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MM > External Marketing Environment (3) > Flashcards

External Marketing Environment (3) Flashcards

1
Q

The external marketing environment has a large impact on an organisation and?

A

plays a vital role in the strategic marketing planning process.

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2
Q

‘The Market Environment has a strong influence on?

A

the success or failure of a business

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3
Q

The main task of marketing management in this environment is to?

A

identify the opportunities that arise, and to evaluate and eliminate any threats, so as to maintain a sustainable competitive advantage.

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4
Q

Management should be aware of the following consumer characteristics?

A
  • Their purchasing power is determined by the variables in the macroeconomic environment.
  • Their purchasing behaviour is influenced by cultural values.
  • Disposable income
  • Demographic factors
  • Their purchasing power is determined by the variables in the macroeconomic environment.
  • Their purchasing behaviour is influenced by cultural values.
  • Disposable income (and not gross earnings) enables them to purchase consumer products and services. Personal disposable income is that portion of personal income that remains after deducting direct tax and credit commitments to banks, shops and other institutions.
  • Demographic factors such as language, age, gender distribution, marital status, family size and literacy influence the consumption patterns of the consumer market.
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5
Q

An organisation takes inputs from suppliers and?

A

converts them into outputs (products and services) which are then marketed and sold to customers.

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6
Q

Define Intermediaries?

A

Intermediaries are the role players that connect the manufacturers with the consumers. Examples of intermediaries include wholesalers, retailers, commercial agents, brokers, banks and insurers

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7
Q

Explain competetors?

A

Organisations that sell the same or similar goods or services are competitors. They compete for the attention and money of the same target customers, and they compete for resources. An organisation’s competitors influence the amount and the price of that organisation’s products.

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8
Q

Which tool is a helpful tool to assess the intensity of competition in their industry,

A

Michael Porter’s five forces model

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9
Q

Porter’s five forces model is a helpful tool, explain it?

A
  1. Barriers to entry:
  2. Power of buyers:
  3. Power of suppliers:
  4. Threat of substitutes:
  5. Competitive rivalry:
  6. Barriers to entry:
    - Entry ease/barriers
    - Geographical factors
    - Incumbent resistance
    - Routes to market
    - New entrant strategy
  7. Power of buyers:
    - Buyer choices
    - Buyer size/number
    - Change cost/frequency
    - Product/service importance
    - Volumes, JIT scheduling
  8. Power of suppliers:
    - Brand reputation
    - Geographical coverage
    - Product/service level quality
    - Relationships with customers
    - Bidding processes
  9. Threat of substitutes:
    - Alternative prices/quality
    - Market distribution changes
    - Fashion and trends
    - Legislative effects
  10. Competitive rivalry:
    - Number and size of firms
    - Industry size and trends
    - Fixed variable cost bases
    - Product/service ranges
    - Differentiation and strategy
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10
Q

Explain The threat of new entrants?

A

*The easier it is for new entrants to access a market, the more competitive that market will be.
*New entrants into a market can expect the following barriers:
- Existing players in the market can use economies of scale to their advantage. For example, the new entrant might not be able to buy the quantities that qualify for bulk-buying benefits.
- New entrants may find it difficult to raise the required capital/investment.
- Customers might be unwilling to undergo the switching costs involved in using the new entrant’s products.

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11
Q

Explain the threat of substitutes?

A

If a product can be substituted easily, the market becomes more competitive and the new product threatens existing players, particularly if it can be made at a lower cost than the old product.

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12
Q

Explain The bargaining power of suppliers?

A

Suppliers with greater bargaining power have a greater influence on competition in the marketplace.

When there are few suppliers in an industry, a monopoly emerges, but when there are many different suppliers, the market is a competitive environment.

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13
Q

The five forces model is a useful tool for competitive analysis and is helpful in conducting a SWOT analysis. However, the following limitations of the model should be noted?

A

*It does not consider:
- the importance of existing organisational strengths.
- interdependencies within the portfolio
- the possibility that certain companies in an industry could make that industry appear more attractive.
- flexible, dynamic or emergent approaches to strategy formulation.
- the possibility of creating new markets rather than selecting from existing ones.

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14
Q

What are the stages in the industry life cycle?

A
  • Fragmentation
  • Shake-out
  • Maturity
  • Decline
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15
Q

Define the Fragmentation stage?

A
  • The first stage in the industry life cycle is the fragmentation stage.
  • Fragmentation occurs when a new industry is developed and normally arises when an entrepreneur overcomes the problems of innovation and invention, and works out how to bring the new products or services into the market.
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16
Q

Explain Shake-out?

A

Is the second stage in the industry life cycle is the shake-out stage; it occurs when a new industry emerges.
This stage enables competitors to recognise business opportunities in the emerging industry.

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17
Q

Explain Maturity?

A

The third stage of the industry life cycle is the maturity stage; it occurs ‘when the efficiencies of the dominant business model give some organisations competitive advantage over their competition. Competition in the industry is rather aggressive because there are many competitors and product substitutes

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18
Q

Explain ‘Decline in the life cycle’?

A

The final stage in the industry life cycle is the decline stage.
- decline is a stage during which war of slow destruction between businesses may develop and those with heavy bureaucracies may fail’. In addition, the ‘demand in the market may be fully satisfied or supplies may be running out’

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19
Q

What is an industry life-cycle analysis?

A
  • Is charted according to the growth of its sales.
  • The fragmentation phase generally sees slow sales, while the shake-out phase sees these sales start to grow.
  • The maturity phase sees sales levelling out before they eventually decline (Inc, n.d.). Companies must be able to analyse the industry life cycle if they are to survive and remain competitive in an industry.
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20
Q

In Kotler’s description of the industry life cycle, at which stage of the life cycle do competitors recognise a business opportunity in the emerging industry?

A

Shake-out

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21
Q

Which of the following is a useful tool for managers to use when a business is assessing the intensity of competition in their industry?

A

Michael Porter’s five forces model

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22
Q

Give 1 example that is considered a limitation of Porter’s five forces model?

A

It does not consider the number and size of businesses in the market

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23
Q

Which of the following describes the role players in the market environment?

A

The role players that the business has little to no control over

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24
Q

The macro-environment involves all the external influences that have a bearing on the business but?

A

do not fall under its direct sphere of influence.

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25
Q

The political environment is complex and difficult to?

A

control or predict.

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26
Q

The economic environment is instrumental to changes in the macro-environment. The economic factors that affect consumer behaviour and the demand for goods and services?

A
  • The inflation rate
  • The business cycle
  • The interest rate
  • The inflation rate: This is the rate at which prices rise. The higher the inflation rate, the more uncertainty there will be in the market and the more difficult it is to adapt to changing prices.
  • The business cycle: This is the pattern of expansion and contraction of economic activities around a long-term growth tendency.
  • The interest rate: This directly influences the cost of credit. A high-interest rate will normally lead to risk aversion and a slowdown in the economy
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27
Q

What components does the social environment consist of?

A
  • Distribution of income
  • Consumerism
  • Employees’ interests
  • Different languages
  • Level of education
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28
Q

Explain training in a marketing environment?

A

Developments in electronic communication, as manifested by the Internet, have changed the face of business. This has created new business opportunities or capabilities, such as e-commerce, e-trading, e-marketing, e-supply and others.

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29
Q

Explain ‘Labour-saving machinery, equipment and products’ benefits?

A

New and improved products, which satisfy specific needs, have been made available to the consumer, thanks to technological innovation.

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30
Q

Increased productivity is probably the most outstanding result of advanced technology, explain why?

A

Increased productivity increases the turnover of the organisation’s products and services. It creates more intense competition and may increase employment opportunities.

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31
Q

The international environment is?

A

profit-oriented and acts across national borders.

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32
Q

The ecological environment involves a nation’s natural resources, and concerns the availability, conservation, improvement and utilisation of these limited resources.

A
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33
Q

Explain The legislative environment?

A

In a mixed economy you would expect to find some legislation that regulates the economic activities of its citizens. Two such pieces of legislation in South Africa are the Consumer Protection Act 68 of 2008 and the Competition Act 89 of 1998.

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34
Q

The Consumer Protection Act aims to promote?

A
  • The right to equality in the consumer market and protection against discriminatory marketing practices
  • The right to privacy
  • The right to choose
  • The right to disclosure of information
  • The right to fair and responsible marketing
  • The right to fair and honest dealings
  • The right to fair, just and reasonable terms and conditions
  • The right to fair value, good quality and safety
  • The right to accountability from suppliers
35
Q

Corporate citizenship refers to?

A

the social responsibility and ethics displayed by a company.

36
Q

Corporate social responsibility (CSR) is an organisation’s?

A

commitment to pursue long-term goals that are good for society. This commitment is not a legal requirement or linked to the profit motive.

37
Q

Corporate social responsibility (CSR) can be subdivided into the following responsibilities?

A
  • Economic responsibilities
  • Legal responsibilities
  • Ethical responsibilities
  • Philanthropic (charitable) responsibilities
  • Economic responsibilities: A business must be profit-oriented and should aim to produce goods and services that satisfy consumer needs and wants, and should sell these products at fair prices that represent their true value. The business must work to make a profit so it can sustain itself.
  • Legal responsibilities: Businesses must operate under specific rules and laws. Legal responsibilities embody basic notions of fairness, and the business has a responsibility toward society to obey these laws.
  • Ethical responsibilities: Ethical responsibilities are not codified into law but they are the norms, standards and behaviours expected by society at large. These expectations reflect the values of consumers, employees, shareholders, and the community.
  • Philanthropic (charitable) responsibilities: Philanthropic activities are voluntary efforts based on the business’s desire to engage in social upliftment projects. These are not required by law, and are not necessarily ethical expectations (Schwartz, 2009).
38
Q

The following objectives are a starting point for an organisation looking to set out where it wants to go. These must all be pursued together because neglecting any of these can cause the organisation to fail in the long run?

A
  • Engage in activities that benefit society. A business needs the approval of consumers in order to succeed, so its activities need to be aligned with the good of its consumers.
  • Develop an organisation to carry the business and implement its strategies.
  • Earn enough profit to survive.
39
Q

The following process can be followed to ensure responsible and ethical business decisions?

A
  • Determine the aim of the decision and evaluate its fairness and impartiality.
  • Establish the motive of the decision.
  • Undertake research on the background, history and details of the matter for the required decision.
  • Determine the means which should be applied to achieve the goals and judge its ethical application.
  • Draw up a list of the possible consequences of the decision.
  • Determine the influence on the physical environment.
40
Q

The code of ethics will typically be a list of statements to guide the decision-making of management and employees in an organisation. The aim of such a code will be to?

A
  • discourage management and employees from acting unethically;
  • prevent the authorities (the state) from having to intervene by passing laws, ordinances or regulations;
  • communicate the intentions of the enterprise to all concerned.
41
Q

The following principles should be considered when drawing up an ethical code for the organisation?

A
  • Abide by the golden rule as discussed above.
  • Involve people of different religions in the drawing up of the code.
  • The code must guarantee confidentiality and give a clear indication as to how disclosure (whistle- blowing) should be implemented.
  • The code must promote equal opportunities and indicate the steps to be taken with regard to discrimination on the basis of race, colour, religion, gender and similar issues.
    The code must explain the policy to be followed in respect of the development of personnel.
    Commitment to the environment and sustainable business practices must be specified.
    There must be a clear stance on how environmental problems will be dealt with.
42
Q

Drafting a code of ethics is only the first step in?

A

ensuring ethical behaviour.

43
Q

The process outlined below will go a long way in helping a company to become an ethical example in their industry?

A

Step 1: Create a code of ethics
Step 2: Communicate the code of ethics
Step 3: Hire ethical people
Step 4: Give ethics training
Step 5: Be an example
Step 6: Involve your employees in the development of your ethical code

44
Q

What is the aim of a code of ethics?

A

To discourage management and employees from acting unethically

45
Q

The CSR pyramid features?

A
  • philanthropic,
  • ethical,
  • economic responsibilities
  • legal responsibilities
46
Q

When dealing with an ethical dilemma, a manager must always adhere to the golden rule. What does the golden rule state?

A

Treat other people the way that you want to be treated

47
Q

A business must analyse their competitors?

A

strengths, weaknesses, strategies and vulnerabilities

48
Q
A
  • Stage 1: Identify current competitors:
  • Stage 2: Identify potential competitors:
  • Stage 3: Understand the competitors
  • Stage 4: Identify competitor strengths and weaknesses
  • Stage 5: Obtain specific information about competitors
  • Stage 1: Identify current competitors:
    Look at your competitors from a consumer perspective.
    Place competitors into strategic groups on the basis of their competitive strategies.
    Design questions to help with the competitor analysis.
  • Stage 2: Identify potential competitors:
    Include potential competitors in your analysis.
    Identify their entry strategies.

Stage 3: Understand the competitors: A competitor’s strengths and weaknesses may reveal opportunities for your business.
Highlight problem areas and monitor them.
Describe your competitors against the following criteria:
- Size, growth and profitability
- Image and positioning strategy
- Competitors’ goals, objectives and commitment
- Current and past strategies of competitors
- Competitors’ organisation and culture
- Cost structure
- Exit barriers

  • Stage 4: Identify competitor strengths and weaknesses

Identify the relevant assets and competencies of your competitors.
Determine why the competitor is successful or unsuccessful.
Identify their key customer motivations.
Identify their large cost components.
Identify any industry mobility barriers.
Identify which elements of the value chain can create a competitive advantage.

  • Stage 5: Obtain specific information about competitors:
    Competitors should be researched.
  • Determine which organisations are the key competitors.
  • Ask different questions that are information-oriented.
  • Consult the published information on your competitors, including industry studies, trade associations, trade publications, business documents, government sources and universities.
49
Q

What do intermediaries in the market environment and trade fulfil?

A

Intermediaries fill the gap that exists between consumers and producers

50
Q

Explain Specific market analysis?

A
  • The market analysis is based on the following stakeholders: consumers, competitors, intermediaries and suppliers.
  • The analysis aims to determine the attractiveness of the markets and to examine market dynamics.
51
Q

The following must be considered when structuring the market analysis?

A
  • Market size and growth
  • Profitability
  • Cost structures
  • Distribution systems
  • Market trends
  • Key success factors
52
Q

Internal marketing is imperative for the successful implementation of a marketing strategy and for?

A

sustaining market advantage

53
Q

The benefits of internal marketing include the following?

A
  • The commitment of employees to the marketing strategy is obtained
  • Employees become customer-conscious
  • It leads to the integration of the organisational functions and avoids departmental isolation
  • Inter-functional conflict is overcome and inter-functional friction is reduced
  • Letter internal communication is achieved
  • It can be used as a general tool to implement other organisational strategies
54
Q

Internal stakeholders are all those who have invested resources in the business; these include the following:

A
  • Shareholders: Owners of the business
  • Management: Leaders and managers at all levels
  • Staff: Not only marketing but all permanent as well as casual staff
55
Q

Marketing objectives should be set with these considerations in mind?

A
  • They should keep the customer in mind
  • They should consider how the activity adds value
  • They should be in line with the company’s objectives
  • They should be formulated by all marketing staff
  • They should be understandable and focused
  • They should match the resources available
  • They should be committed to the entire company and other internal stakeholders
56
Q

A sustainable competitive advantage (SCA) is the key to achieving profitability, based on?

A
  • Outperforming the direct competitors in the marketplace.
57
Q

Marketing objectives are the driving force behind the way a business?

A
  • approaches the market and
  • how it achieves its goals.
58
Q

Marketing objectives should be set within the?

A

the framework of larger company objectives.

59
Q

When focusing on a target market the developer of a marketing strategy needs to consider factors related to?

A
  • market segmentation and
  • product positioning
60
Q

A ‘market’ refers to a?

A

Large group of people (or organisations) who need a particular product and are willing and able to spend money to obtain the product

61
Q

What are the different types of markets?

A
  • The consumer market
  • The industrial market
  • The government market

-The consumer market: People who buy products for their own consumption
- The industrial market: People, groups or organisations who buy materials and products for the production process or to resell to consumers
- The government market: State institutions and departments that buy products in order to provide the public with various services

62
Q

The total marketing approach to marketing management assumes that consumers all have the same?

A

needs

63
Q

The following process can be followed to ensure responsible and ethical business decisions?

A
  • Determine the aim of the decision and evaluate its fairness and impartiality.
  • Establish the motive of the decision.
  • Undertake research on the background, history and details of the matter for the required decision.
  • Determine the means which should be applied to achieve the goals and judge its ethical application.
64
Q

Drawing up a code of ethics, the aim of such a code will be to?

A

discourage management and employees from acting unethically;
prevent the authorities (the state) from having to intervene by passing laws, ordinances or regulations; and
communicate the intentions of the enterprise to all concerned.

65
Q

The following principles should be considered when drawing up an ethical code for the organisation?

A
  • Abide by the golden rule as discussed above.
  • Involve people of different religions in the drawing up of the code.
  • The code must guarantee confidentiality and give a clear indication as to how disclosure (whistle- blowing) should be implemented.
  • The code must promote equal opportunities and indicate the steps to be taken with regard to discrimination on the basis of race, colour, religion, gender and similar issues.
65
Q

The following principles should be considered when drawing up an ethical code for the organisation?

A
  • Abide by the golden rule as discussed above.
  • Involve people of different religions in the drawing up of the code.
  • The code must guarantee confidentiality and give a clear indication as to how disclosure (whistle- blowing) should be implemented.
  • The code must promote equal opportunities and indicate the steps to be taken with regard to discrimination on the basis of race, colour, religion, gender and similar issues.
66
Q

Explain Integrity?

A
  • Be honest, trustworthy, truthful, consistent and open.
  • Act according to the highest ethical standards.
  • We communicate openly, directly and ethically.
67
Q

Explain Respect?

A
  • Treat others as you would have them treat you.
  • Use diversity as strength.
  • Listen to others and treat people with dignity.
  • Provide individuals with fertile ground in which to grow.
  • Treat everyone in the organisation as important.
  • We foster individual strength to build the whole.
68
Q

Explain Accountability?

A
  • Be prepared to make commitments and be judged against your commitments.
  • Deliver on commitments.
  • We take responsibility for our actions.
69
Q

Explain Pushing beyond boundaries?

A
  • Play to the maximum of your abilities across boundaries. - We always strive to break new ground, fuelled by our passion and commitment.
70
Q

Explain Pushing beyond boundaries?

A
  • Play to the maximum of your abilities – as individuals, as teams and as an organisation – across boundaries.
  • We always strive to break new ground, fuelled by our passion and commitment.
71
Q

Explain Being people-centred?

A
  • Invest in people.
  • Create empowering environments through development, support, mentoring, coaching, recognition and reward.
  • People are the source of our strength.
72
Q

When dealing with an ethical dilemma, a manager must always adhere to the golden rule. What does the golden rule state?

A

Always maximise profit, even if it costs people jobs
Treat other people the way that you want to be treated

73
Q

How many components are there in the CSR pyramid?

A

Four

74
Q

A company with good corporate citizenship behaves in a way that is socially responsible and?

A

ethical

75
Q

What does the term CSR refer to?

A

Corporate social responsibility

76
Q

Which of the following describes a code of ethics in a business?

A

A list of statements to guide the decision-making of
management and employees

77
Q

What does SCA stand for?

A

Sustainable competitive advantage

78
Q

What does SCA stand for?

A

Sustainable competitive advantage

79
Q

What is ‘The inflation rate’?

A

This is the rate at which prices rise. The higher the inflation rate, the more uncertainty there will be in the market and the more difficult it is to adapt to changing prices.

80
Q

What is meant by ‘The business cycle’?

A

This is the pattern of expansion and contraction of economic activities around a long-term growth tendency.

81
Q

What is meant by ‘The interest rate?’

A

This directly influences the cost of credit. A high-interest rate will normally lead to risk aversion and a slowdown in the economy

82
Q

The bargaining power of suppliers depends on several factors?

A
  • If there are many buyers and only a few dominant suppliers, the suppliers will have a stronger bargaining position.
  • If there is a high concentration of suppliers, they will have less bargaining power.
  • If the supplier has a strong brand, this gives them a strong bargaining position.
  • If there are increases in the cost of raw materials and labour, suppliers may have to raise their prices
83
Q

It is important for marketing managers to consider the following with regard to the threat of substitutes?

A
  • Is the substitute product of the same quality, or is it superior/inferior?
  • How willing will buyers be to purchase the substitute product?
  • How does the substitute product compare with regard to price and performance?
  • Is there a cost in changing to the new product?
  • Is it easy to replace the old product with the new one?

MM (10 decks)

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