habits. Marketers must increasingly consider the special needs of non-

traditional households, because they are now growing more rapidlythan traditional households.

Each group will have a distinctive set of eeds & buying habits.

Nuclear families, single/divorced will need smaller houses,appliances, food package sizes

Geographical Shifts in Population

Migration from rural to urban and then to suburban areas

Location makes a difference in their goods and service preference.

Movement from Rajastan to Mumbai will lessen the demand forwarm clothing& home heating appliances, but an increased needfor ACs

Cities have an increased demand for movies, expensiverestaurants, entertainment places


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Economic EnvironmentEconomic Environment

Markets require purchasing power as well as people. They must

pay close attention to major trends in income & consumer

spending patterns.

Available purchasing power in an economy depends on:

Income distribution

Savings, Debt, and Credit availability


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Income distribution:A major determinant is a countrys industrialstructure

Subsistence economies

Raw material exporting economies Industrializing economies

Industrial economies

Marketers distinguish countries into 5 diff income distribution patterns:

1. Very low incomes

2. Mostly low incomes

3. Very low, very high incomes

4. Low, medium, high incomes

5. Mostly medium incomes

Eg: The market for a new Lamborghini in countries with type 1 & 2income patterns would be very small.

In the 2 tier US market, affluent people continue to buy expensive

goods but the working class spend more carefully, look for discounts,

buy at less expensive stores


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Savings, Debt, and Credit availability

Consumer expenditure is affected by consumer savings, debts

& credit availability Marketers must pay careful attention to any major changes in

incomes, cost of living, interest rates, savings, borrowing

patterns as they can have a high impact on business,

specially those pdts who have high income & price sensitivity.

Eg: Japanese save 18% of their income, US consumers save6%

Japanese banks are able to grant loans at a lower rate of

interest than the US banks to their companies

US consumers have a high debt to income ratio which retards

further expenditures on housing and larger items


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Natural/Physical EnvironmentNatural/Physical Environment

Environmentalists protect the physical environment from the cost

associated with producing and marketing pdts /services.

Concerned with the social cost of consumption

7 environmental issues of concern:

1. Use of environmental friendly ingredients

2. Recyclable & non wasteful packaging

3. Animal testing of new pdts

4. Shortage of raw materials5. Increased pollution levels

6. Increased energy consumption

7. Changing role of governments in environmental protection


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1. Use of environmental friendly ingredients

Biodegradable & natural ingredients

Eg: BD plastics, Sony s Milddisc brand of CD made from apolymer derived from maize

Challenge: High cost

2. Recyclable & non wasteful packaging

Pressure on manufacturers/retailers to avoid over packagingisenvironmental friendly & makes commercial sense, substantialsaving

Special companies to organize the collection & sorting of waste forrecycling

Eg: Refill packs, removal of outer carton packaging, lightweight

plastic bottles from conventional glass pkging

3. Animal testing of new pdts

Body shop was the 1st company to introduce their range of animalfriendly pdts


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4. Shortage of raw materials

Limiting the use of propellants like CFCs (Chlorofluorocarbons)

in refrigerators & aerosols

Companies making pdts using resources like coal, oil, silver will

face cost increases on their depletion.which may or may not

be able to be passed on as an increased cost to the customer.

R & D faces a good opportunity to develop new substitute

material

5. Increased energy consumption

Has called for measures to conserve energy with a demand for

energy efficient housing, fuel efficient cars, using solar panels,

electric cars

6. Changing role of governments in environmental protection

Govt may vary in their concern & efforts to promote a clean

environment

Companies to accept more social responsibilities and less

expensive devises to control and reduce pollution


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Political/Legal ForcesPolitical/Legal Forces

Mkting decisions can be influenced by this force which determinethe rules by which business is conducted

Plays an imp role specially in international business

To protect companies from unfair competition To protect consumers from unfair business practices

Protect the interest of society from unethical business behaviour

At what point do the costs of regulation exceed the benefits?

Marketers must have a good working knowledge of the major lawsprotecting competition, consumers and society.


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Political/Legal ForcesPolitical/Legal Forces

Close relationships with politicians are often made by org both to

monitor the political mood & also to influence it

Eg: Cigarette industry..to protect themselves from the ban on

advertising

Companies make contributions to the funds of political parties in

order to maintain favorable relationships

Legal: Tobacco advertising is illegal in Italy, Direct alcohol

advertising in banned on India, on sports grounds in France


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Technological ForcesTechnological Forces

One of the most dramatic forces shaping peoples lives istechnology.

The economys growth rate is affected by how many major newtechnologies are discovered.

The marketer should monitor the following trends intechnology:

Accelerating pace of change

Unlimited opportunities for innovation

Varying R & D budgets


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Technological ForcesTechnological Forces

IT describes a broad range of innovations with the field of computing& telecommunications

Benefits of this advancements : MR thru emails, efficiency of salesforce thru sales force automation, videoconferencing

CRM has improved thru database technology to enhancerelationships with customers

Mobile phones.smaller, sleeker, trendierdownload music, viewvideos, email


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Social/Cultural ForcesSocial/Cultural Forces

Purchasing power is directed toward certain goods &

services according to peoples tastes and preferences:

Views of themselves

Views of others

Views of organisations

Views of society consumption patterns often reflect a

social attitude

Views of nature

Views of the Universe


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High persistence of core cultural values marketers have some

chance of changing secondary values but little chance of changing

core values

Existence of subcultures groups with shared values emerging from

the special life experiences or circumstances

Shifts of secondary cultural values through time


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Responses to ECResponses to EC

Companies respond in diff ways to environmental change:

Ignorance: If environmental scanning is poor, company manynot realize the salient forces are affecting their futureprospects.

They continue to be normal, ignoring the environ. issues thatare threatening their existence or opportunities that could beseized

Delay: Is to delay action due to bureaucratic decision makingprocesses that impair quick action.

Mkting myopia resulting in being more pdt focused rather thancustomer

Technological myopia & psychological recoil where change isalways seen as a threat


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Retrenchment: Deals with efficiency problems but

disregards effectiveness issues.As sales & profits declinethe mngt cut costs leadingto a period of higher profits but it does not tackle thedeclining sales problem

Gradual strategic repositioning: Involves a gradualplanned, continuous application to the changingmarketing environment

Radical strategic repositioning: Sudden change in thedirection of the entire business.

Risky if not successful

Scanning Mkting Environment

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