Description
Have you ever wondered how organizations adapt to the changing business environment? How do companies keep up with the many changes that occur in politics, markets, and economics? What processes do they use to try to anticipate changes in technologies?
Learning Outcomes
After reading this chapter, you should be able to:
» Identify and de?ne the three key areas of the marketing environment
» Describe the key characteristics associated with the marketing environment
» Explain PESTLE analysis and show how it is used to understand the external
environment
» Explain the environmental scanning process
» Analyse the performance environment using an appropriate model
» Understand the importance of analysing an organization’s internal environment
and identify the key resources and capabilities
Te Marketing Environment
2
T H E M A R K E T I N G E N V I R O N M E N T 37
CAS E I NS I GHT 2.1
Crompton Greaves Limited, an Indian
multinational company, is in the business of
design, manufacture, and supply of all kinds of
T&D (transmission and distribution) equipment,
including complete solution services, to its
large base of customers in India and abroad.
The company boasts of a global presence today.
How does it keep abreast of the marketing
environment? We speak to Biswaroop Ukil,
General Manger–Marketing (Power Products and
Solutions), to ?nd out.
Biswaroop Ukil for Crompton Greaves Ltd
Growth in the power sector is one of the essential factors
contributing to the gross domestic product (GDP) of a
country. Although the GDP of India has shown signs of
slowing down recently, it had been growing at a fast
pace for quite some time. Several initiatives on the part
of the central government, namely, its mega-power
policy, ultra mega-power projects, the build–own–
operate–transfer/build–own–operate–maintain models,
public–private partnership in transmission projects, and
the restructured accelerated power development and
reforms programme have given tremendous impetus to
all the three segments of the power sector—generation,
transmission, and distribution. Due to this, demand for
all major electrical power products such as transformers
and switchgear has been expanding steadily. If the global
economy, which looks pretty unstable at the moment,
stabilizes to a certain extent, the domestic demand for
T&D products is expected to grow, given the picture
painted by central planners and various government
agencies.
The Indian industry for T&D products is quite mature,
with several local manufacturers and multinationals
possessing the necessary technology, production
facilities, and exclusive sales and service networks across
the country. Apart from ?rms employing individual
market survey techniques and tools, there are industry-
level bodies/associations that gather and compile generic
industry-level information, which is then used by the
members of the association to chart out the course of
their businesses. This industry-level information, along
with the independent sets of market research data,
is then analysed to ascertain all related information,
such as market size, market share, industry growth,
order book position, price movement, and competition
scenario. Based on this analysis, capacity enhancement is
planned and a market strategy is worked out.
Over the past few years, the existing players in the
market have been ramping up their manufacturing
capacity after gaining indications of growth in the power
sector. Several new foreign manufacturers, eyeing a
piece of the pie of the fast-growing Indian power sector,
have come to India; some of them have even set up
green?eld facilities here. All these factors have led to
the supply capacity for T&D products far exceeding the
demand within the country, which has driven down
the price levels signi?cantly. Further, competition from
neighbouring countries has also aggravated the situation,
and the domestic industry is slowly losing market share
to foreign players, especially in the ultra-high voltage
segment.
In the face of excess supply capacity as well as
stiff competition from low-cost manufacturers
from neighbouring countries, the biggest
challenge for domestic manufacturers is to stay
a?oat in the business. How do you suggest a
company like Crompton Greaves can achieve this?
INTRODUCTION
Have you ever wondered how organizations adapt to the changing business environment?
How do companies keep up with the many changes that occur in politics, markets, and
economics? What processes do they use to try to anticipate changes in technologies? How do
38 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
they know which factors will impact on
their businesses and which won’t? We
consider such questions in this chapter.
The operating environment for all
organizations, whether they are com-
mercial, charitable, governmental, or
in the public sector more generally, is
never static and seldom entirely pre-
dictable, and can therefore profoundly
affect a company’s course of action. In
this chapter, we examine the nature of
the marketing environment, determine
environment-related issues, and pro-
vide a context for developing marketing
strategies (see Chapter 5).
Consider the degree to which an organization can in?uence the various environmental
forces acting on it. The external environment, for example, consists of the political, social,
and technological in?uences, and organizations usually have very limited in?uence on each
of these. The performance environment consists of competitors, suppliers, and indirect service
providers, who shape the way an organization achieves its objectives. Here, organizations
have a much stronger level of in?uence. The internal environment concerns the resources,
processes, and policies an organization manages in order to achieve its goals. These elements
can be in?uenced directly by an organization. Each of these three marketing environments is
discussed in this chapter (see Figure 2.1).
UNDERSTANDING THE EXTERNAL ENVIRONMENT
The external environment is characterized in two main ways. In the ?rst, the elements do
not have an immediate impact on the performance of an organization, although they might
do in the longer term. In the second, although the elements can in?uence an organization,
it is not possible to control them. This suggests that the level of risk attached to the external
environment is potentially high. To make sense of the external environment, we use the well-
known acronym, PESTLE. This is by far the easiest and one of the most popular frameworks
with which to examine the external environment. PESTLE stands for the Political, Economic,
Socio-cultural, Technological, Legal, and Ecological environments, as shown in Figure 2.2.
The Political Environment
When we conduct environmental scanning programmes, we consider the ?rm or organization’s
political environment. Although the legal environment relates to the laws and regulations
associated with consumers and business practices, the political environment relates to the
period of interaction between business, society, and government before those laws are
enacted, when they are still being formed, or are in dispute. So, political environmental
analysis is a critical phase in environmental scanning, because companies can detect potential
legal and regulatory changes in their industries and have a chance to impede, in?uence, and
alter that legislation. Most marketing strategy textbooks teach that the political environment
is largely uncontrollable. However, this is not always the case. There are circumstances when
External Environment Internal Environment
Performance
Environment
FIGURE 2.1 The three marketing environments
42 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
The Economic Environment
Companies and organizations must develop an understanding of the economic environment
because a country’s economic circumstances have an impact on what economists term factor
prices within a particular industry for a particular ?rm or organization. These factors could
include raw material, labour, building and other capital costs, or any other input to a business.
The external environment of a ?rm is affected by the following items:
• Wage in?ation—annual wage increases in a particular sector will depend on the supply
of labour in that sector. Where there is scarcity of supply, wages usually increase (e.g.,
doctors).
• Price in?ation—how much consumers pay for goods and services depends on the rate of
supply of those goods and services. If supply is scarce, there is usually an increase in the
price of that consumer good or service (e.g., petrol).
• Gross domestic product (GDP) per capita—the combined output of goods and services
in a particular nation is a useful measure for determining relative wealth between
countries, when comparisons are calculated per member of the population (GDP per
capita at purchasing power parity, see later paragraph).
• Income, sales, and corporation taxes—these taxes, typically operating in all countries
around the world usually at different levels, substantially affect how we market goods
and services.
• Exchange rates—the relative value of a currency vis-à-vis another currency is an important
calculation for those businesses operating in foreign markets or holding ?nancial reserves
in other currencies.
• Export/import quota controls and duties—there are often restrictions placed on the
amounts (quotas) of goods and services that any particular ?rm or industry can export
to a country, depending on the trading bloc or country to which that ?rm or industry
belongs. In addition, countries sometimes charge a form of tax on particular items as
well to discourage or encourage imports/exports and to protect their own economies.
When operating in other countries, we should understand how exchange rates and living
standards operate. We might also need to understand how prices or labour costs change if we
are importing our goods and services, or components of them, from another country, that is,
our factor prices. This is known as the rate of price or wage in?ation. The dif?culty comes in
comparing prices from one country to another. Should we just compare costs (what is paid
for a proposition as a company) and prices of goods (at what price a good is sold, or what is
paid by a consumer) through the exchange rate at any one particular time? Apparently not, as
this is itself subject to political and other pressures. What economists tend to do is calculate
prices for a particular basket of goods—a ?xed list of common items—and compare the costs
in one country versus another. This is known as the purchasing power parity exchange rate.
This rate then allows us to compare directly the relative costs between two countries for a
given item.
Firms usually have little impact on the macroeconomic environment, as they have little
control over macroeconomic variables like oil prices, which might affect their business, or
stock prices, if they are multinationals listed on a major stock exchange (e.g., the NYSE, the
BSE, or the Euronext). The challenge when examining the macroeconomic environment is
to foresee changes in the environment that might affect the ?rm’s activities. If a computer
company in Sweden imports silicon chips from Japan, and pays for them in Swedish Kronor,
but the exchange rate for yen is rising against the Swedish Kronor (in other words, you get
T H E M A R K E T I N G E N V I R O N M E N T 45
the way that consumers now interact with an organization’s marketing activity. Customers
are increasingly happy to work with companies and organizations to solve problems. Howe
(2006) refers to this phenomenon as crowdsourcing. Whitla (2009) suggests that the role
and process of crowdsourcing is to identify a task or group of tasks currently conducted
in-house, and then release the task(s) to a ‘crowd’ of outsiders who are invited to perform
the task(s) on behalf of the company (for a fee or prize). This invite might either be truly
open to everyone or restricted in some way to ensure that those who respond are only those
quali?ed to undertake the task. This new approach can help marketers gain insights into both
new product/service development and marketing communications (see Market Insight 2.2 for
examples of this activity).
MARKET I NS I GHT 2.2
THE WISDOM OF CROWDSOURCING
The following three examples outline different
uses of crowdsourcing for market ideas and
solutions, including the development of a political
billboard advert, a name for a newly developed
?avour, and creative ideas for a print and TV
advert campaign.
When the UK Labour Party developed its ?rst ad for
the general election campaign in April 2010, it used
the talents of its own supporters to design the ad. The
party’s advertising agency, Saatchi and Saatchi, invited
supporters to respond to an online brief to design their
?rst election billboard poster, and received around 1,000
responses. The winning entry parodied the leader of the
Conservatives, David Cameron, as the politically incorrect
Gene Hunt—the character from ‘Ashes to Ashes’, a BBC
TV show set during the Thatcher years—sitting on the
bonnet of an Audi Quattro. Ironically, the Conservatives
felt that the advert was so positive that they developed
their own version of it, replacing the Labour words,
‘Don’t let him take Britain back to the 1980s’ with ‘Fire
up the Quattro, it’s time for a change’.
Nestlé’s Maggi brand is one of the largest and most
loved food brands in India. Nestlé launched the ‘Guess
the Taste’ scheme in March 2011, inviting fans to guess
the taste of a new, mystery ?avour of vegetarian noodles
and name the noodles for the company in India. These
mystery-?avoured noodles are being sold across India in
packets marked with a distinctive question mark. Nestlé
has received more than 45,000 consumers entries with
their suggested names for the taste. ‘Guess the Taste’
follows other recent successful efforts by Nestlé’s Maggi
brand to recognize and develop its long and fruitful
relationship with consumers in India.
Unilever offered $10,000 in a competition to
develop ideas for its next Peperami print and TV advert
campaign, based on its quirky character Animal, a
living representation of the pork salami snack. Using a
crowdsourcing website, www.ideabounty.com, and its
production house SmartWorks, Unilever asked for an
‘unapologetic, unexpected, and incredibly memorable
piece of communication’. The Unilever team was so
impressed with the submissions they received that
instead of picking one winning idea they actually
selected two!
Sources: BBC (2010b); Robinson (2010); Sweney (2009); www.
ideabounty.com/blog/post/2485/peperami.-picks-two-winning-
ideas; www.nestle.in.
1 When do you think crowdsourcing is most useful?
2 When do you think crowdsourcing might not be an
appropriate technique to use?
3 Do you know of any other companies that have
used crowdsourcing approaches? What did they
use it for?
Maggi—‘Guess the taste’
Courtesy: www.nestle.in
T H E M A R K E T I N G E N V I R O N M E N T 51
trademarks all goods as a guarantee to indicate that that particular good has been sourced
from disadvantaged producers in a developing country at a decent price to the producer. Sales
of Fairtrade products include coffee, tea, chocolate, banana, cocoa, ?owers, wine, cotton,
honey, and many others. The retail sales of Fairtrade certi?ed products in Australia and New
Zealand skyrocketed by almost 200% between 2009 and 2010, reaching almost AU$150m. In
2009, there was a signi?cant growth—of more than 1,200%, to over 753 tonnes—of Fairtrade
coffee imports from the Asia-Paci?c region (Fairtrade Association, 2009). Nevertheless,
despite the good intentions of these companies, consumers remain confused over whether a
particular product is organic, fairly traded, and/or ethically sourced (Murray, 2006).
One important question for marketers is how should a company incorporate the changing
trend in sustainability into its organizational processes? To answer this question, Orsato (2006)
suggests that a company can adopt one of the following four different green marketing strategies:
• Eco-ef?ciency—developing lower costs through organizational processes such as the
promotion of resource productivity (e.g., energy ef?ciency) and better utilization of by-
products. This approach should be adopted by ?rms that need to focus on reducing the
cost and environmental impact of their organizational processes. Supermarket chains in
Norway, and other Scandinavian countries, have for a long time encouraged recycling.
• Beyond compliance leadership—the adoption of a differentiation strategy through
organizational processes like certi?ed schemes to demonstrate their ecological credentials,
their environmental excellence, for example, the adoption of the UN Global Compact
principles or other Environmental Management System (EMS) schemes and codes like
ISO14001. This approach should be adopted by ?rms that supply industrial markets, like
car manufacturers.
• Eco-branding—the differentiation of a ?rm’s products or services to promote environmental
responsibility. Examples include Duchy Originals, the British Prince of Wales’ food brand,
the Thai King Bhumibol’s Golden Place brand, or the Toyota Prius, labelled as ‘mean but
green’. Another example is BP—formerly British Petroleum—who changed their logo to
make it green and yellow in a ?ower petal and sun synthesis, which they call the Helios,
and slogan to ‘beyond petroleum’ to re?ect their intended shift in meeting the world’s
energy requirements to more sustainable sources.
• Environmental cost leadership—the offering of products and
services that give greater environmental bene?ts at a lower
price. This strategy particularly suits ?rms operating in price-
sensitive ecologically sensitive markets, such as the packaging
and chemical industries.
Whatever the company and industry, ecological trends in
marketing look set to stay and further develop as the sustainability
debate rages on and companies use it to develop their own
competitive strategies. It is important to assess how this movement
towards greener and sustainable marketing is affecting a particular
industry to ensure that a company within that industry is either
not adversely affected by these changes (e.g., by non-compliance
with regulatory change like packaging) or can take advantage of
the opportunities (e.g., a haulage company taking advantage of
hybrid lorries using engines that run on a combination of energy
produced by petrol combustion and electricity production to lower
energy costs).
BP’s Helios logo
Courtesy: BP
T H E M A R K E T I N G E N V I R O N M E N T 53
to ?nd information on export opportu-
nities through information from second-
ary sources and from market research
exercises. They tended to monitor their
competitors’ export performance, in-
volvement in exporting, and their export
intention, and they were more likely to
monitor changes in technology, prod-
ucts, economic conditions, and socio-
political conditions (Lim, Sharkey, and
Kim, 1996). A study on Thai small- to
medium-sized food processing compa-
nies has indicated that environmental
scanning is a key factor in the new prod-
uct development success in sectors with
high technological turbulence (Ngamk-
roeckjoti and Speece, 2008).
The process through which compa-
nies scan the marketing environment
typically involves three stages (see Figure 2.4). In Stage 1, the focus is principally, but not
exclusively, on data gathering.
In Stage 2, the focus is principally, but not exclusively, on interpreting the data gathered
in a process of environmental interpretation/analysis, and in the ?nal stage, the focus is
principally, but not exclusively, on strategy formulation.
During each of the key scanning stages, there is also some activity in each of the other
two areas so that each of the three processes dominates a particular stage but is also present
at the other stages. So, in Stage 1, we might spend 60% of our time gathering data, 20%
of our time undertaking environmental analysis/evaluation, and the remaining 20% of our
time on strategy formulation. In Stage 2, we spend more time relatively on undertaking the
environment analysis/evaluation, and in Stage 3, we spend more time relatively on strategy
formulation. Environmental scanning is an activity that must be built into the strategy
development and formulation process if it is to impact on company decision-making and help
?rms outperform their competitors by better adapting to their environment.
Although the process seems relatively straightforward, and simply a matter of collecting
the ‘right’ information, barriers to effective environmental scanning occur, because it is
dif?cult to determine what the ‘right’ information actually is. In addition, data gathering
can be time-consuming. In such cases, the information gathered ceases to provide a useful
input to strategic marketing decision-making. In addition, multinational corporations may
see opportunities and desire organizational change, and collect the right data, to take
advantage of those opportunities, but fail to actually undertake such opportunities because of
switching costs and organizational inertia related to production, sourcing, and other business
operations. In a transatlantic survey of European and American companies in the late 1970s
(O’Connell and Zimmerman, 1979), American executives reported a number of frustrations
in their environmental scanning exercises, including the inability to move faster; managerial
inhibitions related to pessimistic discussions; con?ict between the desire for stability and the
reality of constant change; missed opportunities due to poor timing; and problems motivating
the management team to discuss the issues. European executives reported frustrations
%
E
f
f
o
r
t
e
x
p
e
n
d
e
d
100
Time
Data Gathering
Environmental
interpretation/
Analysis
Strategy
Formulation
0
Stage 1 Stage 2 Stage 3
FIGURE 2.4 The environmental scanning process
Source: Adapted from O’Connell and Zimmerman (1979). Reproduced with the kind
permission of California Management Review.
T H E M A R K E T I N G E N V I R O N M E N T 55
3 Those companies that have the potential to indirectly in?uence the performance of the
organization in the pursuit of its objectives. These organizations often supply services
such as consultancy, ?nancial services, or marketing research or communication
agencies.
Analysis of the performance environment is undertaken so that organizations can adapt
to better positions, relative to those of their stakeholders and competitors. These adjustments
are made as circumstances develop and/or in anticipation of environmental and performance
conditions. The performance environment encompasses not only competitors, but also suppliers
and other organizations like distributors, who all contribute to the industry value chain.
Knowledge about the performance arena allows organizations to choose how and
where to operate and compete, given limited resources. Knowledge allows adaptation and
development in complex and increasingly turbulent markets. Conditions vary from industry
to industry. Some are full of potential and growth opportunities, such as cruise holidays,
Fairtrade food, and the online travel and gaming industries, whereas others are in decline
or at best stagnating, for example, high street music stores and car manufacturing. Rivalry
may be on an international, a national, a regional, or a local basis. The source and strength
of competitive forces will vary, so that a strong organization operating in an ‘unattractive’
industry may have dif?culty in achieving an acceptable performance. Weaker organizations,
however, operating in ‘attractive’ environments, may record consistently good performances.
Analysing Industries
An industry is composed of various ?rms that market similar products and services. According
to Porter (1979), we should review the ‘competitive’ environment within an industry to identify
the major competitive forces, as this can help assess their impact on an organization’s present
and future competitive positions. There are a number of variables that help determine how
attractive an industry is and shape the longer term pro?tability for the different companies
that make up the industry. Think of industries such as shipbuilding, cars, coal, and steel,
where levels of pro?tability have been weak, and hence, unattractive to prospective new
entrants. Now think of industries such as new media, oil, banking, and supermarkets, where
levels of pro?tability have been astonishingly high. The competitive pressures in all these
markets vary quite considerably but there are enough similarities to establish an analytical
framework to gauge the nature and intensity of competition. Porter suggests that competition
in an industry is a composite of ?ve main competitive forces. These are the level of threat
that new competitors will enter the market, the threat posed by substitute products, and
the bargaining power of both buyers and suppliers. These, in turn, affect the ?fth force, the
intensity of rivalry between the current competitors. Porter called these variables the Five
Forces of Competitive Industry Analysis (see Figure 2.5).
As a general rule, the more intense the rivalry between the industry players, the lower
their overall performance. On the other hand, the lower the rivalry, the greater will be
the performance of the industry players. Porter’s model is useful because it exposes the
competitive forces in operation in an industry and can lead to an assessment of the strength
of each of the forces. The collective impact determines what competition is like in the market.
As a general rule, the stronger the competitive forces, the lower the pro?tability in a market.
An organization needs to determine a competitive approach that will allow it to in?uence the
industry’s competitive rules, protect it from competitive forces as much as possible, and give
it a strong position from which to compete.
T H E M A R K E T I N G E N V I R O N M E N T 57
industry, where patents protect companies’ investments in new medicines. The cost of a typical
new patented drug at the turn of the twenty-?rst century was around $800m in R&D costs alone
(DiMasi, Hansen, and Grabowski, 2003)—before marketing and other commercial costs—
taking on average around 12 years from invention through to commercial launch (Wall Street
Journal, 2001). Few companies can compete in such a market, as the set-up and ongoing R&D
costs are very large. One strategic response in the industry has been a wave of consolidation
(i.e., mergers and alliances), as pharmaceutical companies tried to build critical mass in R&D,
marketing, and distribution. An example is GSK, from the merger of Glaxo Wellcome plc
and SmithKline Beecham plc in 2000. In 2009, pharmaceutical industry giants P?zer and
GlaxoSmithKline agreed to set up a joint company to develop and market their HIV/AIDS
drugs in a bid to share risk and development costs (Ruddick, 2009). In early 2012, the Piramal
Group, a diversi?ed conglomerate with a presence across 100 countries, made two pharma-
related acquisitions—a research compound for brain cancer detection from Bayer HealthCare
AG and the US-based Decision Resources LLC, a pharma market analytics company.
Substitutes
In any industry, there are usually substitute products and services that perform the same
function or meet similar customer needs. Levitt (1960) warned that many companies fail to
recognize the competitive threat from newly developing products and services. He cites the
American railroad industry’s refusal to see the competitive threat arising from the development
of the automobile and airline industries in the transport sector.
Consider the telecommunications sector. As telecommunications markets continue to
converge (i.e., move together) with the development of broadband internet services, we now
see a variety of different companies such as Airtel, MNTL, and Reliance operating in the
same competitive marketspace. With the development of VOIP (voice over internet protocol),
the internet telecommunication voice transmission standard, ?xed-line telecommunications
is already becoming a commodity, and ?rms operating in the area, like Airtel in India, are
increasingly looking to develop value-added services such as online TV (content-on-demand),
interactive gaming, and web-conferencing services.
At the moment, most countries’ ?xed-line operators are still holding on to the vast majority
of their subscribers, even though much cheaper alternatives are beginning to appear in the
market (e.g., cable, internet, and fusion telephone plans incorporating mobile and ?xed
lines). It takes time for consumers to become aware of new product and service possibilities
and obtain the necessary information to allow them to make a decision over whether or not
to switch to an alternative offering. Consumers consider the switching costs associated with
such a decision, which, in turn, affects their propensity to substitute the product or service for
another offering. They consider the relative price performance of one offering over another.
For example, if we decide we wish to travel from Bangkok to Chiang Mai, we can ?y from
Suvarnabhumi airport to Chiang Mai International airport, take the train, or drive (or hire
a car and drive if we don’t have one). We would consider
the relative price differences (the ?ight is likely to be the
most expensive, but not always) and we would also factor
into this decision how comfortable and convenient these
different journeys were hypothetically before we ?nally
make our choice. In analysing our place within an industry,
it is fundamental that we consider what alternative product
and service offerings exist in the marketplace, which also
meet, to a greater or lesser extent, our customers’ needs.
The Indian telecommunications company
Airtel operates in 20 countries across
South Asia, Africa, and the Channel Islands
Courtesy: Bharti Airtel Limited
58 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
Buyers
Companies should ask themselves how much of their sales go to one individual company. This
is an important question because if one buying company purchases a large volume of product
from the supplying company, as car manufacturers do from steel suppliers, it is likely to be
able to demand price concessions (price/total purchases) when there are lots of competing
suppliers in the marketplace relative to the proportion of buyers (buyer concentration versus
?rm concentration). Buyers may also decide to increase their bargaining power through
backward integration. For instance, a company is said to have backward integrated when
it moves into manufacturing the products or services it previously bought from its suppliers.
Tesco—the British multiple retail grocer operating in 14 markets outside the UK in 2009—also
sells ?nancial services, including debt and credit services to its customers, which it previously
would have purchased from Visa and MasterCard merchant operators. As customers have
tended to pay for many years now using credit/debit cards rather than cash, Tesco has
lowered its transaction costs by setting up its own credit/debit services. Nevertheless, for
the other suppliers in a market, it means that they effectively have a new entrant into the
market, and hence, a new competitor. Another factor impacting on a buyer’s bargaining
power is how price sensitive that particular company is (see Chapter 9). Depending on their
trading circumstances, some companies might be more sensitive to price than other buyers.
If such companies are more price sensitive and yet there are lots of competing suppliers for
their business, they are likely to display less loyalty to their suppliers. Most companies try to
enhance other factors associated with an offering (e.g., after-sales service or product/service
customization) to try to reduce a client company’s price sensitivity. When analysing an
industry, we should understand the bargaining power that buyers have with their suppliers,
as this can impact the prices charged and the volumes sold, or the total revenue earned.
Suppliers
In analysing a particular industry, we should determine how suppliers operate and the extent
of their bargaining power. For instance, if a small number of suppliers operate within an
industry with a large number of competitors, the suppliers have the stronger bargaining
advantage. Conversely, in an industry where there is a large number of suppliers with few
competing companies, the buying companies have the bargaining advantage. We should
also consider whether or not the suppliers are providing unique components, products, and
services that may enhance their bargaining situation. In some industries, suppliers increase
their market dominance by forward integrating (e.g., a toy manufacturer setting up a retail
outlet to sell its own products). Forward integration not only allows a company to control its
own supply chains better, but also allows it to sell at lower prices, thereby increasing sales
vis-à-vis competitors and pro?t from increased retail sales as well. Equally, if a company
faces high switching costs—economic, resource, and time costs associated with using another
supplier—then a supplier has stronger bargaining power as a result with that particular
company.
Competitors
To analyse an industry, we develop an outline of companies that operate within that particular
industry. For example, in the Indian automobile industry, the market-leading vehicle
manufacturers include Tata Motors, Maruti Suzuki India, Hyundai Motor India, Mahindra &
Mahindra, Honda, General Motors, and Range Rover. In undertaking a competitor analysis, we
outline each company’s structure (e.g., details of the main holding company, the individual
business unit, and any changes in ownership), current and future developments (these can
60 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
• Financial market management—incorporating the quantity and contents of service items,
and taking advantage of government deregulation policy and the prosperous stock and
securities markets (Chen, 1999).
UNDERSTANDING THE INTERNAL ENVIRONMENT
An analysis of the internal environment of an organization is concerned with understanding
and evaluating the capabilities and potential of the products, systems, human, marketing,
and ?nancial resources. An analysis of an organization’s resources should not focus on the
relative strength and weakness of a particular resource, but look at the absolute nature of
the resource itself. As Thompson (1990) suggests, ‘resources are not strong or weak merely
because they exist ... their value depends upon how they are being managed, controlled and
used.’ Attention here is given to two main elements, products and ?nance.
Product Portfolio Analysis
When managing a collection or portfolio of products, we should appreciate that understanding
the performance of an individual product can often fail to give the appropriate insight. What
is really important is an understanding about the relative performance of products. By creat-
ing a balance of old, mature, established, growing, and very new products, there is a better
chance of delivering pro?ts now and at some point in the future, when the current products
cease to be attractive and pro?table. One of the popular methods for assessing the variety
of businesses/products that an organization has involves the creation of a two-dimensional
graphical picture of the comparative strategic positions. This technique is referred to as a prod-
uct portfolio or portfolio matrix. The Boston Consulting Group (BCG) developed the original
idea, and their matrix—the Boston Box, shown in Figure 2.6—is based on two key variables,
market growth and relative market share (i.e., market share as a percentage of the share of the
product’s largest competitor, expressed as a fraction). Thus, a relative share of 0.8 means that
the product achieves 80% of the sales
of the market leader’s sales volume
(or value, depending on which mea-
sure is used). This is not the strongest
competitive position, but it is not a
weak position either. A relative mar-
ket share of 1 means that the com-
pany shares market leadership with
a competitor with an equal share. A
relative market share of 2 means that
the company has twice the market
share of the nearest competitor.
In Figure 2.7, the vertical axis re-
fers to the rate of market growth and
the horizontal axis refers to a prod-
uct’s market strength, as measured
by relative market share (as described
above). The size of the circles repre-
sents the sales revenue generated by
the product. Relative market share is
FIGURE 2.6 The Boston Box
Source: Reprinted from B. Hedley, ‘Strategy and the business portfolio’, Long Range
Planning, 10, 1, 12. © 1977, with permission from Elsevier.
R
a
t
e
o
f
m
a
r
k
e
t
g
r
o
w
t
h
Relative market share
High
High
Low
Low
Stars Question marks
Cash cows Dogs
62 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
Portfolio Issues
Portfolio analysis is an important guide to strategic development, if only because it forces
answers to questions such as:
• How fast will the market grow?
• What will be our market share?
• What investment will be required?
• How can a balanced portfolio be created from this point? (See also Market Insight 2.5.)
To take your learning further, you might wish to
read this in?uential paper.
Day, G. (1977), ‘Diagnosing the product portfolio’, Journal
of Marketing, April, 29–38.
Day outlines in this very readable article how
managers should evaluate the relative performance
of products within a portfolio in order to develop
appropriate marketing strategies. He concludes that
portfolio analysis is a useful guide—but not substitute—
for strategy development.
RES EARCH I NS I GHT 2.3
However, the questions posed and the answers generated through the use of the Boston
Box do not produce marketing strategies in themselves. As with all analytical tools and
methodologies, the BCG provides strategic indicators, not solutions. It is management’s
task to consider information from a variety of sources and then make decisions based on
their judgement. The Boston Box has been criticized for providing rigid solutions to product
portfolio evaluation when exceptions to the rule might exist, for example, by proposing that
‘cash cow’ products should not be invested in, when a company may rely solely on its ‘cash
cow’ products to provide pro?ts, and not necessarily have new products/services in the
pipeline to replace them. Equally, the Boston Box proposes that ‘dog’ products should be
divested, when, in fact, they may actually be returning a pro?t to the company. Finding the
necessary and objective data to plot the positions of products or SBUs on the two axes of
relative market share and market growth rate can also be problematic. Reliable industry data
may not actually always be available. Finally, it is not always easy to determine what market
we are concerned with. For example, if we consider the smoothie market, does this include
fruit-based milkshakes, or fruit juices more generally?
Financial Analysis
One of the most important tools for measuring the performance and strength of an organization is
?nancial analysis. This is often the ?rst (and regrettably only) tool managers use when reviewing
performance. This form of analysis is useful to managers, as it provides a means of measuring the
performance of current strategies with those of the past. Finance and benchmarking techniques
also allow measurement of an organization’s performance against their competitors. Suppliers
can also use ?nancial data to measure risk, as it can help them to decide whether to start or
continue trading with a customer. Finally, investors use ?nancial analysis to help examine the
recent and potential performance of an organization and the level of risk.
The reason to undertake an internal ?nancial analysis is to determine the level of ?nancial
resources available to support and sustain marketing strategies. This is not necessarily a
64 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
three environments. First, it considers the external opportunities and threats, where management
has little or no control. Second, it considers the nature, characteristics, and any changes occurring
within the performance environment, where management has partial in?uence. Third, the audit
reviews the quality and potential of the organization’s products, marketing systems, resources,
and capabilities, as part of the internal environment, where there is full control. The topics
normally undertaken as part of the marketing audit are shown in Figure 2.8.
The audit covers the marketing environment, an organization’s objectives and strategies,
its marketing programmes and performance, plus the organization itself and the relevant
marketing systems and procedures. We undertake marketing audits because they bring
together critical information, identify weaknesses in order that they can be corrected, and
provide a platform to build marketing strategy.
The marketing audit can be undertaken either by an internal team, led by a senior manager,
or if a more objective interpretation is desired, an outside consultant can be used. Whoever
conducts the audit, it should be undertaken on a regular, annual basis and be regarded as
a positive activity that can feed into the marketing strategy. Marketing audits should not be
instigated in response to a crisis, but undertaken on a regular, annual basis.
FIGURE 2.8 Dimensions of a
marketing audit
Marketing Function Audits —products, services, prices, distribution, promotion
Marketing Systems Audit —information, planning, and control systems
Marketing Organization Audit —structure, personnel
Marketing Strategy Audit —mission, goals, strategy
Environmental Audit —external and performance environments
A new recruit should be able to present him or herself in a credible, professional, and con?dent manner.
They also need to demonstrate an awareness of our competitors’ marketing campaigns and be able to
critically assess the effectiveness of such campaigns.
Banali L Malhotra, Head of Marketing, RAKBANK
SKILLS for Employment
CHAPTER SUMMARY
To consolidate your learning, the key points from this
chapter are summarized below:
• Identify and de?ne the three key areas of the
marketing environment.
The marketing environment incorporates the external
environment, the performance environment, and
the internal environment. The external environment
incorporates macroenvironmental factors, which are
66 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
2 Read Market Insight 2.4 (MAHYCO’s ongoing debate
on biotechnology crops in India: The classic case of Bt
cotton). Search the internet for further information on
the MAHYCO debate, and answer the following questions:
A What changes have taken place in the external
environment to bring about the MAHYCO debate?
B What strate gies in relation to product development
and promotion could MAHYCO adopt to ensure their
further presence in the seed market?
3 Undertake an environmental analysis using PESTLE, by
sur?ng the internet for appropriate information and by
using available market research reports, for each of the
following markets:
A The automotive market (e.g., you might be Renault,
BMW, Ford, or Toyota).
B The global multiple retail grocery market (e.g., you
might be Walmart, Carrefour, or Tesco).
C The beer industry (e.g., you might be King?sher,
Carlsberg, Heineken, San Miguel, or Singha).
4 Analyse the ecological marketing environment for the
cosmetics industry in a country of your choice. Look
speci?cally at socio-cultural patterns and trends in
habits, particularly in relation to male versus female
grooming. You may surf the internet for appropriate
documents and market intelligence material to help
you develop your arguments.
5 Using the data in Table 2.2, identify the relative market
shares of the various brands in the UK lager market.
Use the market growth rate ?gure as the difference in
total sales between 2007 and 2009. Then draw up a
Boston Box to illustrate the product portfolio for each
of the key companies and their brands.
TABLE 2.2 UK Lager Market
Brand Brewer 2007 2009 (est) 2007–2009
£m % £m % % change
Stella Artois AB InBev 520 17.7 510 18.0 –2
Carling Molson Coors 360 12.2 383 13.5 +6
Foster’s Heineken UK 325 11.1 312 11.0 –4
Carlsberg Carlsberg UK 220 7.5 255 9.0 +16
Budweiser AB InBev 150 5.1 128 4.5 –15
Carlsberg Export Heineken UK 135 4.6 119 4.2 –12
Kronenbourg 1664 Heineken UK 125 4.3 88 3.1 –27
Beck’s AB InBev 80 2.7 108 3.8 +35
Grolsch Molson Coors 100 3.4 79 2.8 –21
Tennent’s C&C
a
72 2.4 65 2.3 –9
Own-label NA 85 2.9 85 3.0 –
Others NA 768 26.1 704 24.8 –8
Totals 2,940 100 2,837 100 –4
a
Formerly AB Inbev.
Source: Mintel, 2009.
REFERENCES
Aguilar, F. Y. (1967), Scanning the Business Environment,
New York: Macmillan.
Albright, K. S. (2004), ‘Environmental scanning: radar for suc-
cess’, Information Management Journal, May–June, 38–45.
Visit the Online Resource Centre and complete the Test Bank to assess your
knowledge of Chapter 2.
68 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
Murray, S. (2006), ‘Confusion reigns over labelling’, Financial
Times, Special Report on Responsible Business, 2.
Ngamkroeckjoti, C., and Speece, M. (2008), ‘Technology
turbulence and environmental scanning in Thai food
new product development’, Asia Paci?c Journal of
Marketing and Logistics, 20, 4, 413–32.
O’Connell, J. J., and Zimmerman, J. W. (1979), ‘Scanning the
international environment’, California Management
Review, 22, 2, 15–23.
Orsato, R. J. (2006), ‘Competitive environmental strategies:
when does it pay to be green?’, California Management
Review, 48, 2 (Winter), 127–43.
Porter, M. (1979), ‘How competitive forces shape strategy’,
Harvard Business Review, March–April.
Rao, P. M. (2005), ‘Sustaining competitive advantage in a high-
technology environment: a strategic marketing perspec-
tive’, Advances in Competitiveness Research, 13, 1, 33–47.
Robinson, J. (2010), ‘David Cameron depicted as Gene
Hunt in Labour poster’, 2 April, The Guardian, retrieve
from www.guardian.co.uk/politics/2010/apr/02/david-
cameron-gene-hunt-labour-poster, accessed
05 December 2012.
Rochart, J. F. (1982), ‘Chief executives de?ne their own data
needs’, Harvard Business Review, March–April, 81–92.
Royal Dutch Shell (2008), ‘Shell energy scenarios to 2050:
an era of revolutionary change’, Internal Corporate
Presentation, 20 March, London: Royal Dutch Shell.
Ruddick, G. (2009), ‘Glaxo-P?zer tie-up opens new era
in AIDS battle’, The Telegraph, 31 October, retrieve
from www.telegraph.co.uk/?nance/newsbysector/
pharmaceuticalsandchemicals/6474678/Glaxo-P?zer-tie-
up-opens-new-era-in-Aids-battle.html, accessed
05 December 2012.
Sclater, I. (2005), ‘The digital dimension’, The Marketer,
May, 22–3.
Sevastopulo, D. (2008), ‘Dog?ght over dollars 35bn air force
contract grows more intense’, Financial Times, 17 March,
p.18.
Sharma, Devinder (2011), ‘Corporate lobbying gaining
strength in India’, Ground Reality, 7 December, retrieve
from http://devinder-sharma.blogspot.in/2011/12/
corporate-lobbying-gaining-strength-in.html, accessed
22 July 2012.
Sheth, Jagdish N., Sisodia, Rajendra S., and Sharma,
Arun (1999), ‘The Impact of Demographic Shifts and
Facilitating Technology Trends on Future Customer
Behavior’, accepted for publication in the Journal of the
Academy of Marketing Sciences, MSI/JAMS Special Issue.
Snoddy, R. (2006), ‘Brands face £70bn pink conundrum’,
Marketing (UK), 15 February.
Sweney, M. (2009), ‘Unilever goes crowdsourcing to spice up
Peperami’s TV ads’, The Guardian, 25 August, retrieve
from www.guardian.co.uk/media/blog/2009/aug/25/
unilever-peperami-advertising-crowdsourcing, accessed
05 December 2012.
Thompson, K. M. (1990), The Employee Revolution:
Corporate Internal Marketing, London: Pitman.
UN Population Division (2005), World Population Prospects:
The 2004 Revision, retrieve from www.un.org/esa/
population/publications/WPP2004/wpp2004.htm,
accessed 05 December 2012.
Valdiserri, T. (2002), ‘Pink market needs respect’, Precision
Marketing, 8 March.
Wallace, J. (2008), ‘Boeing back in tanker running’,
Seattle Pi, 19 June, retrieve from www.seattlepi.com/
business/367462_tanker19.html, accessed 11 April 2010.
Wall Street Journal (2001), ‘Cost of developing drugs found
to rise’, 3 December.
Whitla, P. (2009), ‘Crowdsourcing and its application in
marketing activities’, Contemporary Management
Research, 5, 1, 15–28.
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doc_120423728.pdf
Have you ever wondered how organizations adapt to the changing business environment? How do companies keep up with the many changes that occur in politics, markets, and economics? What processes do they use to try to anticipate changes in technologies?
Learning Outcomes
After reading this chapter, you should be able to:
» Identify and de?ne the three key areas of the marketing environment
» Describe the key characteristics associated with the marketing environment
» Explain PESTLE analysis and show how it is used to understand the external
environment
» Explain the environmental scanning process
» Analyse the performance environment using an appropriate model
» Understand the importance of analysing an organization’s internal environment
and identify the key resources and capabilities
Te Marketing Environment
2
T H E M A R K E T I N G E N V I R O N M E N T 37
CAS E I NS I GHT 2.1
Crompton Greaves Limited, an Indian
multinational company, is in the business of
design, manufacture, and supply of all kinds of
T&D (transmission and distribution) equipment,
including complete solution services, to its
large base of customers in India and abroad.
The company boasts of a global presence today.
How does it keep abreast of the marketing
environment? We speak to Biswaroop Ukil,
General Manger–Marketing (Power Products and
Solutions), to ?nd out.
Biswaroop Ukil for Crompton Greaves Ltd
Growth in the power sector is one of the essential factors
contributing to the gross domestic product (GDP) of a
country. Although the GDP of India has shown signs of
slowing down recently, it had been growing at a fast
pace for quite some time. Several initiatives on the part
of the central government, namely, its mega-power
policy, ultra mega-power projects, the build–own–
operate–transfer/build–own–operate–maintain models,
public–private partnership in transmission projects, and
the restructured accelerated power development and
reforms programme have given tremendous impetus to
all the three segments of the power sector—generation,
transmission, and distribution. Due to this, demand for
all major electrical power products such as transformers
and switchgear has been expanding steadily. If the global
economy, which looks pretty unstable at the moment,
stabilizes to a certain extent, the domestic demand for
T&D products is expected to grow, given the picture
painted by central planners and various government
agencies.
The Indian industry for T&D products is quite mature,
with several local manufacturers and multinationals
possessing the necessary technology, production
facilities, and exclusive sales and service networks across
the country. Apart from ?rms employing individual
market survey techniques and tools, there are industry-
level bodies/associations that gather and compile generic
industry-level information, which is then used by the
members of the association to chart out the course of
their businesses. This industry-level information, along
with the independent sets of market research data,
is then analysed to ascertain all related information,
such as market size, market share, industry growth,
order book position, price movement, and competition
scenario. Based on this analysis, capacity enhancement is
planned and a market strategy is worked out.
Over the past few years, the existing players in the
market have been ramping up their manufacturing
capacity after gaining indications of growth in the power
sector. Several new foreign manufacturers, eyeing a
piece of the pie of the fast-growing Indian power sector,
have come to India; some of them have even set up
green?eld facilities here. All these factors have led to
the supply capacity for T&D products far exceeding the
demand within the country, which has driven down
the price levels signi?cantly. Further, competition from
neighbouring countries has also aggravated the situation,
and the domestic industry is slowly losing market share
to foreign players, especially in the ultra-high voltage
segment.
In the face of excess supply capacity as well as
stiff competition from low-cost manufacturers
from neighbouring countries, the biggest
challenge for domestic manufacturers is to stay
a?oat in the business. How do you suggest a
company like Crompton Greaves can achieve this?
INTRODUCTION
Have you ever wondered how organizations adapt to the changing business environment?
How do companies keep up with the many changes that occur in politics, markets, and
economics? What processes do they use to try to anticipate changes in technologies? How do
38 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
they know which factors will impact on
their businesses and which won’t? We
consider such questions in this chapter.
The operating environment for all
organizations, whether they are com-
mercial, charitable, governmental, or
in the public sector more generally, is
never static and seldom entirely pre-
dictable, and can therefore profoundly
affect a company’s course of action. In
this chapter, we examine the nature of
the marketing environment, determine
environment-related issues, and pro-
vide a context for developing marketing
strategies (see Chapter 5).
Consider the degree to which an organization can in?uence the various environmental
forces acting on it. The external environment, for example, consists of the political, social,
and technological in?uences, and organizations usually have very limited in?uence on each
of these. The performance environment consists of competitors, suppliers, and indirect service
providers, who shape the way an organization achieves its objectives. Here, organizations
have a much stronger level of in?uence. The internal environment concerns the resources,
processes, and policies an organization manages in order to achieve its goals. These elements
can be in?uenced directly by an organization. Each of these three marketing environments is
discussed in this chapter (see Figure 2.1).
UNDERSTANDING THE EXTERNAL ENVIRONMENT
The external environment is characterized in two main ways. In the ?rst, the elements do
not have an immediate impact on the performance of an organization, although they might
do in the longer term. In the second, although the elements can in?uence an organization,
it is not possible to control them. This suggests that the level of risk attached to the external
environment is potentially high. To make sense of the external environment, we use the well-
known acronym, PESTLE. This is by far the easiest and one of the most popular frameworks
with which to examine the external environment. PESTLE stands for the Political, Economic,
Socio-cultural, Technological, Legal, and Ecological environments, as shown in Figure 2.2.
The Political Environment
When we conduct environmental scanning programmes, we consider the ?rm or organization’s
political environment. Although the legal environment relates to the laws and regulations
associated with consumers and business practices, the political environment relates to the
period of interaction between business, society, and government before those laws are
enacted, when they are still being formed, or are in dispute. So, political environmental
analysis is a critical phase in environmental scanning, because companies can detect potential
legal and regulatory changes in their industries and have a chance to impede, in?uence, and
alter that legislation. Most marketing strategy textbooks teach that the political environment
is largely uncontrollable. However, this is not always the case. There are circumstances when
External Environment Internal Environment
Performance
Environment
FIGURE 2.1 The three marketing environments
42 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
The Economic Environment
Companies and organizations must develop an understanding of the economic environment
because a country’s economic circumstances have an impact on what economists term factor
prices within a particular industry for a particular ?rm or organization. These factors could
include raw material, labour, building and other capital costs, or any other input to a business.
The external environment of a ?rm is affected by the following items:
• Wage in?ation—annual wage increases in a particular sector will depend on the supply
of labour in that sector. Where there is scarcity of supply, wages usually increase (e.g.,
doctors).
• Price in?ation—how much consumers pay for goods and services depends on the rate of
supply of those goods and services. If supply is scarce, there is usually an increase in the
price of that consumer good or service (e.g., petrol).
• Gross domestic product (GDP) per capita—the combined output of goods and services
in a particular nation is a useful measure for determining relative wealth between
countries, when comparisons are calculated per member of the population (GDP per
capita at purchasing power parity, see later paragraph).
• Income, sales, and corporation taxes—these taxes, typically operating in all countries
around the world usually at different levels, substantially affect how we market goods
and services.
• Exchange rates—the relative value of a currency vis-à-vis another currency is an important
calculation for those businesses operating in foreign markets or holding ?nancial reserves
in other currencies.
• Export/import quota controls and duties—there are often restrictions placed on the
amounts (quotas) of goods and services that any particular ?rm or industry can export
to a country, depending on the trading bloc or country to which that ?rm or industry
belongs. In addition, countries sometimes charge a form of tax on particular items as
well to discourage or encourage imports/exports and to protect their own economies.
When operating in other countries, we should understand how exchange rates and living
standards operate. We might also need to understand how prices or labour costs change if we
are importing our goods and services, or components of them, from another country, that is,
our factor prices. This is known as the rate of price or wage in?ation. The dif?culty comes in
comparing prices from one country to another. Should we just compare costs (what is paid
for a proposition as a company) and prices of goods (at what price a good is sold, or what is
paid by a consumer) through the exchange rate at any one particular time? Apparently not, as
this is itself subject to political and other pressures. What economists tend to do is calculate
prices for a particular basket of goods—a ?xed list of common items—and compare the costs
in one country versus another. This is known as the purchasing power parity exchange rate.
This rate then allows us to compare directly the relative costs between two countries for a
given item.
Firms usually have little impact on the macroeconomic environment, as they have little
control over macroeconomic variables like oil prices, which might affect their business, or
stock prices, if they are multinationals listed on a major stock exchange (e.g., the NYSE, the
BSE, or the Euronext). The challenge when examining the macroeconomic environment is
to foresee changes in the environment that might affect the ?rm’s activities. If a computer
company in Sweden imports silicon chips from Japan, and pays for them in Swedish Kronor,
but the exchange rate for yen is rising against the Swedish Kronor (in other words, you get
T H E M A R K E T I N G E N V I R O N M E N T 45
the way that consumers now interact with an organization’s marketing activity. Customers
are increasingly happy to work with companies and organizations to solve problems. Howe
(2006) refers to this phenomenon as crowdsourcing. Whitla (2009) suggests that the role
and process of crowdsourcing is to identify a task or group of tasks currently conducted
in-house, and then release the task(s) to a ‘crowd’ of outsiders who are invited to perform
the task(s) on behalf of the company (for a fee or prize). This invite might either be truly
open to everyone or restricted in some way to ensure that those who respond are only those
quali?ed to undertake the task. This new approach can help marketers gain insights into both
new product/service development and marketing communications (see Market Insight 2.2 for
examples of this activity).
MARKET I NS I GHT 2.2
THE WISDOM OF CROWDSOURCING
The following three examples outline different
uses of crowdsourcing for market ideas and
solutions, including the development of a political
billboard advert, a name for a newly developed
?avour, and creative ideas for a print and TV
advert campaign.
When the UK Labour Party developed its ?rst ad for
the general election campaign in April 2010, it used
the talents of its own supporters to design the ad. The
party’s advertising agency, Saatchi and Saatchi, invited
supporters to respond to an online brief to design their
?rst election billboard poster, and received around 1,000
responses. The winning entry parodied the leader of the
Conservatives, David Cameron, as the politically incorrect
Gene Hunt—the character from ‘Ashes to Ashes’, a BBC
TV show set during the Thatcher years—sitting on the
bonnet of an Audi Quattro. Ironically, the Conservatives
felt that the advert was so positive that they developed
their own version of it, replacing the Labour words,
‘Don’t let him take Britain back to the 1980s’ with ‘Fire
up the Quattro, it’s time for a change’.
Nestlé’s Maggi brand is one of the largest and most
loved food brands in India. Nestlé launched the ‘Guess
the Taste’ scheme in March 2011, inviting fans to guess
the taste of a new, mystery ?avour of vegetarian noodles
and name the noodles for the company in India. These
mystery-?avoured noodles are being sold across India in
packets marked with a distinctive question mark. Nestlé
has received more than 45,000 consumers entries with
their suggested names for the taste. ‘Guess the Taste’
follows other recent successful efforts by Nestlé’s Maggi
brand to recognize and develop its long and fruitful
relationship with consumers in India.
Unilever offered $10,000 in a competition to
develop ideas for its next Peperami print and TV advert
campaign, based on its quirky character Animal, a
living representation of the pork salami snack. Using a
crowdsourcing website, www.ideabounty.com, and its
production house SmartWorks, Unilever asked for an
‘unapologetic, unexpected, and incredibly memorable
piece of communication’. The Unilever team was so
impressed with the submissions they received that
instead of picking one winning idea they actually
selected two!
Sources: BBC (2010b); Robinson (2010); Sweney (2009); www.
ideabounty.com/blog/post/2485/peperami.-picks-two-winning-
ideas; www.nestle.in.
1 When do you think crowdsourcing is most useful?
2 When do you think crowdsourcing might not be an
appropriate technique to use?
3 Do you know of any other companies that have
used crowdsourcing approaches? What did they
use it for?
Maggi—‘Guess the taste’
Courtesy: www.nestle.in
T H E M A R K E T I N G E N V I R O N M E N T 51
trademarks all goods as a guarantee to indicate that that particular good has been sourced
from disadvantaged producers in a developing country at a decent price to the producer. Sales
of Fairtrade products include coffee, tea, chocolate, banana, cocoa, ?owers, wine, cotton,
honey, and many others. The retail sales of Fairtrade certi?ed products in Australia and New
Zealand skyrocketed by almost 200% between 2009 and 2010, reaching almost AU$150m. In
2009, there was a signi?cant growth—of more than 1,200%, to over 753 tonnes—of Fairtrade
coffee imports from the Asia-Paci?c region (Fairtrade Association, 2009). Nevertheless,
despite the good intentions of these companies, consumers remain confused over whether a
particular product is organic, fairly traded, and/or ethically sourced (Murray, 2006).
One important question for marketers is how should a company incorporate the changing
trend in sustainability into its organizational processes? To answer this question, Orsato (2006)
suggests that a company can adopt one of the following four different green marketing strategies:
• Eco-ef?ciency—developing lower costs through organizational processes such as the
promotion of resource productivity (e.g., energy ef?ciency) and better utilization of by-
products. This approach should be adopted by ?rms that need to focus on reducing the
cost and environmental impact of their organizational processes. Supermarket chains in
Norway, and other Scandinavian countries, have for a long time encouraged recycling.
• Beyond compliance leadership—the adoption of a differentiation strategy through
organizational processes like certi?ed schemes to demonstrate their ecological credentials,
their environmental excellence, for example, the adoption of the UN Global Compact
principles or other Environmental Management System (EMS) schemes and codes like
ISO14001. This approach should be adopted by ?rms that supply industrial markets, like
car manufacturers.
• Eco-branding—the differentiation of a ?rm’s products or services to promote environmental
responsibility. Examples include Duchy Originals, the British Prince of Wales’ food brand,
the Thai King Bhumibol’s Golden Place brand, or the Toyota Prius, labelled as ‘mean but
green’. Another example is BP—formerly British Petroleum—who changed their logo to
make it green and yellow in a ?ower petal and sun synthesis, which they call the Helios,
and slogan to ‘beyond petroleum’ to re?ect their intended shift in meeting the world’s
energy requirements to more sustainable sources.
• Environmental cost leadership—the offering of products and
services that give greater environmental bene?ts at a lower
price. This strategy particularly suits ?rms operating in price-
sensitive ecologically sensitive markets, such as the packaging
and chemical industries.
Whatever the company and industry, ecological trends in
marketing look set to stay and further develop as the sustainability
debate rages on and companies use it to develop their own
competitive strategies. It is important to assess how this movement
towards greener and sustainable marketing is affecting a particular
industry to ensure that a company within that industry is either
not adversely affected by these changes (e.g., by non-compliance
with regulatory change like packaging) or can take advantage of
the opportunities (e.g., a haulage company taking advantage of
hybrid lorries using engines that run on a combination of energy
produced by petrol combustion and electricity production to lower
energy costs).
BP’s Helios logo
Courtesy: BP
T H E M A R K E T I N G E N V I R O N M E N T 53
to ?nd information on export opportu-
nities through information from second-
ary sources and from market research
exercises. They tended to monitor their
competitors’ export performance, in-
volvement in exporting, and their export
intention, and they were more likely to
monitor changes in technology, prod-
ucts, economic conditions, and socio-
political conditions (Lim, Sharkey, and
Kim, 1996). A study on Thai small- to
medium-sized food processing compa-
nies has indicated that environmental
scanning is a key factor in the new prod-
uct development success in sectors with
high technological turbulence (Ngamk-
roeckjoti and Speece, 2008).
The process through which compa-
nies scan the marketing environment
typically involves three stages (see Figure 2.4). In Stage 1, the focus is principally, but not
exclusively, on data gathering.
In Stage 2, the focus is principally, but not exclusively, on interpreting the data gathered
in a process of environmental interpretation/analysis, and in the ?nal stage, the focus is
principally, but not exclusively, on strategy formulation.
During each of the key scanning stages, there is also some activity in each of the other
two areas so that each of the three processes dominates a particular stage but is also present
at the other stages. So, in Stage 1, we might spend 60% of our time gathering data, 20%
of our time undertaking environmental analysis/evaluation, and the remaining 20% of our
time on strategy formulation. In Stage 2, we spend more time relatively on undertaking the
environment analysis/evaluation, and in Stage 3, we spend more time relatively on strategy
formulation. Environmental scanning is an activity that must be built into the strategy
development and formulation process if it is to impact on company decision-making and help
?rms outperform their competitors by better adapting to their environment.
Although the process seems relatively straightforward, and simply a matter of collecting
the ‘right’ information, barriers to effective environmental scanning occur, because it is
dif?cult to determine what the ‘right’ information actually is. In addition, data gathering
can be time-consuming. In such cases, the information gathered ceases to provide a useful
input to strategic marketing decision-making. In addition, multinational corporations may
see opportunities and desire organizational change, and collect the right data, to take
advantage of those opportunities, but fail to actually undertake such opportunities because of
switching costs and organizational inertia related to production, sourcing, and other business
operations. In a transatlantic survey of European and American companies in the late 1970s
(O’Connell and Zimmerman, 1979), American executives reported a number of frustrations
in their environmental scanning exercises, including the inability to move faster; managerial
inhibitions related to pessimistic discussions; con?ict between the desire for stability and the
reality of constant change; missed opportunities due to poor timing; and problems motivating
the management team to discuss the issues. European executives reported frustrations
%
E
f
f
o
r
t
e
x
p
e
n
d
e
d
100
Time
Data Gathering
Environmental
interpretation/
Analysis
Strategy
Formulation
0
Stage 1 Stage 2 Stage 3
FIGURE 2.4 The environmental scanning process
Source: Adapted from O’Connell and Zimmerman (1979). Reproduced with the kind
permission of California Management Review.
T H E M A R K E T I N G E N V I R O N M E N T 55
3 Those companies that have the potential to indirectly in?uence the performance of the
organization in the pursuit of its objectives. These organizations often supply services
such as consultancy, ?nancial services, or marketing research or communication
agencies.
Analysis of the performance environment is undertaken so that organizations can adapt
to better positions, relative to those of their stakeholders and competitors. These adjustments
are made as circumstances develop and/or in anticipation of environmental and performance
conditions. The performance environment encompasses not only competitors, but also suppliers
and other organizations like distributors, who all contribute to the industry value chain.
Knowledge about the performance arena allows organizations to choose how and
where to operate and compete, given limited resources. Knowledge allows adaptation and
development in complex and increasingly turbulent markets. Conditions vary from industry
to industry. Some are full of potential and growth opportunities, such as cruise holidays,
Fairtrade food, and the online travel and gaming industries, whereas others are in decline
or at best stagnating, for example, high street music stores and car manufacturing. Rivalry
may be on an international, a national, a regional, or a local basis. The source and strength
of competitive forces will vary, so that a strong organization operating in an ‘unattractive’
industry may have dif?culty in achieving an acceptable performance. Weaker organizations,
however, operating in ‘attractive’ environments, may record consistently good performances.
Analysing Industries
An industry is composed of various ?rms that market similar products and services. According
to Porter (1979), we should review the ‘competitive’ environment within an industry to identify
the major competitive forces, as this can help assess their impact on an organization’s present
and future competitive positions. There are a number of variables that help determine how
attractive an industry is and shape the longer term pro?tability for the different companies
that make up the industry. Think of industries such as shipbuilding, cars, coal, and steel,
where levels of pro?tability have been weak, and hence, unattractive to prospective new
entrants. Now think of industries such as new media, oil, banking, and supermarkets, where
levels of pro?tability have been astonishingly high. The competitive pressures in all these
markets vary quite considerably but there are enough similarities to establish an analytical
framework to gauge the nature and intensity of competition. Porter suggests that competition
in an industry is a composite of ?ve main competitive forces. These are the level of threat
that new competitors will enter the market, the threat posed by substitute products, and
the bargaining power of both buyers and suppliers. These, in turn, affect the ?fth force, the
intensity of rivalry between the current competitors. Porter called these variables the Five
Forces of Competitive Industry Analysis (see Figure 2.5).
As a general rule, the more intense the rivalry between the industry players, the lower
their overall performance. On the other hand, the lower the rivalry, the greater will be
the performance of the industry players. Porter’s model is useful because it exposes the
competitive forces in operation in an industry and can lead to an assessment of the strength
of each of the forces. The collective impact determines what competition is like in the market.
As a general rule, the stronger the competitive forces, the lower the pro?tability in a market.
An organization needs to determine a competitive approach that will allow it to in?uence the
industry’s competitive rules, protect it from competitive forces as much as possible, and give
it a strong position from which to compete.
T H E M A R K E T I N G E N V I R O N M E N T 57
industry, where patents protect companies’ investments in new medicines. The cost of a typical
new patented drug at the turn of the twenty-?rst century was around $800m in R&D costs alone
(DiMasi, Hansen, and Grabowski, 2003)—before marketing and other commercial costs—
taking on average around 12 years from invention through to commercial launch (Wall Street
Journal, 2001). Few companies can compete in such a market, as the set-up and ongoing R&D
costs are very large. One strategic response in the industry has been a wave of consolidation
(i.e., mergers and alliances), as pharmaceutical companies tried to build critical mass in R&D,
marketing, and distribution. An example is GSK, from the merger of Glaxo Wellcome plc
and SmithKline Beecham plc in 2000. In 2009, pharmaceutical industry giants P?zer and
GlaxoSmithKline agreed to set up a joint company to develop and market their HIV/AIDS
drugs in a bid to share risk and development costs (Ruddick, 2009). In early 2012, the Piramal
Group, a diversi?ed conglomerate with a presence across 100 countries, made two pharma-
related acquisitions—a research compound for brain cancer detection from Bayer HealthCare
AG and the US-based Decision Resources LLC, a pharma market analytics company.
Substitutes
In any industry, there are usually substitute products and services that perform the same
function or meet similar customer needs. Levitt (1960) warned that many companies fail to
recognize the competitive threat from newly developing products and services. He cites the
American railroad industry’s refusal to see the competitive threat arising from the development
of the automobile and airline industries in the transport sector.
Consider the telecommunications sector. As telecommunications markets continue to
converge (i.e., move together) with the development of broadband internet services, we now
see a variety of different companies such as Airtel, MNTL, and Reliance operating in the
same competitive marketspace. With the development of VOIP (voice over internet protocol),
the internet telecommunication voice transmission standard, ?xed-line telecommunications
is already becoming a commodity, and ?rms operating in the area, like Airtel in India, are
increasingly looking to develop value-added services such as online TV (content-on-demand),
interactive gaming, and web-conferencing services.
At the moment, most countries’ ?xed-line operators are still holding on to the vast majority
of their subscribers, even though much cheaper alternatives are beginning to appear in the
market (e.g., cable, internet, and fusion telephone plans incorporating mobile and ?xed
lines). It takes time for consumers to become aware of new product and service possibilities
and obtain the necessary information to allow them to make a decision over whether or not
to switch to an alternative offering. Consumers consider the switching costs associated with
such a decision, which, in turn, affects their propensity to substitute the product or service for
another offering. They consider the relative price performance of one offering over another.
For example, if we decide we wish to travel from Bangkok to Chiang Mai, we can ?y from
Suvarnabhumi airport to Chiang Mai International airport, take the train, or drive (or hire
a car and drive if we don’t have one). We would consider
the relative price differences (the ?ight is likely to be the
most expensive, but not always) and we would also factor
into this decision how comfortable and convenient these
different journeys were hypothetically before we ?nally
make our choice. In analysing our place within an industry,
it is fundamental that we consider what alternative product
and service offerings exist in the marketplace, which also
meet, to a greater or lesser extent, our customers’ needs.
The Indian telecommunications company
Airtel operates in 20 countries across
South Asia, Africa, and the Channel Islands
Courtesy: Bharti Airtel Limited
58 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
Buyers
Companies should ask themselves how much of their sales go to one individual company. This
is an important question because if one buying company purchases a large volume of product
from the supplying company, as car manufacturers do from steel suppliers, it is likely to be
able to demand price concessions (price/total purchases) when there are lots of competing
suppliers in the marketplace relative to the proportion of buyers (buyer concentration versus
?rm concentration). Buyers may also decide to increase their bargaining power through
backward integration. For instance, a company is said to have backward integrated when
it moves into manufacturing the products or services it previously bought from its suppliers.
Tesco—the British multiple retail grocer operating in 14 markets outside the UK in 2009—also
sells ?nancial services, including debt and credit services to its customers, which it previously
would have purchased from Visa and MasterCard merchant operators. As customers have
tended to pay for many years now using credit/debit cards rather than cash, Tesco has
lowered its transaction costs by setting up its own credit/debit services. Nevertheless, for
the other suppliers in a market, it means that they effectively have a new entrant into the
market, and hence, a new competitor. Another factor impacting on a buyer’s bargaining
power is how price sensitive that particular company is (see Chapter 9). Depending on their
trading circumstances, some companies might be more sensitive to price than other buyers.
If such companies are more price sensitive and yet there are lots of competing suppliers for
their business, they are likely to display less loyalty to their suppliers. Most companies try to
enhance other factors associated with an offering (e.g., after-sales service or product/service
customization) to try to reduce a client company’s price sensitivity. When analysing an
industry, we should understand the bargaining power that buyers have with their suppliers,
as this can impact the prices charged and the volumes sold, or the total revenue earned.
Suppliers
In analysing a particular industry, we should determine how suppliers operate and the extent
of their bargaining power. For instance, if a small number of suppliers operate within an
industry with a large number of competitors, the suppliers have the stronger bargaining
advantage. Conversely, in an industry where there is a large number of suppliers with few
competing companies, the buying companies have the bargaining advantage. We should
also consider whether or not the suppliers are providing unique components, products, and
services that may enhance their bargaining situation. In some industries, suppliers increase
their market dominance by forward integrating (e.g., a toy manufacturer setting up a retail
outlet to sell its own products). Forward integration not only allows a company to control its
own supply chains better, but also allows it to sell at lower prices, thereby increasing sales
vis-à-vis competitors and pro?t from increased retail sales as well. Equally, if a company
faces high switching costs—economic, resource, and time costs associated with using another
supplier—then a supplier has stronger bargaining power as a result with that particular
company.
Competitors
To analyse an industry, we develop an outline of companies that operate within that particular
industry. For example, in the Indian automobile industry, the market-leading vehicle
manufacturers include Tata Motors, Maruti Suzuki India, Hyundai Motor India, Mahindra &
Mahindra, Honda, General Motors, and Range Rover. In undertaking a competitor analysis, we
outline each company’s structure (e.g., details of the main holding company, the individual
business unit, and any changes in ownership), current and future developments (these can
60 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
• Financial market management—incorporating the quantity and contents of service items,
and taking advantage of government deregulation policy and the prosperous stock and
securities markets (Chen, 1999).
UNDERSTANDING THE INTERNAL ENVIRONMENT
An analysis of the internal environment of an organization is concerned with understanding
and evaluating the capabilities and potential of the products, systems, human, marketing,
and ?nancial resources. An analysis of an organization’s resources should not focus on the
relative strength and weakness of a particular resource, but look at the absolute nature of
the resource itself. As Thompson (1990) suggests, ‘resources are not strong or weak merely
because they exist ... their value depends upon how they are being managed, controlled and
used.’ Attention here is given to two main elements, products and ?nance.
Product Portfolio Analysis
When managing a collection or portfolio of products, we should appreciate that understanding
the performance of an individual product can often fail to give the appropriate insight. What
is really important is an understanding about the relative performance of products. By creat-
ing a balance of old, mature, established, growing, and very new products, there is a better
chance of delivering pro?ts now and at some point in the future, when the current products
cease to be attractive and pro?table. One of the popular methods for assessing the variety
of businesses/products that an organization has involves the creation of a two-dimensional
graphical picture of the comparative strategic positions. This technique is referred to as a prod-
uct portfolio or portfolio matrix. The Boston Consulting Group (BCG) developed the original
idea, and their matrix—the Boston Box, shown in Figure 2.6—is based on two key variables,
market growth and relative market share (i.e., market share as a percentage of the share of the
product’s largest competitor, expressed as a fraction). Thus, a relative share of 0.8 means that
the product achieves 80% of the sales
of the market leader’s sales volume
(or value, depending on which mea-
sure is used). This is not the strongest
competitive position, but it is not a
weak position either. A relative mar-
ket share of 1 means that the com-
pany shares market leadership with
a competitor with an equal share. A
relative market share of 2 means that
the company has twice the market
share of the nearest competitor.
In Figure 2.7, the vertical axis re-
fers to the rate of market growth and
the horizontal axis refers to a prod-
uct’s market strength, as measured
by relative market share (as described
above). The size of the circles repre-
sents the sales revenue generated by
the product. Relative market share is
FIGURE 2.6 The Boston Box
Source: Reprinted from B. Hedley, ‘Strategy and the business portfolio’, Long Range
Planning, 10, 1, 12. © 1977, with permission from Elsevier.
R
a
t
e
o
f
m
a
r
k
e
t
g
r
o
w
t
h
Relative market share
High
High
Low
Low
Stars Question marks
Cash cows Dogs
62 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
Portfolio Issues
Portfolio analysis is an important guide to strategic development, if only because it forces
answers to questions such as:
• How fast will the market grow?
• What will be our market share?
• What investment will be required?
• How can a balanced portfolio be created from this point? (See also Market Insight 2.5.)
To take your learning further, you might wish to
read this in?uential paper.
Day, G. (1977), ‘Diagnosing the product portfolio’, Journal
of Marketing, April, 29–38.
Day outlines in this very readable article how
managers should evaluate the relative performance
of products within a portfolio in order to develop
appropriate marketing strategies. He concludes that
portfolio analysis is a useful guide—but not substitute—
for strategy development.
RES EARCH I NS I GHT 2.3
However, the questions posed and the answers generated through the use of the Boston
Box do not produce marketing strategies in themselves. As with all analytical tools and
methodologies, the BCG provides strategic indicators, not solutions. It is management’s
task to consider information from a variety of sources and then make decisions based on
their judgement. The Boston Box has been criticized for providing rigid solutions to product
portfolio evaluation when exceptions to the rule might exist, for example, by proposing that
‘cash cow’ products should not be invested in, when a company may rely solely on its ‘cash
cow’ products to provide pro?ts, and not necessarily have new products/services in the
pipeline to replace them. Equally, the Boston Box proposes that ‘dog’ products should be
divested, when, in fact, they may actually be returning a pro?t to the company. Finding the
necessary and objective data to plot the positions of products or SBUs on the two axes of
relative market share and market growth rate can also be problematic. Reliable industry data
may not actually always be available. Finally, it is not always easy to determine what market
we are concerned with. For example, if we consider the smoothie market, does this include
fruit-based milkshakes, or fruit juices more generally?
Financial Analysis
One of the most important tools for measuring the performance and strength of an organization is
?nancial analysis. This is often the ?rst (and regrettably only) tool managers use when reviewing
performance. This form of analysis is useful to managers, as it provides a means of measuring the
performance of current strategies with those of the past. Finance and benchmarking techniques
also allow measurement of an organization’s performance against their competitors. Suppliers
can also use ?nancial data to measure risk, as it can help them to decide whether to start or
continue trading with a customer. Finally, investors use ?nancial analysis to help examine the
recent and potential performance of an organization and the level of risk.
The reason to undertake an internal ?nancial analysis is to determine the level of ?nancial
resources available to support and sustain marketing strategies. This is not necessarily a
64 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
three environments. First, it considers the external opportunities and threats, where management
has little or no control. Second, it considers the nature, characteristics, and any changes occurring
within the performance environment, where management has partial in?uence. Third, the audit
reviews the quality and potential of the organization’s products, marketing systems, resources,
and capabilities, as part of the internal environment, where there is full control. The topics
normally undertaken as part of the marketing audit are shown in Figure 2.8.
The audit covers the marketing environment, an organization’s objectives and strategies,
its marketing programmes and performance, plus the organization itself and the relevant
marketing systems and procedures. We undertake marketing audits because they bring
together critical information, identify weaknesses in order that they can be corrected, and
provide a platform to build marketing strategy.
The marketing audit can be undertaken either by an internal team, led by a senior manager,
or if a more objective interpretation is desired, an outside consultant can be used. Whoever
conducts the audit, it should be undertaken on a regular, annual basis and be regarded as
a positive activity that can feed into the marketing strategy. Marketing audits should not be
instigated in response to a crisis, but undertaken on a regular, annual basis.
FIGURE 2.8 Dimensions of a
marketing audit
Marketing Function Audits —products, services, prices, distribution, promotion
Marketing Systems Audit —information, planning, and control systems
Marketing Organization Audit —structure, personnel
Marketing Strategy Audit —mission, goals, strategy
Environmental Audit —external and performance environments
A new recruit should be able to present him or herself in a credible, professional, and con?dent manner.
They also need to demonstrate an awareness of our competitors’ marketing campaigns and be able to
critically assess the effectiveness of such campaigns.
Banali L Malhotra, Head of Marketing, RAKBANK
SKILLS for Employment
CHAPTER SUMMARY
To consolidate your learning, the key points from this
chapter are summarized below:
• Identify and de?ne the three key areas of the
marketing environment.
The marketing environment incorporates the external
environment, the performance environment, and
the internal environment. The external environment
incorporates macroenvironmental factors, which are
66 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
2 Read Market Insight 2.4 (MAHYCO’s ongoing debate
on biotechnology crops in India: The classic case of Bt
cotton). Search the internet for further information on
the MAHYCO debate, and answer the following questions:
A What changes have taken place in the external
environment to bring about the MAHYCO debate?
B What strate gies in relation to product development
and promotion could MAHYCO adopt to ensure their
further presence in the seed market?
3 Undertake an environmental analysis using PESTLE, by
sur?ng the internet for appropriate information and by
using available market research reports, for each of the
following markets:
A The automotive market (e.g., you might be Renault,
BMW, Ford, or Toyota).
B The global multiple retail grocery market (e.g., you
might be Walmart, Carrefour, or Tesco).
C The beer industry (e.g., you might be King?sher,
Carlsberg, Heineken, San Miguel, or Singha).
4 Analyse the ecological marketing environment for the
cosmetics industry in a country of your choice. Look
speci?cally at socio-cultural patterns and trends in
habits, particularly in relation to male versus female
grooming. You may surf the internet for appropriate
documents and market intelligence material to help
you develop your arguments.
5 Using the data in Table 2.2, identify the relative market
shares of the various brands in the UK lager market.
Use the market growth rate ?gure as the difference in
total sales between 2007 and 2009. Then draw up a
Boston Box to illustrate the product portfolio for each
of the key companies and their brands.
TABLE 2.2 UK Lager Market
Brand Brewer 2007 2009 (est) 2007–2009
£m % £m % % change
Stella Artois AB InBev 520 17.7 510 18.0 –2
Carling Molson Coors 360 12.2 383 13.5 +6
Foster’s Heineken UK 325 11.1 312 11.0 –4
Carlsberg Carlsberg UK 220 7.5 255 9.0 +16
Budweiser AB InBev 150 5.1 128 4.5 –15
Carlsberg Export Heineken UK 135 4.6 119 4.2 –12
Kronenbourg 1664 Heineken UK 125 4.3 88 3.1 –27
Beck’s AB InBev 80 2.7 108 3.8 +35
Grolsch Molson Coors 100 3.4 79 2.8 –21
Tennent’s C&C
a
72 2.4 65 2.3 –9
Own-label NA 85 2.9 85 3.0 –
Others NA 768 26.1 704 24.8 –8
Totals 2,940 100 2,837 100 –4
a
Formerly AB Inbev.
Source: Mintel, 2009.
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68 P A R T 1 M A R K E T I N G F U N D A M E N T A L S
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