MC9030: Marketing and Financial

Management
Lesson 02

The Marketing Environment

Mr. K. Kajenthiran
BBAHons (Mkt.) (UOJ), MSc in (Mgt.) (USJ)
Senior Lecturer in Marketing,
Faculty of Management Studies and Commerce,
University of Jaffna.
 Intended Learning Outcome
After end this lesson you could able to explain :
• The Marketing Environment

• The environmental forces that affect the company’s ability to serve its
customers.

• How the environmental changes affect marketing decisions.

1-2
Today you have to run
faster to stay in place.
What is Marketing
Environment
 The Marketing Environment

The marketing environment includes the actors

and forces outside marketing that affect
marketing management’s ability to build and
maintain successful relationships with
target customers
- Philip Kotler, 2018 -
 The Marketing Environment cont....
• Every manager in an organization should watch the outside
environment, marketers have two special aptitudes.

• They have disciplined methods—marketing research and marketing

intelligence—for collecting information
• and developing insights about the marketing environment. They also
spend more time in customer and competitor environments.

• By carefully studying the environment, marketers can adapt their

strategies to meet new marketplace challenges and opportunities.
The Marketing Environment

Microenvironment consists of the actors close to

the company that affect its ability to serve.

Macroenvironment consists of the larger societal

forces that affect the microenvironment.
 The Company’s Microenvironment
Actors in the Microenvironment

This combine to make up the company’s value delivery network. Source: Kotler, 2018
 The Company’s Microenvironment (Cont…)
The Company

In designing marketing plans, marketing management takes other company

groups into account—groups such as
• Top management
• Finance
• R&D
• Purchasing
• Operations
• Accounting
 The Company’s Microenvironment (Cont…)
Suppliers
• Provide the resources to produce goods and services

• Treat as partners to provide

customer value

• Supply shortages or delays,

natural disasters, and other events
can cost sales in the short run and
damage customer satisfaction in the long run.
 The Company’s Microenvironment (Cont…)
Marketing Intermediaries

Help the company to promote, sell

and distribute its products to final
buyers
They include resellers, physical
distribution firms, marketing services
agencies, and financial intermediaries.
 The Company’s Microenvironment (Cont…)
Competitors

• A company must provide greater customer value and

satisfaction than its competitors do.

• Firms must gain strategic advantage by positioning their

offerings against competitors’ offerings

• When selecting competitors, the company wants to find the

“sweet spot” where it meets customers’ needs in a way
that rivals can’t.
 Strategic Sweet Spot versus Competitors

When selecting
Competitors’
competitors, the offerings
Customers’ needs
company wants to find
the “sweet spot” where it
meets customers’ needs Sweet
in a way that rivals can’t. spot

Company’s
Strategic sweet spot is that space in which you are able capabilities
to satisfy customer needs better, cheaper or differently
from your competitors. Strategic sweet spot is “where it
meets customer’s needs in a way that rivals can’t, given
the context in which it competes” uncover ideal situations that matter to each unique
- Collis and Rukstad (2008) - business (Mobbs, 2017).
© 2020 Konalingam Kajenthiran
 Finding Uncontested Market Spaces
Rather than competing head to head with established competitors, many
companies seek out unoccupied positions in uncontested market
spaces (No direct competitors) – Blue Ocean Strategy.
To plan effective marketing strategies the company needs to find
out all it can about its competitors. It must constantly compare
its marketing strategies, products, prices, channels, and
promotions with those of close competitors.

Steps in Analyzing Competitors

Assessing competitors’
Identifying the objectives, strategies, Selecting which
company’s strengths and competitors to
competitors weaknesses and attack or avoid.
reaction patterns
The Company’s Microenvironment (Cont…)
Publics
Any group that has an actual or potential interest in or
impact on an organization’s ability to achieve its objectives
• Financial publics
• Media publics
• Government publics
• Citizen-action publics
• Local publics
• General public
• Internal publics
 The Company’s Microenvironment (Cont…)
Customers
• Consumer markets: individuals and households that buy goods and
services for personal consumption.

• Business markets : buy goods and services for further processing

• Government markets: government agencies that buy goods and services

to produce public services
• International markets: buyers in other countries, including consumers,
producers, resellers, and governments.
The Company’s Macroenvironment
The macroenvironment consists of broader forces that affect the actors in
the microenvironment.
 The Company’s Macroenvironment (Cont…)
Demographic Environment

• Demography: the study of human populations in terms of - size,

density, location, age, gender, race, occupation, and other
statistics
• Demographic environment: involves people, and people make up
markets
 Demographic profile in marketing
• Companies today recognize that they cannot appeal to all buyers
in the marketplace—or at least not to all buyers in the same way.

• Buyers are too numerous, widely scattered, and varied in their

needs and buying practices.

• Moreover, companies themselves vary widely in their abilities to

serve different market segments.
© 2020 Konalingam Kajenthiran
Demographic trends:

• Shifts in age,
• Family structure,
• Geographic population,
• Educational characteristics, and
• Population diversity
 1. The Changing Age Structure of the
Population (shifts in age)

When you market a product you have to market it to the right

people and target audience in that specific
area.
Generational Marketing: Do brands need to create separate products and marketing
programs targeting Generation
a marketing approach that uses generational segmentation in marketing
communication.

© 2020 Konalingam Kajenthiran

 1964 1981 and
The Baby Boomers:
The 78 million people
1996
The born during the years
following World War II
Millennials (or
Generation Y): The 83
Changing and lasting until 1964.
(1946-1964)
million children of the
baby boomers born
Age 57-75 years old
between 1977 and 2000.
Aged 25-40
Structure of Generation Z: People
born between 1997 –
the Generation X: The 49 2009 (although many
analysts include people
million people born
Population between 1965 and 1980 born after 1995) who
make up the kids, tweens,
in the “birth dearth”
following the baby boom. and teens markets.
• GI Generation – People who are born
between 1901 and 1926 1965 and 1996
• Silent Generation – People who are born 1976 Aged 41-57
between 1927 and 1945
Generation Alpha consists of those born from
2010 to 2025
 2. Changing Household Pattern/Family Structure
More people are:
• Joint family to Nuclear family
• Divorcing or separating
• Choosing not to marry

• Choosing to marry later

• Marrying without intending to have children

• Increasing number of working women

• Increasing number of stay-at-home dads

© 2020 Konalingam Kajenthiran

 3. Geographic Shifts in Population
• This is a period of great migratory movements between and
within countries.
• Such population shifts interest marketers because people in
different regions buy differently.
• Rapid increase in the number of people who “Telecommute”.
• It has created a booming SOHO (small office/home office) market.

© 2020 Konalingam Kajenthiran

 4. A Better-Educated,
More White-Collar, More
Professional Population
Blue Collar Workers
Blue-collar worker stereotypical refers to workers who engage in hard manual labor, typically agriculture,
manufacturing, construction, mining, or maintenance.

White Collar Workers

White-collar workers are suit-and-tie workers who work at a desk and, stereotypically, eschew physical labor. They
tend to make more money than blue-collar workers.
© 2020 Konalingam Kajenthiran
 • Overseas immigration has led to an increase in not only
population but also the ethnic diversity
5. Increasing
Ethnic Diversity • Marketers now face increasingly diverse markets,
both at home and abroad, as their operations become
more international in scope.
© 2020 Konalingam Kajenthiran
 The Company’s Macroenvironment (Cont…)
Economic Environment
Economic environment consists of factors that affect consumer purchasing
power and spending patterns
• Inflation rates
• Interest rates
• Trade deficits or surpluses
• Budget deficits or surpluses
• Personal savings rate
industrial economies • Business savings rates
• Gross domestic product subsistence economies
 The Company’s Macroenvironment (Cont…)
Natural Environment
Natural environment: Physical environment and natural resources that are
needed as inputs by marketers or that are affected by marketing activities.

Anything from weather to natural disasters - can affect companies and their
marketing strategies.

Trends
• Increased shortages of raw materials
• Increased pollution
• Increased government intervention
• Increased environmentally sustainable strategies
 Trends
- Increased shortages of raw materials
- Increased pollution: Industry will almost always damage the quality of the
natural environment.
- Consider the disposal of chemical and nuclear wastes;
- the dangerous mercury levels in the ocean;
- the quantity of chemical pollutants in the soil and food supply; and
- the littering of the environment with non-biodegradable bottles, plastics, and
other packaging materials.

- Increased government intervention in natural resource

management
- Increased environmentally sustainable strategies
Environmental sustainability

• Environmental sustainability means

meeting present needs without
compromising the ability of future
generations to meet their needs.

• Many companies are responding to

consumer demands with more
Environmentally responsible product
 The Company’s Macroenvironment (Cont…)
Technological Environment

• Most dramatic force in changing the marketplace

• Creates new technologies
• Creating New products and new opportunities
• Concern for the safety of new products

robotic surgery,
 The Company’s Macroenvironment (Cont…)
Political Environment
Political environment consists of laws, government agencies,
and pressure groups that influence or limit various
organizations and individuals in a given society
• Legislation regulating business
• Business legislation has been enacted for number of reasons
• To protect companies from each others
• To protect consumers from unfair business practices
• To protect the interests of society against unrestrained business
behaviour

• Increased Emphasis on ethics and socially responsible

actions
 The Company’s Macroenvironment (Cont…)
Cultural Environment
Cultural environment consists of institutions and other forces that affect a
society’s basic values, perceptions, and behaviors.

People grow up in a particular society that shapes their basic beliefs and values.

The following cultural characteristics can affect marketing decision making:

• The persistence of Cultural Values: individual core beliefs and values e.g.
Individual freedom, hard work, getting married, and achievement and success. Core
beliefs and reinforcement are passed on from parents to children and are
reinforcement by schools, business, religious institutions, and government.

• Shifts in secondary cultural values: The major cultural values of a society are
expressed in a people's views of themselves and others as well in their view of
organization society nature and the universe
Responding to the Marketing Environment
those who make things happen, those who watch things happen, and those who wonder what’s
happened

Views on Responding

Uncontrollable Proactive Reactive

• React and • Aggressive • Watching and

adapt to actions to reacting to
forces in the affect forces forces in the
environment in the environment
environment
avoid the threats and take
advantage of the opportunities the
environment provides
Thank you