lecture 2 - external environment and competitive environment Flashcards
what is the marketing environment?
“The marketing environment is composed of the forces and actors (or companies) that affect a company’s ability to operate effectively in providing products and services to its customers” (Fahy and Jobber, 2012, p.32)
who has direct influence in the marketing environment?
the company
Who has some influence and who does this include?
the micro-level environment
- suppliers
- customers
- distributors
- competitors
who influences the company but the company has little or no influence?
the macro-level environment
-economic
-social/cultural
-technological
-ecological/physical
-political/legal
what are the two theories for studying the environment?
resource-based view
industry-based view
what are the key aspects of the resourced based view?
- company performance is yielded through firms leveraging their resources and capabilities
- performance can be measured in various ways (e.g. sustainable competitive advantages, profitability, sales etc)
- businesses with a stronger resource base are more likely to out-perform those with fewer/weaker assets
- the external market can affect the extent to which firms’ resources and capabilities improve their performance
what are the key aspects of the industry-based view?
- business performance is driven and influenced by forces outside of organisational boundaries (i.e., the macro-level environment)
- does not consider inside-the-firm matters (e.g. management teams leveraging their resources and capabilities)
- one key theoretical representation is the Porter’s Five Forces framework
what are the conditions that indicate that a buyer group is powerful?
-the buyer group is concentrated or purchases large volumes relative to the seller’s sales
- products purchased from the industry are standard or undifferentiated - alternative suppliers are easy to find, and competitors are played against each other
- few switching costs exist (little penalty for moving to another supplier)
- buyers pose a significant threat of backward integration - buyers demand concessions, and may engage in tapered integration (producing some components in-house and purchasing the rest from outside suppliers)
- the industry’s product is not important to the quality of the buyer’s products or services
- the buyer has full information (their knowledge of demand, market prices and supplier costs provide them with leverage)
what are porter’s five forces which maintain rivalry among existing competitors?
- threat of new entrants
- bargaining power of buyers
- threat of substitute products or services
- bargaining power of suppliers
what does PESTLE analysis stand for?
Political
Economic
Socio-cultural
Technological
Legal
Ecological
what are the political and legal factors?
1.Government corruption
2.state ownership
3. left versus right-wing states
4. legislation and regulations
what are the economic factors?
- supply and demand forces
- taxation
- inflation
- exchange rates
- trade regulations
what are the socio-cultural factors?
- income
- demographics
- safety and security
- cultural differences
what are technological factors?
- radical and incremental innovations
- people’s changing behaviours
- social media
- globalisation
what are ecological factors?
- corporate social responsibility
- green marketing
- ethical marketing
- consumer preferences
