THE MARKETING ENVIRONMENT

Definition:
The marketing environment is a collection
of all the actors and forces influencing the
company’s ability to transact business
effectively with its target market.
 THE MARKETING ENVIRONMENT
Demographic

Economic

Market
Cultural

Publics Suppliers

Company

competitors Customers

Intermediaries
Political
Natural

Technological
 THE MICRO ENVIRONMENT
Are forces close to the company that affect its
ability to serve its customers
Includes;
Company
Publics
Suppliers
Competitors
Consumers/ Customers
Intermediaries/Distributors
 Micro Environment contd…..
 Company’s internal environment; functional areas such as top
management, finance and manufacturing etc.

 Publics; any group that perceives itself having an interest in a

company’s ability to achieve its objectives.

 Suppliers; provide the resources needed to produce goods and services.

 Competitors; those who serve a target market with similar products and
services.

 Intermediaries/Distributors; help the company to promote, sell and

distribute its goods to final buyers.

 Consumers/ Customers; occupy the central position in the marketing

environment and are spread over different markets. There are 5 (five)
types of markets i.e. International markets, Consumer markets, Business
markets, Reseller markets and Government markets.
 THE MACRO ENVIRONMENT
Are larger society forces that affect the whole
microenvironment. Thus forces that shape
opportunities and pose threats to a company.
Include:
Demographic Environment
Economic Environment
Natural (Ecosystem) Environment
Political /Legal/ Government Environment
Technological Environment
Cultural Environment
 Macro Environment contd……..
 Demographic; monitors population in terms of age,
gender, race, occupation, location, income, education,
household patters and lifestyle.

 Economic; factors that affect consumer buying power.

Key economic concerns for marketers include- changes
in incomes, economic development, and changes in
consumer spending patterns.

 Natural; natural resources needed as inputs by

marketers or that are affected by marketing activities.
Factors affecting the natural environment include:-
more government intervention, higher pollution levels,
shortages in raw materials and increased cost of energy
among others.
 Macro Environment contd……..
 Technological; forces that create new products and
market opportunities. Issues in the technological
environment include:- rapid pace of change, high R&D
Budgets, increased regulation, focus on minor
improvements among others.

 Political/Legal/ Government; laws, agencies, and groups

that influence or limit marketing actions. Key trends in
the political environment include- changing enforcement,
increased legislation, greater concern for ethics etc.

 Cultural; forces that affect a society’s basic values,

perceptions, preferences and behaviours. They include
views that express values of the universe, of oneself, of
others, of organisations and of nature.
 TOOLS OF ENVIRONMENTAL ANALYSIS
A process referred to as environmental scanning
or monitoring involves gathering information
regarding a company’s environment, analysing
it and forecasting impact of all predictable
environmental changes.
Tools used in environmental scanning include:
SWOT Analysis
PEST Analysis
 SWOT ANALYSIS
S- Strengths
W- Weaknesses
O- Opportunities
T- Threats
SWOT analysis is a tool for auditing an
organisation and its environment. It is the first
stage of planning and helps marketers to
focus on key issues.
Strengths and Weaknesses are internal
factors whereas Opportunities and Threats
are external factors.
 SWOT contd……..
Potential strengths
 A strong financial condition
 Strong brand name, image
&company reputation
 Product innovations
 Cost advantages
 Strong advertising &
promotion
 Better product quality
relative to rivals
 Wide geographic coverage
&strong distribution
(National & global)
capability.
Potential weaknesses
 No clear strategic direction,
poor quality of leadership
 A weak balanced sheet,
burdened by debt
 Higher overall cost in
comparison to rivals
 Weak brand name or
reputation, no efforts to
improve quality of products
or image
 Too narrow product line
relative to rivals
 Abnormally high staff turn
over, inability to retain key
personnel
 SWOT contd……..
Potential Opportunities
 Serving additional customer
groups or expanding into new
geographic markets
 Expanding the company’s
product line to meet broader
range of customer needs
 Using internet and E-
commerce technologies
 Overcoming trade barriers in
attractive foreign markets
 Integrating backwards and
forward
 Alliances or joint ventures that
expand the company’s market
coverage or boosts its
competitive capability
Potential Threats
 Likely entry of potent new
competitors
 Loss of sales to substitute
products
 Increasing competition among
industry rivals
 Slow downs in market growth
 Dwindling sources of basic raw
materials
 A shift in buyer needs, tastes
and preferences away from
the industry’s products
 Costly new regulatory
requirements
 PEST ANALYSIS
P- Political
E- Economic
S- Social
T- Technological

PEST analysis tool is often used by marketers to

understand the Political, Economic, Social and
Technological dimensions of the environment.
 PEST Contd……
Political-Legal factors Economic factors
 Legislative structures  Business cycles
 Political structures  Interest rates
 Government stability  Investment incentives
 Taxation policies and policies
 Employment legislation  Unemployment levels
 Pressure/Interest groups  Energy costs
 Trade unions power
 Relationships with foreign
governments
 Competitive behaviour
legislation
 PEST Contd……
Socio-cultural factors Technological factors
 Demographic structures  Levels of R&D
 Lifestyles expenditures
 Social mobility  Product lifecycles
 Consumerism  Patterns & speed of
technology change
 THE MARKETING MIX
Are the tools available to a business to gain
the reaction it is seeking from its target
market in relation to its marketing objectives

Traditional 4Ps - Price, Product, Promotion,

Place
THE 4Ps OF MARKETING

PRODUCT PRICE

THE MARKETING MIX

PLACE PROMOTION