The Marketing Environment

■ Environment is classified as external and

internal because an organization works
within the framework provided by the
various elements of society.
■ What is Environment ?
In a broad sense, the environment is
infinite and includes everything outside
the organization.
■ The general environment includes
everything and consists of the following
factors:
■ (a) Physical structure
■ (b) Social structure
■ (c) Ecological structure
■ (d) Legal structure
■ (e) Cultural (religious) structure
■ (f) Political structure
■ (g) Economic structure
■ (h) Psychological structure
■ (i) International structure
The Marketing Environment
Environmental scanning is:

■ Gathering information regarding a

company’s external environment
■ Analyzing it
■ Forecasting the trends
 The Marketing Environment
There are two levels of external forces:

■ Macro influences

■ Micro influences
 The External Microenvironment
Six forces affect the organization’s
marketing system:
■ Demography
■ Economic conditions
■ Competition
■ Social and cultural
■ Technology
■ Political and legal factors
The Marketing
Program Economic
conditions

Demo-
graphics Competition

COMPANY’S
MARKETING
PROGRAM

Social
and cultural Technology
forces
Political
and legal
forces
Demographic factors
■ Refers to the changing nature of the
population

■ What are some current demographic

trends?

■ What are the implications of these

changes?
Changing Demographics
Different age groups buy different products or
services.
– Under age 25: Grow by 4.8%.
– 25-34 years old: Decline by 5%.
– 35-44 years old: Increase by 4.5%.
– 45-64 years old: Grow by 2.5 million, or 39.5%.
– Over age 65: Grow by 20%.
What are the implications?
Changing Ethnic Mix
■ Chinese growing to be second largest
language group in Canada

■ Have unique buying habits and needs

■ Make an “ethnic” market segment

Economic Change
1) The stage of the Business Cycle:
– Prosperity, recession and recovery
2) Inflation rate
3) Interest rates
4) Unemployment rate
Competitive Change
Competition takes place at three levels:
1) Direct at the brand or store level
2) Substitute products/services
3) All products and services competing for
the same consumer dollar
Social and Cultural Change
Our lifestyles and values are changing!
What are some changes you think are occurring?

■ Attitudes toward physical activity, exercise, and diet

■ Emphasis on service quality and value
■ Environmental awareness
■ Demand for convenience
Technological Change
■ Can create new forms of competition and
communications: ATM’s, CD-ROM, cellular,
Internet
■ creates new industries to be supplied
■ impacts how people spend their time
■ technology is accepted by consumers,
expected by them, transparent to them, and
often “disposable”
Political and Legal Change
Six categories:
1) General fiscal/monetary policies
2) Policies set by government agencies
3) Social legislation
4) Government relationships with industry
5) Legislation related to marketing
6) Provision of information
 The external macro-environment
External to the firm, but important
because of its close relationship
Suppliers

Your firm

Intermediaries

Market
 The Company’s Marketing Program

Marketing Marketing
Suppliers inter- COMPANY’S inter-
The
MARKETING market
mediaries mediaries
PROGRAM
 Financial
resources

ilit on

Hu ur
re
fac ucti
ies

so
m ces
an
od
COMPANY’S
Pr

NONMARKETING

ag y
Lo

im pan
RESOURCES

e
ca

m
tio

Co
n

Research
and
development
The Internal Market
■ Internal marketing ensures:
– employees are ‘on side’ with the goals of the
organization
– they have direct impact on product and service
quality, dependability, and overall productivity
– they are “internal market” which impact every
department within the firm
– a satisfied internal market will be better able to
satisfy the external (customer) market
Strategic Marketing Planning

What is strategic marketing

planning?
 PLANNING SEQUENCE
Strategic company planning
1. Define org. mission 3. Set org. objectives
2. Conduct situation analysis 4. Select appropriate strategies

Strategic marketing planning

1. Conduct situation anal. 4. Select target markets,
2. Develop marketing obj. measure market demand
3. Determine positioning and 5. Design strategic
differential advantage marketing mix

Annual marketing planning

Prepare annual marketing plan
for each major product and
company division

IMPLEMENTATION AND EVALUATION

Copyright © 1998 by The McGraw-Hill Companies, Inc.
Strategic Marketing Planning
■ 5 step process:
1) Situation analysis
2) Develop marketing objectives
3) Determine positioning and differential
advantages
4) Select target markets and market demand
5) Design the marketing mix
Situational analysis
■ Examine:
– external environment

– non-marketing resources (internal)

– the present marketing mix

A firm’s complete marketing
environment
SWOT
■ After an environmental scan, a SWOT
will help analyze your results
■ Objectives are based on information
from the SWOT
Planning Stages

1) Planning

2) Implementation

3)Performance-Evaluation stage
 The Planning Management Process

PLANNING IMPLEMENTATION EVALUATION

Analyze situation Organize Compare
Set goals Staff performance
Select strategies Direct with goals
and tactics

Feedback, so management can adapt future plans and the

implementation to the changing environment
Models to assist in Planning

1) The Boston Consulting Group Matrix:

■ Using this model, a business unit can be
classified according to two factors—
market share relative to competitors and
industry growth
■ A company should have a balance of
SBUs with a mix of stars, cash cows,
and ???
 COMPANY’S MARKET SHARE
High Low

High
GROWTH RATE
INDUSTRY

Stars Question marks

Low

Cash cows Dogs

Models to assist in Planning

2) Product Market Growth Matrix

■ Growth requires examination of products and
markets to determine what needs changing
■ Options:
– Market penetration:
– Market development:
– Product development:
– Diversification:
Product Market Growth Matrix
PRESENT PRODUCTS NEW PRODUCTS

PRESENT Market Product

MARKETS penetration development

NEW Market
MARKETS development Diversification

The product-market growth matrix depicts the

options available in considering markets and
products.