Marketing Environment

Marketing Environment

Environmental Scanning and Environmental Management

• Environmental Scanning is the process of collecting information about the external marketing environment to identify and interpret potential trends.

• Environmental Management involves marketers’ efforts toward achieving organizational objectives by predicting and influencing the competitive, political-legal, economic, technological, and social-cultural environments.

THE COMPANY’S MARKETING

ENVIRONMENT• All Companies operate within a

marketing environment. This environment consists of all the factors and forces that affect the company’s ability to transact effectively with its target market.

• This environment can be divided into : (A) Micro-environment (B) Macro-environment

Marketing EnvironmentMarketing Environment

• All the factors and forces influencing the company’s ability to transact business effectively with it’s target market.

• Includes:– Microenvironment - forces close to the

company that affect its ability to serve its customers.

– Macroenvironment - larger societal forces that affect the whole microenvironment.

The Marketing Environment

The Marketing Environment

Company

Demographic

Economic

Natural

Technological

Political

Cultural Company

Customers

Intermediaries

Suppliers

Competitors

Publics

The MicroenvironmentThe Microenvironment

CompanyCompany

CustomersCustomers

PublicsPublics Suppliers Suppliers

CompetitorsCompetitors IntermediariesIntermediaries

Forces Affecting a Company’s Ability to

ServeCustomers

Forces Affecting a Company’s Ability to

ServeCustomers

The Company’s MicroenvironmentThe Company’s

Microenvironment

• Company’s Internal Environment- functional areas such as top management, finance, and manufacturing, etc.

Suppliers - provide the resources needed to produce goods and services.

Marketing Intermediaries - help the company to promote, sell, and distribute its goods to final buyers. They include middlemen, physical distribution firms, marketing service agencies and financial intermediaries

• Customers: – Five types of markets that may

purchase a company’s goods and services.• Consumer• Business• Reseller• Government• International

The Microenvironment

The Company’s MicroenvironmentThe Company’s

Microenvironment

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

Publics - any group that perceives itself having an interest in a company’s ability to achieve its objectives.

The Macro-environmentThe Macro-

environment

DemographicDemographic

TechnologicalTechnological

CulturalCultural EconomicEconomic

PoliticalPolitical NaturalNatural

Forces that ShapeOpportunities

and Pose Threatsto a Company

Forces that ShapeOpportunities

and Pose Threatsto a Company

Socio – cultural factors• Anything within the context of society

that has the potential to affect an organization.

• Includes factors such as attitudes, customs, lifestyles, values etc.

• Any change in the above factors can be an opportunity or a threat for the firm.

Demographic factors• Demography : Study of population.• A change in the age mix of the population has

many potential consequences for organizations.

• Eg.: US, Japan and many other European countries are ageing out as a result of the sharp decline in the birth rate & improvements in health care.

• By 2015, more than 35% population of these countries will be more than 65 years of age.

• India, Brazil, Mexico are young countries.

Demographic factors• 33% of the Indian population below

15yrs in 2000. In 2020, the average age of an Indian will be 29yrs in contrast to China (37 ), US ( 45 ) & Western Europe ( 48 ).

• Companies in the other countries will now have to change their product offerings to suite the older market.

Education Levels• Rising education has a major impact on

organizations. As education levels increase, there is a subsequent increase in income, hence consumption increases. The std. of living of the society increases.

• The education level also determines the knowledge consumers have about various products.

Technological factors• Technological advancements mean

“creative destruction”. If companies fail to embrace new technology, they are planning to fail in the long run.

• Changing technology has a direct impact on the demand for a firm’s products and services, production processes and raw material.

• Technology can change the lifestyles and buying patterns of consumers.

• Internet has created huge opportunities for many Indian firms who have started exporting on a large scale.

• It also changes the production process. Shift from manual work to robotics has increased productivity and also unemployment.

Political & Legal factors• The philosophy of the political

parties influence business practices and determines the risk of doing business in a particular region.

• Political stability is a key factor in determining the attractiveness of a particular area.

• The legal environment serves to define what organizations can and cannot do at a particular point of time.

• Consumer protection acts and the protection given to consumers is becoming stringent day by day.

Economic factors• Refer to the nature and health of the

economic system within which the firm operates. Economic factors include the state of business cycles, distribution of wealth in the population, interest rates, savings, debt and credit availability and the governments monetary and fiscal policy.

Business Cycle• The business cycle directly

influences the consumer spending.• Purchases of durable goods

(appliances, furniture, automobiles ) etc can be postponed during period of recession.

Rising Incomes• Trend toward dual-income families

leading contributor.• Provides more discretionary

income.• This raises the demand of goods

and services.• Huge opportunity for

organizations.

Inflation• Inflation causes consumers to do

two things:– Decrease brand loyalty to search for

lowest prices– Take advantage of coupons and sales

to stock up on items