Marketing Environment

Session 7-8
 ENVIRONMENT
Environment is circumstances, objects or
conditions by which somebody or something is
surrounded.
ENVIRONMENT (Contd.)
Environment

Interna Externa
l l
 ENVIRONMENT (Contd.)
Environment information is used in 2 main ways
As an input to planning process
As part of ongoing analysis of marketing opportunities
and threats (Environmental scanning)
 The Microenvironment
Marketing success requires building relationships with other company
departments, suppliers, marketing intermediaries, competitors, various
publics, and customers, which combine to make up the company’s value
delivery network.
 The Company
With marketing taking the lead, all departments—from manufacturing and finance
to legal and human resources—share the responsibility for understanding customer
needs and creating customer value.

Marketing management

Top management
finance
Research and development
purchasing
operations
accounting
 Suppliers
Suppliers provide the resources needed by the company
to produce its goods and services.
Most marketers today treat their suppliers as partners in
creating and delivering customer value.
 Marketing Intermediaries
Marketing intermediaries help the company promote, sell, and distribute its
products to final buyers.
Physical distribution firms help the company stock and move goods from their
points of origin to their destinations.
Marketing services agencies are the marketing research firms, advertising
agencies, media firms, and marketing consulting firms.
Financial intermediaries include banks, credit companies, insurance
companies and other businesses that help finance transactions or insure
against the risks associated with the buying and selling of goods.
 Competitors
Marketers also must gain strategic advantage by positioning their offerings
strongly against competitors’ offerings in the minds of consumers.
Each firm should consider its own size and industry position compared to
those of its competitors.

V.S
 A public is any
Financial group that
Influences has an actual
the company’s abilityortopotential interest in or impact on
obtain funds
ny’s marketingandecisions
organization’s
publics be ability
Banks,
may to achieve
investment analysts,itsand
objectives.
stockholders
ed by consumer are the
Weorganizations,
can identify major
seven financial
types publics.
of publics:
ental groups, minority groups, andThis group includes workers, managers,
Internal
This groupvolunteers,
includes neighborhood
and the boardresidents
of and
directors.
Local publics community organizations.
relations Publics
department can help
Governm
Large it stay Management
companies must
usually create take government
departments and
with consumer and citizen groups.that deal
developments
with local into account.
ent
programs community issues
and Marketerssupport.
provide community
Publics must often consult the company’s
lawyers on issues of product safety, truth in
advertising, and other matters.

Media Carries news, features, and editorial opinion.

publics It includes newspapers, magazines, television
stations, and blogs and other Internet media.

A company needs to be concerned about the

General general public’s attitude toward its products
public and activities.
The public’s image of the company affects its
buying.
 Customers Consist of
individuals and
Consist of these households that buy
buyers in other goods and servicesBuy goods and
countries, including for personal
customers, Consumer services for further
The company might target any or all
consumption.
markets five types of customer markets:
producers, processing or use in
resellers, and their production
governments processes
Internation Business
al markets markets
Consist of
government
agencies that buy Buy goods and
goods and services to resell at
services to Government a profit.
Reseller
produce public markets markets

services or
transfer the goods
and services to
The Macro environment
 Marketing Environment model
PEST
SLEPT
STEP
PESTEL
Major Forces in the Environment
Political-legal

Ecological Economic

Socio-cultural
Legal

Technological
 The Political-Legal Environment
The political and legal environment consists of
laws,
government agencies, and
pressure groups
that influence various organizations and individuals.
Sometimes these laws create new business opportunities. Mandatory
recycling laws have boosted the recycling industry and launched dozens of
new companies making new products from recycled materials.
Two major trends are the increase in business legislation and the growth of
special-interest groups.
Insurance Regulatory and Development Authority (IRDA)
has directed the life insurance companies to focus on
need-based selling.
 Economic Environment
Income distribution
Income, savings, debt etc
Consumer spending depends on the
Consumer psychology - In an inflationary
environment, consumers become choosy, bargain for
better deals, buy bulk or economy packs, and
postpone discretionary purchases.
disposable income,
socioeconomic profile,
aspirations, and
expectations from the future.
 The Economic Environment
The economic environment consists of economic factors that affect consumer
purchasing power and spending patterns.
Some countries have industrial economies, which constitute rich markets for
many different kinds of goods.
At the other extreme are subsistence economies; they consume most of their
own agricultural and industrial output and offer few market opportunities.
In between are developing economies that can offer outstanding marketing
opportunities for the right kinds of products.
 Changes in Consumer Spending
In turn, value marketing has become the watchword for many marketers.
Marketers in all industries are looking for ways to offer today’s more
financially frugal buyers greater value—just the right combination of
product quality and good service at a fair price.
 Income Distribution
Marketers should pay attention to income distribution as
well as income levels.
Over the past several decades, the rich have grown
richer, the middle class has shrunk, and the poor have
remained poor.
 Social-Cultural Environment
Populaiton and Demographics
– growth, age mix, household
etc
Religion.
Language.
Food habits.
Impact on values, attitudes
and aspirations.
 Demographics
Demographics is a part of Socio-cultural 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
Population growth
Population age mix
Ethnic and other markets
Educational groups
Household patterns
 The Demographic Environment
Demography is the study of human populations in terms
of size, density, location, age, gender, race,
occupation, and other statistics.
 The post-World War II baby boom produced 78 million baby
boomers, who were born between 1946 and 1964. Over the
The years,
Changing Age Structure of the Population
The baby boomers have been one of the most powerful
forces
shaping the marketing
The youngest boomers environment.
are now moving into their fifties;
the oldest
are in their late sixties and entering retirement. The
maturing
Boomers are rethinking the purpose and value of their
work,
resposibilities, and relationships.

Baby Generation Generation

boomers Y X
 Transition:
Increasing population.
Growing middle class:
Bulging belly.
Global Indians.
Changing family system.
Changing role of women.
Better educated, more
white collared, more
professional population.
Increasing diversity.
Technological Environment
Pace of change

Opportunities
for innovation

Varying R&D
budgets
 Ecological Environment

Fairtrade
Energy efficiency
Eco-branding – BP Helios logo
Increased Emphasis on Ethics and Socially
Responsible Actions

Socially Responsible Behavior:

Enlightened companies encourage their managers to look beyond what the
regulatory system allows and simply “do the right thing.”
These socially responsible firms actively seek out ways to protect the long-run
interests of their consumers and the environment.
 Increased Emphasis on Ethics and Socially
Responsible Actions

Caused-Related Marketing:
Cause-related marketing has become a primary form of corporate giving. It lets
companies “do well by doing good” by linking purchases of the company’s
products or services with benefiting worthwhile causes or charitable
organizations.
It has some controversy. Critics worry that cause-related marketing is more a
strategy for selling than a strategy for giving ─ that “cause related” marketing
is really “cause-exploitative” marketing.
 Responding to the Marketing Environment

Uncontrollab Proactive Reactive

le Aggressive Watching
React and actions to and
adapt to affect reacting
forces in forces in to forces
the the in the
environme environme environme
nt nt nt
Thank You