Anushka Gunawardana

MBA (UK), BBMgt (Mkt)

MARKETING ENVIRONMENT Sp (UOK), PG Dip in
Bus. Mgt (UK), CIMA
Passed Finalist
LEARNING OUTCOMES
Understand the element of marketing environment
AGENDA
Marketing environment – Introduction
Internal environment
Micro environment
Macro environment
SWOT analysis
MARKETING ENVIRONMENT
Marketing is a management
Internal
process which identifies, Environment
anticipates and supplies Micro
customer requirements Environment

efficiently and profitably Macro

Environment
Marketing environment
consists of external forces that
directly or indirectly influence
an organization’s acquisition
of inputs and creation of
outputs.
 An organization's
internal environment is
composed of the
elements within the
organization,
including;
Current employees
Management
Corporate culture
(defines employee
INTERNAL behavior)

ENVIRONMENT
ANALYSING INTERNAL
ENVIRONMENT

McKinsey’s 7S Model
This model covers 07 key aspects of the
organization;
 Strategy (plans)
 Structure (interaction and co-ordination)
 Systems (formal and informal
procedures)
 Style (management and leadership style)
 Staff (human resources and capabilities)
 Skills (distinctive competencies)
 Shared values (core values of the
company)
MCKINSEY’S 7S MODEL
Hard elements- These elements are relatively easier to define/
identify and hence management can directly influence them.
1. Structure- the way organisation is structured: hierarchy of
authority and communication flows.
2. Strategy- Plan to build and maintain competitive advantage
over the competition .
3. Systems- activities and procedures: accounting , HRM,
information management etc
MCKINSEY’S 7S MODEL
Soft elements – Soft elements are less tangible and hence more
difficult to describe/ define.
1.Skills: the capabilities and competencies that exist within the
company. What it does best.
2.Shared values: the values and beliefs of the company that
guide the behaviour of its employees.
3.Staff: the company's people resources and how the are
developed, trained and motivated to achieve organisational
vision and mission.
4.Style: the leadership approach of top management and the
company's overall operating approach.
 BCG METRIX
The BCG matrix is a tool that
High is used to evaluate the
position of the product
Star Problem portfolio of a business.
Child
Market The market share for each
growth product unit is determined
relative to the market share
Cash Dog
cow of the competitor.
low The market growth is used as
a measure of a market’s
attractiveness.
High Relative Market Share low.
BCG METRIX

Cash cow – a business unit that has a large market share in a

mature, slow growing industry. Cash cows require little investment
and generate cash that can be used to invest in other business units.

Star – a business unit that has a large market share in a fast growing
industry. Stars may generate cash, but because the market is growing
rapidly they require investment to maintain their lead. If successful, a
star will become a cash cow when its industry matures.
BCG METRIX

Question mark – a business unit that has a small market share in a

high growth market. These business units require resources to grow
market share, but whether they will succeed and become stars is
unknown.

Dog – a business unit that has a small market share in a mature

industry. A dog may not require substantial cash, but it ties up capital
that could better be deployed elsewhere. Unless a dog has some
other strategic purpose, it should be liquidated if there is little
prospect for it to gain market share.
MICRO ENVIRONMENT
MICRO ENVIRONMENT

Suppliers Competitors
The company: Marketing intermediaries:
 Management, finance,  Resellers
research & development,  Physical distribution firms
purchasing, manufacturing,
 Marketing service agencies
accounting, and human
 Financial intermediaries
resources
MICRO ENVIRONMENT
MICRO ENVIRONMENT
Customers:
 Consumer, business, reseller, government, and international markets
Publics:
 Financial
 Media
 Government
 Citizen-action groups
 Local
 General
 Internal
ANALYZING MICRO ENVIRONMENT -
FIVE FORCE MODEL
FIVE FORCE MODEL

Competitive Rivalry – looks at the competition between the

existing players - is one player very dominant or are all equal
in strength/size?
Customer bargaining power – looks at how strong the position
of buyers is - can they work together to order large volumes?
This depends on the available choices in the market place for
customers. If a large number of similar kinds of products are
available in the market, it gives higher power to the customers
for selection.
FIVE FORCE MODEL
Suppliers bargaining power – looks at how strong the position
of sellers is - are there many or only few potential suppliers, is
there a monopoly? When there is a low number of suppliers,
their power increases as there is a demand for their products/
materials.
Threat from new entrance – this looks at how easy or difficult
is it for new entrants to start to compete and which barriers
exist. Is there a possibility of small market players becoming
large in the future and creating competition?
FIVE FORCE MODEL
Substitutes – looks at how easily products or services be
substituted. This is especially applicable when cheaper products
that fulfill similar requirements can be identified as substitutes
and if customers cannot reach the original product they may
test these substitutes. One needs to identify whether substitutes
are available in the market you operate in.
 THREE CS FRAMEWORK
Micro Details
environment
component
Customers Information about customers in the market; market trends in
demand; seasonality and cycles; composition of the market:
needs and wants, benefits sought; demographics, and other
segmentation characteristics.
Competitors Identification of competitors; market presence; size, strengths
and
weaknesses; strategic groups; response profiles. Pattern of
competition adopted: price and non-price dimensions
Channel This relates to suppliers and intermediaries. Importance and
members reliance for procurement and service. Market coverage.
Relationships and power balance.
COMPETITOR ANALYSIS
Should analyse the competition in the current market as well as
potential market.
Should assess the level of competition and whether
competition is direct in terms of offering the same or similar
products, or indirect where there is competition for the same
‘share of the wallet’ in a different market.
COMPETITOR ANALYSIS – LEVEL OF
COMPETITIONS
Brand competitions – companies offering similar product and
services
Industry competition – all companied who make same
product/ same class of products
Form competition – companies that manufacture products that
supply same service
Generic competitions – all the companies who compete for
same share of wallet.
COMPETITOR ANALYSIS – TYPES OF
COMPETITORS
Laid-back competitors - Respond
slowly, or not respond at all

Tiger competitors - Respond in an

aggressive manner in terms of speed
and weight of response

Selective/ strategic – React only to

selective strategies

Stochastic competitors -
Unpredictable responses.
COMPETITOR ANALYSIS- EXAMPLE
The process of identifying key competitors, assessing their
objectives, strategies, strengths and weakness and reaction
patterns and selecting which competitors to attack or avoid.
 Unique features
Competitor
1
5
4
3
2
1
0
Competitor Competitor
3 2 Superior Quality
Competitor 1
5
4
3
2
1
0

Competitor 3 Competitor 2
 MACRO ENVIRONMENT
Demographic Economic Social-Cultural Natural Technological Political & Legal
Environment Environment Environment Environment Environment Environment

Demography Culture molds

is the study of and regulates
population daily The natural Marketers are
trends. This is behavior. Our The state of
important Macro attitudes, environment technology is a mainly
because of the economics is beliefs, forms the function of influenced by
marketers about the values and backdrop to resources and the political
concern with aggregate language our social and of the dimension in
the size, behavior of derive from economic lives knowledge and general terms
structure, consumers, such cultural - Trends skills needed and by the
composition businesses and influences as relevant for legislative
governments input, process To use such environment in
and the family, and outputs. resources detail.
characteristics community,
of the religion and
population. education
DEMOGRAPHIC ENVIRONMENT
Important trends to monitor;
Current population levels and the future size of any given
population
The growth rates of developed countries versus developing
countries
The age and gender structure and its distribution by
region/locality
Migration within national borders and between international
borders
The demographic impact on world resources and the physical
environment
CHINA – “SIX-POCKET SYNDROMES”
DEMOGRAPHIC ENVIRONMENT
The world’s population continues
to grow, albeit more slowly than
in the recent past. Today, it is
growing by 1.10 per cent per
year, yielding an additional 83
million people annually.
Children under 15 years of age
represent roughly one quarter of
the world’s inhabitants (26 per
cent), while older persons aged
60 or over account for just over
one eighth (13 per cent).
More than half (61 per cent) are
adults between 15 and 59 years
of age.
Globally, population aged 60 or
over is growing faster than all
younger age groups
Sixty per cent of the world’s
people live in Asia
At the global level, the numbers
of men and women are roughly
equal, with the male population
being slightly larger than the
female population. Currently, in
2017, there are 102 men for
every 100 women.
POPULATION OF THE WORLD AND REGIONS, 2017, 2030, 2050 AND
2100, ACCORDING TO THE MEDIUM-VARIANT PROJECTION

Population (millions)
Region 2017 2030 2050 2100
World 7 550 8 551 9 772 11 184
Africa 1 256 1 704 2 528 4 468
Asia 4 504 4 947 5 257 4 780
Europe 742 739 716 653
Latin America and the 646 718 780 712
Caribbean
Northern America 361 395 435 499
Oceania 41 48 57 72

Source: United Nations, Department of Economic and Social Affairs, Population Division
(2017). World Population Prospects: The 2017 Revision. New York: United Nations.
 DEMOGRAPHIC ENVIRONMENT
Current demographic trends
Millennials are the United
States’ largest living generation.
In 2016, there were an
estimated 79.8 million
Millennials (ages 18 to 35 in
that year) compared with 74.1
million Baby Boomers (ages 52
to 70). The Millennial
population is expected to
continue growing until 2036 as
a result of immigration.
Baby Boomers(1646-1964) - Work
hard (post phone retirement), Prefer
Anti aging products
Generation X(1965-1976) - High
divorce rate, Their mothers are
employed, Latchkey kids, Care
about environment
Generation Y(1977-1994) -
Impatient and “Now-Oriented”,
Technology Oriented
Millennial(1995-2000..) - more
likely to be living in their parents’
home. Significant Historical shift.
Distribution of the world’s population by age and sex, 2017

Source: United Nations, Department of Economic and Social Affairs,

Population Division (2017). World Population Prospects: The 2017
Revision. New York: United Nations.
ECONOMIC
ENVIRONMENT
Trends/ factors that effect
purchasing power/ patterns
of the people.
Mainly discuss economic
growth and developments.
Can be measured through;
 Income level /Income
distribution
 Savings, debt and credit
availability (Interest rates)
 Inflation
 Exchange rates fluctuation
 Import and export (BOP)
ECONOMIC ENVIRONMENT
Walt Disney sells two different sets of toddler/kids items
to two different income levels.
SOCIAL-CULTURAL ENVIRONMENT
Culture is built up through a system of values, beliefs and
attitudes.
Culture is specific to one group.
Culture is not innate but is learned from one generation to the
next.
Culture influences the group in uniform and predictable ways.
SOCIAL-CULTURAL
ENVIRONMENT
From our sociocultural environment we
absorb, almost unconsciously, a world
view that defines our relationships to
ourselves, others, organizations, society,
nature, and the universe.
Other cultural characteristics of interest
to marketers are the high persistence
of core cultural values and the
existence of subcultures.
SOCIAL-CULTURAL ENVIRONMENT
The following dimensions have
had particular significance to
the marketing environment.
 Role of women
 Religious values
 Healthy living and fitness trends
 Social class
 Reference groups
 The family/ family life cycle
 Life style
NATURAL
ENVIRONMENT
NATURAL ENVIRONMENT
Organization interaction with
natural environment;
 Inputs (renewable, non renewable)
 Outputs (core products, by-
products, waste)
Trends in natural environment:
 Growing shortages of raw
materials
 Increased pollution
 Increased government intervention
 Green movement
 Focus on environmental
sustainability strategies
NATURAL ENVIRONMENT
TECHNOLOGICAL ENVIRONMENT
Technology is the application of
knowledge and tools to solve
problems and perform task more
efficiently.
Technology decide how the
society satisfy the phycological
needs.
Technology can have two
impacts;
 Improvement for the product/
service offered
 Improvements for the way
company communicate with the
customers
TECHNOLOGICAL ENVIRONMENT
Recent technological
developments;
AR (augmented reality) and VR
(virtual reality) technology (Ikea,
The Walking Dead game)
Everything on demand via phone
apps (Uber, pickme, banking, etc)
Physical-Digital Integrations –
wall mart- Store map, product
trail
Social media dominance
POLITICAL AND LEGAL ENVIRONMENT
Political and legal forces are Effect from legislations could
closely interrelated be in terms of;
 Formation of business
This consist of laws,
government agencies and  Employment/ labour
pressure groups that influence  Competitive activities
and limit various organization  Effect to society
and individual.  Advertising
Two major trends in legal  Intellectual property rights
environment;
 Increase in business legislations
 Growth of special-interest
groups
POLITICAL AND LEGAL ENVIRONMENT
Business legislations has four
main purposes
 To protect companied from
unfair competition
 To protect consumers from
unfair business practices Then
 Protect the interest of society
from unbridle business behavior
 To charge business with the
social costs created by their
products or production
processes

Now
ANALYSING MACRO ENVIRONMENT
PEST/ PESTEL analysis
Political
Economical
Social
Technological
Ecological
Legal
SWOT ANALYSIS
The overall evaluation of a
company’s strengths,
weaknesses, opportunities,
and threats is called SWOT
analysis.
It’s a way of monitoring the
external and internal
marketing environment.
SWOT ANALYSIS
Strengths - A firm's strengths are its resources and capabilities
that can be used as a basis for developing a competitive
advantage.
Weaknesses – The absence of certain strengths may be viewed
as a weakness.
Opportunities - The external environmental analysis may
reveal certain new opportunities for profit and growth.
Threats - Changes in the external environment also may present
threats to the firm.
SWOT ANALYSIS
Strengths Weakness
Company inner capabilities, Poor reputation among
good reputation among customers, high cost structure
customers or favorable or lack of access to the best
access to distribution natural resources.
networks.

Opportunities
Arrival of new technologies
or the repeal of restricting
regulations
Threats
Shifts in consumer tastes
away from the firm's
products, emergence of
substitute products or new
regulations.
QUESTIONS?