PLAN DE ANALISIS:

In this section you will now be looking at the components of the macro environment and considering in more depth the issues relating to each element of SLEPT.

There are a number of perceived benefits to the organization in undertaking such an activity:

o _{It aids the decision-making process and planning process.}

o _{It can provide a sound basis for change and evolution within the organization.}

o _{It provides a clear analysis of competitive activities and an understanding of related}

market share.

o _{It enables organizations to anticipate the opportunities that change in the external}

environment might present.

o _{Organizations may become more aware of emerging trends and opportunities in inter-}

national markets that it may be appropriate to pursue.

o _{Organizations may, as a result of the changing external environment, need to consider}

their resources, both financial and physical, in order that they may implement relevant change strategies.

o _{It enables organizations both to foresee and consider the implications of environmental,}

regulatory and political change and to manage the implementation of such changes successfully.

o _{It can assist organizations in forecasting potential supply and demand from the open}

market and from their supply chain.

The list could go on. What is important, however, is that understanding the key components of PESTEL is essential to an organization if it is to cope with change and, most important, respond to it.

Political

The 21st century is experiencing a new kind of political power that is very broad and very diverse. With increasing moves towards emphasis on globalization, there is more and more influence from global politics and international driving forces. Both national and international governments are increasing their political weight, enforcing greater regulation of a range of industry sectors, in order that customers and organizations alike are protected from irregula- rities that can bring organizations into disrepute.

Political initiatives at both home and abroad can create many opportunities, while also gen- erating many threats into the political scene. There are political agendas in all areas of business; there is political influence in agriculture, mining and fuels, to name but a few. Key issues might include:

o _{Increases in taxation, reducing disposable income} o _{Environmental protection (a social and political issue)} o _{Employment law}

o _{Health and safety}

o _{Foreign trade agreements}

o _{Stability of political systems (e.g. Middle East).}

Political factors can also often impact in a cyclical manner, and the cause-and-effect scenario sees political influences cross-fertilizing with other elements of the external market analysis.

Economic

One of the key influences in any organization is the state of both the local economy and the global economy. There has been talk of economic slowdown in the USA and its potential to create a spiralling effect on economies all over the world. Historically, economic indicators have provided a basis for business cycles to move on to the next stage, effectively ‘boom’ or ‘bust’ (Figure 2.2). Obviously the impact of September 11 is a classic example of how economic indicators can be affected by world events.

Figure 2.2 Business cycle model

Key component measures of the economy are:

o _{Inflation rates} o _{Interest rates} o _{Income levels} o _Resources

o _{Gross National Product} o _{Gross Domestic Product} o _{Employment levels}

o _{Exchange rates – currency valuation} o _{Consumer spending patterns.}

As a marketer, it is important to understand economic factors and indicators and also how to use the information to aid your marketing decision-making and planning process.

For example, if there is a fluctuation in interest rates, then it is likely that your organization may be involved in considering increases in costs. Essentially this is like ‘cause and effect’; as the interest rate rises, there will be a cyclical effect in the marketplace. The cost of living increases, the cost of borrowing increases and, therefore, the likelihood is that availability of disposable income may drop, reducing consumer spending considerably and thereby influencing a slow- down in market activity.

From the perspective of a marketer it is important to consider closely how to manage this particular element of economic change. You will be encouraged to consider how long it might

take for the impact of an interest rate rise to filter through to organizational activity, how long the anticipated rise in interest rates is likely to last, and what might be the competitive responses to this economic change. Furthermore, you need to think about what will be the consumer response to this change and ultimately what it will do to consumer spending power.

The whole area of economic pressure and power is complex, but crucial to understanding the power of buyers and suppliers in the marketplace.

Social

Understanding the social influences and implications on the marketing environment is of utmost importance, as organizations need to respond to the social infrastructure of their marketplace. Social factors include issues such as:

o _{Demography – The characteristics of customers, age, sex, class, family life cycle and so}

on, trends in age distribution.

o _{Society – This reflects upon the infrastructure of society and its attitude towards many}

issues, that is religion, culture, families, the environment, green and ethical issues. (This will also be looked at under ‘Environment’.)

Question 2.1

The population trends for the older generation, ‘the grey market’, are clearly highlighting that people are living much longer. What potential opportunities could this present to you, as marketing manager for a healthcare products manufacturer?

For example, there has been a serious decline in church-going in the UK, which would suggest the demise of the Anglican Church by the middle of this century. There are now fewer 19-year- olds going to church than at any time previously.

In response to the ‘Green Issue’, vehicle manufacturers such as BMW have been stressing the suitability of their 3 series range for recycling, making them more environmentally friendly cars. This was in response to potential EU legislation that would likely have enforced the recycling of vehicles. BMW responded to this and now has 30 partner recycling plants worldwide. In doing this they have responded to the growing social and environmental awareness of their customers.

Today we find ourselves subject to lively debate and forceful demonstrations about environ- mental issues. There is an increasing choir of consumer voices raising the stakes in respect of environmentally friendly practices. As there is growing social concern for the environment, the impact of which could be quite major to industry practices today and ultimately upon organiza- tional profitability in the future, organizations are being faced with change programmes as never before. The significance of understanding consumer power, customer needs and wants

is critical to organizational success, and therefore failure to react to the outcomes can have a high profile and catastrophic implications in the future. An example of this can be found in the Exxon case study.

o _{Culture – The range of variables relating to culture is extensive, and will be covered in}

more depth in Unit 9, ‘International marketing’, but they include: – Language

– Religion

– Values and attitudes – Law

– Healthcare – Education

– Social organization.

This is possibly the most complex area of analysis that an organization might involve itself in. Values and norms will vary greatly from country to country, and will reflect different social divides.

For an organization involved in exploiting international marketing opportunities this is important to understand, as on occasions significant mistakes have been made by large organizations as a result of their lack of appreciation of the underpinning culture of their host nation.

Technological

Technology has evolved rapidly over the past 20 years and particularly in the past 10 years. Technological developments have seen improved manufacturing techniques, new and dynamic innovations and increases in efficiency and effectiveness in a way never previously imagined. However, marketers need to understand the drive for technological change, and the need to go with the flow, to remain competitive. Decisions to improve, change or implement new techno- logical processes must be made in order to meet customer needs and expectations. Principally, if there is a cost-effective method or process that could improve customer service and increase efficiency and effectiveness and add to the bottom line financially, then it should be the focus of serious research and development, in order to pursue the opportunity that technological advances might present.

External or ‘macro’ market analysis is vitally important to the development of any marketing strategy and associated plan. As a marketer engaged in operational level marketing, you may find yourself very involved in collating much of the intelligence gathered, in order that the decision-making process may be fully informed and responsive to the challenges of the external marketing environment. It will be important to call on previous knowledge gained through Marketing Research and Information, in order that you fully understand the challenges of market scanning and intelligence gathering.

While on occasions you may collect information specifically related to developing strategies and plans, it is equally important to continue scanning the external environment, in order that change may be detected and subsequently responded to in a proactive rather than in a reactive way.

As you move on through your studies, and upwards to the Postgraduate Diploma, you will be well placed to consider the strategic implications of environmental change and how it could impact upon the strategic planning process in the future.

Environmental

The world is currently in an age where there is growing industrial wastage, discharge of effluent, emissions of fumes and acid rain, all of which have to be taken seriously by manufacturers. Due to the high level of industrialization in the modern world, the environment is under constant threat from global warming. In recent times we have experienced severe weather effects, such as heavy rain, gales and significant flooding. All of this relates to environmentalism and as such means that organizations must in the future consider their strategy in relation to these issues. There are many organizations whose role is to dispose of atomic waste. Organizations such as NIREX are continually subject to heavy criticism by environment groups such as the Green Party and the press. Their contact with the consumer is minimal; they deal with industry, hence they are little influenced by the consumer.

However, organizations need to become increasingly aware of their environmental responsi- bilities and aim to ensure that inherent within their corporate mission, vision and strategy, is the need to be environmentally aware, and should position environmentalism as a principle that should be embedded within their overall CSR.

Legal

In a culture bound by regulatory bodies, legal restraints and an increasing role played by European and international legislation, organizations will clearly need to understand the legis- lative nature of their own marketing environment and abide by it.

Every organization is bound by controls. For example, there are regulations concerning:

o _{Monopolies and mergers} o _{Competitive activities} o _{Unfair trading}

o _{Consumer legislation} o _{Trade descriptions} o _{Health and safety}

o _{Professional codes of conduct (for example, the Chartered Institute of Marketing).}

Stage 2 – Analysis of the micro environment

Analysis of the ‘micro’ environment is equally important. As a marketing manager you must clearly understand the issues relating specifically to your organization.

For example, you will need to consider the following components:

o _Sales o _{Market share} o _{Marketing procedures} o _{Profit margins} o _{Sales/marketing controls} o _{Marketing mix} o _{Number of employees} o _{Financial resources} o _{Physical resources}

Each of these factors will in some way affect the organization’s overall achievements in terms of the key marketing objectives of meeting both the needs of customers and the organization’s profit requirements. In turn this results in the undertaking of an ‘internal audit’.

A more simplistic approach to this analysis will be to break it down into the following five key elements: 1. Business 2. Competitors 3. Suppliers 4. Customers 5. Stakeholders.