THE MARKETING

ENVIRONMENT

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MARKETING ENVIRONMENT
 The marketing environment surrounds and
impacts upon the organization.

 There are three key perspectives on the

marketing environment, namely the
 internal environment
 micro-environment
 macro-environment
.

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The Marketing Environment

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The internal or the organisational
environment
 The internal environment includes the
following departments

 HR
 Accounting & Finance
 Operations
 R&D

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Internal Environment
Marketing is affected by:
 The culture of the organisation

 Resource availability

 The extent to which the major functional areas work

together supporting the marketing function to be

customer orientated.
 Allocation of responsibilities within the company

 Internal process and procedures.

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Micro Environment

 These are the internal forces close to the

company and have a direct impact on the
organization strategy.

 It influences the organization directly. It

describes the relationship between the firms
and the driving forces that control their
relationship.

 The firm may exercise a degree of influence.

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The micro-environment
 It comprises all those organisations and individuals
who directly affect the activities of the company, E.g,
 Customers - Those whom an organisation wishes to
engage in exchange process usually by selling them
something

 Suppliers - Those who provide the inputs to enable a

business to produce its products and services.

 Intermediaries

 Competitors – Other organisations attempting to sell similar

products to meet customer needs.

 Employees
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 The Macroenvironment
 This includes all factors that can influence an
organization, but that are out of their direct control.

 The wider environment is also ever changing, and

the marketer needs to compensate for changes in

 Politics
 Economics
 Sociocultural
 Technology
 Environment
 Legal and Regulatory

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 Macro-environment :Political
Factors
 The political arena has a huge influence upon the
regulation of businesses, and the spending power of
consumers and other businesses. Issues to
consider:
 Stability of government.
 Existence/non-existence of trading agreements.
 Government’s position on marketing ethics

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Macro-environment : Economic
Factors
 Marketers need to consider the state of a
trading economy in the short and long-terms.
This is important when planning for
international marketing. E.g
 1. Interest rates.
 2. The level of inflation
 3. Employment /Unemployment level .

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 Macro-environment : Sociocultural
Factors.
 The social and cultural influences on business vary
from country to country. It is very important that such
factors are considered.

 1.What are attitudes to foreign products and services?

 2.What are the roles of men and women society?
within
 3.How long are the population living?
 4. Are the older generations wealthy?
 5.Do the population have a strong/weak opinion on
green issues?

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Technological Factors
 Technology is vital for competitive advantage, and is a
major driver of globalization. Points to consider:
 1. Does technology allow for products and services to be
made more cheaply and to a better standard of quality?
 2.Do the technologies offer consumers and businesses
more innovative products and services such as Internet
banking, new generation mobile telephones, etc?
 3.How is distribution changed by new technologies e.g.
books via the Internet, flight tickets, auctions, etc?
 4.Does technology offer companies a new way to
communicate with consumers

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Macro-environment :
Environmental Factors
 The rise of ethically and environmentally conscious
consumers who continually demand firms
 to adopt practices such as paper packaging and use of recycled
materials.
 To make use of environmentally friendly materials.

 Many retailers are also faced with government pressure

that demands proper waste disposal.

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Macro-environment : Legal Factors

 Laws & Legislations

 - Employment
 Consumer protection
 Ban on certain materials/products
 Competition

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PESTEL Factors

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 Five Forces Analysis

 Five Forces Analysis helps the marketer to

contrast a competitive environment.

 It has similarities with other tools for

environmental audit, such as PESTEL
analysis.

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Five forces analysis looks at five key areas
namely
 the threat of entry,
 the power of buyers,
 the power of suppliers,
 the threat of substitutes,
 competitive rivalry.

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 Porter’s Five Forces Model of Competition

Threat of
Threat of
New
New Entrants
Entrants

Bargaining Rivalry Among Bargaining

Power of Competing Firms Power of
Suppliers in Industry Buyers

Threat of
Substitute
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 The threat of entry
 Economies of scale e.g. the benefits associated
with bulk purchasing.
 Ease of access to distribution channels
 Will competitors retaliate?
 Government action e.g. will new laws be
introduced that will weaken the competitive
position?
 How important is differentiation?

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 The power of buyers.

 If there are a large number of undifferentiated,

small suppliers e.g. small farming businesses
supplying the large grocery chains.
 The cost of switching between suppliers is low
 When there are few buyers
 Many substitutes are available
 Buyers threaten backward integration

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 The power of suppliers.

 Where the switching costs are high

 e.g. Switching from one software supplier to another.

 Power is high where the brand is powerful e.g.

Sony, Microsoft.

 There is a possibility of the supplier integrating

forward

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 The threat of substitutes

 Defined by product functions, i.e, by what the

product is used for and not by the product
form

 Where there is product-for-product

substitution

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 Competitive Rivalry
 Extent to which there exists competition and how
competitors fight for market share among each
other.

 This is most likely to be high where entry is likely;

there is the threat of substitute products, and
suppliers and buyers in the market attempt to
control.

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 Assessing the marketing environment
Environmental scanning

 Scanning to identify changes at an early stage

 Monitor - To collect evidence regarding the nature of the
emerging trends
 Identify – trends, issues, events that are significant to the
organisation.
 Forecast – where the trends are heading. Examine the
threats and opportunities they are likely to bring in the
future.
 Evaluate – the impact of threat and opportunities on the
firm’s long term strategy.

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Question

Why is it important to understand the macro and

micro environment?

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Responding to the
Marketing Environment

“There are three kinds of companies:

those who make things happen,
those who watch things happen, and

those who wonder what’s happened.”

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 Question
 In relation to the Mauritian market, conduct a competitive
analysis using Porter’s Five Forces framework of the

1. Tertiary education sector Ghavish Ramburn &team

2. Automobile market Vashini Toylocco &team
3. Residential care home sector (targeting older people) Aidah
Khodabaccas &team
4. Convenience food sector Mokshada Taurah &team
5. Energy drink market Selvina Nullathemby &team

Group report – approx.1,500 - 2,000 words

Presentation (approx. 15 minutes) starting at 14.10
Report to be submitted on 11th September on the day of presentation.

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