The University of Sydney Page 1
MKTG1001 Marketing Principles
Dr Jeaney Yip
Lecture 3
The University of Sydney Page 2
MKTG1001 Marketing Principles
Lecture 3
Housekeeping:
– Group formations are finalized in wk 3 (wk 4 is an exception).
Group Establishment form (in Canvas) due in your tutorials (one form
per group).
– Every enrolled student must be in a group by wk 4.
– Once groups are formed, start researching the environment and
trends surrounding your chosen idea.
– All group related forms in ‘Assessment’ and ‘Group Project’. Please
use the ‘group diary’ template to record all group meetings.
– Academic honesty module to be completed by wk 4 by all new
(commencing students).
– More info here: https://www.sydney.edu.au/students/academic-integrity.html
– Actual module here: https://canvas.sydney.edu.au/courses/47318
The University of Sydney Page 3
This Class
Last lecture:
– What strategic planning is
– The different layers of strategic planning
This lecture:
– Environmental analysis
Learning Outcomes:
1. List the elements of the marketing organisation’s microenvironment and
discuss their importance in the marketing process.
2. Explain the broad concept of the organisation’s macro and micro-
environment.
3. Understand the impact of the macro & micro-environments on the target
market and marketing strategies.
4. Identify the main trends in the firm’s macro and micro environments.
The University of Sydney Page 4
The Marketing
Environment
The University of Sydney Page 5
Pulling it all together
– Searching for buyers
– Identifying their needs
– Designing products and
services
– Setting prices
– Promoting them
– Delivering them (Place)
The 4 P’s of marketing constitute
the controllable variables that
the marketer can manipulate
in order to serve a market.
The University of Sydney Page 6
The Marketing Process
Target
Consumers
Product
Place Price
Promotion
Competitors
Marketing
Channels
PublicsSuppliers
Demographic-
Economic
Environment
Technological-
Natural
Environment
Political-
Legal
Environment
Social-
Cultural
Environment
The University of Sydney Page 7
Why do I need a Marketing Plan?
Marketing planning helps you develop products and services in your business that meet
the needs of your target market. Good marketing helps your customers understand
why your product or service is better than, or different from, the competition.
A good marketing plan can help you reach your target audience, boost your customer
base, and ultimately, increase your bottom line. It's often required when seeking
funding and helps you set clear, realistic and measurable objectives for your business.
Without customers, your business would not survive. To attract and retain customers,
your business needs to understand the value of marketing. People are unlikely to
simply walk into your business and buy something from you if they don't know who you
are, what you are selling and why they should choose you over the competition.
https://www.business.gov.au/planning/marketing-plans/why-do-i-need-a-marketing-
plan
The University of Sydney Page 8
Sections of a Marketing Plan
Current marketing situation Consumers, trends, product profits,
competition, channels, environment
SWOT and situation analysis Key strategic/growth questions
Objectives Clearly stated goals
Marketing strategy Target market, positioning, 4P’s/7P’s
Action programs Step-by-step list of tasks
(Around the 4Ps)
Financials Impact on profit/sales
Controls Key goals (and a quick Plan B)
The University of Sydney Page 9
INTERNAL TO THE FIRM
EXTERNAL TO THE FIRM
SWOT analysis is an overall evaluation of the
company’s strengths (S), weaknesses (W),
opportunities (O) and threats (T).
The University of Sydney Page 10Leverage
Strengths
Internal capabilities that may
help a company achieve its objectives
Cost advantages
Financial resources
Customer loyalty
Modern production
facilities
Patents
Opportunities
External factors that the company
may be able to exploit to its advantage
Add to product line
Enter new markets
Acquire firms with
needed technology
(Based on environmental
trends)
Problems
Weaknesses
Internal limitations that may interfere
with a company’s ability to achieve its objectives
Too narrow a product line
Lack of management depth
High-cost operation due
to high labour cost &
obsolete production
facilities
Weak brand image
Threats
Current and emerging external factors
that may challenge the company
Changing buyer tastes
Likely entry of new
competitions
Adverse government
Policies
(Based on environmental
trends)
The outcome of an environmental scan is a SWOT analysis.
The University of Sydney Page 11
Analysing Market Opportunities
♦ Requires research to gather information about the
marketing environment (macro and micro).
♦ Requires understanding of consumer markets through
research.
♦ Requires close attention to competitors through
research.
The University of Sydney Page 12
The need to keep up
– A key role for marketing lies in understanding the world in
which they operate.
– Marketing research
– Marketing intelligence
– Healthy curiosity
– The reward of constant monitors is identification of
opportunities (and threats).
– Environmental scanning is the process of collecting information
about forces, events and relationships in the external
marketing environment that may affect the future of the
organisation or the implementation of a marketing plan.
– Environmental analysis is the process of assessing and
interpreting the information gathered through environmental
scanning.
The University of Sydney Page 13
The Marketing
Environments
More than one level
The University of Sydney Page 14
The Marketing Environments
• Marketers must be the environmental trend trackers and
opportunity seekers. Marketers have two special aptitudes.
They have disciplined methods – marketing research and
marketing intelligence – for collecting information about
the marketing environment.
• Marketers spend more time in customer and competitor
environments. By carefully studying the environment,
marketers can adapt their strategies to meet new
marketplace challenges and opportunities.
The University of Sydney Page 15
Types of Environment
The Internal Environment – Inside the firm – Relates
only to the firm
The Micro Environment – Inside the industry – Affects
Most/All Players in the Industry
The Macro Environment – Outside the industry – Has Varying
Effects on a Broad Range of Industries
The University of Sydney Page 16
Micro vs Macro Environments
– Microenvironment
– The forces close to the organisation that affect its ability to serve its
customers ;
• the company,
• customers,
• market channel firms,
• competitors and publics.
– Macroenvironment
– The larger societal forces that affect the whole microenvironment;
• demographic,
• economic, natural,
• technological,
• political forces
• social and cultural
The University of Sydney Page 17
The firm ConsumersSuppliers
Retailers
(channels)
Competitors
Publics (Various interest-holders)
The University of Sydney Page 18
Actors in the marketing environment: Customers
Consumer markets
Business markets
Government markets
International markets
Companies might target any or all of five types of customer markets:
Reseller markets
Each market type has special characteristics that calls for careful
study by the seller.
The University of Sydney Page 19
Actors in the marketing environment: Suppliers
Suppliers form an important link in the
company’s overall customer value
delivery system.
Most marketers today treat their
suppliers as partners in creating and
delivering customer value.
Suppliers provide materials, equipment, and
the like. They are an important link in the
organisation’s overall customer ‘value delivery
system’.
The University of Sydney Page 20
Types of marketing intermediaries
Financial intermediaries: Banks and insurance companies are among the many financial intermediaries that
comprise the broader value network in which a business operates. Managing these relationships is also
important.
Resellers
Find & sell to customers
Physical distribution firms
Inventory & move goods
Marketing service agencies
Research, advertising, media & consulting
Financial intermediaries
Finance transactions or insure against risk
The University of Sydney Page 21
Competition
New competitors look for
a gap or a new way of
operating
Existing competitors may
innovate for an
advantage
Degree of rivalry will
vary by industry
Should be able to predict
existing competitor’s
behaviour
Existing
competitors
New (or potential)
competitors
Substitute products 
meet same need
Sources of
competition:
The University of Sydney Page 22
– Every organisation faces a wide range of competitors. The marketing
concept states that, to be successful, an organisation must provide greater
customer value and satisfaction than its competitors.
– Marketers must do more than simply adapt to the needs of target consumers;
they must gain strategic advantage by positioning their offerings strongly
against competitors.
Types of competition:
– Price-based
– Quality-based
– Time-based
– Location-based
– No single competitive marketing strategy is best for all organisations. Each
marketer should consider its own size and industry position compared with
those of its competitors.
Actors in the marketing environment: Competitors
The University of Sydney Page 23
3 Levels of Competition
– Product Form
• Brands in the product category going after the
same segment with the same product features.
– Product Category
• Products or services with similar features.
– Generic
• Products or services fulfilling the same needs.
The University of Sydney Page 24
Actors in the marketing environment: Publics
Publics are…
any group that has
an actual or
potential interest in
or impact on an
organisation’s ability
to achieve its
objective.
Publics
Financial
public
Media
Government
Citizens’
action
groups
Local public
General
public
Internal
public
The University of Sydney Page 25
5 mins
The University of Sydney Page 26
The Macro
Environment
Across all industries
The University of Sydney Page 27
Major Forces in the organisation’s Macro Environment
– The organisation and its suppliers, marketing intermediaries, customers,
competitors and publics all operate in a larger macro-environment of forces
that shape opportunities and pose threats to the organisation.
The University of Sydney Page 28
Analysing the Macro environment for…
1. A fad is “unpredictable, short-lived
and without social, economic and
political significance”.
2. A trend is a direction or sequence of
events with momentum and durability.
3. A trend is more predictable and
durable than a fad, trends reveal the
shape of the future and can provide
strategic direction. Trends can take the
business to global markets.
– Mega trends are global, sustained
and macro economic forces of
development that impacts business,
economy, society, cultures and
personal lives thereby defining our
future world and its increasing pace
of change.
The University of Sydney Page 29
Macro (External) Environment
PEST Analysis
Analysis of the external factors
that can affect an organisation
Political
Stability
Attitude to business
Economic
Growth
Interest rates
Sociocultural
Current trends
Demographics
Technology
Use of Internet of
things
Digital advancementsNatural
Limited resources
Environment
The University of Sydney Page 30
Demographic environment
Demography is the study of human populations in terms of…
Age & gender
Location & geographic population shifts
Educational characteristics
Population size, density & diversity
Other relevant demographic statistics
Marketers keep close track of demographic trends & developments
Occupation
Race/Ethnicity
Family size & structure
The University of Sydney Page 31
Demographic Environment
– Demography is the study of human populations in terms of size, density, location,
age, gender, race, occupation and other statistics.
– Changing age structure of the population
– Increases and decreases in different age groups.
– Changing households/changing family structure.
– Geographic shifts.
– White-collar population/the gig economy
– Ethnic diversity.
– People at age 50 now can expect to live longer with men living to 80.6 years
and women to 84.6 years (an additional 5.5 years for men and 3.9 years for
women between 1980-82 and 2002-04).
– Average weekly hours worked for full-time and part-time workers have increased
over the last two decades. Full-time working hours for men increased by 1.9 hours
per week to 43.2 hours between 1985 and 2005 and for women by 1.7 hours to
39.3 hours. Part-time hours worked by men increased 0.7 hours to 16.4 hours
over the same period and for women by 1.4 hours to 16.9 hours per week.
– www.abs.gov.au, Social Trends report
The University of Sydney Page 32
The University of Sydney Page 33
The University of Sydney Page 34
The University of Sydney Page 35
The University of Sydney Page 36
Generational Marketing
– Marketers need to be careful about ‘turning off’ one
generation each time they craft a product or message that
appeals effectively to another.
– Each generation spans decades of time and many
socioeconomic levels.
– Marketers need to form more precise age-specific segments
within each group.
– Defining people by their birthdates may be less effective than
segmenting them by their lifestyle, life stage or the common
values they seek in the products they buy.
The University of Sydney Page 37
How Australia’s Demographics are
Changing
Far more women
in the workforce
Much greater
ethnic diversity
The University of Sydney Page 38
Some examples of how this affects
marketers
Far more women
in the workforce
Much greater
ethnic
diversity
Conveni nce and
child-care
Mo
segments,
different needs
The University of Sydney Page 39
Demographics
Statistics that measure
observable aspects of
a population
Example:
More people living
alone
Need for:
Smaller cars
City apartments
Ready-to-eat-meals
Marketing Implications
The University of Sydney Page 40
Natural environment
The natural environment involves the natural resources that are needed
as inputs by marketers or that are affected by marketing activities.
Shortages of raw materials
Increasing pollution
Rise in government intervention
Key natural environment issues:
The University of Sydney Page 41
Natural Environment
Recycling
Green
Marketing
The University of Sydney Page 42
– What is the trend? Environmentalism, sustainability, climate change
– What is the product/service/idea that drives the trend? Anything
environmentally-friendly, behaviours that prevent waste, products made
from recycled and/or sustainable materials
– Who is interested in this trend/product/service/idea?
– How is the trend communicated to its audiences (ie. Customers)? Advertising,
social influencers, PR, events, all forms of media
– Why is the trend trendy? People increasingly care about their environments
they live in and want to make a difference
The University of Sydney Page 43
Economic Environment
Changes
in Consumer
Spending Patterns
Economic
Development
Changes
in Income
Key
Economic
Concerns for
Marketers
The economic environment consists of factors that
affect consumer purchasing power and spending
patterns
Over the past several
decades, the rich have grown
richer, the middle class has
shrunk and the poor have
remained poor.
This distribution of income has
created a tiered market.
Companies target markets
accordingly.
People shift their spending
patterns across food,
housing, transportation,
health care and other goods
and services as family
income rises.
The University of Sydney Page 44
Economic
Shift in global economic power
The University of Sydney Page 45
Political and social environment
The political environment consists of laws, government agencies and pressure
groups that influence or limit various organisations and individuals in a given
society.
Legislation affecting business:
• Increasing legislation
• Changing government agency enforcement
Emphasis on ethics and socially responsible behaviour:
• Social responsibility
• Cause-related marketing
• Increase in online activity
Key political issues:
Australian
Competition and
Consumer
Commission (ACCC)
The Trade Practices Act (1974)
The University of Sydney Page 46
Technological Environment
Communication
Medical
Manufacturing
Materials
Big R+D focus
Energy
Food
The invention of plastic in the mid-1800’s had an
enormous impact in product design, shape, colour,
weight and cost
The technological environment designates forces
that create new technologies, creating new
product and market opportunities
The University of Sydney Page 47
The Group Project
1. Undertake an environmental scan (macro only) and research on current trends
that are likely to be strategic drivers for your chosen idea. Based on these
trends, justify why your idea has market potential which will become the basis
for the rest of your tasks.
2. Conduct a segmentation analysis and present who you would recommend as
your target market(s). Demonstrate how you would position your idea as a
market offering to this recommended target market relative to competitors.
3. Design your marketing mix with the target market(s) in mind.
Money saving personal assistant Flexitarian, pescatarian or low GI Food Truck
Time saving personal assistant Rapid test for respiratory illnesses
‘Hotel’ style retirement home Pollutant detector
Rent-a-pet service Lab based eggs
A robo café or bar Kids only gym
The University of Sydney Page 48
Where do I research?
– Internet: be selective over your online and digital sources.
– Electronic database such as Factiva, Proquest, Marketline, Euromonitor, Business
Source Premier (from library website, click on ‘databases’ and choose ‘Business -
Marketing’ by subject).
– Trend reports from McKinsey, Euromonitor, Wunderman Thompson, Trendwatching
– www.abs.gov.au (Australian Bureau of Statistics)
– www.ibisworld.com.au (Industry reports)
– www.ami.org.au (Australian Marketing Institute)
– www.roymorgan.com (market research company)
– www.nielsen.com/au (market research company)
– www.mccrindle.com.au (market research company)
– www.qmr.com.au (Quantum market research company)
– www.weforum.org (World Economic Forum)
– In Canvas under ‘Resources’, various library options are listed.
The University of Sydney Page 49
Next Class
– Finishing the cultural environment…
– Consumer Behaviour
– Tutorial discussion on mental health and
Movember (in Canvas, wk 4 button)