MARKETING MARKETING ENVIRONMENTENVIRONMENT

PRESENTED BY:Dr. Bhupendra patel

MBA(HA)

““It is useless to tell a river to stop It is useless to tell a river to stop running; the best thing is to learn running; the best thing is to learn how to swim in the direction it is how to swim in the direction it is

flowing.”flowing.”--AnonymousAnonymous

Chapter ObjectivesChapter Objectives List and discuss the importance of the elements of

the company’s microenvironment

Describe the macroenvironmental forces that

affect the company’s ability to serve its customers

Explain how changes in demographic and

economic environments affect marketing and describe the levels of competition

Chapter ObjectivesChapter Objectives Identify the major trends in the firm’s natural and

technological environments

Explain the key changes that occur in the political and cultural environments

Discuss how companies can be proactive rather

than reactive when responding to environmental trends

Includes:– Microenvironment: actors close to the

company that affect its ability to serve its customers.

– Macro environment: larger societal forces that affect the microenvironment.

Considered to be beyond the control of the organization.

MarketingMarketing Environment Environment

Actors in the Actors in the MicroenvironmentMicroenvironment

– Marketing must consider other parts of the organization including finance, R&D, purchasing, operations and accounting

– Marketing decisions must relate to broader company goals and strategies

MicroenvironmentMicroenvironment

1. The company

Goal 1: Describe environmental factors

The Company

Marketing managers must work with all departments of a company

All Departments have an impact on the marketing department’s plans and actions

“Think Consumer”

– Provide resources needed to produce goods and services.

– Important link in the “value delivery system.”

– Most marketers treat suppliers like partners.

Suppliers:Suppliers:

Marketing IntermediariesMarketing Intermediaries

Marketing intermediaries help the company promote, sell, and distribute its goods to the final buyers

Marketing service agencies help formulate and implement marketing strategies

Financial intermediaries help hospitality companies finance their transactions

Partnering With IntermediariesPartnering With Intermediaries

5 Types of Customers5 Types of Customers

1. Consumer markets

2. Business markets (B to B)

3. Reseller markets

4. Government markets

5. International markets

CompetitorsCompetitors

To be successful, a company must satisfy needs and wants of consumers better than competitors

A company should monitor three variables when analyzing each of its competitors – Share of Market– Share of Mind– Share of Heart

Levels of Competition (Adapted from Analysis for Market Planning), Donald R. Lehmann and Russell S. Winer, p.22, ©1994 by Richard D. Irwin

Competitors…Competitors…

Must understand competitor’s strengthsMust differentiate firm’s products and

offerings from those of competitors• Competitive strategies should emphasize

firm’s distinctive competitive advantage in marketplace

Types of PublicsTypes of Publics

The Company’s Macro environmentThe Company’s Macro environment

Demographic EnvironmentDemographic Environment

Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics

Demographics change over time and companies must keep up with them

Age Distribution of the U.S. Age Distribution of the U.S. PopulationPopulation

(78 million people born 1946-1964) One of the most powerful forces shaping

the marketing environment, 30% of population

(45 million people born 1965-1976) More skeptical, cynical of frivolous marketing pitches promising easy

success (72 million people born 1977-1994)

Fluent and comfortable with computer, digital, and Internet

technology (Net-Gens)

Key U.S. Demographic Key U.S. Demographic TrendsTrends

Key U.S. Demographic Key U.S. Demographic TrendsTrends

Changing Age StructurePopulation is getting older

Changing Age StructurePopulation is getting older

Changing Family StructureMarrying later, fewer children,

working women, and nonfamily households

Changing Family StructureMarrying later, fewer children,

working women, and nonfamily households

Geographic ShiftsMoving to the Sunbelt and suburbs (MSA’s)

Geographic ShiftsMoving to the Sunbelt and suburbs (MSA’s)

Increased EducationIncreased college attendance

and white-collar workers

Increased EducationIncreased college attendance

and white-collar workers

Growing Ethnic and Racial Diversity72% Caucasian, 13% African-American,

11% Hispanic & 3% Asian

Growing Ethnic and Racial Diversity72% Caucasian, 13% African-American,

11% Hispanic & 3% Asian

Changing American FamilyChanging American Family

Household makeup:– Married couples with children = 34%, and falling– Married couples and people living with other relatives =

22%– Single parents = 12%– Single persons and adult “live-togethers” = 32%

Better Educated PopulationBetter Educated Population

1980:– 69% of people over age 25 completed high school– 17% had completed college

2002:– 84% of people over age 25 completed high school– 27% had completed college

Currently, ⅔ of high school grads start college

Economic EnvironmentEconomic Environment

Changes in Income– 1980’s – consumption

frenzy– 1990’s – “squeezed

consumer”– 2000’s – value marketing

Income Distribution– Upper class– Middle class– Working class– Underclass

Consists of factors that affect consumer purchasing power and spending

patterns.

Global EconomicDevelopment

Global EconomicDevelopment

Changes in IncomeChanges in Income

Changing ConsumerSpending Patterns

Changing ConsumerSpending Patterns

KeyEconomic

Concerns forMarketers

KeyEconomic

Concerns forMarketers

Economic EnvironmentEconomic Environment

•Economic FactorsEconomic Factors(a)Gross national product.(b)Per capita income.(c)Balance of payments position.(d)Industry life cycle and current phase through which the

industry is passing. The different phases of this life cycle could be classified as recovery, boom, recession and depression.

(e)Trends in the prices of goods and services—specifically, whether the inflationary or deflationary trends are visible.

(f)Fiscal policies and prime rate of interest charged by commercial banks.

Rich (Rs.5lakh<Income<Rs.10lakh)

Delhi14%

Gujarat8%

Maharshtra24%

Others40%

Punjab7%

Tamil Nadu7%

Statewise depiction of different classes of Rich

The Super Rich (Rs. 10lakh<Income<Rs.20lakh)

Others34%

Maharshtra28%

Delhi16%Gujarat

8%Punjab

7%

Tamil Nadu7%

Obscenely Rich (Rs.Income>1Crore)

Maharshtra39%

Delhi25%

Gujarat6%

Punjab6%

Tamil Nadu5%

Others19%

Natural EnvironmentNatural Environment

Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities.

Natural Natural EnvironmentEnvironment

Natural Natural EnvironmentEnvironment

ConservationOf Resources

ConservationOf Resources

EcotourismEcotourism

Recycle andReduce Waste

Recycle andReduce Waste

Factors Affectingthe

NaturalEnvironment

Factors Affectingthe

NaturalEnvironment

Natural EnvironmentNatural Environment

Natural Environment:– Involves the natural resources that are needed

as inputs by marketers or that are affected by marketing activities

Trends– Shortages of raw materials– Increased pollution– Increased government intervention

Goal 3: Identify trends in natural and technological environments

Technological EnvironmentTechnological Environment

Most dramatic force now shaping our destiny.

Technological ForcesTechnological Forces

Changes in technology may make business obsolete; e.g.,– buggy whips (automobile)– airport at Gander, Newfoundland

(longer range aircraft)– Federal Express (fax machine;

Internet)

New opportunities—e.g., specialty online retailers, mass customization

Cultural EnvironmentCultural Environment

The institutions and other forces that affect a society’s basic values, perceptions, preference, and behaviors.

Marketing ManagementMarketing ManagementThemselves

Identify with brands for self-expression

Others Recent shift

from “me” to “we” society

Organizations Trend of decline

in trust and loyalty to companies

Society Patriotism on the

rise

Nature “lifestyles of

health and sustainability” (LOHAS) consumer segment

Universe Includes religion

and spirituality

Cultural Environment Includes people’s views

of…

Goal 4: Explore political and cultural environments

Increasing LegislationIncreasing Legislation

Changing Government

AgencyEnforcement

Changing Government

AgencyEnforcement

Includes Laws, Government Agencies, Etc. that Influence & Limit Organizations/ Individuals in a Given Society

Includes Laws, Government Agencies, Etc. that Influence & Limit Organizations/ Individuals in a Given Society

IncreasedEmphasis on

Ethics &Socially

ResponsibleActions

IncreasedEmphasis on

Ethics &Socially

ResponsibleActions

Political EnvironmentPolitical Environment

Political TrendsPolitical Trends

Increased legislation and regulation affecting business

Changing government Agency Enforcement

Increased emphasis on socially responsible actions and ethics e.g. MADD and PETA

Legal and Regulatory Legal and Regulatory EnvironmentEnvironment

Laws and Regulations– for safety– for consumer protection– to protect special interests

Dangers of litigation--anyone can sue, and juries often buy it!

Examples:– Antitrust

Fair competition Pricing

– “Truth in Lending”--have to tell people real costs of financing; car leases now regulated

The Marketing Environment The Marketing Environment and Competitor Analysisand Competitor Analysis

SWOT analysis

PEST analysis

Five forces analysis

SWOT analysisSWOT analysis

Strengths (internal)Weaknesses (internal)Opportunities (external)Threats (external)

PEST analysisPEST analysis

Political factors Economic factors Socio-cultural factors Technological factors

Political/legalPolitical/legal

Monopolies legislationEnvironmental protection lawsTaxation policyEmployment lawsGovernment policyLegislationOthers?

Economic FactorsEconomic Factors

InflationEmploymentDisposable incomeBusiness cyclesEnergy availability and costOthers?

Sociocultural factorsSociocultural factors

DemographicsDistribution of incomeSocial mobilityLifestyle changesConsumerismLevels of educationOthers?

TechnologicalTechnological

New discoveries and innovationsSpeed of technology transferRates of obsolescenceInternetInformation technologyOthers?

Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4.

Threat ofThreat ofsubstitutessubstitutes

Potentialentrants

Threat ofThreat ofentrantsentrants

Suppliers

BargainingBargaining powerpower

Substitutes

Buyers

BargainingBargaining powerpower

COMPETITIVE RIVALRY

Five forces analysis

Five Forces Analysis: Key Questions and Implications

• What are the key forces at work in the competitive environment?

• Are there underlying forces driving competitive forces?

• Will competitive forces change?• What are the strengths and weaknesses of

competitors in relation to the competitive forces?• Can competitive strategy influence competitive forces

(eg by building barriers to entry or reducing competitive rivalry)?

Environmental Scanning and Environmental Scanning and AnalysisAnalysis

SCANNING ANALYSIS

ACTION

Environmental ScanningEnvironmental Scanning

Determine Environmental Areas That Need to Be Monitored

Determine How the Information Will Be Collected

Implement the Data Collection Plan

Anaylze and Use the Data in Planning

Responding to the Responding to the Marketing EnvironmentMarketing Environment

Many companies feel the marketing environment is uncontrollable

An environmental management perspective takes action to sway the marketing environment

Take a proactive rather than a reactive approach

THANKS…….THANKS…….