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• The Micro-environment
• This environment influences the organization directly. It includes suppliers that deal
directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to
suggest small, but this can be misleading. In this context, micro describes the relationship
between firms and the driving forces that control this relationship. It is a more local
relationship and the firm may exercise a degree of influence.
• The Macro-environment
• This includes all factors that can influence an organization but that are out of their
direct control. A company does not generally influence any laws (although it is accepted that
they could lobby or be part of a trade organization). It is continuously changing, and the
company needs to be flexible to adapt. There may be aggressive competition and rivalry in a
market. Globalization means that there is always the threat of substitute products and new
entrants. The wider environment is also ever changing, and the marketer needs to compensate
for changes in culture, politics, economics and technology.
• Internal Marketing
• Internal marketing is an important 'implementation' tool. It aids communication and
helps one to overcome any resistance to change. It informs, and involves all staff in new
initiatives and strategies. It is simple to construct, especially if you are familiar with
traditional principles of marketing.
• If not, it would be valuable to spend some time considering marketing plans. Internal
marketing obeys the same rules and has a similar structure to, external marketing. The main
differences are that your customers are staff and colleagues from your own organization.
• At this stage internal marketing meets traditional 'change management.' Firstly one
should identify the internal customers. As with external customers, they will have their own
buyer behavior, or way of 'buying into' the changes which you are charged to implement.
• The similarities in differing groups of internal customers allow you to segment them.
As Jobber (1995) explains, you can target three different segments namely 'supporters‘,
‘neutral' and finally 'opposers.' Each group requires a slightly different internal marketing
mix in order that your internal marketing objectives can be achieved.
• For example, if the change was that a company was to relocate closer to its market,
you could target 'supporters' with a tailor-made relocation video explaining about the lower
property prices in the new location; 'neutral' internal customers could be targeted with
incentives such as pay increases; and 'opposers' could be coerced, or forced to accept the
change regardless.
• Always make sure that you have thought through your approach before starting the
implementation.
• Make sure that you have created a cultural climate that is willing to accept change.
2. THE MARKETING ENVIRONMENT FOR SERVICES 4
TY BMS - SEM V - ACADEMIC YEAR 2010-2011 – BHAVAN’S COLLEGE
Compiled by Faculty: L. A. D’Costa +91 98193 77556 dcosta.l.a@gmail.com
Source of Compilation: Web
SERVICE SECTOR MANAGEMENT
• Appoint a change agent, or champion for change that will help to ease your changes
through.
• Audit the skills and capabilities of your team. Train and develop as necessary.
• Your team must be built around you with the objective as the focus for you all.
• The change must be correctly marketed to your target audience using an approach
such as Jobbers.'
• Try to anticipate the arguments against change, and decide how to counteract them
positively.
• The external environment can be audited in more detail using other approaches such
as SWOT Analysis, Michael Porter's Five Forces Analysis or PEST Analysis.
• SWOT Analysis
• For example:
• A strength could be:
• Your specialist marketing expertise.
• A new, innovative product or service.
• Location of your business.
• Quality processes and procedures.
• Any other aspect of your business that adds value to your product or service.
• For example:
• An opportunity could be:
• A developing market such as the Internet.
• Mergers, joint ventures or strategic alliances.
• Moving into new market segments that offer improved profits.
• A new international market.
• A market vacated by an ineffective competitor.
Strengths - Wal-Mart is a powerful retail brand. It has a reputation for value for money,
convenience and a wide range of products all in one store.
Weaknesses - Wal-Mart is the World's largest grocery retailer and control of its empire,
despite its IT advantages, could leave it weak in some areas due to the huge span of control.
Opportunities - To take over, merge with, or form strategic alliances with other global
retailers, focusing on specific markets such as Europe or the Greater China Region.
Threats - Being number one means that you are the target of competition, locally and
globally.
• Strengths - Nike is a very competitive organization. Phil Knight (Founder and CEO)
is often quoted as saying that 'Business is war without bullets.
• Weaknesses - The organization does have a diversified range of sports products.
• Opportunities - Product development offers Nike many opportunities.
• Threats - Nike is exposed to the international nature of trade.
• Where will you find the Mumbai Indians, the Royal Challengers, the Deccan
Chargers, the Chennai Super Kings, the Delhi Daredevils, the Kings XI Punjab, the Kolkata
Knight Riders and the Rajasthan Royals?
• Weaknesses - An often cited original weakness is that when the business was started
by Sunil Bharti Mittal over 15 years ago, the business has little knowledge and experience of
how a cellular telephone system actually worked. So the start-up business had to outsource to
industry experts in the field.
Five Forces Analysis helps the marketer to contrast a competitive environment. It has
similarities with other tools for environmental audit, such as PEST analysis, but tends to
focus on the single, stand alone, business or SBU (Strategic Business Unit) rather than a
single product or range of products. For example, Dell would analyze the market for
Business Computers i.e. one of its SBUs.
• Five forces analysis looks at five key areas namely the threat of entry, the power of
buyers, the power of suppliers, the threat of substitutes, and competitive rivalry.
• Competitive Rivalry
• This is most likely to be high where entry is likely; there is the threat of substitute
products, and suppliers and buyers in the market attempt to control. This is why it is always
seen in the center of the diagram.
• PEST Analysis
• What is PEST Analysis?
• It is very important that an organization considers its environment before beginning
the marketing process. In fact, environmental analysis should be continuous and feed all
aspects of planning.
• 1. The internal environment e.g. staff (or internal customers), office technology,
wages and finance, etc.
2. THE MARKETING ENVIRONMENT FOR SERVICES 9
TY BMS - SEM V - ACADEMIC YEAR 2010-2011 – BHAVAN’S COLLEGE
Compiled by Faculty: L. A. D’Costa +91 98193 77556 dcosta.l.a@gmail.com
Source of Compilation: Web
SERVICE SECTOR MANAGEMENT
• 2. The micro-environment e.g. our external customers, agents and distributors,
suppliers, our competitors, etc.
• 3. The macro-environment e.g. Political (and legal) forces, Economic forces, Socio-
cultural forces, and Technological forces. These are known as PEST factors.
• Political Factors
• The political arena has a huge influence upon the regulation of businesses, and the
spending power of consumers and other businesses. You must consider issues such as:
• 1. How stable is the political environment?
• 2. Will government policy influence laws that regulate or tax your business?
• 3. What is the government's position on marketing ethics?
• 4. What is the government's policy on the economy?
• 5. Does the government have a view on culture and religion?
• 6. Is the government involved in trading agreements such as EU, NAFTA, ASEAN,
or others?
• Economic Factors
• Marketers need to consider the state of a trading economy in the short and long-terms.
This is especially true when planning for international marketing. You need to look at:
• 1. Interest rates.
• 2. The level of inflation Employment level per capita.
• 3. Long-term prospects for the economy Gross Domestic Product (GDP) per capita,
and so on.
• Socio-cultural Factors
• The social and cultural influences on business vary from country to country. It is very
important that such factors are considered. Factors include:
• 1. What is the dominant religion?
• 2. What are attitudes to foreign products and services?
• 3. Does language impact upon the diffusion of products onto markets?
• 4. How much time do consumers have for leisure?
• Technological Factors