OHT 2.1 © Pearson Education Limited 2003 Brassington and Pettitt: Principles of Marketing, 3rd Edition The European marketing environment

OHT 2.1

© Pearson Education Limited 2003Brassington and Pettitt: Principles of Marketing, 3rd Edition

The European marketing environment

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STEP analysis

Organisations do not operate in a vacuum. They need to look outwards at the following factors:

• Socio-cultural.

• Technological.

• Economic and competitive.

• Political and legal.

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Elements of the external environment

Figure 2.1

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Environmental scanning

The collection and evaluation of information from the wider marketing environment that might affect the organisation and its strategic marketing activities.

An important task but often a difficult one.

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Information sources

• Previous experiences.

• Personal contacts.

• Published research studies.

• Government statistics.

• Trade sources.

• Specially commissioned market research.

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Socio-cultural influences

Figure 2.2

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Company/industry examples

• Body Shop.

• Huntingdon Life Sciences.

• McDonald’s.

• Organic food stuffs.

• The arms industry.

• Marks & Spencer.

• The aviation industry.

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Technological environment

• Fast moving and changing environment.

• An environment with far reaching effects on businesses and their products/services.

• Technological advances can affect materials, components and products, manufacturing business processes, administration and distribution systems.

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The technological advances

• Technology developed for other purposes, e.g. academic, medical or military use.

• Market driven technological advances, e.g. companies R&D departments searching for specific solutions to marketing problems.

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Technology and materials – an example

Elite sports people want to maximise their performance and look to sports clothing manufacturers to provide sports wear that provides that added edge.

Speedo the swim wear manufacturer has its shark’s skin suits that it claims reduces drag and enhances a swimmers performance in the water.

The Italian swim wear company Diana (and the official supplier to the UK swimming team) has its own developed fabric which does not absorb water as other fabrics do.

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Technology helping the dialogue between a company and its customers

• Technology has helped market research - complex sets of data can be input and analysed quickly and safely.

• Database technology allows the storage, retrieval and maintenance of detailed customer profiles and the creation of personalised customer marketing offers.

• Information sharing and communication between company and customers.

• Means of ordering goods and services.

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Macroeconomic influences on the flow of goods and services

Figure 2.4

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Economic impact examples

• Rates of VAT vary across Europe - this had led to ‘unofficial markets’ e.g. illegal imports of tobacco and alcohol.

• Interest rate rises can influence the amount of cash a consumer has available to purchase luxury items, for example.

• Exchange rates - for example strong exchange rates mean that imports become cheaper, exports however become more expensive.

• International trading blocs for example EU trade agreements, General Agreement on Tariffs and Trade (GATT), etc.

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Market structures

• Monopoly.

• Oligopoly.

• Monopolistic competition.

• Perfect competition.

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Market structures (1 of 4)

Monopoly:

• Where one supplier has sole control over a market and there is no competition.

• Where there is a captive market with no alternative source of supply.

• A strong positive image, good customer service, and fair pricing are essential.

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Oligopoly:

• Where a small number of companies account for a large share of the market.

• Where a certain amount of interdependence exists between the key players.

• Oligopolists spend time watching each other.

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Monopolistic competition:

• Many competitors in market.

• Each has differentiated products.

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Perfect competition:

• Involves many small producers all supplying identical products that can be substituted for each other.

• Producers do not influence or determine price.

• There are no barriers to market entry or exit.

• Buyers and sellers have complete information about what is happening.

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The political and regulatory environment

• National and local governments - to determine and maintain the legislative framework within which organisations do business. Examples include contract law, consumer protection, competition and trading policies.

• The European Union - guidelines and directives which aim to achieve consistency across member states.

• Regulatory bodies - for example Office of Fair Trading, Advertising Standards Agency, Competition Commission, etc. These bodies are there to monitor and regulate commerce.

Documents

OHT 2.1 © Pearson Education Limited 2003 Brassington and Pettitt: Principles of Marketing, 3rd Edition The European marketing environment