Week 3 – Class Agenda

• Chapter 2 – Review and Wrap-Up

• Chapter 3 – Analyzing the Marketing
Environment
Measuring and Managing
Return on Marketing Investment
Return on marketing investment (marketing
ROI) is the net return from a marketing
investment divided by the costs of the
marketing investment. Marketing ROI
provides a measurement of the profits
generated by investments in marketing
activities.
Additional Concepts
• Net Marketing Contribution (NMC) – This is a
measure of contribution to company profits
after marketing and sales expenses are
accounted for.
• Marketing Return On Sales (MRS) – The
percent of net sales attributable to the net
marketing contribution
• Marketing Return on Investment (MROI) – Is a
measure of marketing productivity of a marketing
investment
Bonus Question
HUM Network is Launching its Own Online
Grocery Shop
One of the Pakistan’s most well-known media group, Hum
Network Ltd is hoping to make a mark with its new new business
venture in an entirely different field. The TV network is planning to
roll out its ecommerce operations, with HUM Mart (Pvt), its online
grocery company.
The group is not only preparing to set up an online grocery
company but it is also in the final stages of launching its news
channel, HUM News, in the next few months. For this, hiring of
news staff and production team has almost concluded in all major
cities.
Last year, the group also acquired majority shares for the
renowned monthly magazine, Newsline, which is being run under
the previous management effectively.
• The media group also owns three magazines of different
genres.
1. Glam – Showcasing the latest trends and teaching its
readers how to assume a distinctly chic and modern
appearance.
2. Masala Tv Food Mag- quality home cooking for the
people who love to eat and cook.
3. Newsline Magazine – socio-political magazine for the
readers.
Based on the scenario shared, construct the
Ansof’s matrix for Hum Network.
 Lecture Three

Chapter 3: Analyzing the Marketing

Environment
Analyzing the Marketing Environment
Topic Outline

• The Company’s Microenvironment

• The Company’s Macroenvironemnt
• Responding to the Marketing Environment
The Marketing Environment
The marketing environment includes the actors and
forces outside marketing that affect marketing
management’s ability to build and maintain successful
relationships with target customers
The Micro Environment

Microenvironment consists of the

parties/institutions close to the company that
affect its ability to serve its customers. These
include: the company, suppliers, marketing
intermediaries, customer markets,
competitors, and publics
The Company’s Microenvironment
The Company
• Top management
• Finance
• R&D
• Purchasing
• Operations
• Accounting
The Company’s Microenvironment

Suppliers

• Provide the resources to produce goods and services

• Treated as partners to provide customer value
The Company’s Microenvironment
Marketing Intermediaries

• Help the company to promote, sell and distribute

its products to final buyers
• These include resellers, physical distribution
firms, marketing services agencies and financial
intermediaries.
The Company’s Microenvironment

Competitors

• Firms must gain strategic advantage by positioning

their offerings against competitors’ offerings
The Company’s Microenvironment
Publics
• Any group that has an actual or potential interest
in or impact on an organization’s ability to
achieve its objectives
• Financial publics
• Media publics
• Government publics
• Citizen-action publics
• Local publics
• General public
• Internal publics
 The Company’s Microenvironment
Customers
• The company may target any or all five of the types of
consumer markets:
• Consumer markets
• Business markets
• Reseller markets
• Government markets
• International markets
The Company’s Macroenvironment
Demographic Environment

Demography is the study of human populations

in terms of size, density, location, age, gender,
race, occupation, and other statistics
• Demographic environment is important
because it involves people, and people make
up markets
• Demographic trends include age, family
structure, geographic population shifts,
educational characteristics, and population
diversity
The Company’s
Macroenvironment
Demographic Environment
• Generation X includes people born between 1965
and 1976
• Less materialistic
• Family comes first
• Millennials (gen Y or echo boomers) include those
born between 1977 and 2000
• Comfortable with technology
• Includes:
• Tweens (ages 8–12)
• Teens (13–19)
• Young adults (20’s)
Demographic Environment
• Increasing Population
• A Depleting/Growing Middle Class
• Growth in Urban Population
• A changing family system
• The changing role of women
• Increasing diversity – changes in the workforce
• Changes in where people work: telecommute,
home-office
The Company’s
Macroenvironment
Economic Environment

Economic environment consists of factors that affect

consumer purchasing power and spending patterns
• Industrial economies are richer markets
• Subsistence economies consume most of their own
agriculture and industrial output
• Changes in income – BOTTOM OF PYRAMID
MARKETING
• Value marketing involves ways to offer financially
cautious buyers greater value—the right combination
of quality and service at a fair price. Discuss the
example of Liberty Books in Pakistan.
The Company’s
Macroenvironment
Natural Environment
Natural environment involves the natural
resources that are needed as inputs by
marketers or that are affected by marketing
activities
• Trends
• Shortages of raw materials
• Increased pollution
• Increase government intervention
• Environmentally sustainable strategies – the
example of HP!
The Company’s Macroenvironment
Technological Environment

• Most dramatic force in changing the marketplace

• Creates new products and opportunities
• Safety of new product always a concern
• Can you think of the next industry that will be
disrupted by the Digital / Technological
factor of the Macro-environment?
 Mini Case Study for Applying the Concept
A company from regional Australia (called Winkiwoo) has experienced tremendous
success with their innovative Facebook photo books product. Surprisingly, the new-to-
the-world product, which was only launched five months ago, has already reached
80,000 in sales to customers in over 80 countries. Basically the product allows
consumers to utilize the photos they have put on Facebook to produce a tailored and
attractive physical book. Customers using the service simply install the Winkiwoo
Facebook application and then select which of their Facebook photos they want to
include in the book and place the order online. The book is then printed and sent back
to the customer. The firm saw an unmet market need and developed a new-to-the-world
product solution. According to the general manager of its innovation division, Brendon
Watson, “with digital photos, more photos are being taken than ever but (in ratio) less
photos are being printed than ever … until now there wasn’t a way to take your
memories from Facebook and put them in a nicely presented photo product. It allows
the customer to create and physically touch their memories rather than just having
them sitting on the Facebook servers forever.” The product would have great appeal to
regular Facebook users and in the gift market. Winkiwoo, is a division of Eastmon,
which is a company used to run a chain of stores specializing in developing film
photographs – an industry that has all but died out along with analog film technology.
Over the last several years it has shut down all of these stores and the company is now
the largest printer of digital photos in Australia. When a consumer orders a digital print
or photo book from a leading retailer in Australia (such as, Harvey Norman, Bing Lee,
Dick Simth, Big W, Camera House or Snapfish), it is likely that it is printed by Eastmon.
Questions
• This is an example of a firm finding an
opportunity in a changing environment. Do
you think that most established firms look at
environmental change as an opportunity or a
threat?
• How could this firm protect itself against
‘copy-cat’ competitors?
• Do you see this business venture as having
long-term viability or do you think it is
probably a fad? Why?
The Company’s
Macroenvironment
Political Environment
Political environment consists of laws, government
agencies, and pressure groups that influence or limit
various organizations and individuals in a given society
• Legislation regulating business
• Increased legislation
• Changing government agency enforcement – Punjab
Food Authority
• Increased emphasis on ethics
• Socially responsible behavior – Sialkot Soccer Industry
• Cause-related marketing – Help A Child Reach Age 5!
The Company’s
Macroenvironment
Cultural Environment

Cultural environment consists of institutions

and other forces that affect a society’s basic
values, perceptions, and behaviors
Core beliefs and values are persistent and are passed
on from parents to children and are reinforced by
schools, churches, businesses, and government
Secondary beliefs and values are more open to
change and include people’s views of themselves,
others, organizations, society, nature, and the
universe
Cultural Trends On The Rise
• Rise in Islamic Marketing
• Increasing trend towards “ethnic brands”
 The following exercise contains a list of
questions facing particular industries
1. Should car manufacturers only produce vehicles that have
maximum speed of the legal speed limit, as speeding is
dangerous?
2. Should supermarket chain cease selling cigarettes, as they are
harmful to consumers?
3. Should mobile phone companies restrict young people (under 25
years) from entering phone contracts, so that these customers do
not get into financial difficulties?
4. Should banks remove their ATMs from clubs and casinos so that
problem gamblers cannot access cash on the premises?
5. Should fast-food chains decide NOT to market products to children
(via advertising and merchandised toys with meals), particularly
after they have invested millions in kid-friendly premises, menu
items and in-store playgrounds?
6. Should telephone directory pages continue to be produced
physically? They both use enormous quantities of paper and many
people utilize the internet to find firms and phone numbers.
Follow-Up Questions
1. Identify which macro-environmental factor
is at play with each statement.
2. Which of the statements do you agree with
(that is, the firm should move in this
direction)?
3. What are the for/against arguments, from a
firm’s perspective, of implementing some of
these actions?
Responding to the Marketing
Environment
Views on Responding

Uncontrollable Proactive Reactive

• React and • Aggressive • Watching

adapt to actions to and reacting
forces in the affect forces to forces in
environment in the the
environment environment