CHAPTER 5

The Marketing
Environment

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 Chapter 5: The Marketing Environment

At the end of this chapter, you should be able to:

⮚ Understand that Value Delivery Rests on Proper Grasp of

Environment
⮚ Understand that Strategic Response to Environment is Possible
only with Sound Knowledge of Environment
⮚ Recognise that Environment carries Opportunities and Threats
⮚ Comprehend the tasks Involved in Marketing Environment Analysis
⮚ Identify the Components of the Environment to be Analysed
⮚ Interpret Mega/Macro Environment
⮚ Identify Environmental Components Specific to the Business
Concerned
⮚ Understand the Influence of Society upon Businesses

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Value Delivery Rests on Proper Grasp of Environment
Chapter 5: The Marketing Environment

■ Consumer, technology, competitors, and many other similar

components are parts of an Environment.
■ Insights obtained from the environment help in the formulation of the
right strategies for delivering the value.
(Example: GM and Sony)

Strategic Response to Environment Possible only with

Sound Knowledge of Environment

■ Environment Analysis gives the Needed Insights

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 Chapter5: The Marketing
Spotting the Opportunities and Threats Environment

■ Environment analysis enables firms to spot events and trends taking

place in the environment that are subsequently interpreted as
opportunities or threats.
■ Opportunity- Threat profile
⮚ Summing up the opportunities and threats that are cropping up.

The Tasks Involved in Marketing Environment Analysis

■ Analysis of macro environment factors

■ Analysis of environmental factors specific to the business

■ Studying the customer.
■ Examining alternative technologies that are available/emerging
■ Checking the scope for invasion by substitute products
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Components of the Environment to be Analysed
Chapter 5: The Marketing
Environment

■ Mega/Macro environment
⮚ Technological, socio-cultural, economic, political, and
demographic environment.
■ The environment that is specific to the business the firm is
engaged in.
⮚ Position of the industry concerned
⮚ Competition
⮚ Consumer

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1.Mega/Macro Environment
The components are:

■ Technology Environment

■ Socio-Cultural Environment

■ Economic Environment

■ Political Environment

■ Demographic Environment

■ Natural Environment

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■ Legal Environment/ Publishers
Business LegislationIndia
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 Chapter 5: The Marketing
Environment
Mega/Macro Environment (…contd)

■The Sequence is Reversed; PEST Becomes TSEP

■Technology Environment

⮚ Options available in technology

⮚ Government’s approach in respect of technology
⮚ Technology selection
⮚ Spheres where technology breakthroughs are happening
⮚ Technology breakthroughs in ICE
⮚ Digital revolution
• Homes go digital- digitalisation of entertainment
• TV becomes smarter
• Digital cameras and E-cinema
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 Chapter5: The Marketing
Environment
Technology Environment (…contd)
⮚ The Convergence Phenomenon
● Convergence of IT and CT brings forth ICT
● Convergence of ICT and Entertainment technologies brings forth ICE
● Devices too converge
● PC journeys from a utility device to a connectivity device to an entertainment device
● Processors, protocols and standards too converge
● Breakthrough in telecom technology – main enabler of the convergence
● WAP
□ The WAP mobile phone
□ The WAP broadband
⮚ Breakthroughs in technology foster a new type of competition

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 Chapter 5: The Marketing
Mega/Macro Environment (…contd) Environment

■ Socio-Cultural Environment
⮚ Culture
⮚ Social class
⮚ Developments on the global socio-cultural scene
⮚ The ‘Techno intoxication’ of consumer communities
⮚ Spread of consumerist culture and Americanisation
● Pace of life gets ever more rapid.
⮚ The New iGen and the New Tweens

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 Chapter 5: The Marketing
Socio-Cultural Environment
Socio-Cultural Environment
Environment (…contd)
(…contd)

⮚ The Advent of the ‘Next Society’

● People’s work pattern will change.
● A flexible working system.
(Example of British telecom)

■ Economic Environment

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 Chapter 5: The Marketing
Environment
Mega/Macro Environment (…contd)

■ Political Environment
⮚ Economic environment is often a by-product of the political
environment.
⮚ Form of Govt. a major factor
⮚ Political stability another
⮚ Includes elements like social and religious organisations, media,
pressure groups and lobbies of various kinds.

■ Demographic Environment
⮚ Size of population, growth rate, age distribution, religious
composition and literacy levels
⮚ Composition of workforce, household patterns, regional
characteristics and population shifts

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 Chapter 5: The Marketing
Environment
Mega/Macro Environment (…contd)
■ Natural Environment
⮚ Natural resources
⮚ Ecology
⮚ Climate
■ Legal Environment/ Business Legislation
⮚ Corporate affairs
⮚ Consumer protection
⮚ Employee protection
⮚ Sectoral protection
⮚ Corporate protection
⮚ Protection of society as a whole against unbridled business
behaviour
⮚ Regulations on products, prices and distribution
⮚ Controls on trade practices
⮚ Protecting national firms against the onslaught of foreign firms
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2. Environmental Components Specific to the
Business Concerned
The components are:

■ Market/Demand

■ The Consumer

■ Industry and Competition

■ Government Policies

■ Supplier Related Factors

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Environmental Components Specific to the
Business (…contd) Chapter 5:
Environment
The Marketing

■ Market/Demand
⮚ Nature of demand, size of demand, patterns of consumption,
buying habits, invasion of substitute products, etc.

■ The Consumer
⮚ Tastes and preference of the consumer keep fluctuating.

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 Chapter 5: The Marketing
Environment
Environmental
Environmental Components
ComponentsSpecific
Specificto
tothe
the
Business
Business (…contd)
(…contd)

■ Industry and Competition

⮚ Knowledge about industry and competition is a fundamental
requirement for Strategy

■ Government Policies
⮚ Profoundly affect the specific environment of any industry/
business

■ Supplier Related Factors

⮚ Suppliers constitute one of the five forces shaping competition
⮚ Their Bargaining power affects costs and profits of the firm

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 Chapter 5: The Marketing Environment

Influence of Society upon Businesses

■ Society has its concerns over the products/services/marketing
schemes of corporates
⮚ Attack on McDonald’s
⮚ Pressure on Microsoft to have a shared platform with other
operating systems
⮚ Greenpeace campaign against Nestle dealing GM foodstuffs

Techniques Used in Environment Analysis

■ We will see the details in the chapters on Marketing Planning, MR,
and Sales Forecasting

Insights from Environment must Govern Strategy

Environment©Analysis
MacmillanisPublishers India Affair
a Continuous
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