Marketing Environment

Chapter 3.
Business Environment.
External Environment..
Factors which affects the company’s prospects directly

Competitors & Public

Types of competitive structures.
• Monopoly.
• Oligopoly.
• Monopolistic competition.
 Monopoly.

• It is a structure where one firm completely

controls the supply of a product which has
no close substitute.
Eg: Indian Railways, State Electricity Board
 Oligopoly.

• It is a structure in which few sellers

control the major supply of the product.
• Eg: Airline, Petroleum,
 Monopolistic Competition.
• In this structure many firms compete with
one another.
• Each firms has a relatively small market
share.
• Marketers try to differentiate their from
that of competitors by varying their
marketing mix to capture the market.
Eg: Some Newspaper, Some Restaurant
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
 Economic Factors
• Inflation
• Employment
• Disposable income
• Business cycles
• Energy availability and cost
 Sociocultural factors
• Demographics
• Distribution of income
• Social mobility
• Lifestyle changes
• Consumerism
• Levels of education
 Technological
• New discoveries and innovations
• Speed of technology transfer
• Rates of obsolescence (no longer used)
• Internet
• Information technology
 Five forces analysis
Potential
entrants

Threat of
entrants

Suppliers COMPETITIVE Buyers

RIVALRY
Bargaining Bargaining
power power

Threat of
substitutes

Substitutes

Analyze Level of Competition within an Industry

Five Forces Analysis: Key Questions
and Implications
• What are the key forces at work in the competitive
environment?
• Are there underlying forces driving competitive
forces?
• Will competitive forces change?
• What are the strengths and weaknesses of
competitors in relation to the competitive forces?
• Can competitive strategy influence competitive forces
(eg by building barriers to entry or reducing
competitive rivalry)?
Porters 5 force- Pepsi
Threat of New Entrants/Potential Competitors: Medium Pressure
•Entry barriers are relatively low : there is no consumer switching cost
•New brands appearing in the market with similar prices
•Pepsi not a beverage but also a brand.
• Held a very significant market share for a long time and loyal
customers are not very likely to try a new brand.
Threat of Substitute Products: Medium to High pressure
•Many kinds of energy drink s/soda/juice products in the market.
•Pepsi doesn’t have an entirely unique flavor.
•Blind taste test
The Bargaining Power of Buyers: Low pressure
•The individual buyer no pressure on Pepsi
•Large retailers, like Wal-Mart, have bargaining power because of the
large order quantity, but the bargaining power is lessened because of
the end consumer brand loyalty.
The Bargaining Power of Suppliers: Low pressure
•The main ingredients for soft drink include carbonated water,
phosphoric acid, sweetener, and caffeine.
•The suppliers are not concentrated or differentiated.
•Pepsi is likely a large, or the largest customer of any of these
suppliers.
Rivalry Among Existing Firms:  High Pressure
• Main competitor is Coke-wide range of beverage products under its
brand.
•Both Coca-Cola and Pepsi are the predominant carbonated beverages
and committed heavily to sponsoring outdoor events and activities.
•There are other soda brands in the market that become popular,
because of their unique flavors.
•These other brands have failed to reach the success that Pepsi or
Coke have enjoyed.
THANK YOU