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The External Marketing environment

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Introduction

Marc Menendez 05260233 Marketing Strategy and planning Assignment 1 2006/2007 Environmental Scanning and Analysis As expressed by Aguilar 1967, environmental scanning gathers and uses information regarding events, trends, and relationships in a businesses' external environment.. Conceptual Framework for Environmental Scanning (Choo 2001, p.103) Environmental analysis has the role of assisting managers in "assessing and interpreting the information gathered" (Dibb, Simkin, Pride, Ferrell 1997) from environmental scanning. Hence environmental analysis is a vital means of organisational learning. As indicated by Dibb, Simkin, Pride and Ferrell, the process may help managers to describe current and future changes in the external environment. By evaluating changes the marketing manager can pinpoint opportunities and threats that may arise from environmental fluctuations. Understanding the current state of the environment and identifying threats and opportunities, companies assess the current performance of their marketing campaigns and develop future strategies. Marc Menendez 05260233 The External Marketing Environment Is determined by "social, demographic, economic, technological, political and legal, and competitive variables" (Williams, 2004). The external market environment is also described "in terms of four key components: economic, technological, political and legal, social and cultural" (Perreault & McCarthy 2000, p.78). "PESTLE analysis is a popular method of examining the many different external factors affecting an organisation" (Thames Valley University, 2006). PESTEL Analysis * Political * Economic * Sociological * Technological * Legal * Environmental There are different ways of dividing the external marketing environment which vary from text to text. ...read more.

Middle

Companies relying heavily on imports benefit from reduced prices, generating increased competitiveness at domestic level as well as on the international arena. Companies relying heavily on exports and companies operating solely at domestic level will be hindered by this. British goods become more expensive in foreign markets, translating into a disadvantage for exporters. Furthermore, foreign goods become cheaper in Britain, facing companies in the domestic market with an influx of new competition able to trade at lower prices. The Technological Environment "Provides a base for the economic environment. Technical skills and equipment affect the way companies convert an economy's resources into output" (Perreault & McCarthy 2000, p.85). Technology provides new business processes, such as use of computers for more accurate planning and control. Shifts in the technological environment lead to new products such as the ipod which shows how new technology can create new markets. Furthermore, the internet has changed the way many businesses operate their marketing strategies. Blockbuster offer online DVD rental as can be seen on their website (www.blockbuster.co.uk). When dealing with the technological environment, marketing managers must take care not to violate the social and cultural environment as well as the legal environment. Invasion of privacy over the internet may be used for marketing purposes, however this may be more detrimental than beneficial to a company, as an invasion of privacy is generally perceived as a negative action. ...read more.

Conclusion

The government may request that companies provide detailed information about their products. These types of law are stricter where public health and safety is an issue. It is expected that by January 2007 all junk food adverts on television will be banned from daytime broadcasting. "OFCOM said the moves would cost broadcasters an estimated �39m in lost advertising revenue" (BBC News, 17 November 2006). This depicts the extent to which changes in social attitudes and awareness can influence the political environment which in turn can change the legal environment. All these environmental factors will, according to the evidence, deal a �39 million blow to UK broadcasters. Marc Menendez 05260233 Conclusions "Careful monitoring of the macro environment can enable an organisation to identify opportunities for and threats to its business and will enable it to adopt a proactive rather than a reactive approach in the action it takes"(Atkinson M. 1997, p.26). Somewhat like preparing for the arrival of a hurricane rather than waking up to the hurricane. An understanding of the external marketing environment allows businesses to design their marketing strategies having observed and analysed the big picture, enabling them to plan ahead. "Therefore those who do not know the plans of competitors cannot prepare alliances. Those who do not know the lay of the land cannot manoeuvre their forces. Those who do not use local guides cannot take advantage of the ground. The military of an effective rulership must know all these things" (Tzu S.500 BC p.6). ...read more.

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