THE MARKETING

ENVIRONMENT
Prepared by: Robert V. Espiritu
 General

THE BUSINESS
Task
ENVIRONMENT

Internal
The Internal
Environment
◦ The organization’s internal
environment includes the factors
that affect its performance from
within its boundaries. They are
called internal factors because they
are within the organization’s
control, as opposed to external
factors, which are outside the
organization’s control.
 Task Environment

Task Environment of an organization is

An organization's task environment is
the environment which directly affects
the collection of factors that affects its
the organization from attaining
ability to achieve goals. Common
business goals. In brief, Task
factors in the task environment include
Environment is the set of conditions
competitors, customers, suppliers
originating from suppliers,
and distributors. By identifying
distributors, customers, stock
potential factors that could impede
markets, and competitors which
success, the organization has the ability
directly affects the organization from
to adapt.
achieving its goals.
 Porter’s 5
Forces of
Competition
◦ Porter’s 5 forces
framework is used for
strategic industry
analysis. It was
developed in 1979 by
Michael Porter, Harvard
Business School
professor. Michael
Porter’s five forces of
competition can be
used to examine and
analyze the competitive
structure of an industry
by looking at 5 forces of
competition that
influence and shape
profit potential.
 Task Environment

Competitors Customers Suppliers

Substitute New
Distributors
Products Entrants
 Competitors
Competition is the basic element of a
free enterprise system. The interests of
both the organization and the
customers are better served when
choices in the market are available.
Competition encourages progress and
product-developments. It forces
organizations to be more innovative and
productive.
Customers
The basic reason for the very existence
of any business organization is making
profits and the profits are created by
customers. Hence, knowledge about the
customer’s needs and fulfilling these
needs is an organization’s primary
concern. Accordingly, an organization
must continuously monitor the
consumer environment in terms of any
changes in customer’s needs or
preferences.
Suppliers
Since all organizations transform inputs
of materials, equipment, energy, capital
and labor into outputs of products and
services, an organization must interact
with a network of suppliers from whom
these inputs are obtained.
This interaction is mutual and two- way.
Just as an organization is interested that
its suppliers maintain the quality of the
materials that it buys from them, the
suppliers are equally interested that the
buyer organization brings out quality
product.
 Distributors
Distributors play a vital role in
keeping the lines between
manufacturers and users operating
smoothly. They can expedite
response times, enhance a
company's reach and even create
value-added packages. The benefit
of a solid distributor network is the
speed with which manufacturers can
respond to customer demands.
Distributors do not only offer benefits
to manufacturers-they can also be a
boon for users. Because distributors
represent multiple products and
companies, they can bundle.
Substitute Products New Entrants
Technological advances lead to the All organizations want to keep their
development of substitutes for number in the given industry limited.
existing products which offer either This reduces competition and
price or quality or convenience increases profitability of these
advantages. Pressure from substitute organizations.
products limits an industry’s profit
potential by competing and placing
a ceiling on prices. Firms that ignore
the potential threats from substitutes
find themselves losing their market
share.
 The General
Environment
◦ Is the outer layer that is
widely dispersed and
affects organizations
indirectly. It includes
social, demographic
and economic factors
that influence all
organizations equally.
The dimensions of the
general environment
include international,
technological, socio-
cultural, economic, and
political/legal.
 Socio-Cultural

Technological
Components Economic
of the General
Environment Environmental

Politico-legal

Global
Socio-cultural Forces
Consists primarily of the demographic and cultural statistics of the
societies in which an organization operates.
◦ Demographics: the descriptive characteristics of a people in society
◦ Population demographics
◦ Income distribution
◦ Lifestyle changes
◦ Attitudes to work and leisure
◦ Consumerism
◦ Levels of education
◦ Culture
Technological Forces

Product technological changes

◦ Those that lead to new product features and capabilities
of existing products or to completely new products.

Process technological changes

◦ Relate to the alterations in how to make products or how
to manage an enterprise.
Examples of
Technological
Forces
◦ Government spending on research
◦ Government and industry focus on
technological effort
◦ New discoveries / developments
◦ Speed of technology transfer
◦ Rates of obsolescence
◦ Industry standards and innovations
Economic Forces

Refer to the nature and ◦ Business cycles

direction of the economy in ◦ GNP trends
which business operates. ◦ Interest rates
◦ Money supply
◦ (ex. Exchange rate)
◦ Inflation
◦ Unemployment
◦ Disposable income
Environmental
Forces
◦ One of the biggest factors affecting
success or failure is the natural world
and how it affects the business,
sometimes with unexpected or sudden
occurrences such as climate and
weather

◦ Also known as Physical Forces, which

include infrastructure such as roads,
arable land, deep water harbors, mineral
resources, forests, etc.
Examples of Environmental Forces
◦ Environmental protection laws
◦ Waste disposal
◦ Energy consumption
◦ Geography
◦ Topography
◦ Climate
◦ Weather
 Examples of
Politico-legal Forces
◦ Laws
◦ Constitution
◦ Labor Code
◦ Corporation Code
◦ Product safety
◦ Government stability
◦ Taxation policy
◦ Foreign trade regulations
◦ Social welfare policies
Republic Act No. 9211
June 23, 2003
Examples of
Global Forces
◦ Global trends
◦ Foreign markets
◦ Foreign Investments
◦ Internet
◦ Cross-cultural
concepts and ideas
 THE
MARKETING
ENVIRONMENT:
KOTLER
THE MARKETING ENVIRONMENT:
MICROENVIRONMENT
(PHILIP KOTLER)
THE MARKETING ENVIRONMENT:
MACROENVIRONMENT
(PHILIP KOTLER)
 THE
MARKETING
ENVIRONMENT:
PERRAULT