MARKETING

ENVIRONMENT
Ms Janet Liau
Department of Marketing
NUS Business School
National University of Singapore
 Learning Objective
• Understand some of the major forces in a
company’s micro- and macroenvironment
• Learn Tools for company and Industry Analysis
• Identify sources of growth
 ORGANIZATION

1. Introduction

2. Microenvironment

3. Macroenvironment

4. Marketing Opportunities/Sources
of Growth
 INTRODUCTION
• Diverse, dynamic, & uncontrollable forces external
to firm’s marketing management function affecting
its operations & opportunities

• Microenvironment: Actors in firm’s immediate

environment affecting its ability to serve its
customers
• Macroenvironment: Larger societal forces
affecting all actors in firm’s microenvironment
 INTRODUCTION

• Imposes Constraints
- Limits what firms can do, esp. wrt manipulation of
marketing decision variables
 INTRODUCTION
• Poses Threats
- Changes that, without firm’s action, will have
detrimental consequences for its performance
- e.g., Online and sharing economies
 INTRODUCTION
• Creates Opportunities
- Development of new products/markets or
expansion of old ones

» Requires constant monitoring &

adaptation
 MICROENVIRONMENT
Students to provide
examples

• 6 major sectors
To be covered under
Consumer Behavior
 MICROENVIRONMENT

1. Suppliers
• Firms & individuals providing the resources
required by the company & its competitors
• Affect costs & availability of supply
• Maintain good buyer-seller relations
• Multiple sourcing
 MICROENVIRONMENT

2. Marketing Intermediaries

• Firms aiding the company in promoting &

distributing its goods to final buyers

• Physical distribution firms, trade members, &

marketing services agencies (e.g., ad agencies)
 MICROENVIRONMENT

3. Competition
• Direct
• Indirect
 MICROENVIRONMENT
3. Competition (cont’d)

• Primary Demand
– General needs (e.g. entertainment)

Generic Competition (basic ways of need satisfaction e.g.

karaoke, cinema, live theatre, gaming etc all different forms
of entertainment)
 MICROENVIRONMENT
Direct vs indirect
• Selective Demand competition
– Specific version of generic product

– Product-form Competition (different forms of same

good e.g. Video game console, PC game, handheld game
console, mobile games)

– Brand/Enterprise Competition (e.g. Samsung vs Apple

mobile phones)
 MICROENVIRONMENT

4. Publics
• Group with actual or potential interest or impact on
firm’s ability to achieve its objectives

• Citizen action (e.g., CASE), media, financial, &

internal publics
 MACROENVIRONMENT
• 6 major sectors Students to provide
examples
 MACROENVIRONMENT

1. Demographic
•Age distribution & family changes
•Geographic population shifts
•Better education
•Working women
 MACROENVIRONMENT

2. Economic
•General conditions (e.g., inflation, recession)

•Changes in real income & expenditure patterns

 MACROENVIRONMENT

3. Natural
•Energy, pollution, & shortages of natural resources,
pandemic
 MACROENVIRONMENT

4. Technological
•Accelerating pace of change

•May be most dramatic force

•Innovative opportunities, R&D, Copyright law

•In areas of Medical, Manufacturing, Transportation Internet

related etc
 MACROENVIRONMENT

5. Political/Legal
•Government & statutory boards (laws, taxes,
competition, & privatization)

•Political corruption
 MACROENVIRONMENT

6. Sociocultural
•Multi-racial/cultural society

•Westernization/Modernization

•Subcultures
MARKETING OPPORTUNITIES/SOURCES OF
GROWTH
• Marketing Opportunity: Attractive proposition for
marketing action where firm enjoys competitive
advantage

• Internal sources (strengths)

- Lower costs (manufacturing, production, engineering, & QC
skills)
- Innovation (R&D & product design)
- Marketing
MARKETING OPPORTUNITIES/SOURCES OF
GROWTH
• External sources (opportunities)
- High entry barriers (high capital investment
requirements)
- Weak competitors
- Weak or few substitutes
- Weak suppliers
- Weak buyers
Situational Analysis Framework - SWOT Analysis
Favorable Unfavorable

Internal STRENGTHS WEAKNESSES

External OPPORTUNITIES THREATS

Situational Analysis Framework - SWOT Analysis
Strengths:
- Strong R&D and engineering
- Strong sales and service
network
- Efficient
production/automation
capabilities
Opportunities:
- Growing affluent market
demands more luxurious cars
with many options
- Attractive offers to build an
assembly plant in the US
- Chrysler and American
Motors need small engines
Weaknesses:
- Heavy reliance on one
product
- Rising costs in Germany
- No experience with US labor
unions if building plants in the
US
Threats:
- Exchange rate: Devaluation of
USD in relation to Euro
- Competition from Japanese
and American car makers
- Fuel shortage and price
increases
Porter’s Five Competitive Forces Industry Analysis
Framework
Michael Porter’s 5 Competitive Forces
Watch video:
• https://www.youtube.com/watch?v=mYF2_FBCvXw

• This is an industry analysis tool to evaluate the

attractiveness of the industry (not a company
analysis tool).
Michael Porter’s 5 Competitive Forces
• Degree of Market Rivalry
– No of players and share distribution
• Oligopoly vs monopolistic competition
– Market growth (high vs low)
– Differentiation (strong vs weak)
Michael Porter’s 5 Competitive Forces
• Bargaining Power of Suppliers
– No. of alternative suppliers
– Switching costs
– Supplier’s product is differentiated/specialised
– Critical nature of product to buyer
– Ease of forward integration
Michael Porter’s 5 Competitive Forces
• Bargaining Power of Buyers
– No. of alternative buyers (distributors and end
consumers)
– Loyalty
– Relative size
– Switching costs
– Buyer’s knowledge of products
– Products’ differentiation
– Ease of backward integration
Michael Porter’s 5 Competitive Forces
• Degree of Substitutes
– Similarity of functions/benefits
– Loyalty or preferences
– Price
– Performance
– Switching cost
Michael Porter’s 5 Competitive Forces
• Potential Entrants
– Barriers to Entry -
• Government regulations
• Scale of investment
• Required competence e.g. patents/proprietary knowledge or
access to distribution
• Economies of scale
• Loyalty in market
 SOURCES OF GROWTH
1. Analysis of sources of growth

• Define Product/Market

* Product or group of products satisfying particular

need in market

* Broad or narrow definition

 SOURCES OF GROWTH

• Useful for:

- Defining competition

- Identifying sources of growth

- Suggesting growth strategies

SOURCES OF GROWTH
 SOURCES OF GROWTH
2. Growth Strategies
• Market Penetration
- Increase sales from present customers in existing
markets

• Market Development
- Identify new segments for current products
 SOURCES OF GROWTH

• Product Development
- Offer modified or new products to present customers

• Diversification
- Acquire or start businesses unrelated to present
products & markets
 SOURCES OF GROWTH

3. Evaluation of growth sources

• Company objectives

• Company resources

Turn to next page

 Marketing Strategic Planning
•Situation Analysis
Market Strategic Plan
– Environmental Scanning
•Executive summary
– PEST Analysis
•Situation Analysis
– –Competitor Analysis
SWOT Analysis
– –SWOT AnalysisScanning
Environmental
•Objectives – PEST
andAnalysis
issues
– Competitor Analysis
•Marketing strategy
•Objectives and issues
•Action programs
•Marketing strategy
•Budgets
•Action programs
•Budgets
•Controls
•Controls

naging the Marketing Effort

40
 Participation Question
(1) Are NFTs (Non-Fungible Tokens) a product? If so, what needs does
it satisfy? Do you think marketers of NFTs adopt the marketing
concept?

Link your answers to concepts of needs/demand, value creation and marketing

concept. Provide examples.

Don’t read your answer, speak to the class succinctly (concise and clear)
 Participation Question
(2) Think about the metaverse. Do you think the metaverse is an
appropriate platform to market products? If so, are there certain
types of products more suited to being on metaverse than others?
Why?

Link your answers to concepts of needs/demand, value creation and marketing

concept. Provide examples.

Don’t read your answer, speak to the class succinctly (concise and clear)
THE END