Forces to be Reckoned With

Submitted by sylvia.wong@up… on Tue, 10/05/2021 - 04:29
Sub Topics

Welcome to Topic 2: Forces to be Reckoned With. In this topic, you will learn about:

  • Marketing environments
  • The micro-environment
  • The macro-environment
  • Responding to the marketing environments.

This topic will allow you to understand the different factors (human factors) and forces within the marketing environments that can affect a business. Analysing and understanding the marketing environment is the first step in creating value for our customers.

These relate to the Subject Learning Outcomes:

  1. Demonstrate an understanding of the importance in business practice of market orientation.
  2. Evaluate market conditions and consumer needs when forming marketing strategies.

Welcome to your pre-seminar learning tasks for this week. Please ensure you complete these prior to attending your scheduled seminar with your lecturer.

Click on each of the following headings to read more about what is required for each of your pre-seminar learning tasks.

Read Chapter 3 of Kotler, P & Armstrong, G 2021, Principles of Marketing Global Edition, 18th edn., Pearson.

Read the following journal articles:

Read the following web articles and industry reports:

Read the case study, ‘Square: In Relentless Pursuit of a More Elegant Payment Experience’ on pp. 114-115 of the prescribed text.

Read and watch the topic content.

There are discussion forum activities for this topic, which will enhance your knowledge and give you the opportunity to interact with your peers. You can access the activities by clicking the following links. You can also navigate to the forum by clicking on 'MKT100 Subject Forum' in the navigation bar for this subject.

Marketing environments

A marketing executive sitting in a relaxed environment looking at information on a laptop
Marketing involves facilitating the exchange relationship that exists between an organization & its external environment.
(Zeithaml & Zeithaml 1984, p. 46)

Our business and customers do not exist in a vacuum. When you are in a market, you will be surrounded by many variables that influence your business and your customers. This means the exchange relationship possessed by a company is not just limited to that of its own customers. It also includes other companies involved in the delivery or creation of its product and the environment in which it is operating.

Before we dive deeper into thinking about our marketing strategies, it is essential that we know the landscape of where we will be operating – better known as our marketing environment. There are two components for us to examine here – micro-environment (internal) and macro-environment (external).

Micro-environment

Micro-environment refers to “the forces close to the company that affect its ability to service its customers” (Kotler et al. 2017, p. 109). It includes the actors specific to your organisation that you essentially rely on or depend on to create products and build meaningful exchanges with your customers. As these are internal factors, they will affect your business but not necessarily other businesses. The following figure shows the main factors of the micro-environment.

A diagram explaining the parts of the micro-environment
Adapted from Principles of Marketing Global Edition, by P Kotler & G Armstrong, 2021, 18th edn., Copyright 2021 by Pearson Education Limited.
The company

Marketing managers are required to work closely with top management and other departments in the company. For example, the finance department is concerned with finding and using the necessary funds to carry out the company’s plans. A lack of collaboration within a department or across departments can affect the overall customer experience.

Suppliers

Suppliers are firms and individuals that provide resources needed by the company to produce its goods and services. For example, a boutique fashion store requires suppliers of clothing, utility services, property, internet and phone, insurance and much more. Good relationships with suppliers are essential to creating and delivering customer value (Kotler & Armstrong 2021).

You can also think about it from a supply chain perspective. Suppose there is a disruption in any of these elements (for example, shortage of raw materials, poor manufacturing or availability of transportation). In that case, it will affect your business in the form of higher costs, more returns or refunds and delivery delays.

The following figure represents a typical supply chain.

A diagram explaining the supply chain

Adapted from Predictive analytics in the supply chain, by W Vorhies 2015, Copyright 2015 by Data-Magnum.

Marketing intermediaries

Marketing intermediaries help to promote, sell and distribute the products to the final buyer. For example, Coca-Cola distributes to exclusive fast-food chains such as McDonald’s and Subway. Marketing intermediaries will be discussed in more detail in our upcoming seminar.

Competition

In the micro-environment, ‘competitors’ refer to existing competitors rather than new competitors, which are identified in the macro-environment. For example, McDonald’s needs to be aware of existing competitors such as Hungry Jack's, KFC, and Oporto. Competitors can win customers over from your business as they might serve a very similar target market. The different types of competitors and steps to examine competitors will be discussed in our upcoming seminar.

Public

The public refers to any group with an actual or potential interest in or impact on an organisation’s ability to achieve its goals. This includes banks, media, government, environmental groups, neighbourhood or community, volunteers and consumer organisations.

Customers

This force includes monitoring and assessing those factors that influence consumer decisions and characteristics. Factors such as social influence, reference groups, brand perception, consumer-related psychological factors, and the buying process are part of this environment. The customer and their buying behaviour will be examined in more depth in our upcoming seminars.

Knowledge check

Macro-environment

The macro-environment refers to “larger societal forces that affect the whole micro-environment” (Kotler et al. 2017, p. 109). They are general forces that affect the function of all businesses, as shown in the following figure. Some forces more so in one industry or sector than others.

A diagram explaining the parts of the macro-environment
Adapted from Principles of Marketing Global Edition, by P Kotler & G Armstrong, 2021, 18th edn., Copyright 2021 by Pearson Education Limited.
Demographic forces

The key factors include demographic trends, family composition, culture, and society. For example, changes in the population's age structure will have implications for business, and these generations include Baby Boomers, Generation X, Millennials, Generation Z (Armstong et al. 2020). Consumers within the same generation tend to share similar life experiences and world events. This shared experience will translate into similar characteristics, attitudes and behaviours, and drive their consumption behaviours (Williams et al. 2010).

Watch the following video to gain an overview of seven different generations over 125 years of American history.

Generational differences

Click on each of the following links and read the articles to learn more about generational differences:

Francis, T & Hoefel, F 2018, ‘True Gen’: Generation Z and its implications for companies

Fedder, C, Joshi, S & Upadhyaya, J 2018, Millennials and beyond

NCR 2021, From baby boomers to Gen Z: generational marketing insights to win with every consumer generation

Page, R 2021, The new rules of Millennial marketing in 2021

Emsley, V 2020, Don’t Underestimate the Market Power of the 50+ Crowd

There is also a popular meme, ‘Millennials Are Killing’, which sets out the changing patterns of Millennial consumers and how they are negatively impacting once booming industries.

Economic forces

The economic climate would include consumers’ purchasing power, disposable income, discretionary income, and spending patterns (Kotler & Armstrong 2021). Changes in these factors are likely to have an impact on businesses. For example, an increase in the cost of fuel, groceries, housing, and taxes will affect how much money you will spend on luxury items.

One of the measurements used is consumer sentiment. Consumer sentiment measures the economy's overall health based on consumer opinions, such as feelings towards their financial health and their views on economic growth (Liberto 2021).

Read the linked article to learn more about consumer sentiment in the context of consumer spending during the uncertain times of the COVID-19 crisis.

Natural forces

Implementing environmentally friendly programs, being eco-efficient, and monitoring changes in natural environments, such as depletion of resources or the use of new resources, can impact operations and business strategies. For example, businesses are now involved in recycling, renewable energy, supporting charities, and being environmentally sustainable (Kotler & Armstrong 2021).

Whilst there are impacts of climate change on businesses, as outlined in the linked article, there is also a strong business case for going sustainable. More than 50% of consumers said they would be willing to pay more for products from companies committed to social and environmental causes (Nielsen 2015) and sustainable products designed to be reused or recycled (Accenture 2019).

Watch this brief interview with Nicolas de Skowronski about the rise and importance of the socially, environmentally and politically conscious consumer.

Technological forces

Technological Forces are forces that create change by offering new technology (Armstrong et al. 2020). For example, the use of the e-wallet and online purchases has increased in Australia, which would not have been possible without technological advancements (Armstrong et al. 2020). There is also the notion of disruptive technology – “an innovation that significantly alters the way that consumers, industries, or businesses operate.” (Smith 2020).

Read this article to find out how eight key industries were changed forever by disruptive technology.

Political forces

Political Forces relate to the government laws, agencies, and pressure groups that influence businesses (Armstrong et al. 2020). For example, Australia and New Zealand have numerous “laws covering issues such as competition, fair trade practices, environmental protection, product safety, truth in advertising, consumer privacy, packaging and labelling, pricing and other important areas” (Armstrong et al. 2020, p.83). These laws govern the way organisations conduct their business.

Have a look at the common legal laws to which all Australia businesses must comply.

For marketers, it is essential to be aware of and understand the laws. For example, a good understanding of privacy laws such as the General Data Protection Regulation (GDPR) would be critical since businesses often collect and use customer data.

The following video explains the European Union’s GDPR and how it affects everyone, even those who do not necessarily live in the EU.

Cultural environment

The cultural environment creates forces that affect society’s basic values, perceptions, preferences and behaviour. These include core beliefs (passed from parents to children) and secondary beliefs and values (more open to change than core beliefs).

For example, people have different values, beliefs, and life experiences, which businesses must consider. With the increasing diversity of the population and an increase in numbers of minority and ethnic groups worldwide, marketers will need to understand the nature of this changing consumer market (Emslie et al. 2007; Cui & Choudhury 2002). Many of today’s consumers also expect brands to be more inclusive and embrace diversity (Petrock 2020).

Watch the following video, which discusses the progress of the Unstereotype Alliance – a movement aimed at replacing harmful gender-based stereotypes in marketing and advertising with diversity.

Responding to market environment

Some of the micro-environment factors can be controlled relatively easily by the organisation, for example, by switching suppliers or marketing intermediaries. However, businesses are not able to control the macro-environment factors. A company cannot change the demographic of the population nor the economic environment. However, they can respond to the market environment using their marketing tools (7P's) or innovate in delivering a product that caters to the current consumer needs and wants.

Not all of these shifts and changes within the market environment are threats. For some companies, they are opportunities.

Knowledge check

Complete the following four (4) tasks. Click the arrows to navigate between the tasks.

Key takeouts

Congratulations, we made it to the end of the second topic! Some key takeouts from Topic 2:

  • There are many variables that can affect a business and its customers, hence it is important to understand our marketing environment before we think about any strategies.
  • Micro-environmental factors are internal factors specific to a business w that can affect their ability to serve their customers, for example, suppliers, marketing intermediaries and the public.
  • Macro-environmental factors are larger, external societal forces that affect all businesses or businesses within the same sector, for example, demographic trends, economic climate and cultural values.
  • While micro-environmental factors can be controlled, macro-environmental factors are uncontrollable, however, they can be responded to.

Welcome to your seminar for this topic. Your lecturer will start a video stream during your scheduled class time. You can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then clicking 'Join' to enter the class.

Click here to access your seminar.

The learning tasks are listed below. These will be completed during the seminar with your lecturer. Should you be unable to attend, you will be able to watch the recording, which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.

Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)

In-seminar learning tasks

The in-seminar learning tasks identified below will be completed during the scheduled seminar. Your lecturer will guide you through these tasks. Click on each of the following headings to read more about the requirements for each of your in-seminar learning tasks.

This learning task will give you an insight into how businesses from different industries adapt to the changing environment. To start, select an industry out of the following two (2) options and access the web links to look at how businesses have adapted to the environment. Work in a breakout room assigned by your lecturer during the scheduled seminar to answer the three (3) questions below in relation to your chosen industry. Your lecturer will request that you present the findings back to the class:

Option 1: Fashion and beauty industry

Option 2: Food industry

Questions

  1. What are the macro-environmental forces affecting the chosen industry? Provide specific examples from the web articles.
  2. Investigate these forces in more detail and comment on their relevancy in today’s environment in relation to the chosen industry.
  3. What other forces that were not already mentioned could impact businesses within the chosen industry?

In this learning task, you will put what you have learned into practice and scan the marketing environments for a business. In the same breakout room as the previous task, select an organisation within an industry different from the previous two (2) options and examine their marketing environments. Your lecturer will request that you present the findings back to the class:

  1. Out of the different micro-environment and macro-environment factors, choose two (2) from each that you believe will strongly impact the organisation.
  2. Explain the impacts of your chosen factors in relation to the organisation’s ability to meet the needs and wants of consumers.
  3. Provide some recommendations as to how the organisation should respond, manage or control these factors in order to stay competitive.

Welcome to your post-seminar learning tasks for this week. Please ensure you complete these after attending your scheduled seminar with your lecturer. Your lecturer will advise you if any of these are to be completed during your consultation session.

Click the following headings to learn more about your post-seminar learning tasks.

Reflect on this topic. Prepare a list of key terms with their definitions and summarise the key points in your own words. Share these with your lecturer in your reflective journal.

You can also access the reflective journal by clicking on ‘Journal’ in the navigation bar for this subject.

Review the instructions and requirements for Assessment 1 from the Study Guide and come prepared to the consultation session with any questions.

Each week you will have a consultation session, which will be facilitated by your lecturer. You can join in and work with your peers on activities relating to this subject. These session times and activities will be communicated to you by your lecturer each week. Your lecturer will start a video stream during your scheduled class time. You can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then clicking 'Join' to enter the class.

Click here to access your consultation session.

Should you be unable to attend, you will be able to watch the recording, which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.

Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)

References

  • Accenture, 2019, More than half of consumers would pay more for sustainable products designed to be reused or recycled, Accenture survey finds, https://newsroom.accenture.com/news/more-than-half-of-consumers-would-pay-more-for-sustainable-products-designed-to-be-reused-or-recycled-accenture-survey-finds.htm
  • Armstrong, G, Denize, S, Volkov, M, Adam, S, Kotler, P, Ang, SH, Love, A, Doherty, S & Esch, PV 2020, Principles of Marketing, 8th edn., Pearson.
  • Chaney, D, Touzani, M & Slimane, KB 2017, ‘Marketing to the (new) generations: summary and perspectives’, Journal of Strategic Marketing, 25(3):179-189.
  • Coppola, M, Krick, T & Blohmke, J 2019, Feeling the heat? Companies are under pressure on climate change and need to do more, Deloitte, https://www2.deloitte.com/us/en/insights/topics/strategy/impact-and-opportunities-of-climate-change-on-business.html
  • Cui, G & Choudhury, P 2002, ‘Marketplace diversity and cost‐effective marketing strategies’, Journal of Consumer Marketing, 19(1):54-73.
  • Emsley, V 2020, Don’t Underestimate the Market Power of the 50+ Crowd, https://hbr.org/2020/01/dont-underestimate-the-market-power-of-the-50-crowd
  • Emslie, L & Bent, R & Seaman, S 2007, Missed opportunities? Reaching the ethnic consumer market, ‘International Journal of Consumer Studies’, 31(2):168-173.
  • Fedder, C, Joshi, S & Upadhyaya, J 2018, Millennials and beyond, https://www2.deloitte.com/us/en/insights/topics/marketing-and-sales-operations/millennials-x-z-beyond-generational-marketing-consumer-profiling.html
  • Francis, T & Hoefel, F 2018, ‘True Gen’: Generation Z and its implications for companies, https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/true-gen-generation-z-and-its-implications-for-companies
  • Grewal, D & Hulland, J, Kopalle, PK & Karahanna, E 2019, ‘The future of technology and marketing: a multidisciplinary perspective’, Journal of the Academy of Marketing Science, 48:1-8.
  • Kotler, P & Armstrong, G 2021, Principles of Marketing Global Edition, 18th edn., Pearson.
  • Kotler, P, Bowen, JT, Makens, JC & Seyhmus, B 2017, Marketing for hospitality and tourism, 7th edn., Prentice Hall.
  • Lee, TB 2016, Why the next 20 years will see a lot less technological disruption than the past 20, Vox, https://www.vox.com/new-money/2016/10/3/13076152/silicon-valley-disruption-slow
  • Liberto, D 2021, Consumer sentiment, Investopedia, https://www.investopedia.com/terms/c/consumer-sentiment.asp
  • Lobaugh, K, Stephens, B & Simpson, J 2019, The consumer is changing, but perhaps not how you think: a swirl of economic and marketplace dynamics is influencing consumer behavior, Deloitte, https://www2.deloitte.com/us/en/insights/industry/retail-distribution/the-consumer-is-changing.html
  • NCR 2021, From baby boomers to Gen Z: generational marketing insights to win with every consumer generation, https://www.ncr.com/blogs/generational-marketing-to-four-consumer-generations
  • Nielsen 2015, The multicultural edge: rising super consumers, https://www.nielsen.com/wp-content/uploads/sites/3/2019/04/the-multicultural-edge-rising-super-consumers-march-2015.pdf
  • Nielsen 2015, The sustainability imperative: new insights on consumer expectations, https://www.nielsen.com/wp-content/uploads/sites/3/2019/04/Global20Sustainability20Report_October202015.pdf
  • Page, R 2021, The new rules of Millennial marketing in 2021, https://www.cmo.com.au/article/686123/new-rules-millennial-marketing-2021/
  • Petrock, V 2020, Consumers expect brands to be inclusive, eMarketer, https://www.emarketer.com/content/consumers-expect-brands-inclusive
  • Smith, T 2020, Disruptive technology, Investopedia, https://www.investopedia.com/terms/d/disruptive-technology.asp
  • Vorhies, W 2015, Predictive analytics in the supply chain, https://www.datasciencecentral.com/dsc-webinar-series-predictive-analytics-for-supply-chain-management/
  • Williams, KC, Page, RA, Petrosky, A & Hernandez, EH 2010, ‘Multi-generational marketing: descriptions, characteristics, lifestyles, and attitudes’, Journal of Applied Business and Economics, 11(2):21-36.
  • Zeithaml, CP & Zeithaml, VA 1984, ‘Environmental Management: Revising the Marketing Perspective’, Journal of Marketing, 48:46-53.
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