Kotler on

Marketing
Today you have to run
faster to stay in place.

Chiranjeewa Atapattu
Marketing Environment
Definition
A company’s marketing environment consists of the
task environment of actors and the broad
environment that affect the company’s ability to
develop and maintain successful transactions with its
target customers.
Kotler (2000)

https://www.youtube.com/watch?v=RvOv5whZ-a0
 The Marketing Environment

•The External Environment

–Definition, Significance, Techniques (PEST)
•Strategic Marketing
–Definition, Benefits, Stages, Techniques (SWOT, Five
Force Model)
•Market and Marketing Research
–Definition and significance (Ch 4)
Analyzing Needs and Trends in
the Macro environment
• Trend: a direction or sequence of events that has some
momentum and durability
• Fad: unpredictable, short-lived, and without social, economic,
and political significance
• Megatrends: large social, economic, political and technological
changes that had great influences for some longer time

IKEA EXAMPLE:

https://www.youtube.com/watch?v=2IxHqtQj1rU
 Forces (Macro) & Actors
(Micro)
Broad Forces

Political/Legal Technological
Task Actors

Customers Suppliers
Competitors Company
Publics/Stakeh Intermediaries
olders

Economic

Social/Cultural
https://www.youtube.com/watch?v=j0yxuvJwXj8
The PEST Analysis

•Political
•Economic
•Societal
•Technological
 Marketing Environments
Challenges from Macro
Environments

Decrease in birth rate Recruitment of

private schools
Improvement of
technology Short Product Life Cycle
Dynamic strategic planning
Figure 6-1:
Colgate-Palmolive’s
Total Global Branding
Strategy

Colgate-Palmolive
has had global
success with its
Colgate line of tooth-
care products. The
products and their
packaging design do
not vary from
country to country;
the only thing that
changes is the
language on the
packages.
 Political Environment

Increased
Increased
Legislation
Legislation
Political-
Political-
Legal
Legal
Environment
Environment

Special-
Special-
Interest
Interest
Groups
Groups
https://www.youtube.com/watch?v=QXpWhkDp8Gc
 Economic Environment
Income
Income Savings,
Savings, Debt,
Debt, & &
Distribution
Distribution Credit
Credit Availability
Availability

Subsistence
Subsistenceeconomies Changes
economies Changesin inincomes
incomes
Raw-material-exporting
Raw-material-exporting Cost
Costofofliving
living
economies Interest
economies Interestrates
rates
Industrializing
Industrializingeconomies Saving
economies Savingand
andborrowing
borrowingpatterns
patterns
Industrial
Industrialeconomies
economies
The Social/Cultural
Environment
- Demographic Change
• World-wide population growth but in
developed countries getting married
later, having less children
• Living longer - ageing population -
Baby boomers 1946-64, Generation
X 1965-1976 and Generation Y 1977-
1994
• Geographical shifts - multicultural
societies
• Household changes. Diverse or non-
traditional households.
Meeting Family Size Needs
• Folger’s Coffee
addresses an important
need by allowing single
people to brew one cup
of coffee at a time.
The “Sandwich Generation”

• This insurance ad reminds us that people in the “sandwich

generation” often must care for their parents in addition to
their children.
Cultural Values
Two Brides
Women Manage Many Tasks
• Women often manage
many tasks within the
family that pull them
in many directions.
Attitudes & Lifestyle

Of
Of Oneself Of
the Universe Others
Views
Views
That
That Express
Express
Values
Values
Of Of
Nature Of Organizations
Society
Status Symbols are Always in Flux
• At one time, having very
pale skin was the mark of an
upper social class because it
indicated that the person did
not have to work in the
fields. Today, a suntan is
equated with leisure time
and consumers go to great
lengths to get one naturally
or with “help.”
Technological Environment
Accelerating
Accelerating Pace
Pace Unlimited
Unlimited Opportunities
Opportunities
of
of Change
Change for
for Innovation
Innovation

Issues
Issues in
in the
the Technological
Technological
Environment
Environment

Varying
Varying Increased
Increased
R
R&&DD Budgets
Budgets Regulation
Regulation
Figure 6-2: Virtual Reality Applications in Marketing

Virtual Reality technology lets users interact with

computer-generated worlds through sight, sound, and
touch.
 Example PEST Analysis
• Political
• Privatisation of national carriers
• Economic
• Low interest rates on debt leading to
increased penetration of credit cards
• Social
• Increase in demand for overseas
destinations
• Increasing consumer knowledge and
confidence
• Technological
• Increasing affordability and penetration of
technology such as the internet and
mobile phones.

https://www.youtube.com/watch?v=YDPcZeOFQhQ
Environmental concerns :
https://www.youtube.com/watch?v=BZYuAPif-Fw
Strategic Marketing Planning
(SMP)

The managerial process of developing

and maintaining a viable fit between
the organisations objectives, skills, and
resources and its changing market
opportunities. The aim of strategic
planning is to shape the company’s
businesses and products so that they
yield target profits and growth.
Kotler (2001)
 Strategic Marketing Planning
(SMP)
Business Mission
Where are we now?
Marketing planning
and control at Marketing Audit - Internal and How did we get
corporate/business External Analysis here?
level Where are we
SWOT Analysis heading?

(Re) evaluation of Mission

Strategic Options
Where would we like to be?
Marketing planning Marketing Objectives
at product level
Tactical Plans & Mixes (4Ps) How do we get there?

Evaluation & Control Are we on course?

SWOT Analysis
SOURCE

Internal - Strengths Weaknesses

Controllable

Opportunities Threats
External -
Uncontrollable

Internal Factors include: Marketing activity: Financial

situation; Manufacturing operations; Organisational style
and structure. See Kotler (2000) pg 78
SWOT Analysis of Easy Jet
Strengths
Established brand name
Flies out of central airports
Has flexible staff contracts
supporting low cost proposition
Has charismatic CEO
Opportunities
Increasing mobile phone usage
Interactive television
Ageing population
Weaknesses
Reputation for unreliability
Limited UK coverage
Threats
Increased competition from other
airlines
Post Sept 11th flying fears
Competition from other forms of
transport
 Drawing a Conclusion
• Formulate strategic options that:
• Minimise weaknesses and threats
• Maximise strengths and opportunities
• For example:
• Threat: Increased competition and limited UK coverage
• Strategy: Take over competitor increasing coverage of UK market
 Competitive Forces
Five Forces Determining Segment Structural Attractiveness

Threats of:
1. Intense segment
rivalry
2. New entrants
3. Substitute products
4. Buyers’ growing
bargaining power
5. Suppliers’ growing
bargaining
power

https://www.youtube.com/watch?v=0iIh5YYDR2o
Identifying Competitors
• Industry Concept of Competition
• Industry - https://www.youtube.com/watch?v=weKJdaT9c-4
• Number of Sellers and Degree of Differentiation
• Pure monopoly- https://www.youtube.com/watch?v=Xv3wVWIApSc
• Oligopoly
https://www.youtube.com/watch?time_continue=58&v=9Vi8LBXPg2I
• Pure oligopoly
• Differentiated oligopoly
• Monopolistic competition- https://www.youtube.com/watch?
v=XG6jWY0SvC0
• Pure competition
 Identifying Competitors
• Entry, Mobility, Exit Barriers
• Entry barriers
• Mobility barriers
• Exit barriers
• Cost Structure
• Degree of Vertical Integration
• Vertical integration
• Degree of Globalization
• Market Concept of Competition

https://www.youtube.com/watch?v=uOO4ClVUrkw
Designing Competitive Strategies

Hypothetical
Market Structure
(Kolter, 2003)
https://www.youtube.com/watch?v=Nz53CopmFig
Benefits of SMP
• Forces organisation to critically evaluate its current
situation in light of current and future environmental
trends
• Prompts firm to identify its strengths and weaknesses
• Increases awareness of opportunities and threats
• Encourages organisations to adapt
• Stimulates achievement
• Promotes search for competitive advantage
However there are also problems:
• How confident are we in identifying and predicting trends?
• By selecting certain options are we restricting ourselves
and losing flexibility/stifling creativity?
Summary
• There are two components of the marketing
environment - the broad forces and the task actors
• PEST is a technique used to evaluate the forces in
the marketing environment
• SMP is used to “fit” the organisation to its
environment and a key tool is a SWOT analysis
• There are both benefits and problems of SMP
• Market and Marketing Research are important in
linking the firm to the marketing environment
Promotional Mix Methods

Types of Promotion Explanation

Advertising Communication through mass media, the firm will usually pay for
this type of communication.
Public Relations Developing a positive relationship between the organisation and
the media and the public. Good public relationships involves not
only creating favourable publicity through the media but also
involves minimising the impact of negative situations.
Sales Promotion Promotions designed to create a short term increase in sales.
Examples of sales promotion include money off coupons, discount
codes and "flash sales".
Personal Selling Sales interaction between the firm's representative and a consumer
on a one to one basis.
Direct Mail (post and e-mail) This involves sending marketing to a named individual or
organisation. Firms often buy lists of names, e-mails and postal
addresses for this purpose. This can be highly effective when the
direct mail recipients are within the firm's target market.
Internet Marketing Placing adverts on internet pages through programmes such as
Google's AdWords.
Social Media Firms place daily messages on social media such as Facebook and
Twitter to keep customers interested in their organisation. They
may even run promotions, flash sales and discounts just for their
social media readers.
Sponsorship An organisation or event is paid to use your branding and logos.
Sponsorship is commonly used in sporting events; player's
clothing and stadiums will be covered in the firm's branding and
even the tournament may be named after the firm. Although
effective sponsorship requires a large audience you may get
smaller firms interested in local business sponsoring small events
in their area e.g. school fairs.
Questions

1.Decide on a “fictional” consumer product which you wish to

bring to market. Propose and describe SIX promotional
strategies to attract your target market.
Hint : 1) Advertising 2) Sales Promotion 3) Personal Selling 
4) Publicity etc. (25 marks)
Consumer Behavior
https://www.youtube.com/watch?v=aGfdubLAtY8
 Model of Consumer Behavior
•Product Marketing •Economic
Marketing and
and
•Price Other
Other Stimuli
Stimuli •Technological
•Place •Political
•Promotion •Cultural

Characteristics
Buyer’s Decision Buyer’s Black Box affecting
Process consumer
behavior

•Product Choice • Purchase

Buyer’s Timing
•Brand Choice Buyer’s Response
Response
• Purchase
•Dealer Choice Amount