Marketing Environment
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marketing environment
For a market of your choice, outline the important macro- and micro-environmental factors that would need to be considered by marketers in trying to satisfy the needs and wants of consumers in that market, and explain why a clear understanding of the environment within which it operates is important for an organisation.
The marketing environmental analysis means using a set of academic models and knowledges to evaluate the components might be affecting the organization. It is very important for the success of a company. The marketing environment change is important for marketers to decide their marketing strategy. Market-oriented companies may through examining marketing environment to provide products and services to customers and operate effectively.
Marketing Environment is the external element which affects the marketing strategy of organisation. as chart 2 shows, marketing environment would have influence on strategic decision.
Chart 2 Strategic marketing fit
The marketing environment can be classified into two levels micro-environment and macro-environment.
The macro-environment consists of a number of broader forces that affect not only the company, but also the other actors on the micro-environment. Macro-environment can be analysed by STEP model, which consists of social, technological, economic and political/legal.
The micro-environment consists of the actors in the firms immediate environment or business system that affects its capabilities to operate effectively in its chosen market. The key actors are suppliers, distributors, customers and competitors, which related with Porters 5 forces.
The automobile market will be the sample selected to evaluate the micro-environment factors using Porters 5 forces framework and micro-environment by using STEP model.
According to Porter, there are five forces influencing the market in micro-environment: the threat of new entrants, the threat of substitute, the bargaining power of suppliers, the bargaining power of buyers and the rivalry among existing competitors.
New entrants to an industry bring new capacity and they push prices downward. However, the threat of new entrants in automobile market is relatively low because the existing players have already achieved significant economies of scale. It results in the difficulty for potential new entrants to be competitive. In addition, another reason for difficult to entry this market is the capital requirement. It needs huge amount capital to support the operation (financing R&D, advertising, inventories.)
A second force influencing the marketing microenvironment is the threat of substitute products. The availability of substitute products places limits on the prices market leaders can charge in an industry; higher prices may induce buyers to switch to the substitute. Currently, there are not significant substitute can instead an automobile as a common transport tool. LOW.
If suppliers have enough leverage over industry firms, they can raise prices high enough to significantly influence the profitability of the industry. The bargaining power of suppliers in automobile industry in not very high, even though the carmakers need a lot of parts such as tires, components etc., but there are a lot of suppliers in the industry, and most of the suppliers are rely on one carmaker to survival.
The buyers in the automotive market have the considerable bargaining power due to there are a lot of alternatives when they purchase a car. However, it depend the geographic factors. Different country may have the different policy to influence the buyers power.
Rivalry among firms refers to all the actions taken by firms in the industry to improve their position and gain advantage over each other. In the automobile industry, there are a lot of carmakers such as GM, TOYOTA, and HONDA. Consequently, the competition is very high.
STEP is often used to describe the macro-environmental, which includes social, technological, economic and political forces.
Social: Environment, car culture, fashion and taste, redundancies (too many).
Technological: E-commerce, safety, plant efficiency, gizmo.
Economic: Excess capacity, Economies of scale, Diversification, Mergers and strategic alliance.
Political: Legislation: environment, company cars, competition. Taxes and Duty. Subsidies. (Unleaded petrol price)
Conclusion: the importance of environmental analysis when considering the more overtly strategic role of marketing (especially the role of marketing as philosophy of business, as embodied in a marketing orientation)
Both these micro- and micro-environmental forces are able to affect significantly the marketing decisions.
Branding
Branding has often been described as the process by which an organisations product offer is differentiated from those of its competitors. Using appropriate examples, explain how might such differentiation be created and outline the advantages of so doing.
Students could begin by defining a brand, emphasising, in line with the question, that branding is the process by which companies distinguish their product offerings from the competition.
The importance of differentiation could then be discussed in terms of giving consumers some point of difference in relation to the evaluative criteria used by consumers in choosing between one brand and another. Different types of differentiation could then be outlined, using appropriate illustrative examples. These different avenues for differentiation could include: product aspects (e.g. specific features, performance, style & design etc.); service aspects (speed, installation etc.); personnel, image etc.
Students could then move on to discuss the importance and ubiquity of branding in todays marketing landscape – emphasising that if an individual organisation does not implement effective branding strategies, then it will be at a competitive disadvantage in relation to those competitors that do.
Students could conclude with some discussion the advantages of branding, such as: enhancement of company value through brand assets; positive effects on consumer preference/loyalty;