Marketing Environment

Environmental Scanning and Environmental Management

Environmental Scanning is the process of collecting information about the external marketing environment to identify and interpret potential trends. Environmental Management involves marketers efforts toward achieving organizational objectives by predicting and influencing the competitive, political-legal, economic, technological, and social-cultural environments.

THE COMPANYS MARKETING ENVIRONMENT

All Companies operate within a marketing environment. This environment consists of all the factors and forces that affect the companys ability to transact effectively with its target market. This environment can be divided into : (A) Micro-environment (B) Macro-environment

Marketing Environment
All the factors and forces influencing the companys ability to transact business effectively with its target market. Includes: Microenvironment - forces close to the company that affect its ability to serve its customers. Macroenvironment - larger societal forces that affect the whole microenvironment.

The Marketing Environment

Demographic
Company

Cultural
Publics

Economic Company
Suppliers
Customers

Political

Competitors

Natural

Intermediaries

Technological

The Microenvironment
Company

Publics

Forces Affecting a Companys Ability to Serve Customers

Suppliers

Competitors

Intermediaries

Customers

The Companys Microenvironment

Companys Internal Environment- functional areas such as top management, finance, and manufacturing, etc. Suppliers - provide the resources needed to produce goods and services. Marketing Intermediaries - 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

The Microenvironment
Customers:
Five types of markets that may purchase a companys goods and services.
Consumer Business Reseller Government International

The Companys Microenvironment Competitors - those who serve a target market with similar products and services. Publics - any group that perceives itself having an interest in a companys ability to achieve its objectives.

The Macro-environment

Demographic Cultural
Forces that Shape Opportunities and Pose Threats to a Company

Economic

Political Technological

Natural

Socio cultural factors

Anything within the context of society that has the potential to affect an organization. Includes factors such as attitudes, customs, lifestyles, values etc. Any change in the above factors can be an opportunity or a threat for the firm.

Demographic factors
Demography : Study of population. A change in the age mix of the population has many potential consequences for organizations. Eg.: US, Japan and many other European countries are ageing out as a result of the sharp decline in the birth rate & improvements in health care. By 2015, more than 35% population of these countries will be more than 65 years of age. India, Brazil, Mexico are young countries.

Demographic factors
33% of the Indian population below 15yrs in 2000. In 2020, the average age of an Indian will be 29yrs in contrast to China (37 ), US ( 45 ) & Western Europe ( 48 ). Companies in the other countries will now have to change their product offerings to suite the older market.

Education Levels
Rising education has a major impact on organizations. As education levels increase, there is a subsequent increase in income, hence consumption increases. The std. of living of the society increases. The education level also determines the knowledge consumers have about various products.

Technological factors
Technological advancements mean creative destruction. If companies fail to embrace new technology, they are planning to fail in the long run. Changing technology has a direct impact on the demand for a firms products and services, production processes and raw material.

 Technology can change the lifestyles and buying patterns of consumers. Internet has created huge opportunities for many Indian firms who have started exporting on a large scale. It also changes the production process. Shift from manual work to robotics has increased productivity and also unemployment.

Political & Legal factors

The philosophy of the political parties influence business practices and determines the risk of doing business in a particular region. Political stability is a key factor in determining the attractiveness of a particular area.

 The legal environment serves to define what organizations can and cannot do at a particular point of time. Consumer protection acts and the protection given to consumers is becoming stringent day by day.

Economic factors
Refer to the nature and health of the economic system within which the firm operates. Economic factors include the state of business cycles, distribution of wealth in the population, interest rates, savings, debt and credit availability and the governments monetary and fiscal policy.

Business Cycle
The business cycle directly influences the consumer spending. Purchases of durable goods (appliances, furniture, automobiles ) etc can be postponed during period of recession.

Rising Incomes
Trend toward dual-income families leading contributor. Provides more discretionary income. This raises the demand of goods and services. Huge opportunity for organizations.

Inflation
Inflation causes consumers to do two things:
Decrease brand loyalty to search for lowest prices Take advantage of coupons and sales to stock up on items