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The Marketing Environment

Internal and External Factors which Influence Marketing Strategies and Activities

Learning Objectives

• Describe the environmental forces that affect the company’s ability to serve its customers. • Explain how changes in the demographic and economic environments affect marketing decisions. • Identify the main trends in the firm’s natural and technological environments. • Explain the key changes that occur in the political and cultural environments. • Discuss how companies can react to the marketing environment.

Marketing Environment
• All the actors and forces influencing the company’s ability to transact business effectively with it’s target market. • Includes:
–Microenvironment - forces close to the company that affect its ability to serve its customers. –Macro environment - larger societal forces that affect the whole microenvironment.

The Marketing Environment Demographic Company Cultural Publics Economic Company Suppliers Customers Political Competitors Natural Intermediaries Technological .

. • market channel firms. • competitors and publics. • customer markets. which combine to make up the firm’s value delivery system.The Company’s Microenvironment • The forces close to the company that affect its ability to serve its customers • They include : • – the company.

The Microenvironment Company Publics Forces Affecting a Company’s Ability to Serve Customers Suppliers Competitors Customers Intermediaries .

such as top management. and distribute its goods to final buyers. into consideration. finance. • Suppliers . marketing management must take other company groups.( ‘Details of intermediaries’ follows………) . • Marketing Intermediaries . purchasing.In designing marketing plans.provide the resources needed to produce goods and services.The Company’s Microenvironment • Company’s Internal Environment. manufacturing and accounting. sell.help the company to promote. research and development (R&D).

• Physical distribution firms: warehouse. • Marketing-service agencies: marketing research firms. credit companies and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods. . • Financial intermediaries: banks. marketing consulting firms and other service providers that help a company to target and promote its products to the right markets. transportation and other firms that help a company to stock and move goods from their point of origin to their destinations. advertising agencies.Intermediaries… • Resellers: the individuals and organizations that buy goods and services to resell at a profit.

follows…) • The company must study its customer markets closely and keep up to date with changing customer requirements.five types of markets that purchase a company’s goods and services. • The company must communicate with its customers. and must listen to them closely. (a diagrammatic rep. .The Company’s Microenvironment • Customers • .

Customer Markets International Markets Consumer Markets Company Government Markets Reseller Markets Business Markets .

Competitors – those who serve a target market with similar products and services • The marketing concept states that. marketers must do more than simply adapt to the needs of target consumers. . a company must provide greater customer value and satisfaction than its competitors. • They must also gain strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of consumers. Thus. They must strive to anticipate competitor activity and strategy. to be successful.

• Government publics Management must take government developments into account. • Media publics are those that carry news. truth in advertising and other matters. magazines and radio and television stations.any group that perceives itself having an interest in a company’s ability to achieve its objectives • Financial publics influence the company’s ability to obtain funds. Banks. features and editorial opinion. investment houses and stockholders are the principal financial publics. • continued …..Publics . Marketers must often consult the company’s lawyers on issues of product safety. . They include newspapers.

• Internal publics A company’s internal publics include its workers. • Local publics Every company has local publics. minority groups and other pressure groups. managers. environmental groups. volunteers and the board of directors. The public image of the company affects its buying. . • General public A company needs to be concerned about the general public’s attitude towards its products and activities.Publics… • Citizen action publics A company’s marketing decisions may be questioned by consumer organizations. such as neighborhood residents and community organizations.

technological.Company’s Macro environment • The larger societal forces that affect the whole microenvironment . economic. political and cultural forces. . natural.demographic.

economic.demographic. . political and cultural forces. technological. natural.The Company’s Macro environment • The larger societal forces that affect the whole microenvironment .

The Macro environment Demographic Socio-Cultural Forces that Shape Opportunities and Pose Threats to a Company Economic Political Technological Natural .

natural resources needed as inputs by marketers or that are affected by marketing activities. • Natural . race. • Economic .monitors population in terms of age. location and other statistics. occupation. . sex.factors that affect consumer buying power and patterns.The Company’s Macro environment • Demographic .

Key Demographic Trends Changing Age Structure Population is getting older Changing Family Structure Marrying later. working women. fewer children. and nonfamily households Geographic Shifts Moving to the Urban and suburbs Increased Education Increased college attendance and white-collar workers Growing Ethnic and Racial Diversity .

Economic Environment Economic Development Key Economic Concerns for Marketers Changes in Consumer Spending Patterns Changes in Income .

depression and recovery. • Recovery: The stage of the business cycle in which the economy moves from depression or recession to prosperity. recession. • Depression: A period during which unemployment is extremely high. • Recession: A period during which unemployment rises and total buying power declines. total disposable income is at a minimum and consumers lack confidence in the economy. . wages are very low.General Economic Conditions • Business cycle: fluctuations in the economy that follow the general pattern of prosperity. • Prosperity: A period during which unemployment is low and total income is relatively high.

influenced by the ability to buy. • Disposable income: After-tax income. • Willingness to spend: A disposition towards using buying power. pensions and subsidy payments for a given period. • Wealth: The accumulation of past income. • Income: The amount of money received through wages. natural resources and financial resources. . rents.Consumer Demand and Spending Behaviour • Buying power: Resources such as goods.. • Discretionary income: Disposable income that is available for spending and saving after an individual has purchased the basic necessities of food. expected satisfaction from a product and numerous psychological and social forces. cont’d…. which is used for spending or saving. investments. services and financial holdings that can be traded in an exchange situation. clothing and shelter.

. • Product-specific spending patterns: The annual monetary amounts families spend for specific products from within a general product class.Consumer Demand and Spending Behaviour… • Consumer spending patterns: Information indicating the relative proportions of annual family expenditures or the actual amount of money spent on certain goods and services. • Comprehensive spending patterns: The percentages of family income allocated to annual expenditures for general classes of goods and services.

Natural Environment More Government Intervention Higher Pollution Levels Factors Affecting the Natural Environment Shortages of Raw Material Increased Costs of Energy .

• Issues • Shortage of raw materials • Increased cost of energy • Increased pollution • Government intervention in natural resource management .Natural Environment • Natural resources that are needed as inputs by marketers or that are affected by marketing activities.

The Company’s Macro environment • Technological .forces that affect a society’s basic values. agencies and groups that influence or limit marketing actions. preferences. • Political .forces that create new product and market opportunities. perceptions. . • Cultural . and behaviors.laws.

Technological Environment Rapid Pace of Change High R & D Budgets Issues in the Technological Environment Focus on Minor Improvements Increased Regulation .

• Forces that create new technologies. creating new product and market opportunities. • Issues • Fast pace of technological change • High R&D budgets • Concentration on minor improvements • Increased regulation • Effect of technology on society • Effect of technology on marketing • Technology assessment .Technological Environment • Technology: the knowledge of how to accomplish tasks and goals.

Political Environment Increased Legislation Key Trends in the Political Environment Greater Concern for Ethics Changing Enforcement .

Socio-Cultural Environment Religion Festivals Socio-Cultural Factors Music Language Eating Habits Dressing Habits .

• PEST (STEP) analysis • • • • • • • • • POLITICAL ECONOMIC SOCIAL/CULTURAL TECHNOLOGICAL • SLEPT analysis SOCIAL/CULTURAL LEGAL ECONOMIC POLITICAL TECHNOLOGICAL • To be continued…. .Environmental Analysis …..

Environmental Analysis …. • BPEST analysis • • • • • • • • • • • BUSINESS POLITICAL ECONOMIC SOCIAL/CULTURAL TECHNOLOGICAL • PESTLE analysis POLITICAL ECONOMIC SOCIAL/CULTURAL TECHNOLOGICAL LEGAL ENVIRONMENTAL/ECOLOGICAL .

• Environmental analysis: the process of assessing and interpreting gathered through environmental scanning.Examining and Responding to the Marketing Environment • Environmental scanning: the process of collecting information about the forces on the marketing environment. . • Environmental management perspective: the firm takes aggressive actions to affect the publics and forces rather than simply watching it and reacting to it.

•Proactive: Environmental Management –Use of lobbyists. advertorials. .Responding to the Marketing Environment •Reactive: Passive Acceptance and Adaptation –Companies design strategies that avoid threats and capitalize upon opportunities. lawsuits. and contractual agreements to influence environmental forces. complaints. PR.

The marketing Environment and Strategic Opportunities • Strategic windows: major developments or opportunities triggered by changes in the marketing environment. – new technology –new markets –new distribution channels –market re-definition –new legislation and regulation –financial and political shocks .