L3 Marketing management

The market environment

Includes all internal and external factors that surrounds them and directly or indirectly affect the organization's marketing activity decisions the business externally.

Factors in the market environment:

- Social factors

- Economic factors

- Technology and innovation

- Political and legal factors

- Competitive factors

- External environment

Enviromental scanning

Used to collect and evaluate environmental information to identify competitors, market opportunities and threats and helps organizations understand the customer's (/most valuable) and their needs in a changing environment and needs.

Social factors

Most difficult, unpredictable external variables to forecast, influence or integrate into marketing and affect consumer behavior and marketing landscape

Why does marketers need tp do environment scanning?

Must constantly do environment scanning to keep up with these and understand these evolving dynamics and adapt strategy accordingly. Failing to do so misaligned marketing effort with customer needs and preferences, reducing effectiveness.

Hofstede's Cultural Dimensions

power distance, individualism, masculinity, uncertainty avoidance, long-term orientation, Motivation towards achievement and success

Power distance

a value orientation that refers to the extent to which less powerful members of institutions and organizations within a culture expect and accept an unequal distribution of power.

- Hierarchy within a society,

Individualism/Collectivism

Whether a culture prioritizes individual needs (me, myself, I) or group needs (us, group, society). Individualistic focuses on individual decisions while collectivistic focus on group decisions.

Motivation towards achievement and success

what motivates people, wanting to be the best or liking what you do

uncertainty avoidance

the degree to which societies are willing to tolerate uncertainty and risk: how people deal with future and rules, making decisions to reduce uncertainty

long term orientation vs short term orientation

Where cultures favor a dynamic, future-oriented mentality, long term, over traditions and values, which are short term.

Indulgence

Values satisfaction of human needs and desires. Restrained society sees value inn withholding pleasures to align with societal norms.

Social factors affect:

- The products people buy: Due to social values, cultural norms, lifestyle trends e.g. environmental awareness, demographic factors (aging population wanting phones for calling) or tiktok.

- The price paid: Affected by social status, culture, economic conditions.

- The effectiveness of specific promotion: Marketing messages and promotional campaigns must resonate with social values + beliefs of target audience for effectiveness, insensitive.

- How, where and when people expect to purchase products: Change shopping behavior e.g. more online instead because of social media.

Types of social factors:

- Demographic factors

- Social media

- Pop (popular) culture

- Diversity, Equity, Inclusion

Demographic factors

o Demographics: The study of people's vital statistics (e.g. income, employment, what you spend on)

o Different generational cohorts: (E.g. tweens, millennials, Gen Z, Baby Boomers) have distinct experiences and behaviors that marketers need to address,

o Changing family structures: (Boomerang) e.g. kids move out, marry, have family and come back - multigenerational household

o Geographic shifts in the population: Rural/urban - move from rural to urban areas -> create new market concentrations.

o A better educated and more professional (white collar) population: Change from blue collar (industry) to white collar (better educated) affect demand.

Social media

Changed how info is obtained and how consumers interact, share beliefs, ideas, values and interest e.g IoT and online reviews. Firms use to engage customers in products/services and humanize brands.

Pop (popular) culture

Includes products and forms of expression that are used, accepted, approved in particular society elg. Music, art, literature, movies, sports and fashion e.g. TikTok.

Diversity, Equity, Inclusion:

Diversity is recognizing the presence of difference, equity is ensuring access to the same opportunities, and inclusion is about welcoming and valuing all people.

Diversity, Equity, Inclusion 2

o Diversity: Surround people' race, religion, gender, ethnicity, nationality, socioeconomic status, age and abilities.

o Equity: Fairness in procedures and resource distribution.

o Inclusion: People have diverse backgrounds and everyone can participate.

o E.g. different barbies that kids can connect to, who we employ

So what does this mean for marketing?

- Increase in number and range

o Products for the elderly, because when eyes don´t work well you want phone that can call, deal with another generational group that needs different things. Change in behavior and needs of products due to different abilities as they get older.

o Services targeting this group

Economic factors: Affects consumers purchasing power and spending:

- Consumer's income: Low then spend less.

- Purchasing power: Decrease due to inflation, income, recession.

- Inflation: Can decrease purchasing power if income do not rise with the prices.

- Recession: Economic struggles impacting spending.

- Macroeconomic context for marketing decisions (GDP, PPP, inflation rate, unemployment rate, population below the poverty line).

Technology and innovation: Technological success is based upon innovation. Innovation affects marketing through:

- New technologies, products and services e.g Smart TVs

- Social media (Youtube, Facebook Instagram)

- The use of drones, AI and VR

Organizations go through 4 stages when faced with new technology:

- Stage 1: signals amidst the noise

- Stage 2: change takes holds

- Stage 3: The inevitable transformation

- Stage 4: adapting to the new normal

Research types:

- Basic research: Pure research Aims to confirm existing theories or to learn more about a concept or phenomenon.

- Applied research: Attempts to develop new and improved products.

Political and legal factors

- Business needs government regulation to protect innovators of new technology, the interests of society and consumers

- While Government needs business to generate taxes

- What u can/can't say or do are because of rules and laws.

- E.g. Konsumentverket, allmänna reklamationsnämnden, universitetskanslersämbetet

Consumer privacy

- Info companies collect from e.g. cookies, apps, to know about you e.g ICA card. Use algorithms to predict what you are interested in.

o Do we want them to know.

o They know everything about you

Competitive factors:

- Selling similar products to similar consumers e.g. Hemköp and ICA.

- Differentiation can be the key to gaining competitive advantage

- Market share and profits

o Firms must work harder to maintain their profits

Global competition

Firms face this as more foreign firms enter markets, competing on factors like product quality.

- More foreign firms are entering markets around the world

- Foreign firms in the U.S now compete on product quality

Environmentalism

- How organizations think and act relating to the physical environment

- Creating new product opportunities but also new ways of doing things e.g packaging