Marketing Environment

 Marketing activities are influenced by several

factors inside and outside a business firm

 These factors or forces influencing marketing

decision making are collectively called
marketing environment.

 It comprises all those forces which have an

impact on market and marketing efforts of the
enterprises
Dr. Reeti Agarwal MM1 (Section C & D) 1
 Marketing environment refers to
the actors and forces outside
marketing that effect marketing
management's ability to develop
and maintain successful
transactions with its target
customers (Philip Kotler)

Dr. Reeti Agarwal MM1 (Section C & D) 2

 Purpose of Marketing
Environment Analysis
 To know the relevant events & trends in
the environment.
 Discover the opportunities & threats.
 Environmental projection.
 Assess scope of opportunities.
 Right fit between the environment &
business unit.
 Formulate the right marketing strategy.
Dr. Reeti Agarwal MM1 (Section C & D) 3
 Components of
Marketing Environment

Demographic Economic
Forces

Technological Forces
Forces
Physical Forces

Suppliers Intermediaries

FIRM Public
Competitors
Customers

Political And Legal Social And Cultural

Forces Forces
Dr. Reeti Agarwal MM1 (Section C & D) 4
 The Company’s
Microenvironment

 The forces close to the company

that affect its ability to serve its
customers– the company, market,
channel firms, customer markets,
competitors and publics

Dr. Reeti Agarwal MM1 (Section C & D) 5

 1) The company
R&D Purchasing

Finance Manufacturing
Marketing

Top
Accounting
Management
Dr. Reeti Agarwal MM1 (Section C & D) 6
  2) Suppliers
 Suppliers have bargaining power-
influence cost of raw materials.
 Integrate vs Outsource.

 3) Marketing Intermediaries
Firms that 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

Dr. Reeti Agarwal MM1 (Section C & D) 7

 4) Customers

International
Business markets Government
markets markets

Consumer Reseller
Company
markets markets

Dr. Reeti Agarwal MM1 (Section C & D) 8

 5) Competitors

 6) Publics
Any group that has an actual
or potential interest in or
impact on an organization’s
ability to achieve its
objectives

Dr. Reeti Agarwal MM1 (Section C & D) 9

 Publics
Government Citizen action
publics publics

Media Local
publics Company publics

Financial General
Internal public
publics
public

Dr. Reeti Agarwal MM1 (Section C & D) 10

 The Company’s
Macro Environment
( Uncontrollable Factors)

 The larger societal forces that

affect the whole microenvironment
-- demographic, economic, natural,
technological, political, and
cultural forces

Dr. Reeti Agarwal MM1 (Section C & D) 11

 The Macro Environment
Demographic Economic
forces forces

Technological Natural
forces Company forces

Political- Legal Social- Cultural

forces forces

Dr. Reeti Agarwal MM1 (Section C & D) 12

 Demographic Environment

The study of human population in terms of size,

density, location, age, sex, race, occupation,
and other statistics
 Increasing Population
 Growth in rural population
 The changing family system
 Changing role of women
 A better educated population
 Increasing diversity

Dr. Reeti Agarwal MM1 (Section C & D) 13

 Economic Environment

 Global financial crisis

 Changing income distribution

and consumer spending habits

Dr. Reeti Agarwal MM1 (Section C & D) 14

 Natural Environment
Natural resources that are needed as
inputs by marketers or that are affected
by marketing activities
 Shortages of raw materials
 Increased cost of energy
 Increased pollution
 Government intervention in natural resource
management

Dr. Reeti Agarwal MM1 (Section C & D) 15

 Technological
Environment
Forces that create new technologies, creating new
product and market opportunities
 Fast pace of technological change
 High R & D budgets
 Concentration on minor improvements
 Increased regulation

 Analyze overall technology environment & technology

options.
 Analyze merits & cost effectiveness of alternative
technologies.
 Govt. regulations related to technology.
 Forecast technological trends.

Dr. Reeti Agarwal MM1 (Section C & D) 16

 Political Environment
Laws, government agencies, and pressure
groups that influence and limit various
organizations and individuals in a given society
 Increasing legislation
 Changing government agency enforcement
 New forms of non-tariff barriers in trde
 Increased emphasis on ethics and socially
responsible actions
 Economic & Industrial policies depend upon Political
environment.
 Political stability
Dr. Reeti Agarwal MM1 (Section C & D) 17
 Cultural Environment
 Institutions and other forces that
affect society’s basic values,
perceptions,
 Preferences, and behaviors
 Persistence of cultural values
 Core beliefs
 Secondary beliefs
 Shifts in secondary cultural values
 People’s views of themselves
 People’s views of others
 People’s views of organisations
 People’s views ofMM1
society
Dr. Reeti Agarwal (Section C & D) 18
 Environmental Scanning
 To monitor changes in the
marketing environment
effectively, marketers must
engage in
 Environmental Scanning
 and Analysis

Dr. Reeti Agarwal MM1 (Section C & D) 19

 Environmental Scanning is the process
of collecting information about the
forces in the marketing environment

 Scanning involves observation, perusal

of secondary sources of information
such as publications, reports, etc.

Dr. Reeti Agarwal MM1 (Section C & D) 20

 Environmental Analysis is the
process of assessing and
interpreting the information
gathered through scanning

Dr. Reeti Agarwal MM1 (Section C & D) 21

 SWOT Analysis
 S- Strengths
Internal Environment
Analysis

 W- Weaknesses

 O- Opportunity
External Environment
Analysis

 T- Threat
Dr. Reeti Agarwal MM1 (Section C & D) 22
 Environmental Opportunity

 A major purpose of environmental

scanning is to identify new
marketing opportunities.

 A marketing opportunity is an area of

buyer need or potential interest in
which a company can perform
profitably.
Dr. Reeti Agarwal MM1 (Section C & D) 23
 Environmental Threat
 Some developments in the external
environment represent threats

 An environment threat is a challenge posed by

an unfavorable trend or development that
would lead to deterioration in sales or profit

 Threats should be classified according to

seriousness and probability of occurrence.
Dr. Reeti Agarwal MM1 (Section C & D) 24