Marketing

Environment
What is Marketing Environment?

• Is the combination of external and internal factors

and forces which affect the company’s ability to
establish a relationship and serve it’s customers.

• Consists of forces that surround the marketing

department. To be successful, the company must
adapt it’s marketing mix to trends and developments
in this marketing environment.
Company’s Marketing Environment
It consists of the actors and forces outside of
marketing that affect marketing management’s ability
to develop and maintain successful transactions with
it’s target customers.
The uncertain marketing environment deeply affects
the company. Instead of changing slowly and
predictably, the environment can produce major
surprises shocks.
Components of Marketing Environment

1. Internal Environment
- it includes all the forces and factors inside
the organization which affect it’s marketing
operations. These components can be
grouped under Five M’s of the business
which are ; Men , Money , Machinery ,
Materials , and Markets.
2. External Environment
- Constitutes factors and forces which are external
to the business and on which the marketer has a
little or no control. The external environment is in
two types: Micro environment and the Macro
environment.
 Microenvironment(TaskEnvironment)
- consists of the forces close to the company that affects it’s
ability to serve the customers. It includes;

 Suppliers
Marketing Intermediaries
Customers
Competitors
Publics
Partners
Suppliers
Are firms and individuals that provide the resources needed
by the company to produce goods and services. It also must
obtain labor, equipment, fuel, electricity, computers, and
other factors of production.
Supplier developments can seriously affect marketing.
Marketing managers need to watch price trends of their key
inputs. Rising supply costs may force price increase s that can
harm the company’s sales volume. Marketing managers must
also watch supply availability. Supply shortages, labor strikes,
and other events can lose sales in the short run and damage
customer goodwill in the long run.
Market Intermediaries
are firms that help the company to promote, sell, and distribute it’s goods to
final buyers. They include middlemen, physical distribution firms, marketing
service agencies, and financial intermediaries.

Middlemen
are business firms that help the company find customers or make sales to
them. These include wholesalers and retailers who buy and resell merchandise
(they are often called resellers).
Selecting and working with middlemen is not easy. No longer do
manufacturers have many small, independent middlemen from which to
choose. They now face large and growing middlemen organizations. These
groups have great power to dictate terms or shut the manufacturer out of large
markets. Manufacturers must work hard to get “ shelf space”.
Physical Distribution Firms

Help the company to stock and move goods from

their origin to their destination. Warehouses are firms
that store and protect goods before they move to the
next destination. Transportation firms include railroads,
truckers, airlines, barges, and other companies that
specialize in moving goods from one location to
another. A company has to decide on the best ways to
store and ship goods, balancing such factors as cost,
delivery, speed, ad safety.
Marketing Services Agencies

Marketing services agencies- marketing research firms, advertising

agencies, media firms, and marketing consulting firms help the
company to target and promote it’s products to the right markets.
When the company decides to use one of these agencies, it must
choose carefully, since these firms vary in creativity, quality service, and
price.. The company has to review the performance of such firms
regularly and consider replacing those that no longer perform well.
Financial Intermediaries
includes banks, credit companies, insurance companies,
and other companies that help finance transactions or
insure risk associated with the buying and selling off goods.
Most firms and customers depend on financial
intermediaries to finance their transactions. The company’s
marketing performance can be seriously affected by rising
credit costs or limited credit or both. For this reason, the
company has to develop strong relationships with important
financial institution.
Customers
The company needs to study it’s customer markets closely. It can
operate in five types of customer markets. These are:

• Consumer markets - individuals and households that buy goods and

services for personal consumption.
• Industrial markets – organizations that buy goods and services for
further processing or for use in their productionprocess.
• Reseller markets – organizations that buy goods and services in order
to resell them at a point.
• Government markets - government agencies that buy
goods and services in order to produce public services
or transfer these goods and services to others who
need them.
• International markets - foreign buyers , including
consumers, producers, reselling and governments.
Competitors
Every company faces a wide range of competitors. The
marketing concept states that to be successful, the company must
satisfy the needs and wants of consumer better than competitors
do. They must also adapt to the strategies of competition who are
serving the same target consumers. Companies must gain strategic
advantage by strongly positioning their offerings against
competitors’ offerings in the minds of the customer.
No single competitive marketing strategy is best for all
companies. Each firm must consider it’s size and industry position
compared to those of competitors.
Publics
The company’s marketing environment also includes
various publics. We define public as follows:
A public is any group that has an actual or potential
interest in or impact on as organization’s ability to
achieve its objectives.
Type of Publics
• Financial publics. Financial publics influence the company’s
ability to obtain funds, Banks, investment houses, and
stockholders are the major financial publics.
• Media publics. Media publics are those that carry news, features,
and editorial opinion. They include newspapers, magazines, and
radio and television stations.
• Government publics. Management takes government
developments into account.
• Citizen action publics. A company’s marketing decisions may be
questioned by consumer organization, environmental groups,
minority, groups, and others. For example, parent groups are
lobbying for greater safety in bicycles, which are the nation’s
number-one hazardous product.
• Local publics. Every company has local publics such as neighborhood
residents and community organizations. Large companies usually appoint a
community relations officer to deal with the community, attend meetings,
answer questions, and contribute to worth-while causes.
• General publics. A company needs to be concerned about the general
public’s attitude toward its products and activities. The public’s image of
the company affects its buying. To build a strong “corporate citizen” image.
• Internal publics. A Company internal publics include blue-collar workers,
white-collar workers, volunteers, managers, and the board of directors.
Large companies have newsletters and other ways to inform and motivate
their internal publics. When employees feel good about their company, this
positive attitude spills over to external publics.
Macroenvironment
Demographic Environment
Demography is the study of human populations in terms of size,
density, location, age, sex, race, occupation, and other statistics. The
demographic environment is major interest to marketers because
people make up markets.
The changing age structure of the population will result in different
growth rates for various age groups over the decade, and these
differences will strongly affect marketers’ targeting strategies. Expected
growth trends for six age groups; Children, Youths, Young Adults, Early
Middle Age, Late Middle Age, Retirees.
Economic Environment
The economic environment consists of factors that affect
consumer purchasing power and spending patterns. Markets
require buying power. Total purchasing power depends on
current income, prices, savings. Marketers should be aware of
major trends in income and of changing consumer spending
patterns.
Change in Income
Real income per capita declined during the 1970s and early
1980s, as inflate high unemployment, and increased taxes
reduced the amount of money person had to spend.
Natural Environment
The natural environment involves natural resources that are needed
by marketers or that are affected by marketing activities. During the
1960 the concern grew over whether the natural environment was
being damaged by industrial activities of modern nations. Popular
books raised concerns about of natural resources and about the
damage to water, earth, and air caused industrial activity. Watchdog
groups such as the Sierra Club and Friends of sprang up, and legislators
proposed measures to protect the environment should be aware of
four trends in marketing environment.
 Shortage of Raw Materials
Air and water may seem to be infinite resources, but some groups see a
danger to these supplies. Environmental groups have lobbied for a ban or
propellants used in aerosol cans because of their potential damage to the
layer. Water shortage is already a problem in some parts of the world.
Renewable resources. Such as forests and food, have to be used wisely.
In the forestry business are required to reforest timberlands in order to
produce soil and to ensure enough wood supplies to meet future demand.
Food supply to be a major problem in that the amount of farmable land is
limited, and more of its being developed for urban areas.
Increased Cost of Energy
On nonrenewable resource, oil, has created the most serious problem for
future economic growth. The major industrial economies of the world
depend heavily on oil, and until economical energy substitutes can be
developed, oil will continue to dominate the world political and economic
picture.
Increased Levels of Pollution
Industrial activity will damage the quality of the natural environment. The
public concern for nonpolluted environment creates marketing opportunity
for alert companies. It creates a large market of pollution control solution
such as scrubber and recycling centers. It leads to a search for new ways to
products and package goods that do not cause environmental damage.
Government Intervention in Natural Resources Management

Various government agencies play an active role in environmental

protection. Marketing management needs to pay attention to the
natural environment. Business can expect strong controls from
government and pressure groups. Instead of opposing regulation,
business should help develop solutions to the material energy
problems facing the nation.
Technological Environment
The most dramatic force shaping people’s destiny is technology.
The technological environment consists of forces that affect new
technology, creating new products and market opportunities.
Technology has released such wonders as penicillin, open heart
surgery, and the birth control pill. It has released such horrors as
the hydrogen bomb, nerve gas, and the submachine gun. It has
released such mixed blessings of the automobile, television, and
white bread. Out attitude toward technology depends on whether
we are more impressed with its wonders or with its blunders.
 Every new technology replaces an older technology.
Transistors hurt the vacuum tube industry, xerography hurt
the carbon-paper business, the auto hurt the railroad and
television hurt the theaters, instead of the older industries
adopting the new technologies, they fought or ignored them,
and their businesses declined.
New technologies create new markets and opportunities.
the marketer should watch the following trends in technology.
Faster Pace of Technology Change
Companies that do not keep up with technological change will soon
find their products out of date. And they will miss new product and
market opportunities.
Unlimited Opportunities
Scientists today are working on a wide range of new technologies
that will revolutionists our products and production processes. The
most exciting work is being done at biotechnology, solid-state
electronics, robotics, and materials science.
 Scientists also speculate on fantasy products, such as small flying cars,
single-person rocket belts, three-dimensional television, space colonies, and
human clones. The challenge in each case is not only technical but
commercial – to make practical, affordable versions of these products.
Concentration on Minor Improvements
As a result of the high cost of developing and introducing new
technologies and products, many companies are making minor product
improvements instead of gambling on major innovations. Most companies
are content to put their money into copying competitor’s products and
making minor feature and style improvements. Much of the research is
defensive rather than offensive.
Increased Regulation
As products become more complex, the public needs to know that
products are sage. Thus government agencies investigate and ban
potentially unsafe products.
Marketers need to understand the changing technological
environment and how new technologies can serve human needs. They
need to work closely with R & D people to encourage more market-
oriented research. They must be alert to possible negative aspects of
any innovation that might harm users and bring about opposition.
Political Environment
Marketing decisions are strongly affected by development in the
political environment. The political environment is made up of laws,
government agencies, and pressure groups that influence and limit
various organizations and individuals in society. We will look at some
main political trends and what they mean to marketing management.
Legislation regulating Business
Legislation affecting business has increased steadily over the years.
This legislation has been enacted for a number of reasons. The first is
to product companies from each other. Business executives all praise
competition but to try to neutralize it when it touches them.
Changing Government Agency Enforcement
Agencies can have a major impact on a company’s marketing
performance. Government agencies have some discretion in enforcing the
laws, from time to time, they appear to be overly eager and unpredictable.
The agencies are dominated by lawyers and economists, who often lack a
practical sense of how business and marketing works.
Growth of Public Interest Groups
The volume of laws, agency enforcement, and growing pressure groups
put restraints on marketer freedom. Marketers often have to clear their plan
with the company’s legal and public relations departments. Private
marketing transactions have moved into the public domain.
Cultural Environment
The cultural environment is made up of institutions and other forces that
are society’s basic values, perceptions, preferences, and behaviors. People
grow up with particular society that shapes their basic beliefs and values.
They absorb a view that defines their relationship to themselves and others.
The following cultural characteristics can affect marketing decision making.
Subcultures
Each society contains subcultures – groups of people with shared value
systems based on common life experiences or situations. Episcopalians,
teenagers, and working women all represent separate subcultures whose
members share common beliefs, preferences, and behaviors. To the extent
that subcultural groups show different wants and buying behavior, marketers
can choose subcultures as their target markets.
Persistence of Cultural Values
People in given society hold many beliefs and values. Their core
beliefs and values have a high degree of persistence.
People’s secondary beliefs and values are more open to change.
Believing in marriage is a core belief, believing that people should get
married early is a secondary belief. Thus family planning marketers
could argue more effectively that people should get married later that
that they should not get married at all. Marketers have some chance of
changing secondary values, but little chance of changing core values.
Shift in Secondary Cultural Values
Although core values are fairly persistent, cultural swings do take
place. Consider the impact of popular music groups, movie
personalities, and other culture heroes on young people’s hair styling,
clothing, and sexual norms. Marketers want to predict cultural shifts in
order to spot new opportunities or threats. Several firms offer
“futures” forecasts
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GOODEVENING!