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MNM 2602Study Unit 2 - The Marketing EnvironmentIn this study unit pay particular attention to the following:The marketing environment and its influence on the organisationMicro Environmental VariablesMarket Environmental variables and the influence it has on an organisationThe Macro Environmental variables and the influence it has on an organisation- ALL ORGANISATIONS OPERATES WITHIN AN ENVIRONMENT WHICH INCLUDES INTERNAL AND EXTERNAL FACTORS. THIS ENVIRONMENT IS DYNAMIC AND CHANGEs ALL THE TIME- BUSINESS AND SOCIETY INFLUENCE EACH OTHER AND DEPEND ON EACH OTHER FOR THEIR EXISTENCE- ORGANISATIONS SHOULD MONITOR THE ENVIRONMENT IN WHICH THEY OPERATE CONTINUOUSLY COMPONENTS OF THE MARKETING ENVIRONMENTMICRO ENVIRONMENT0571500Variables in Micro Environment (Table 2.1 p 32)1. Business Aim 2. Target Market 3. Marketing Objectives 4. Resources Skills + Abilities 5. Marketing InstrumentsVariables in Micro Environment: 1. Business AimThe mission and strategy explain why business exist It is the declaration of the business’ “reason for being” When formulating the mission statement consider the following questionsa) Who is the customer?b) What does the customer buy?c) Where is the customer located?d) How does the customer buy?e) How can the customer be reached?f) What does the customer regards as value for money?A MISSION STATEMENT SHOULD ALWAYS FOCUS ON THE CUSTOMER 2. Target MarketA target market must be selectedThis target market must be big enough for company to meet objectives and ensure long term survival and growthAll markets have specific characteristics (main features of selected target group) – marketers must be aware of these characteristics in order to develop a marketing strategy to ensure the highest possible returnSee table 2.2 p 34 for examples of characteristics3. Marketing ObjectivesThe stated mission will lead to a set of objectivesEach functional area will have its own set of objectives that together with others help an organisation to execute its mission eg. Marketing objectives, financial objectives, HR objectives. Objectives need to meet 5 requirementsSMARTSpecific – not vague must relate to single specific topicMeasurable – Must be stated in specific terms that can be measured Achievable – reasonable and realisticResult – Objective should relate to a result rather than an activity to be performedTime – An objective should be set within a timeframeThere are different types of objectives:a) Business/Long term objectives – 8 major areas1. Market standing2. Productivity3. Innovation4. Physical and Financial Resources5. Profitability6. Manager performance & development7. Worker performance and attitude8. Public and social responsibilityb) Functional/ Short term objectives1. Profit2. Customer orientation3. Survival and growth4. Increase in sales and market share5. Efficiency Motive6. Marketing instrument objectives4. Resources Skills and AbilitiesResources, skills and abilities as controllable internal elements of the micro environment that is used to take advantage of external opportunities of counter threatsExamples are- capital- skills- structures- knowledge5. Marketing instruments/marketing mixTHE USE OF MARKETING INSTRUMENTS IS DETERMINED BY THE SPECIFIC TARGET MARKET:THE MARKETING ENVIRONMENTVariables in the market environment1. SuppliersBusinesses and individuals who provide resources the business needs to produce goods & servicesHaving the right supplier may mean the difference between success and failureThe supply of materials and services is extremely important as it has a direct influence on the profit of the business and the price charged to the customer2. CustomersCustomers should be the focal point of every business – needs; purchasing power; behaviour patternsA MARKET CAN BE DEFINED AS CONSISTING OF PEOPLE WITH NEEDS WHO HAVE MONEY TO SPEND AND IS WILLING TO SPEND THAT MONEYThere are 5 types of customer markets (p 40)1. Consumer Markets2. Industrial / B2B Markets3. Reseller Markets4. Government Markets5. International Markets3. CompetitorsDefinition of competition - a situation in a market where several businesses offer similar kinds of products or services and compete for the business patronage of the same customersCompetitive Market Structures (p 41 for detail)THE MACRO ENVIRONMENTVariables in the macro environmentFACTORS OR VARIABLES OVER WHICH THE INDIVIDUAL ORGANISATION HAS NO CONTROL AND ON WHICH IT HAS LITTLE EFFECTThe macro environment is dynamic – it changes rapidly and impact of such change can be felt very quickly1. Political and LegalPolitical stability is one of the most important influencers of the marketing environmentInternational law and regulations will also effect how organisations do business in other counties2. International environmentWhat happens in the world is almost immediately and markets reacts to these events instantaneously.Sourcing suppliers is much easier than in the past – organisations are not limited to local suppliers onlyIt is important to understand relevant regulations and conditions of all countries you do business in.Also be aware of cultural differences that may impact trade3. Physical environmentNatural resources are not available in infinite quantities – businesses must be aware of limitationsAvailability of raw materials used in manufacturing will have an effect on supply of a product4. Technological environmentTechnological innovations can be described as the process that expands people’s capacity. It originates in research and development of enterprises and the stateIt results in new machinery and products and also new processes, methods and management approaches. This bring about changes in the environment5. Economic environment6. The Socio-cultural EnvironmentThe socio cultural environment has an impact on marketing techniques, media used, types of advertisements, organisational structures, and products designed and offered for sale across all types of businesses and industriesSocial trends directly affect marketing strategiesTrends include – demographics, lifecycles, cultural values, and sub cultural influencers THE SWOT ANALYSISThe swot analysis help managers identify internal strengths and weaknesses as well as external opportunities and threatsENVIRONMENTAL SCANNINGMeasurement; projection and evaluation of change in different environmental variablesImportance of environmental analysis:Helps business capitalise on early opportunities Early signal of impending problems or threatsSensitises business to changing needs and wants of customersObjective info about SWOTImproves image of business by showing it is sensitive and responsive to environment ................
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