The Marketing

Environment
 The Organization as a System
It is useful to conceptualize the organization as a
system with interdependent parts. The systems
approach solves problems by diagnosing them within a
framework of inputs, transformation processes, outputs,
and feedback.
 Inputs are the labor (human), money (financial),
materials, and equipment resources.
 Transformation processes comprise the technologies
used to convert inputs into outputs.
 Outputs are the original inputs as changed by a
transformation process into products and services.
 Feedback is information about a system's status and
performance.
.
The Marketing Environment
The marketing environment surrounds and impacts
upon the organizational system. It is necessary for
organizations to understand the environmental
conditions because they interact with strategy
decisions.

The “larger environment” of an organization consists

of all the factors and variables external to it, and are
operating largely out of the organization's control.
Three Groups

 The Core – factors which have an

immediate effect

 The Publics – Organizations and

institutions which have short and longer
term effects.

 The Macro – longer term, often

qualitative factors
Three Frequencies

 Irregular – crisis initiated, ad hoc and

reactive

 Periodic – problem solving, proactive

 Continuous - problem avoidance, longer

term, proactive
 Recent Environmental Trends
 Pace of environmental change
 Environmental volatility
 Environmental complexity
 Extended and intensified competition
 Increased collaboration and alliancing
 Windows of fleeting opportunity
 Sectoral growth and segmentation
 Internationalisation of markets
 Customization of demand
 Technology of “mass-customisation”
 New technologies and sciences
 Insecurity due to wider recognition of politico-economic imbalance of wealth,
resources and political influence
The Internal Environment
All factors that are internal to the organization are known
as the “internal environment”. The internal environment is
as important for managing change as the external.
Marketers call the process of managing internal change
“internal marketing”.

Internal marketing is an important implementation tool. It

informs and involves all staff in new initiatives and
strategies. It is simple to construct, especially if the
marketer is familiar with traditional principles of
marketing.

Internal marketing obeys the same rules as, and has a

similar structure to, external marketing. The main
difference is that the customers are staff and colleagues
from the organization.
The Micro-environment
This environment influences the
organization directly. It includes suppliers
that deal directly or indirectly, consumers
and customers, and other local
stakeholders.
Micro tends to suggest small, but this can
be misleading. In this context, micro
describes the relationship between firms
and the driving forces that control this
relationship. It is a more local relationship,
and the firm may exercise a degree of
influence.
The Macro-environment

The macro-environment includes all factors that

influence an organization but are out of its direct
control. The market or environment is
continuously changing, and the company must be
able to adapt.

There may be aggressive competition or rivalries

in a market. The trend towards globalization
means that there is always the threat of substitute
products and new entrants. The wider the
environment is for the product, the more is the
need to compensate for changes in culture,
politics, economics and technology.
Economic
 Public versus private ownership
 Centralization or decentralization of
economic planning
 Banking system and fiscal policies
 Disposable income
 Consumption patterns
 Inflation
 Employment
 Business cycles
 Natural resources and climate
 Energy availability and cost
Demographics
 Nature of resources available
 Number, distribution, age and sex
 Industrialization and urbanization
 Distribution of income
 Levels of education
 Socio-cultural
 Class structure and mobility
 Social roles
 Development of social institutions
 Historical Background and ideologies
 Values and norms
 Views on authority relationships
 Leadership patterns
 Interpersonal relationships
 Nationalism
 Lifestyle changes
 Political / Legal
 General political climate
 Power concentration
 Political party system
 Legislation
 Constitutional considerations
 Nature of legal system
 Jurisdiction of governmental units
 Monopolies legislation
 Environmental protection laws
 Taxation policy
 Employment laws
 Government policy
 Regulatory bodies
Technological

 Physical base
 Knowledge base
 New discoveries and innovations
 Speed of technology transfer
 Rates of obsolescence
 Internet
 Information technology
Cherished assumptions now
thought obsolete
 Import penetration of home markets will
never exceed 15 per cent.
 Workers do not have an important impact on
productivity or quality.
 Frequent styling changes are more important
to customers than product quality.
 The consumer rights movement does not
represent the concerns of a significant portion
of the public.
Cherished assumptions now
thought obsolete …contd.
 The primary aim of business is to make
money.
 Strict financial control is the secret to good
administration.
 Market growth of 10 percent p. a.
 Energy will always be cheap and
abundant.