Module 2 moodle book – The context of marketing PDF

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11/26/2020

Module 2 moodle book – The context of marketing

Module 2 moodle book – The context of marketing

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Module 2 moodle book – The context of marketing

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USQStudyDesk

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Grace Addai

Course:

Introduction to Marketing

Date:

Thursday, 26 November 2020, 12:00 PM

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Module 2 moodle book – The context of marketing

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Module 2 moodle book – The context of marketing

Description This module book identifies the five major environments in the marketing organisation’s external operating environment, helps you understand important issues impacting marketing organisations, and discusses the purpose and importance of monitoring and managing the marketing organisation’s external environment.

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Table of contents The context of marketing Socio-cultural environment Economic environment Technological environment Competitive environment External environment facing global marketers Social and ethical issues Ethical business practice Corporate social responsibility Reference list

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Module 2 moodle book – The context of marketing

The context of marketing

Learning objectives On successful completion of this module, you should be able to: identify and explain the five major environments in the marketing organisation’s external operating environment understand and explain important issues impacting marketing organisations such as ethical business practice, sustainability and corporate social responsibility discuss the purpose and importance of monitoring and managing the marketing organisation’s external environment. Marketing organisations do not operate in isolation. Rather, the marketing organisation operates in a rapidly changing and dynamic business environment. Indeed, the environment can be both unpredictable and unstable. The marketing organisation’s external operating environment comprises sociocultural, economic, technological, political and legal, and competitive forces. Changes in the external environment present opportunities and threats to the marketing organisation. Because the marketing organisation’s environments are constantly changing, the marketing organisation needs to closely monitor or scan these environments, and then adapt its operations and marketing activities to address attractive opportunities and to minimise threats.

Marketing operates within a dynamic global environment. As the marketing landscape changes, managers need to think in innovative ways about their marketing objectives and practices. Today's companies wrestle with changing customer values and orientations, market maturity in many industries, environmental decline, increased global competition, and a growing need for social and sustainable marketing. https://usqstudydesk.usq.edu.au/m2/mod/book/tool/print/index.php?id=1611245

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Module 2 moodle book – The context of marketing

The following interactive diagram explains the five major forces in the marketing organisation's external environment. Please view this diagram and read the accompanying explanations.

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Socio-cultural environment Lamb et al. (2018) focus on four major socio-demographic groups, namely, baby boomers, Generation X, Millenials (Generation Y) and Generation Z. In particular, the different attitudes, value systems, and lifestyles of these four groups impact upon their needs and buying behaviour. A newly emerging segment is the ‘golden oldies’. These older people are moving into retirement with much better health and greater financial resources than their predecessors. They spend quite a lot of money on travel, eating out, health products and retirement properties. A number of interesting issues arising from changes in the sociocultural and demographic environments include: changing values and views of the world personalised economy component lifestyles the changing nature of families multiculturalism.

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Click to view larger chart (Source: McCarthy & Deloitte 2012)

 Changing generations of population Baby boomers

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The people who were born after the Second World War are categorised as baby boomers. Post World War II, the birth rates increased, and thus 7 million baby boomers were born in Australia and New Zealand. Those baby boomers were born between 1946 and 1964. The baby boomers have been targeted by marketers throughout years and thus, this generation has contributed much towards shaping marketing environment. By this date, a large number of boomers have either retired or they are close to retirement age. (Source: Armstrong, Kotler & Opsresnik 2018, p 101) Generation X The generation born after the baby boomers are called Generation X. The people in this generation were born somewhere between 1965 and 1976. There were 4 million births (Generation X) in Australia and New Zealand during that era. Although Gen X seek success, they are less materialistic than other groups, they prize experience, not acquisition. (Source: Armstrong, Kotler & Opsresnik 2018, p 102) Millennials The millennials (additionally called Generation Y)were born somewhere between 1977 and 2000and are the offspring of baby boomers. Their total population is 9.3 million including Australia and New Zealand. The millennials offer a huge market potential. The purchasing power of Millennials can be much higher compared to baby boomers. (Source: Armstrong, Kotler & Opsresnik 2018, p 103)

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(Source: Kotler & Armstrong 2014, p. 99)

Learning activity Which sociocultural group do you belong to? What impact does this have on your needs and buying behaviour?

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Economic environment Changes in the economic environment impact upon purchasing power and spending patterns. Changes in major economic variables such as income, inflation, cost of living have a large impact on the marketplace (Kotler et al. 2013). Other economic issues include the value of the local currency and its impact on the cost of imports and exports, unemployment levels, interest rates and the cost of credit, and income distribution. For example, In the last couple of decades, store brands and private labels have been gaining strength. Recent tighter economic times have created a store-brand boom (Armstrong, Kotler & Opsresnik 2018, p 253). Organisations watch these variables using economic forecasting, in order to anticipate and respond to changes in the economic environment.

Learning activity What impact would changes in the value of the Australian dollar have on the Australian tourism industry?

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(Source:www.australia.com/campaigns/nothinglikeaustralia/wallpapers/ )

 

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Technological environment Rapid changes in the technological environment create both opportunities and threats for the marketing organisation. On the one hand, advances in technology provide faster and more cost-effective means of production and distribution, as well as, the development of innovative and superior products. On the other hand, the cost of acquiring new technology and the expertise to use it can be daunting, especially for smaller organisations. Further, new products entering the market can render the marketing organisation’s current product offering obsolete. Indeed, entire industries have been crippled by the emergence of a new technology. For example, the traditional watch making industry was significantly affected by the emergence of digital technology, and the cinema (movie) industry was severely affected by the advent of television.

The Internet has presented many opportunities for marketing organisations including, access to global markets, a new media for presenting promotional messages and providing information to target markets, as well as providing an alternative channel of distribution. 

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(Source Kotler & Armstrong 2014) Marketing managers find it challenging to understand and capitialise on the complexity of the many and varied electronic media platforms and the explosion of data that they can access about their customers and suppliers. Even though the new technologies enable more information than ever before to be collected and subsequently analysed, they are just beginning to engage with this trend. Source: Lamb et al. 2016, p. 215

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Competitive environment Changes in the competitive environment may present a serious threat to the marketing organisation. An analysis of the competitive environment entails monitoring changes in the industry sector within which the marketing organisation operates, as well as both direct and indirect competitors. The Internet means that many organisations now compete in global rather than only within their domestic market.

Direct competitors compete for similar segments with similar products while indirect competitors compete for similar segments but with alternative products that still meet the same basic need. For example, the local indoor bowling alley competes directly with other indoor bowling alleys in the same geographic region. However as the basic need that the bowling alley is satisfying for many of its target markets is the need for entertainment, then indirect competitors may include cinemas, theatres, skating rinks etc.

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External environment facing global marketers

Lamb et al. (2018) focus on the five factors that impact on global marketing. These factors, are similar to the environmental factors that we have discussed previously when focusing on the domestic market, and include culture, economic and technological development, political structure, demographic makeup and natural resources. These are outlined below: Cultural considerations include societal values, attitudes and beliefs, language and customary business practices. A country’s economic and technological status depends on its stage of industrial development; traditional society, pre-industrial society, takeoff economy, industrialising society, or fully-industrialised society. The political environment consists of laws, government agencies and pressure groups that influence and limit various organisations and individuals in society. The demographic environment considers human populations in terms of size, density, location, age, sex, race, occupation and other statistics. The natural environment consists of natural resources that are needed as inputs by marketers and manufacturers or those which may be affected by marketing activities.

Managing change in the external operating environment Lamb et al. (2018) explain the importance of scanning and managing changes in the marketing organisation’s external operating environment. Kotler & Armstrong (2018) suggest there are 3 kinds of companies: those that make things happen, those that watch things happen, and those that wonder what's happened (p.114). Although many companies view the marketing environment as an uncontrollable element to which they must react and https://usqstudydesk.usq.edu.au/m2/mod/book/tool/print/index.php?id=1611245

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adapt, others take a proactive stance towards the marketing environment. Marketing management are not always able to control environmental forces. Companies would have little success in trying to influence geographic population shifts, major cultural values or the economic environment. However where possible, marketing managers should take a proactive, rather than a reactive approach to the marketing environment (Kotler & Armstrong 2018).

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Learning activity Marketing in action Cathay Pacific Airlines ... determined that many travellers were avoiding Hong Kong because of lengthy delays at immigration. Rather than assuming that this was a problem they could not solve, Cathay's senior staff asked the Hong Kong government how to avoid these immigration delays. After lengthy discussions, the airline agreed to make an annual grant-in-aid to the government to hire more immigration inspectors - but the reinforcements would primarily service the Cathay Pacific gates. The reduced waiting period increased customer value and thus strengthened Cathay's competitive advantage.

(Source: Kotler et al. 2013 p. 141)

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Social and ethical issues in marketing In this course, we encourage the adoption of an ethical, socially responsible approach to marketing. Ethics is defined as: the moral principles or values that generally govern the conduct of an individual or a group; the standard of behaviour by which conduct is judged. (Source: Lamb et al. 2018, p. 31)

Morals reflect cultural values and norms. Hence, what might be appropriate in one culture may not be acceptable in another. Obviously this has implications for organisations operating in international markets.

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Social and ethical issues Ethics and Corporate Social Responsibility Companies can have different impacts on society and environment. Most of those activities can be favourable to people and society, however, some actions can have a negative impact. Therefore, companies are under the moral obligation to adopt socially responsible actions. Consumers tend to have more preference towards products from socially responsible firms. They are even willing to pay a higher price for products from socially responsible companies. A company or a corporate house comprises of a number of people from different backgrounds working together and thus corporate social responsibility goes beyond individual ethics. Each employee must keep up a high moral and ethical principles, and perceive how their individual choice lead to ideal collective actions of the firm. The companies that maintain a solid ethical climate have a tendency to be more socially responsible. Corporate social responsibility and ethical business practices are two different entities but are strongly linked to each other. It is important that the employees should behave in an ethically responsible manner for the successful implementation of socially responsible programs of the company. However, sometimes despite the ethical behaviour of employees a firm may not be considered socially responsible because the firm’s actions do not have a considerable effect on anyone other than its stakeholders, employees, and stockholders. (Source: Grewal et al. 2018, p.71)

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Ethical business practice Lamb et al. (2018) discuss a range of factors that influence ethical business decision making including: the extent of ethical problems within the organisation (organisational culture) top management’s attitudes towards ethical practice the potential severity of the consequences of unethical behaviour social consensus the likelihood of a harmful outcome as a result of the behaviour the time lag between the unethical behaviour and its consequences the number of people affected by the behaviour. Many organisations or associations develop a code of ethics that provides guidelines for decision making for employees and members. According to Lamb et al. (2016, p.34) creating ethics guidelines has several advantages: it helps employees identify what the organisation recognises as acceptable business practices it acts as an effective internal control on behaviour it helps employees to avoid confusion when determining whether decisions are ethical it facilitates discussion among employees about what is right and wrong and therefore creates better decisions. Example of code of ethics

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(Source: Lamb et al. 2016, p. 34) 

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Corporate social responsibility Lamb et al. (2018) define corporate social responsibility as: 'an organisation's concern for society's welfare'. They identify four corporate social responsibilities including: to pursue financial goals (economic responsibility) to obey the law (legal responsibility) to do what is right, just and fair (ethical responsibility) to be a good corporate citizen (philanthropic responsibility).

Managing change in the external operating environment Lamb et al. (2018) explain the importance of scanning and managing changes in the marketing organisation’s external operating environment. Although many companies view the marketing environment as an uncontrollable element to which they must react and adapt, others take a proactive stance towards the marketing environment. Rather than simply watching and reacting, these firms take aggressive actions to ...