MARKETING ENVIRONMENT
Dr M Manjunath Shettigar
It is useless to tell a river to stop
running; the best thing is to learn
how to swim in the direction it is
flowing.
-Anonymous
Marketing Environment
Marketing environment refers to the
larger context in which marketing
exercise of the company is managed. It
includes:
Microenvironment: factors & forces in the
immediate environment which affect the
companys ability to serve its customers.
Macro environment: larger societal forces
that affect the microenvironment.
Considered to be beyond the control of the
organization.
Actors in the
Microenvironment
Microenvironment
1. The company
Marketing must consider other parts of the organization
including finance, R&D, purchasing, operations and
accounting
Marketing decisions must relate to broader company
goals and strategies
The Company
Marketing managers must work with all
departments of a company
All Departments have an impact on the
marketing departments plans and actions
Think Customer
Suppliers:
Provide resources
needed to produce
goods and services.
Important link in the
value delivery
system.
Most marketers treat
suppliers like partners.
Marketing Intermediaries
Marketing intermediaries help the company
promote, sell, and distribute its goods to the final
buyers
They are middlemen (wholesalers, retailers,
agents), distributing agencies, market service
agencies, etc.
5 Types of Customers
1.
2.
3.
4.
5.
Consumer markets
Business markets (B to B)
Reseller markets
Government markets
International markets
Competitors
To be successful, a company must satisfy
needs and wants of consumers better than
competitors
A company should monitor three variables
when analyzing each of its competitors
Share of Market
Share of Mind
Share of Heart
Competitors
Must understand competitors strengths
Must differentiate firms products and
offerings from those of competitors
Competitive strategies should emphasize
firms distinctive competitive advantage in
marketplace
Types of Publics
The Companys Macro environment
Demographic Environment
Demography is the study of human populations in
terms of size, density, location, age, gender, race,
occupation, and other statistics
Demographics change over time and companies
must keep up with them
Economic Environment
Consists of factors that affect consumer
purchasing power and spending patterns.
Changes in Income
Income Distribution
1980s consumption
Upper class
frenzy
1990s squeezed
consumer
2000s value marketing
Middle class
Working class
Underclass
Economic Environment
Global Economic
Development
Changes in Income
Changing Consumer
Spending Patterns
Key
Economic
Concerns for
Marketers
Economic Factors
(a)Gross national product.
(b)Per capita income.
(c)Balance of payments position.
(d)Industry life cycle and current phase through which the
industry is passing. The different phases of this life cycle
could be classified as recovery, boom, recession and
depression.
(e)Trends in the prices of goods and servicesspecifically,
whether the inflationary or deflationary trends are visible.
(f)Fiscal policies and prime rate of interest charged by
commercial banks.
Natural Environment
Involves the natural
resources that are
needed as inputs by
marketers or that are
affected by marketing
activities.
Natural Environment
Conservation
Of Resources
Ecotourism
Recycle and
Reduce Waste
Factors Affecting
the
Natural
Environment
Natural Environment
Natural Environment:
Involves the natural resources that are needed
as inputs by marketers or that are affected by
marketing activities
Trends
Shortages of raw materials
Increased pollution
Increased government intervention
Goal 3: Identify trends in natural and technological environments
Technological Environment
Most
dramatic
force now
shaping our
destiny.
Technological Forces
Changes in technology may make
business obsolete; e.g.,
buggy whips (automobile)
airport at Gander, Newfoundland
(longer range aircraft)
Federal Express (fax machine;
Internet)
New opportunitiese.g., specialty
online retailers, mass
customization
Cultural Environment
The institutions and
other forces that
affect a societys
basic values,
perceptions,
preference, and
behaviors.
Cultural Environment
Marketing
Management
Includes peoples views of
Themselves
Identify with
brands for selfexpression
Others
Recent shift from
me to we
society
Organizations
Trend of decline in
trust and loyalty
to companies
Society
Patriotism on the
rise
Nature
lifestyles of health
and sustainability
(LOHAS) consumer
segment
Universe
Includes religion
and spirituality
Goal 4: Explore political and cultural environments
Political Environment
Includes Laws, Government Agencies, Etc. that Influence
& Limit Organizations/ Individuals in a given society
Increasing
Legislation
Changing
Government
Agency
Enforcement
Increased
Emphasis on
Ethics &
Socially
Responsible
Actions
Political Trends
Increased legislation and regulation
affecting business
Changing government Agency Enforcement
Increased emphasis on socially responsible
actions and ethics
Legal and Regulatory
Environment
Laws and Regulations
for safety
for consumer protection
to protect special interests
Dangers of litigation--anyone can sue,
and juries often buy it!
Examples:
Antitrust
Fair competition
Pricing
Truth in Lending--have to tell people
real costs of financing; car leases now
regulated
The Marketing Environment and
Competitor Analysis
SWOT analysis
PEST analysis
Five forces analysis
SWOT analysis
Strengths
(internal)
Weaknesses (internal)
Opportunities (external)
Threats (external)
PEST analysis
Political factors
Economic factors
Socio-cultural factors
Technological factors
Political/legal
Monopolies
legislation
Environmental protection laws
Taxation policy
Employment laws
Government policy
Legislation
Others?
Economic Factors
Inflation
Employment
Disposable
income
Business cycles
Energy availability and cost
Others?
Sociocultural factors
Demographics
Distribution of
Social
income
mobility
Lifestyle changes
Consumerism
Levels of education
Others?
Technological
New
discoveries and innovations
Speed of technology transfer
Rates of obsolescence
Internet
Information technology
Others?
Five forces analysis
Five forces model is a environment analysis
tool developed by famous strategy Guru
Michael Porter
The 5 forces he speaks about are:
Completive rivalry in the industry
Bargaining power of buyers
Bargaining power of suppliers
Threat of new entrants
Threat of substitute products
Five forces analysis
Threat of
New entrants
Suppliers
Bargaining
power
COMPETITIVE
RIVALRY
Buyers
Bargaining
power
Threat of
substitutes
Source: Adapted from M. E. Porter,
Competitive Strategy, Free Press,
1980, p. 4.
Environmental Scanning and
Analysis
SCANNING
ACTION
ANALYSIS
Environmental Scanning
Determine Environmental Areas That Need
to Be Monitored
Determine How the Information Will Be Collected
Implement the Data Collection Plan
Anaylze and Use the Data in Planning
Responding to the
Marketing Environment
Many companies feel the marketing environment
is uncontrollable
An environmental management perspective takes
action to sway the marketing environment
Take a proactive rather than a reactive approach
THANKS.
