The Global Marketing Environment Friday, November 3
The marketing environment • Is composed of the actors and forces that affect a company’s ability to operate effectively in providing services and products to its customers. • It is useful to classify these forces into 2 categories Microenvironment and macroenvironment
What’s the difference between the two? • Microenvironment – immediate environment like suppliers, distributors, customers and competitors. • Macroenvironment – economic, social, political/legal forces.
Microenvironment Where does everyone fit in? Legal Suppliers CUSTOMERs Individual Social Distributors Competitors Political Economic Macroenvironment
Global Economic Forces • Economic Growth and Unemployment • Interest Rates and Exchange Rates • Development of Economic Areas
Economic State • The general state of both national and international economies can have a profound effect on an individual company’s success or failure. • Most of the world’s economies went through a significant growth period in the late 1990s, driven mainly by developments in telecommunications and computing.
As an example • Ireland – Late 1990s car sales rose from 70,000 to around 200,000 in 2000. • ipod – In 2005 saw a 60% increase over the year before - $3.3 billion. iPod's sales growth is expected to cool from a sizzling 234% in 2005 to just 18% in 2006. Wonder why??
Economic Growth defined • Economic growth is driven by greater use of inputs (such as labor, capital and natural resources) and/or growth in productivity. • This increase in an economy’s ability to produce goods and services which brings about a rise in standards of living.
Economic Growth – what is happening? • Switzerland, Finland and Sweden are the world’s most competitive economies according to The Global Competitiveness Report 2006-2007, released by the World Economic Forum in September 2006. • Denmark, Singapore, the United States, Japan, Germany, the Netherlands and the United Kingdom complete the top ten list, but the United States shows the most pronounced drop, falling from first to sixth.
The results • Low growth rates are reflected in high unemployment levels, which in turn affect consumers spending power.
CountriesUnemployment rates (%) • Afghanistan 40% (2005 est.) • Norfolk Island 0% (2005 est.) • Nauru 90% (2004 est.) • United Arab Emirates 2.4% (2005) • France 9.9% (2005 est.) • United States 5.1% (2005 est.)
Interest and Exchange Rates One of the levers that governments can use to manage the economy is interest rates. Interest rates are the rate at which money is borrowed by businesses and individuals. Throughout the world, interest rates are historically low.
The Trend has been • House prices have been growing • Thus significant sales in global furniture retailers like IKEA. • What other trends have you seen? There was a 7.3 month supply of homes on the market, the largest supply of homes for sale by that measure since April 1993.
Cycles…. Inflation is a rise in the general level of prices, as measured against some baseline of purchasing power.
Exchange Rates • Exchange rates are the rates at which one currency buys another. With the formation of the European Union, exchange rates between most European countries are now fixed. • For the U.S. dollar, the euro, sterling, and the yen are still traded on variable rates. • Why would the dollar not be strong today?
How much is your money worth? • 1.00 Euro =1.27779 USDUnited States Dollars • 1 Euro = 1.43932 Canadian Dollar • 1 Euro = 1,936.27 Italian Lira
What are the “HOT” countries • http://news.bbc.co.uk/1/hi/business/6074724.stm • Europe and Japan have suffered a sharp economic slowdown over the past decade. To rekindle growth, they need to encourage competition (especially in the services sector), which will, in turn, boost productivity growth, the most desirable source of growth in all economies.