Scanning the EU environmnetformarketing purpose

Purpose of scanning the environment

• to detect facts (data and information) that can beuse in everyday marketing decisions and operations, marketing plans and marketing strategies;

• to find and collect facts that can be used in somespecific analyses for concrete marketing purposes;

• (IMPORTANT!!! – I T IS NONSENCE TO PROVIDE GENERAL ANALYSES – to collect data and information that do not lead to the solution ofproblem, that do not provide rich and meaningful and contextual information – analyses must SPECIFIC

• FACTS can be: trends, threats, risks, barriers, opportunities, driving forces and just facts

What are the differences?(example – Confectionary market in Poland)

Marketing, environment and its constituents

company

microenvironment

EU macroenvironment

Global macroenvironment

LAYERS OF ENVIRONMENT:

Not only ONE market but the influence and

impact of other markets, EU as whole and forces

from the globe!!!

If analyzing one country in the EU, it is

necessary to know not only the situation in that

country, but how thissituation is and will be

influenced by whathappens and will

happen in the EU and in the world

=MULTILAYERS OF ENVIRONMENTS

macroenvironment

• The macroenvironment consists of a number of broad forces that affect not only the company but also the other actors in the microenvironment.

ANALYSES - forces:

• STEEPLE – Social, Technological, Economic, Ethical, Political, Legal, and Environmental

• PESTLIED – Political, Economic, Social, Technological, Legal, I nternational, Environmental, and Demographic

• STEEPLED – Social, Technological, Economic, Environmental, Political, Legal, Educational, and Demographic

• OR – AND – geographical, physical (infrastractural), cultural…

• In contrast to a SWOT, PESTLE encourages you to think about the wider environment and what might be happening now and in the future which will either benefit or be of disadvantage to the organization, individual etc. You can use results from PESTLE for SWOT – OT (opportunities and threats) part but PESTLE can be used also separately. OTs come always from PESTLE and other analyses

– a kind of radar which picks up trends and developments in the external environment which can be used to inform longer term planning and strategy making

You cannot do SWOT without any macro and microenviroment analyses done before!

PESTLE vs. SWOT

• The main problem with these external PESTLE factors is that they are continuously changing

• Therefore PESTLE analysis should include a thorough analysis of what is affecting the organization or a project Now, and what is likely to affect it in the Future – not in general but focused!

• The result of a PESTLE analysis is usually a list of positive and negative factors that are likely to affect a project – However, by themselves, theses factors they mean very little – It is important to bear in mind, that PESTLE analysis requires careful

Application of results

All factors must be carefully evaluated and their impact mu be clearly expressed – see example in other file

Issues of concern

HELPS FREDICT analysis (common to PESTLE) G. Clarke

FACTORS importance 1-10

probability 1-10

impact - 5+5

sum

historical

economic

language

political

sociál

financial

rules of international trade

environmental

demographic

infrastructural

cultural

technological

microenvironment

• Constituents of microenvironment:

supplierscustomerscompetitorscommunitydistributorsother partners

industry

market

The microenvironment consists of the actors in the firm’s immediateenvironment that affect its capabilities to operate effectively in its chosen markets.

Model of 5 competitive forces (Michael Porter)

Threat of and opportunity from:

1. (intense) segment rivalry

2. new entrants

3. substitute products

4. buyers’ bargaining power

5. suppliers’ bargaining

power

10

Understanding the competitors

Objectives and CommitmentObjectives and Commitment

Image and PositioningImage and PositioningSize, Growth

& ProfitabilitySize, Growth

& Profitability

Current and Past Strategies

Current and Past Strategies

Strengths and WeaknessesStrengths and Weaknesses

Cost StructureCost Structure

Exit BarriersExit Barriers Organization and Culture

Organization and Culture

Competitor Actions

Competitor Actions

Figure 3.3

Rivalry Between Established Competitors

The extent to which industry profitability is depressed by aggressive price competition depends upon:

• Concentration (number and size distribution of firms)• Diversity of competitors (differences in goals, cost structure, etc.)• Product differentiation• Excess capacity and exit barriers• Cost conditions

– Extent of scale economies– Ratio of fixed to variable costs

Microenvironment – strategic groups

Source: http://pics1.imagezone.org/key/%20Strategic%20Group%20Mapping

I nternal environment of company

• The internal environment contains resources, capabilities, competencies that help to utilise opportunities formarketing objectives and to minimise threats from theexternal environment

ANALYSES:

Value chain (!!! This analysis can be used both for theinternal as well as for the external analysis)Resources analysis

INTERNAL ANALYSIS(ES) MUST BE MADE ALWAYS AS IN COMPARISON TO COMPETITORS – STRENGHTS AND WEAKNESSES LEAD TO COMPETITIVE ADVANTAGE –THEY CANNOT BE UNDERSTOOD FROM THE INTERNAL POINT OF VIEW!!!!

I nternal environment of company

• Value chain activities – differentiation and cost –differences in other markets – facts about situationand forces

Example of results of macro, micro and company analyses combination

Source: Schmid and Grosche, 2008, Managing the international value chain in the automotive industry

Resources analysis

Resources analysis

• Resources = assets and capabilities (Graham Hooley et al., Marketing strategy and competitive positioning, every edition)

ASSETS

asset tangible intangible

physical land -

financial Cash in hand Credit worthiness

operations Plant and machines Procedures and systems- technology

human people abilities, skills

marketing Customer database Brands, reputation

legal Copyrights and patents Reputation in litigation

systems Databases and MIS Knowledge and DSS

other ? ?

Resources analysis - capabilities

CAPABILI TI ESCAPABI LI TY individual group corporate

strategic

Orientationand dominant logic

Customercare

Customerorientation

Market orientation

learning Individuallearning

Group learning

Organisationallearning

innovation Taskimprovement

New processes

New market offerings

functional

Outside-in Externalfocus

marketing Market sensing

Inside-out Internal focus operations Resourceutilisation

spanning Coordinatingskills

New productdevelopment

innovation

operationalTask skills Individual

taskGroup tasks Planning

processes

other ? ? ?

Resources analysis

• MARKETING ASSETS:Supply chain assets = distribution network and

relationships; distribution control; pocket of strenght (full responsibility of selected distributor for some area); distribution uniqueness, security of supply; supplier network and relationships…

Customer-based assets = relationships with customers;name and reputation; brand; country of origin; market domination; superior products and services…

Internal, support assets = cost advantages; information systems; technical skills; production expertise; copyrights and patents; franchises and licences; partnerships…

Alliance-based assets = access to markets; access to management skills; shared technology; exclusivity --

Resources analysis

• MARKETI NG CAPABI LI TI ES:Strategic = market sensing; market targeting and

positioning…

Functional = customer relationship management; customer access capabilities; product management capabilities; innovation capabilites…

Operational = implementation capabilities…