Chapter 3 – The marketing environment

Chapter 3 – The marketing environment

1 Describe the nature of the marketing environment

It is comprised of two areas that shape the opportunities and threats facing a company. Yet they are largely uncontrollable

  • the micro-environment (the customers, suppliers, distributors & competitors)
  • the macro-environment (economic, social, political, legal, physical & technological forces)

2 Explain the distinction between the microenvironment and the macro-environment

  • The micro-environment are those actors in the immediate vicinity that affect its ability to operate effectively in its chosen market.
  • The macro environment are those wider group of forces that effect not only the company but also the other actors in the micro-environment

  

3 a) Discuss the impact of political and legal forces

They create the rules in which business can be conducted. At both EU and National level, in US it is at Federal and state level. Marketeers that act with an ethical agenda should have no problem working within this legal framework

  • ·          EU rules prevent collusion; price fixing; bid rigging; Market sharing
  • ·          Abuse of market dominance in freezing out competitors
  • ·          Restrict acquisitions and mergers to restrict a build up of excessive market power
  • ·          Restrict State Aid to firms that would give them an unfair competitive advantage

3 b) Economic forces,

They affect supply and demand and are affected by foreign entities, the marketer needs contingency plans that are mindful of these key factors:

  • ·          Economic growth
  • ·          Unemployment
  • ·          Interest and exchange rates
  • ·          Changes in global economic environment

3 c) Ecological/physical environmental forces

They are concerned with the environmental cost of consumption

  • ·          Global warming pg 81
  • ·          Pollution control pg 83
  • ·          Resource and energy conservation pg 83
  • ·          Green ingredients and components pg 84
  • ·          Recyclable and non wasteful packaging pg 84

 3 d) Social/cultural forces

They change demand patterns, creating new markets (opportunities and threats)

  • ·          Demographic forces pg86
  • ·          Cultural differences pg87
  • ·          Consumerism impact pg89

 3 e) Technological forces on marketing decisions

They change the rules of the game, they offer huge opportunities and equally huge threats. They need to monitor trends and pioneer breakthroughs. It should also be used to improve the overall marketing operations – harness the power of technology and use it to their advantage. Pg90

4 Explain how to conduct environmental scanning

There are two decisions to be made are what to scan and how to organise the activity. The system should monitor trends, develop forecasts,  analyse and interpret internally produced material, establish a database, provide environmental experts, disseminate information and evaluate and revise the system itself.  There are four approaches to this activity:

  • ·          Line management does it
  • ·          Strategic planner does it
  • ·          Separate organizational unit does it
  • ·          Joint management team does it. pg 94

5 Discuss how companies respond to environmental change

There a five typical responses to this:

  • ·          Ignorance pg95
  • ·          Delay
  • ·          Retrenchment
  • ·          Gradual strategic repositioning
  • ·          Radical strategic repositioning

 

Quiz:

1 Traditionally the macro environment consists of a number of broad forces; these include economic, social, political and which one of the following:

A) Geographical

B) Technological

C) Town Planning

D) Ecological

2 From a macro environmental viewpoint, which of the following forces has recently become important?

A) Legal/Administrative

B) Cultural/Ethical

C) Technological/computing

D) Ecological/Physical

3 The study of changes in world population and age distribution is known as:

A) Sociology

B) Ethics

C) Demographics

D) Ageism

4 Corporate social responsibility refers to:

A) Organised action against business practices not in the interests of consumers

B) The ethical principle that an organisation should be accountable for the effect of its behaviour on society

C) The combination of traditions, values and attitudes of the society in which an individual lives

5 The consumer movement is a collection of individuals, organisations and groups whose objective is to:

A) Stop environmental damage.

B) Protect consumers’ rights.

C) Publicise bad business practices.

D) Force lower prices.

E) Stop globalisation of business.

6 Which of the following is not an object of the EU laws tackling barriers to competition

A) Control of acquisition and merger

B) Control of monopolies and discriminatory pricing

C) Control of the sale and supply of goods

D) Restriction of state aid

7 Which of the following macro environmental forces might focus on collusion?

A) Political/legal

B) Economic

C) Ecological/physical

D) Social/cultural

E) Technological

8 Why must companies continually monitor the technical environment?

A) To identify emerging opportunities and threats.

B) To identify cheaper suppliers.

C) To see if competitors are copying their ideas.

D) To keep up with new trends.

E) To replace aging equipment.

9 How many levels are there of EU legislation?

A) 1

B) 2

C) 3

D) 4

E) 5

10 How might the information collected about the business environment be disseminated throughout an organisation?

A) Informal meetings and social events.

B) Television and press advertising.

C) Newsletters, reports and lectures.

D) Exhibitions and trade shows.

11 There are several approaches, that can be used to organise the environmental scanning process, which of the following is not one of these

approaches:

A) Line management

B) Strategic planner

C) Separate organizational unit

D) Strategic Business Unit

E) General management teams

12 Environmental scanning takes place annually.

A) TRUE

B) FALSE

13 Retrenchment is a response to environmental change but what does it mean?

A) Companies tackle efficiency problems but will ignore effectiveness issues

B) Companies not realising that salient forces are affecting their future prospects

C) Delayed action

D) Companies tackle effectiveness problems but will ignore efficiency issues

14 In order for a company to benefit from grey purchasing power they would need to:

A) Buy branded goods from unauthorised dealers.

B) Understand the needs of the over 45s and tailor the marketing mix accordingly.

C) Target women over 60.

D) Target men over 60.

15 Cultural forces influencing management behaviour are the same throughout Europe.

A) TRUE

B) FALSE

16 Companies are no longer solely judged by financial success.

A) TRUE

B) FALSE

17 When a company investigates the extent to which they can use recyclable and non-wasteful packaging which of the following

environmental forces are they responding to?

A) Economic

B) Social

C) Technological

D) Legal

E) Ecological

18 The micro-environment consists of factors that affect the ______________ environment.

A) Internal

B) Immediate

C) External

D) Outside

19 Companies can ruin their competitors’ profitability by making better alternative products.

A) True

B) False

20 Give two specific examples of when retrenchment and strategic repositioning may occur.

  1. Change in Consumer taste
  2. Global warming
  3. Changes in interest rates

21 What are tweets?

A) Text messages

B) Marketing Emails

C) Web page content

D) Text-based web posts

E) All of the above

22 Which of the following functions can be performed by a channel intermediary?

A) breaking bulk

B) making products available to customers where and when they want them

C) providing specialist support services

D) All of the above

23 Which of the following actions does Brownlie’s research suggest could be performed by a complete environmental scanning system?

A) Monitor trends

B) Develop forecasts

C) Establish a library

D) Disseminate information

E) All of the above

24 Companies can respond to environmental changes in different ways, of which of the following responses is marketing myopia an example?

A) Ignorance

B) Delay

C) Retrenchment

D) All of the above

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