MARKETING MANAGEMENT 1A (MMA11A1)

Unit 1: Marketing environment

23 – 24 February 2023

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Chapter 2: The marketing environment

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 OUTCOMES FOR CH 2
 List, describe and provide examples of the components of the micro-environment.
 List, describe and provide examples of the different types of customer markets.
 List, describe and provide examples of the components of the macro-environment.
 Explain how the concept of LSM can influence marketing decisions.
 Perform a SWOT analysis for a given organisation.

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 KEY CONCEPTS

• Baby Boomers • Generation X, generation Y

• Broad-based black economic
empowerment
• Competitors
• Environmental analysis
• Environmental scanning
• Forms of competition
• Living Standards Measure
• Macro-environment
• Marketing distributors
• Microenvironment
• Suppliers

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 INTRODUCTION
• Marketers are faced with many challenges
• Building good relationships with all stakeholders (i.e. customers, suppliers, employees
etc.) is vital
• In order to build these relationships, companies need to understand the different factors
that can influence the way in which they conduct business – this is often referred to as
the marketing environment
• The marketing environment comprises of two broad areas: the micro-environment
(including the internal environment) and the macro-environment
• This chapter focuses on the marketing environment

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MARKETING ENVIRONMENT

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 2.2 THE IMPORTANCE OF THE MARKETING ENVIRONMENT

• Identify what you can and cannot control but still influences your organization
• The move from the product orientation to the societal and relationship marketing orientation has
made it much more important to consider these other areas that influence a business
• Therefor environmental scanning and an environmental analysis is essential.
• Marketing research must be done

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2.3 THE MICRO-ENVIRONMENT

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 2.3 MICRO-ENVIRONMENT

2.3.1 INTERNAL ENVIRONMENT

• Includes many important groups or departments which are integral to the success of marketing
management in their quest to satisfy customers through analysing and evaluating the marketing
environment (i.e. top management)
• SUPPLIERS
• Supply companies with the resources needed to produce goods and services
• Often treated as partners
• DISTRIBUTORS
• Deal with assisting the firm in the promotion, selling and distribution of final goods and services
to consumers and include:
• Retailers, physical distribution services, marketing services and financial services

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 2.3 MICRO-ENVIRONMENT

CUSTOMERS
• Customers are very important to the success of the company
• Customer markets can be separated into different types:
• Consumer market
• Business market (B2B)
• Reseller market
• Government market
• Global market

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 2.3 MICRO-ENVIRONMENT

COMPETITORS
• Analysing the competition will assist an organization in creating a sustainable competitive
advantage
• A lack of analysis could lead to other competitors taking the company’s share in the market or
producing better products which consumers need or want

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 2.4 MACRO-ENVIRONMENT
• The macro-environment is made up of the following:
• Demographic environment
• Social environment
• Economic environment
• Political and legal environment
• Natural environment
• Technological environment

• Keep in mind that the macro-environment is typically not manageable by the

organisation

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 2.4 MACRO-ENVIRONMENT
• DEMOGRAPHIC ENVIRONMENT
• Consisting of consumers who make up the market, this is an important environment to
understand for segmentation and targeting purposes
• The demographic environment is made up of different groups:
• Population (i.e. the age of the population in a country)
• Generational cohorts (i.e. Baby Boomers, Gen X etc.)
• Living Standards Measure (LSM) – to be replaced with Socio-Economic Measure (SEM)

http://www.eighty20.co.za/lsm-calculator/

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 2.4 MACRO-ENVIRONMENT
• SOCIAL ENVIRONMENT
• This involves attitudes and beliefs shared by the community that the business serves, even the
broad community comprising the whole country
• Society influences not only the products that are produced, but also the prices consumers are
willing to pay, the impact of the advertising message and the channels to be used
• The following factors influence ever-changing societal values:
• Impact of digital era on customer values
• Internet and culture

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 2.4 MACRO-ENVIRONMENT
• ECONOMIC ENVIRONMENT
• Consumption of goods and services requires purchasing power and people
• Every business will be affected by the components of the economic environment
• Marketers need to pay close attention to these trends and patterns of consumption across the
globe as these patterns impact on the purchase of goods and services in the business
• There are different factors influencing the economic environment, specifically buying power:
• Employment and income
• Interest rates
• Inflation

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 2.4 MACRO-ENVIRONMENT
• POLITICAL AND LEGAL ENVIRONMENT
• The political environment plays a crucial role in the delivery of services that assist businesses to
produce goods and services for their consumers within a particular country
• The laws adopted by a country can have major implications for a business’s operations and for
the marketing team – for example, the recent sugar tax in SA
• Businesses must also be aware of several laws that govern how they compete, how they interact
with the consumers, what rights consumers have and, lastly, that promote competition

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 2.4 MACRO-ENVIRONMENT
• TECHNOLOGICAL ENVIRONMENT
• Companies must be able to adapt to technological changes in their industry – especially new
inventions (both to production and marketing).
• If companies fail to analyse the technological environment, this can lead to their losing their
position in the market.
• Technological changes also give rise to opportunities, especially since they make so much data
available for analysing prospective customers. The digital environment has opened up many new
communication channels.
• For example: Facebook adverts are targeted to the type of user.

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 2.4 MACRO-ENVIRONMENT
• NATURAL ENVIRONMENT
• Companies want to be involved in developing better ways to produce products that do not cause
harm to the environment
• Marketers should be concerned with this as consumers attitudes towards the environment are
changing, for instance consumers are demanding environmentally friendly packaging

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 2.5 SWOT ANALYSIS
• A SWOT analysis is a tool used by organisations to identify their strengths, weaknesses,
opportunities and threats
• S & W are internal while O & T are external
• The SWOT analysis is used to list factors which are favourable and unfavourable for a
particular business or situation
• The SWOT analysis assists managers to make strategic decisions

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 2.5 SWOT ANALYSIS FOR NANDOS
Strengths Weaknesses
• Selling flame-grilled chicken which is • Low level of presence in small cities
affordable • Limited choice for vegetarians
• Popular brand and has established food • Limited options of chicken dishes
franchises international
• Specialises in chicken with a various flavours
• Advertisements that uses humour

Opportunities Threats
• Grow the selling of Nando’s products online. • Increase number of competition producing
• Diversify Nando’s offering to offer more flame grilled chicken
innovate products • Risk of bird flu
• Enter the hotel industry • Chicken being dumped from other countries
such as Brazil.

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 2.6 CONCLUSION

Write down a summary of the main aspects learned in this chapter:

• The marketing environment presents companies with both opportunities and threats
• Organisations need to understand and scan both the micro-environment and the macro-
environment to determine whether there are any changes that could influence them
directly

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