Marketing Environment Marketing

MARKETING ENVIRONMENT

Marketing Environment

The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers.

Environmental Monitoring/ Scanning

The process of gathering information marketing research and marketing intelligence) regarding marketing environment, analyzing it and forecasting the impact of whatever trends the analysis suggests.


By carefully studying the environment, marketers can adapt their strategies to meet new marketplace challenges and opportunities.

How important is environmental monitoring to business success?

In a word VERY.

One study of about 100 large companies concluded, marketers having advanced systems to monitor events in the environment exhibited higher growth and greater profitability than firms that did not have such systems.

MARKETING ENVIRONMENTThe marketing environment is made up of a

microenvironment and a macro environment.

Microenvironment

The actors close to the company that affect its ability to serve its customers – the company, suppliers, marketing intermediaries, customer markets, competitors and publics.

Macro-environment

The larger societal forces that affect the microenvironment – demographic, economic, natural, technological, political and cultural forces

MARKETING ENVIRONMENTThe Company’s Microenvironment

The Company

Top management, finance, R & D, purchasing, operations, accounting all are internal environment for marketing.

These departments have an impact on the marketing department’s plans and actions and under the marketing concept all of these functions must think consumer. They should work in harmony to provide superior customer value and satisfaction.


Suppliers

Suppliers form an important link in the company’s overall customer value delivery system.

Marketing executives often are not concerned enough with the supply side of marketing. But they do become very concerned when shortages occur. Shortages underscore the need for cooperative relationships with suppliers. Most marketers today treat their suppliers as partners in creating and delivering customer value.


Marketing IntermediariesFirms that help the company to promote, sell, and distribute its goods to final buyers, they include resellers, physical distribution firms, marketing service agencies and financial intermediaries.

Resellers: Wholesalers, Retailers

Physical Distribution: Logistics, Transportation

Marketing Services: Marketing Research, Advertising, Media firms, Marketing Consultants

Financial Intermediaries: Banks, Insurance companies, Credit Companies


CustomersPeople or organizations with wants to satisfy, money to spend and the willingness to spend the money.

The company needs to study five types of customer markets closely:

(1)Consumer markets

(2)Business markets

(3)Reseller markets

(4)Government markets

(5)International markets


CompetitorsMarketers must do more than simply adapt to the needs of target customers they must provide greater customer value and satisfaction than its competitors do.

Types of competition:

-Direct Competition-similar products

-Substitution

-Customer’s limited buying power


Publics

Financial

Media

Government

Citizen Action

Internal Publics

General Public

MARKETING ENVIRONMENTThe Company’s Macro-environment

The company and all of the other actors operate in a larger macro-environment of forces that shape opportunities and pose threats to the company. Major forces in the company’s macro-environment include

MARKETING ENVIRONMENTThe Company’s Macro-environment

MARKETING ENVIRONMENTDemographic Environment

Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. It is of major interest to marketers because it involves people, and people make up markets Demographic trends are constantly changing. Some of the more interesting trends are 1). The world’s population (though not all countries) rate is growing at an explosive rate that will soon exceed food supply and ability to adequately service the population. The greatest danger is in the poorest countries where poverty contributes to the difficulties. 2) The most important trend is the changing age structure of the population.

MARKETING ENVIRONMENTKey Pakistani Demographic Trends

Changing Age StructurePopulation is getting younger; many divisionsBaby and teen markets.Day care centersChanging Pakistani FamilyLate marriages, fewer children, workingwomen, and nontraditional householdsFrozen food industry and ready made products.Commercialization and “mall culture”Geographic ShiftsMoving to the metropolitan citiesBetter-Educated & More White-Collar Increased college attendanceand white-collar workers


Key Generations of USA

Baby Boomers

Generation X

Generation Y

Generation Z

MARKETING ENVIRONMENTBaby Boomers

Born between 1946 and 1964

Represent 28% of the population; earn 50% of personal income (USA)

Many mini-segments exist within the boomer group

Entering peak earning years as they mature

Lucrative market for travel, entertainment, housing, financial institutions and more

MARKETING ENVIRONMENTGeneration X


The baby boom was followed by a birth dearth

Maintain a cautious economic outlook

Want a better quality of life

Represent $125 billion in annual purchasing power

MARKETING ENVIRONMENTGeneration Y

Born between 1977 and 199472 million strong; almost as large a group as their baby boomer parentsAlso called echo boomersThe echo boom has created a large teen and young adult market.New products, services, and media cater to GenYComputer, Internet and digitally savvyChallenging target for marketers

MARKETING ENVIRONMENTGeneration Z


It has created a relatively small market of young children.

MARKETING ENVIRONMENTEconomic Environment

Affects consumer purchasing power and spending patterns.

Classes of consumers include:

1. Upper class—spending patterns are not affected by current economic events and who are a major market for luxury goods.

2. Middle class—somewhat careful about its spending but can still afford the good life some of the time.

3. Lower class must count their pennies when making even the most basic purchases


Economic Environment•Changes in Income – value marketing has been promoted. Income distribution b/w the classes has changed

•Changing consumer spending- Engle’s Law- if Family income rises, %age on food declines, housing remain constant, saving increases.

•Inflation, interest rate, unemployment

business life cycle (prosperity, recession, depression & recovery)


Some Shocking TrendsBased on the requirements of 2150 calories, the Government of Pakistan has adopted the official poverty line in 1998-99 as Rs.650 per capita per month. According to the caloric-based poverty definition (headcount ratio), 28.2 percent people in Pakistan lived below the poverty line in 1998-99 and as per the survey report of State Bank of Pakistan 2002-2003 it has increased to 33 percent. This simply means that almost one third of Pakistan’s population is living below the poverty line. With population of 149 million (2003), Pakistan ranks 7th in terms of World's population size and this means that at least 50 million people in Pakistan live below the poverty line.


Some Shocking TrendsIn 1947, 32.7 million people lived in Pakistan. According to estimates, by the end of 2004 the total population will be 151.96 million. Thus, in roughly two generations, Pakistan’s population has increased by 119.28 million, or has grown at an average rate of 2.8 percent per annum. And presently this growth rate is 2.1 percent i.e. addition of 3.1 million persons every year. And with 2.1 percent population growth rate the total number will reach 217 million by the year 2020. This means that Pakistan has now more mouths to feed, more families to house, more children to educate.


Some Shocking TrendsUnemployment in Pakistan has increased from 5.89 percent in 1998 to 7.82 percent in 2003. Similarly unemployment in the rural areas which was 5.0 percent in 1998 has risen to 6.94 percent in 2003 and urban unemployment from 8.0 percent in 1999 to 9.9 percent in 2003.


Natural EnvironmentThe natural environment involves natural resources that are needed as inputs by marketers or that are affected by marketing activities.During the past two decades environmental concerns have steadily grown. Some trend analysts labeled the 1990s as the “Earth Decade,” where protection of the natural environment became a major worldwide issue facing business and the public. Specific areas of concern were:


Natural Environment1). Shortages of raw materials. Staples such as air, water, and wood products have been seriously damaged and non-re-newables such as oil, coal, and various minerals have been seriously depleted during industrial expansion. 2). Increased pollution is a worldwide problem. Industrial damage to the environment is very serious. Far-sighted companies are becoming “environmentally friendly” and are producing environmentally safe and recyclable or bio de grad- able goods. The public response to these companies is encouraging.3). Government intervention in natural resource management has caused environmental concerns to be more practical and necessary in business and industry.Instead of opposing regulation, marketers should help develop solutions to the material and energy problems facing the world.


Our environment Government has started programs of city cleanliness. e.g signposts.Increased pollution(6.8 times higher than WHO standards) and shortage of RM and natural resources. Depend on imported oil.Loss of bio diversity ,vanishing wild life!Worlds second highest rate of de-forestation.Vehicles jumped to 400% in 20 yearsLand pollution (Pakistanis generates 47920 tones of solid wastes per day)


Technological Environment The technological environment includes forces that create new technologies, creating new product and market opportunities.Technology is perhaps the most dramatic force shaping our destiny.New technologies create new markets and opportunities. Almost unlimited opportunities being developed daily in health care, space industry, robotics, and bio-genetic field.Every new technology, however, replaces an older technology.The challenge is not only technical but also commercial—to make practical, affordable versions of products.


Political Environment The political environment includes laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society.

Business is regulated by various forms of legislation.

1). Governments develop public policy to guide commerce—sets of laws and regulations limiting business for the good of society as a whole.

2). Almost every marketing activity is subject to a wide range of laws and regulations.


Political Environment Some trends in the political environment include:

Increasing legislation to:

a) Protect companies from each other.

b) Protecting consumers from unfair business practices.

c) Protecting interests of society against unrestrained business behavior.

Mandatory recycling laws.

In India food companies need special approval to launch brands that duplicate what already exists In market such as another cola drink or brand of rice.


Cultural Environment Society’s major cultural views are expressed in:a) People’s views of themselves. People vary in their emphasis on serving themselves versus serving others. In the 1980s, personal ambition and materialism increased dramatically, with significant implications for marketing. The leisure industry was a chief beneficiary.b) People’s views of others.Observers have noted a shift from a “me-society” to a “we-society.” Consumers are spending more on products and services that will improve their lives rather than their image.c) People’s views of organizationsPeople are willing to work for large organizations but expect them to become increasingly socially responsible. Many companies are linking themselves to worthwhile causes.


Cultural Environment d)People’s views of society. This orientation influences consumption patterns. “Buy American” versus buying abroad is an issue that will continue into the next decade.e) People’s view of nature. More recently people have recognized that nature is finite and fragile and it can be destroyed or spoiled by human activities. Consumers seek out everything from natural, organic and nutritional products to fuel-efficient cars and alternative medicines.f) People’s views of the universe Studies of the origin of man, religion, and thought-provoking ad campaigns are on the rise. Spiritual individualism may be a new theme. People have been moving away from materialism to seek more permanent values-family, community, earth, faith and more certain grasp of right and wrong.

MARKETING ENVIRONMENTWhat’s the point of knowing these forces?

•Many companies view these forces as “uncontrollable” to which they must adapt.•Forces pose both opportunities and threats.•Smart companies grab the opportunities and ward off or prepare for the threats. They make things happen. They take aggressive action and are proactive to changes in the environment.•Passive companies just sit and watch and react to the changes as they happen.•Looser companies just wonder what’s happened.

MARKETING ENVIRONMENTConclusion

Companies should try to be proactive in realizing its SWOT ,instead of being reactive. They should try and change with the environment instead of avoiding/resisting or ignoring it.

Marketing Environment Marketing

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