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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