THE MARKETING ENVIRONMENT COLLEGE OF BUSINESS ADMINISTRATION CHUNGANG UNIVERSITY THE MARKETING ENVIRONMENT COLLEGE OF BUSINESS ADMINISTRATION CHUNGANG UNIVERSITY THE MARKETING ENVIRONMENT COLLEGE OF BUSINESS ADMINISTRATION CHUNGANG UNIVERSITY
3. THE MARKETING ENVIRONMENT Marketing Environment — Actors and forces outside marketing that affect marketing management ability to develop and maintain successful transactions with target customers. COLLEGE OF BUSINESS ADMINISTRATION CHUNG-ANG UNIVERSITY PROF HYUNSUK SUH 2 The objectives of the current chapter are described. Objectives Understand the marketing environment that affect the company’s ability to serve its customers Understand the meaning of microenvironment and macroenvironment Understand tools to analyze marketing situations 0. Objectives 3 The objectives of the current chapter are described. Chapter Opening Example 0. Objectives Example Xerox introduced the first plain-paper copier almost 50 years ago. For years, the company that invented photocopying dominated the field. In 1998, Xerox’s profits were growing at 20 percent a year. Then everything went wrong. In only 18 months, Xerox lost $38 billion in market value. The company was on the brink of bankruptcy. The world had quickly gone digital and Xerox had not kept up. While Xerox was busy perfecting copy machines, customers were no longer relied on the company’s flagship products – stand alone copiers. They were looking for more sophisticated document management solutions. They wanted systems that would let them scan documents in Frankfurt weave them into colorful showpieces in San Francisco. Since those dark days, Xerox has rethought, redefined and reinvented itself. The new Xerox mission is to “help companies and people be smarter about their documents.” Xerox CEO Anne Mulcahy sums things up this way: “We have transformed Xerox into a business that connects closely with customers in a content rich digital marketplace.” The message is clear. Even the most dominant companies can be vulnerable to changing marketing environments. 4 STRATEGIC PLANNING PROCEDURE Mission Objectives & Goals Alternative Strategies/Sols Internal Competency External Environment Selection of Strategy Execution of Strategy Result The procedure of establishing a company strategy is illustrated in below diagram. Establishing Company Strategy Evaluation & Feedback Designing Business Portfolio Analysis on the Marketing Environment 1. Strategic Process 5 TOOLS & FRAMEWORKS TOOLS & FRAMEWORKS FAW 5 Forces Business System & Value Chain Analysis 7S 3 C SWOT ANALYSIS ON THE EXTERNAL ENVIRONMENT ANALYSIS ON THE INTERNAL COMPETENCY ANALYSIS ON THE COMPETITIVENESS Tools and Frameworks for the Analysis The tools for the analysis of strategic planning should selectively be employed according to the different purposes intended on the target occasions. 1. Strategic Process Strategy ( 전략 ) Structure ( 조직구조 ) System ( 운영제도 ) Staff ( 인재 ) Skill ( 조직능 력 ) Style ( 기업풍토 ) Threat of Substitute Products Threat of New Entrants Threat of New Entrants Rivalry Among Competing Firms in Industry Bargaining Power of Buyers Bargaining Power of Suppliers Shared Value ( 기업이념 , 공유가치 ) 6 7S Check Points The following is an example of the 7S analysis being actually employed in one of the business consulting projects. 1. Strategic Process 7S Analysis What is shows Pivotal Job Design How behavior patterns of front-line people need to change in order to build new institutional skills Career Path Analysis Expected career path for key managers Managerial Candidate Evaluation Helps match individual managers strengths with position requirements Promotion Speed by Function What functions have or have not been enhanced by promotion patterns Career Blochage Analysis Where and how promotion is blocked or career progression options are limited Managers' Background What backgrounds dominate among managers or employees at a certain level Cross-Functional Experience Whether senior management has a broad or functional perspective on issues Turnover Analysis The extent and organizational location of employee turnover Executive Readiness Assessment Readiness of CEO(and other key executives) to lead major change Staff Role and Evolution The roles staff play and the change in those roles over time Organizional Skills Analysis What the organization is good(or poor) at, the new skills required to execute a winning strategy, and the organizational changes necessary Skills Self-Assessment What the managers believe are their organization's strengths and weaknesses Skills Gap Analysis If an organization has the necessary skills to maintain competitive advantage Competitive Skills Assessment A comparison of our performance on skills with competitor's skills performance Dimensions of Challenge Company's relative ability to decide the right thing to do and then implement that chosen direction Content Analysis Hard data on the way top management really spends its time and attention Actual Time Allocation Difference between what a manager supposedly does and what he or she really does to support out strategy Shared Values Identification Makes employees decide what is of crucial importance to them Perception Difference Analysis Whether people at different levels of the organization see the company the same way Skill Style Shared Value Staff 7S Analysis What is shows Strategic Era Analysis The organizational characteristics of the past eras Changes Strategy Matrix Magnitude of required change and pressures for/against it Decision Grid How and where decisions are made as well as centralization/decentralization concerns Responsibility Dispersion How Many people are involved in making key decision(is anybody responsible?) Expenditure Authority The extent to which managers have the proper level of authority over expenditures Organization Chart Analysis Structural barriers to organizational effectiveness "Real" Organization Chart The effects of actual reporting relationships in an organization-as opposed to the official ones Overhead Distribution Analysis If the numer and location of overhead personnel supports the company's strategy Systems Analysis If systems provide a source of competitive advantage Strategic Impact of Systems If systems are appropriately calibrated to a company's strategy and management is giving appropriate attention to key systems Decision Flows Decision-making patterns which support or diminish an organization's efficiency Systems Evolution Flow Chart If systems have evolved to keep pace with changes in the organization or the competitive environment Systems/Process Flows If Information or a product is efficiently transmitted across the organization Systems Redesign What current systems focus on and how they might be more effectively designed Compensation Comparision Competitive and behavioral impact of compensation package Reward Systems Analysis If the reward systems are still meaningful and in support of the company's strategy Strategy Structure System Example 7 Forces at Work The tools for the analysis of strategic planning should selectively be employed according to the different purposes intended on the target occasions. 1. Strategic Process 8 What is “Marketing Environment”? Marketing Environment The actors and forces that affect a firm’s ability to build and maintain successful relationships with target customers. Aspects of the marketing environment: - Micro environment : Includes the actors close to company - Macro environment: Involves larger social forces Kotler and Armstrong, 2011, 2013 2. Marketing Environment Definition 9 The Microenvironment of the Company The major actors in marketer’s microenvironment to create customer value and satisfaction are illustrated below. company company MACRO MICRO S u p p l i e r S u p p l i e r C u s t o m e r C u s t o m e r C o m p e t i t o r C o m p e t i t o r I n t e r m e d i a r y I n t e r m e d i a r y Public Public P o l i t i c a l P o l i t i c a l T e c h n o l o g i c a l T e c h n o l o g i c a l E c o n o m i c E c o n o m i c N a t u r a l N a t u r a l Demographic Demographic MICROENVIRONMENT Actors close to the company that affect its ability to serve its customers 1. Suppliers Provide resources to produce the company goods and services (e.g. resource, part, and facility) 2. Intermediaries Help company to promote, sell, and distribute its goods to final buyers (e.g. reseller, physical distribution firm, marketing service agency, financial service) 3. Customers Consumer/ Business/ Reseller/ Government/ International markets that include all of above 4. Competitors 5. Public Any group with actual & potential interest/impact on organization’s ability to achieve its objectives Cultural Cultural 3. Microenvironment 10 자 사 (Company) 경쟁사 (Competitor) 고 객 (Customer) 3C To understand and deal with the competitive environment today, 3C analysis works on the core factors of following levels; the customer, competitor, and company. 3C Analysis 1. Who are they? 2. Characteristics and Behaviors? 3. Size of target market? 1. Who are our competitors? 2. Pros and Cons? 3. Best practices? 1.Major products and services? 2.Organization? 3.Pros and Cons? 4. 3C and SWOT [...]... behavior and buying power 16 5 Macroenvironment The demographic environment is the most basic factor that determines size of the market Statistics for the World Population Imagine the world is a large village, and the total number of people is 1,000, our village would 1 520 females and 480 males, 33 0 children, 60 people over 65, 10 college graduates, and 33 5 illiterate 2 52 North Americans, 55 Russians,... , 2010-1.21 명 )- Markets? 2 Increasing number of people over the age of “65” (1980-1,446 명 , 2000 -3, 372,000 명 , 2005-4 ,37 0,000, 2010-5,420,000 (24 .3% increase)) 3 Increasing divorce rate (2005- 1,140,000 명 , 2010-1,610,000 명 (41.2% increase)) 4 Increasing number of foreign workers (2005- 237 ,517 명 , 2010-589, 532 (148.2% increase)) 17 5 Macroenvironment It takes only 26 years for us to reach from aging... like the food He responded rather blandly, “It wasn’t very good” Germans being low-context oriented, they deliver information without any social padding If it was Americans in the same situation, the answer would more likely be “It was pretty good but a bit too spicy.” A Japanese would answer “It was very good Thanks.” But he would never order Mexican food again 23 5 Macroenvironment Other macro environment. .. 대응 전략방안 약점을 보완한 외부환경위협의 대응 전략방안 * SWOT : Strengths, Weaknesses, Opportunities, Threats 15 5 Macroenvironment In a larger sense, the macroenvironment shapes opportunities, and poses threats to the company Six(6) major forces are illustrated below The Macroenvironment of the Company MACRO MACROENVIRONMENT r er liie p pp Su Su In te rm ed ia ry MICRO all ca tiic lliit P Po Te ch no lo gi ca l Cultural... Africans, and 584 Asians 3 329 Christians, 178 Moslems, 32 Hindus, 60 Buddhists, 3 Jews, 161 non-religious, and 45 atheists 4 1 /3 have access to clean, safe drinking water, half of children would be immunized 5 200 controls 75% of wealth, 70 own cars, 1 own computers that even may not be connected Demographic Environment of Korea 1 Decreasing Birth Rate (Summated Birthrate-between the child bearing period... again 23 5 Macroenvironment Other macro environment also affect on the company’s marketing activities Other Environments NATURAL ENVIRONMENT 1 Shortage of raw materials (e.g water) 2 Pollution 3 Government Intervention e.g Chiclets gum (12) In India? (2) TECHNOLOGICAL ENVIRONMENT Companies should keep up with technological changes so that they do not miss new products and market opportunities Issues regarding... advantage in the future Questions to Ask: • Who are our competitors? • What threats do they post? • What is the profile of our competitors? • What are the objectives of our competitors? • What strategies are our competitors pursuing and how successful are these strategies? • What are the strengths and weaknesses of our competitors? • How are our competitors likely to respond to any changes to the way we... and digitally savvy their mental attitude Challenging target for marketers 19 5 Macroenvironment Let’s take a look at some of the business fields that can target for the Silver Market Issues of Disability Example What is Disability ? 20 5 Macroenvironment Cultural environment is explained as the institutions and other forces that affect society’s basic values, perceptions, preferences, behaviors, and... younger due to Now in their 30 s and 40s planning to send their kids off to college Home ownership is important goal for them Generation Y Born between 1979~1994 75 million strong: almost as large a group as their baby boomer parents New products and services (e.g Tommy Hilfiger, DKNY, Gap, Toys “R” us, Talbots, Eddie Bauer, etc.) Computer, Internet and digitally savvy their mental attitude... 따 른 업무조정 및 재배치 • 택배업체와의 경쟁력 강화 및 협 력전략수립 4 3C and SWOT The questions you need to deal with SWOT analyses are addressed below SWOT Analysis Strength Weakness - What are the core competencies of our company? (what do we do well?) - What is the company’s reputation in the market place? - What areas of business need most improvement? O Threat Opportunity - As environmental forces/changes affect and influence . of the marketing environment: - Micro environment : Includes the actors close to company - Macro environment: Involves larger social forces Kotler and Armstrong, 2011, 20 13 2. Marketing Environment. 3. THE MARKETING ENVIRONMENT Marketing Environment — Actors and forces outside marketing that affect marketing management ability to develop and. HYUNSUK SUH 2 The objectives of the current chapter are described. Objectives Understand the marketing environment that affect the company’s ability to serve its customers Understand the meaning