MARKETING ENVIRONMENT

PRESENTED BY:
Dr. Bhupendra patel
MBA(HA)
“It is useless to tell a river to stop
running; the best thing is to learn
how to swim in the direction it is
flowing.”
-Anonymous
 Chapter 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 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
 Marketing Environment
 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.
 Actors in the
Microenvironment
 Microenvironment

1. The company

– 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

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”
 Suppliers:

– Provide resources
needed to produce
goods and services.
– Important link in the
“value delivery
system.”
– Most marketers treat
suppliers like partners.
 Marketing 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 Intermediaries
 5 Types of Customers
1. Consumer markets
2. Business markets (B to B)
3. Reseller markets
4. Government markets
5. International markets
 Competitors
 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…
 Must understand competitor’s strengths
 Must differentiate firm’s products and
offerings from those of competitors
• Competitive strategies should emphasize
firm’s distinctive competitive advantage in
marketplace
Types of Publics
The Company’s Macro environment
 Demographic 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.
Population

(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
Trends
Changing Age Structure
Population is getting older

Changing Family Structure

Marrying later, fewer children,
working women, and nonfamily households

Geographic Shifts
Moving to the Sunbelt and suburbs (MSA’s)

Increased Education
Increased college attendance
and white-collar workers

Growing Ethnic and Racial Diversity

72% Caucasian, 13% African-American,
11% Hispanic & 3% Asian
 Changing 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 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 Environment
Consists of factors that affect consumer
purchasing power and spending patterns.

 Changes in Income  Income Distribution

– 1980’s – consumption frenzy – Upper class
– 1990’s – “squeezed – Middle class
consumer” – Working class
– 2000’s – value marketing – Underclass
 Economic Environment
Global Economic
Development

Key
Changes in Income Economic
Concerns for
Marketers

Changing Consumer
Spending Patterns
•Economic 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.
Statewise depiction of different classes of
Rich
The Super Rich (Rs. 10lakh<Income<Rs.20lakh)

Maharshtra
Others
28%
34%

Tamil Nadu
7% Delhi
Punjab Gujarat 16%
7% 8%
 Obscenely Rich (Rs.Income>1Crore)

Others
19%
Maharshtra
Tamil Nadu
39%
5%
Punjab
6%
Gujarat Delhi
6% 25%
 Natural Environment
 Involves the natural
resources that are
needed as inputs by
marketers or that are
affected by marketing
activities.
 Natural
Environment
Conservation
Of Resources

Factors Affecting
Ecotourism the
Natural
Environment

Recycle and
Reduce Waste
 Natural 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 Environment

 Most dramatic
force now
shaping our
destiny.
Technological 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 Environment

 The institutions and

other forces that
affect a society’s
basic values,
perceptions,
preference, and
behaviors.
 Cultural Environment
Marketing Management
Includes people’s views of…
Themselves
 Identify with
brands for self-
expression
Others
 Recent shift from
“me” to “we”
society
Organizations
 Trend of decline in
trust and loyalty
to companies
Goal 4: Explore political and cultural environments
Society
 Patriotism on the
rise
Nature
 “lifestyles of health
and sustainability”
(LOHAS) consumer
segment
Universe
 Includes religion
and spirituality
 Political Environment
Includes Laws, Government Agencies, Etc. that Influence
& Limit Organizations/ Individuals in a Given Society

Increased
Changing Emphasis on
Increasing Government Ethics &
Legislation Agency Socially
Enforcement Responsible
Actions
 Political 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
Environment
 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
and Competitor Analysis

SWOT analysis
PEST analysis
Five forces analysis
 SWOT analysis
Strengths (internal)
Weaknesses (internal)
Opportunities (external)
Threats (external)
 PEST analysis
 Political factors
 Economic factors
 Socio-cultural factors
 Technological factors
 Political/legal
 Monopolies legislation
 Environmental protection laws
 Taxation policy
 Employment laws
 Government policy
 Legislation
 Others?
 Economic Factors
Inflation
Employment
Disposable income
Business cycles
Energy availability and cost
Others?
 Sociocultural factors
 Demographics
 Distribution of income
 Social mobility
 Lifestyle changes
 Consumerism
 Levels of education
 Others?
 Technological

New discoveries and

innovations
Speed of technology transfer
Rates of obsolescence
Internet
Information technology
Others?
 Five forces analysis
Potential
entrants

Threat of
entrants

Suppliers COMPETITIVE Buyers

RIVALRY
Bargaining Bargaining
power power

Threat of
substitutes

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

SCANNING ANALYSIS

ACTION
 Environmental 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
Marketing 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…….