werabe UNIVERSITY

COLLEGE OF BUSINESS AND

ECONOMICS
DEPARTMENT OF marketing MANAGEMENT

principles of marketing
 CHAPTER TWO
MARKETING ENVIRONMENT AND MARKETING INFORMATION
2.1 Need for Environmental Analysis

 A major purpose of environmental analysis is to detect new marketing opportunities and an environmental threat.

 In order to correctly identify opportunities and monitor threats, the company must begin with a thorough understanding of the marketing environment in which the firm operates.
 Marketing environment can be “Internal or External”

The Internal Environment

 It refers to all the factors within an organization, which impart strengths or cause weaknesses in the particular organization.

 The systematic approach to understanding the environment is the SWOT analysis. Business firms undertake SWOT analysis to understand the external and internal environment.
SWOT is the acronym for  Strengths,
 Weaknesses,
 Opportunities
 Threats
 The External Environment

 The external factors are by and large, beyond the control of a company, such as the
* Economic factors
* Sociocultural factors
* Government and legal factors
* Demographic factors
* Geophysical factors etc.
 The external marketing environment may be classified as:
A. Micro-environment
B. Macro -environment
 A. Microenvironment

The micro-environment:- consists of the actors in the company’s environment that affects the performance of the company.

These include the:-

* Suppliers
* Marketing intermediates(middle-men)
* Competitors
* Customers.
 B. Macro environment

The macro environment consists of larger societal forces that affect all the actors in the company’s microenvironment.

 Macro environmental forces include:-

* Demographic
* Economic
* Technological
* Political (internal &external)
* Cultural forces.
The macro forces are, generally, more uncontrollable than the micro forces.
 1. Demographic Environment:

 Demographic factors:- such as size of population, population growth rate, age composition, life expectancy, family size, spatial dispersal, occupation status, employment pattern etc.

2.Technological factors:- sometimes pose problems. A firm that is unable to cope with the technological changes may not survive.

3. Natural Environment:- Geographical and ecological factors such as natural resource endowments, weather and climatic conditions, topographical factors.
 Cont’d

4. Economic Environment:- Economic conditions, economic policies and economic system are the important external factors that constitute the economic environment of a business.

5. Political and Government Environment:- Political environment has a close relationship with the economic system and economic policy.

 The laws cover such matters as standards of product, packaging, promotion, etc.
 Cont’d

6. Socio-cultural Environment:- The buying and consumption habits of the people, their language, beliefs and values, customer and traditions, tastes and presences, education are all factors that affect business.

7. International Environment:- It is particularly important for industries directly depending on imports or exports and import competing industries.
END OF CHAPTER two
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