CHAPTER TWO

SCANNING THE MARKETING

ENVIRONMENT

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 What is marketing environment?
 A company's marketing environment consists of the actors
and forces outside marketing that affect marketing
management's ability to develop and maintain successful
transactions with its target customers.
 The marketing environment offers both opportunities and
threats. - marketing intelligence
 marketers’ disciplined - marketing research
method
• By conducting systematic environmental scanning, marketers
are able to revise and adapt marketing strategies to meet
new challenges and opportunities in the marketplace.
 It consists: micro and macro env’t
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 The Company's Microenvironment
• the forces close to the company that affect its ability
to serve its customers - the company, suppliers,
marketing channel firms, customer markets,
competitors and publics.

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Principal actors in the company‘s microenvironment

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 The company

• In designing marketing plans, marketing

management should take other company groups, such
as top management, finance, research and
development (R & D), purchasing, manufacturing
and accounting into consideration.
A. Top management: sets the company's mission,
objectives, broad strategies and policies.
• Marketing managers must make decisions
consistent with the plans made by top management,
and marketing plans must be approved by top
management before they can be implemented.

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 Cont…

B. Finance: concerned with finding and using funds to

carry out the marketing plan.
C. The R & D : focuses on the problems of designing safe
and attractive products.
D. Purchasing: worries about getting supplies and
materials
E. Manufacturing: responsible for producing the desired
quality and quantity of products.
F. Accounting has to measure revenues and costs to help
marketing know how well it is achieving its objectives.
Therefore, all of these departments have an impact on
the marketing department's plans and actions.
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Company’s internal environment

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 Suppliers
 Suppliers are an important link in the company's overall
customer 'value delivery system". They provide the
resources needed by the company and its competitors to
produce goods and services.
 Marketing managers must:
- watch supply availability
- monitor the price trends of their key inputs.
Marketing Intermediaries
 They are firms that help the company to promote, sell and
distribute its goods to final buyers. They include resellers,
physical distribution firms, marketing services agencies
and financial intermediaries.
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 Customers

• The company must study its customer markets closely.

i.e. all six types of customer market.
• Consumer markets consist of individuals and
households that buy goods and services for personal
consumption.
• Business markets buy goods and services for further
processing or for use in their production process
• Reseller markets buy goods and services to resell at a
profit.
• Institutional markets are made up of schools,
hospitals, nursing homes, prisons and other institutions
that provide goods and services to people in their care.
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 Cont…

• Government markets are made up of government

agencies that buy goods and services in order to
produce public services or transfer the goods and
services to others who need them.
• International markets consist of buyers in other
countries, including consumers, producers, resellers
and governments.

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 Competitors
• The marketing concept states that, to be successful, a
company must provide greater customer value and
satisfaction than its competitors do.
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 Publics
A public is any group that has an actual or potential
interest in or impact on an organization‘s ability to
achieve its objectives.

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 The Company's Macro environment

• The company and all the other actors operate in a larger

macro environment of forces that shape opportunities and
pose threats to the company.
1. Demographic Environment
• is the study of human populations in terms of size, density,
location, age, gender, race, occupation and other statistics.

it contain people people make-up of market

People + purchasing power = success

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 important demographic characteristics and trends in
the largest world markets.
 Population Size and Growth Trends
 Changing Age Structure of a Population
 The Changing Family
 Rising Number of Educated People
 Increasing Diversity

2. Economic environment
• It consists of factors that affect consumer purchasing
power and spending patterns.

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 Cont..
 Marketers should be aware of the following
predominant economic trends:
 Income Distribution and Changes
in Purchasing Power
 Changing Consumer Spending
Patterns
3. Natural Environment
• The natural environment involves the natural resources
that are needed as inputs by marketers or that are
affected by marketing activities.
E.g air and water
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 Cont…

 Marketers should be aware of four trends in

the natural environment:
 Shortages of Raw Materials
 Increased Cost of Energy
 increased Pollution
 Government Intervention in Natural
Resource Management

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4. Technological environment
• Technology is the application of science to
develop methods.
• The technological environment is perhaps the
most dramatic force now shaping our destiny.
• Every new technology replaces an older
technology. When there is a change (new
invention), it affect (hurts) the existing
technology.
• New technologies create new markets and
opportunities.
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 Cont…

 The marketer should watch the following trends in

technology:
 Fast Pace of Technological Change - Technology
life cycles are getting shorter.
 High R&D Budgets - Technology and innovations
require heavy investments in research and
development.
 Concentration on Minor Improvements
 Increased Regulation - As products become
more complex, people need to know that they are
safe. Thus, government agencies investigate and ban
potentially unsafe products.
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 5. Political environment
consists of laws, government agencies and pressure groups that
influence and limit various organizations and individuals in a
given society.
 Legislation Regulating Business: Even the most liberal
advocates of free-market economies agree that the system works
best with at least some regulation. Thus, governments develop
public policy to guide commerce - sets of laws and regulations
that limit business for the good of society as a whole.
This legislation has been enacted for a number of reasons: to
protect companies from each other, to protect consumers
from unfair business practices, and to protect the interests of
society against unrestrained business behavior.
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6. Cultural Environment

 The cultural environment is made up of institutions

and other forces that affect society's basic values,
perceptions, preferences and behaviors.
 People grow up in a particular society that shapes
their basic beliefs and values.
 Marketers must be aware of these cultural
influences and how they vary across societies
within the markets served by the firm:
 Persistence of Cultural Values
 Shifts of Secondary Cultural Values Through Time

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 Influential forces in the company‘s macro environment

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GATHERING MARKETING
INFORMATION

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 Introduction

. To carry out marketing analysis, planning,

implementation and control, managers need information.
they need information about market demand, customers,
competitors, dealers and other forces in the marketplace.

 One marketing executive put it this way:

'To manage a
business well is to manage its future; and to manage the
future is to manage information.

 Increasingly, marketers are viewing information as

not just an input for making better decisions, but also a
marketing asset that gives competitive advantage of
strategic importance. 23
 Discussion point
• During the twentieth century, most
companies have been small and have
known their customers at first hand.
Managers picked up marketing information
by being around people, observing them
and asking questions. However, it is not
true for today.
what are the factors that increase the
need for more and better information? 24
 Soln.

• As companies become national or international in

scope, they need more information on larger, more
distant markets.
• As incomes increase and buyers become more
selective, sellers need better information about how
buyers respond to different products and appeals.
• As sellers use more complex marketing approaches
and face more competition, they need information on
the effectiveness of their marketing tools.
• Finally, in today's rapidly changing environments,
managers need up-to-date information to make
timely decisions.
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 What is marketing Information system?

marketing information system (MIS):

People, equipment and procedures to
gather, sort, analyse, evaluate and
distribute needed, timely and accurate
information to marketing decision
makers.
The MIS begins and ends with marketing managers.

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 marketing information system process:

1. Assessing Marketing Information Needs

 interacts with managers to assess their
information needs; i.e. The company begins to
find out what informant the mangers would like to
have.
 But managers do not always need all the
information they ask for and they may not ask for
all they really need.
Sometimes the company cannot provide the
needed information, either because it is not
available or because of MIS limitations. 28
2. Developing Marketing Information

• The information needed by marketing

managers comes from internal company
records, marketing intelligence and marketing
research.
• The information analysis system then processes
this information to make it more useful for
managers.

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components of Marketing Information system

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 A.Internal Data
• Most marketing managers use internal records and reports
regularly, especially for making day-to-day planning,
implementation and control decisions.
• Internal records information consists of information
gathered from sources within the company to evaluate
marketing performance and to detect marketing problems
and opportunities.
• Marketing managers can readily access (quickly and
cheaply) and work with information in the database to
identify marketing opportunities and problems, plan
programs, and evaluate performance.
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 Sources of information

• The company's accounting department

• Manufacturing reports
• The sales force reports
• The customer service department
• Research studies done for one
department
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 B. Marketing Intelligence
• Marketing intelligence is everyday information about
developments in the marketing environment that helps
managers prepare and adjust marketing plans.
• It is systematic collection and analysis of publicly
available information about competitors and
developments in the marketplace.
• The marketing intelligence system determines the
intelligence needed, collects it by searching the
environment and delivers it to marketing managers who
need it.

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 Cont…
• The goal of marketing intelligence is to improve
strategic decision making, assess and track
competitors’ actions, and provide early warning
of opportunities and threats.
• Much intelligence can be collected from people
inside the company.
• But company people are often busy and fail to
pass on important information. The company
must 'sell' its people on their importance as
intelligence gatherers, train them to spot new
developments and urge them to report
intelligence back to the company.
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• The company can also obtain important
intelligence information from suppliers,
resellers, and key customers.
• It can get good information by observing
competitors.
– It can buy and analyze competitors’ products
– monitor their sales,
– check for new patents.
– Competitors may reveal intelligence information
through their annual reports, business
publications, trade show exhibits, press releases,
advertisements, and Web pages.
– The Internet is proving to be a vast new source of
competitor-supplied information.
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 C. Marketing Research

• Managers cannot always wait for information to

arrive in bits and pieces from the marketing
intelligence system. They often require formal
studies of specific situations.
• Marketing research is the systematic design,
collection, analysis, and reporting of data relevant
to a specific marketing situation facing an
organization.

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 Cont…
• Marketing research is the function linking the
customer and public to the marketer through
information.

• Marketing Research (Information) is used to

identify and define marketing opportunities and
problems: to generate, refine and evaluate
marketing actions; to monitor marketing
performance and to improve understanding of the
marketing process.

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 Cont….

• Marketing researchers engage in a wide

variety of activities, ranging from analyses of
market potential and market shares to
studies of customer satisfaction and
purchase intentions.
• Every marketer needs research.

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 Cont…

• A company can conduct marketing research in its

research department or have some or all of it
done outside.
• Although most large companies have their own
marketing research departments, they often use
outside firms to do special research tasks or
special studies.
• A company with no research department will
have to buy the services of research firms.
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 Cont…
• Many people think of marketing research as a
lengthy, formal process carried out by large
marketing companies.
• But many small businesses and non-profit
organizations also use marketing research.
• Almost any organization can find informal, low-
cost alternatives to the formal and complex
marketing research techniques used by research
experts in large firms.

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 The Marketing Research Process
i. Defining the Problem and Research Objectives

ii. Developing the Research Plan

i. Data source
ii. Sampling
iii. Data collection technique

iii. Implementing the research plan

iv. Interpreting and Reporting the Findings

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Cont….

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 3. Analyzing Marketing Information
• Information analysis might involve a collection of analytical
models that will help marketers make better decisions.
• Information gathered by the company’s marketing
intelligence and marketing research systems require
detailed analysis. This include use of advanced statistical
analysis.
• Information analysis might also involve a collection of
mathematical models that will help marketers make better
decisions.
• Each model represents some real system, process, or
outcome.
• These models can help answer the questions of what, if and
which is best 43
4. Distributing and Using Marketing Information

• Marketing information has no value until it is used to

make better marketing decisions.

• Many firms use a company intranet to facilitate this

process. The intranet provides ready access to
research information, stored reports, shared work
documents, contact information for employees and
other stakeholders, and more.

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 Customer Relationship Management

• Smart companies capture information at every possible

customer touch point.
• These touch points include customer purchases, sales
force contacts, service and support calls, Web site visits,
satisfaction surveys, and every contact between the
customer and the company.
• This information is usually scattered widely across the
organization.

• Many companies are now turning to customer

relationship management (CRM) to manage detailed
information about individual customers and carefully
manage customer touch points in order to maximize
customer loyalty.
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• CRM consists of sophisticated software and analytical
tools that integrate information from all sources,
analyze it in depth, and apply the results to build
stronger customer relationships.

• CRM analysts develop data warehouses.

• A data warehouse is a companywide electronic
database of finely detailed customer information that
needs to be sifted through for gems.

• Once the data warehouse brings the data together, the

company uses high-powered data mining techniques
to sift through the mounds of data and dig out
interesting findings about customers.

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• By using CRM to understand customers better,
companies can provide the higher levels of customer
service and develop deeper customer relationships.

 The most common cause of CRM failures is that

companies mistakenly view CRM only as a technology
and software solution.

• When it works, the benefits of CRM can far outweigh

the costs and risk.

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