ABM 353:

MARKETING IN AGRIBUSINESS
LECTURE NOTES
BY:

DR. DAVID BOANSI

Dept. of Agric. Economics, Agribusiness & Extension, KNUST, Kumasi-Ghana

LEAD FACILITATOR:DR. MRS GIFTY BOAKYE APPIAH

TITLE:

MARKETING ENVIRONMENT
„It is useless to tell a river to stop running; the
best thing is to learn swimming in the direction it
is flowing“ (Anonymous)
 MARKETING ENVIRONMENT
 Marketing firms operate within a complex and dynamic environment

 To survive and be competitive

Linking of resources of the organization to customers requirements –
by marketing-oriented organization

   To be done within the framework of opportunities and threats in

the external environment  
o Environment offers both opportunities and threats

 A need to understand the marketing environment – using marketing

intelligence and research
• The marketing environment
Internal and external factors, which directly or indirectly influence an
organization’s decision related to marketing activities.

 Internal factors – within the control of the organization

o Organization’s strengths, weaknesses and competencies

External factors – without/outside the control of the organization

o Government, technological, economic, social and competitive forces

Consists of the actors and forces outside marketing that affect marketing
management’s ability to develop and maintain successful relationship with its
target customers (those most likely to buy from you)
To be successful, organizations need to monitor both changing needs and
wants of target markets and changes in the marketing environment.

Enables adaptation of strategies to meet new market place challenges and

opportunities

A need for constant monitoring and adapting to the changing environment

 Features of marketing environment
 The marketing environment is characterized by numerous features
Specific (direct) and general (indirect) forces: different forces that affect the
marketing environment.
o Specific forces – customers and investors
o General forces – social, political, legal, and technological forces
 Complexity: Marketing environment includes a number of factors, conditions
and influences, the interaction amongst which makes marketing environment
complex

Vibrancy: Implies the dynmaic nature of the marketing environment. The forces
outlining the marketing environment change over time. Ability for marketers to
control some of the forces and fail in others.
o Gain edge over competitors by understanding the vibrant nature
Uncertainty: Market forces are unpredictable in nature

o Marketers try to predict market forces to make strategies and update plans
o Difficulty in predicting some of the changes which occur frequently .e.g. Customer tastes and
preferences

Relativity: explains the reasons for differences in demand in different countries

o Product demand of any industry or organization may vary depending on the country, region,
or culture e.g. Demand for sarees (traditional dress of women in India) may be high in India
but zero in other western countries. Same for Kente in Ghana, etc.
 Why analyze the marketing environment
 The business environment is not static. Marketing environmental analysis will help marketers
to
Become well acquinted with the changes in the environment
Gain qualitative information about the business environment – to guide the development of
strategies to cope with the changing environment
To understand markets needs and wants - to modify products to satisfy these requirements
Decide on matters related to Government-legal-regulatory policies in a particular country – to
formulate strategies successfully amidst such policies
Allocate resources effective
Identify threats from the environment in terms of new competitors, price wars, competitor‘s
new products or services, etc. and prepare strategies on this basis
Identify opportunities in the environment and exploit these opportunities to firm‘s advantage
Identify weaknesses such as lower quality of goods or services - aimed at converting
weaknesses into strength
Identify strengths and fully exploit them in firm‘s advantage
 Importance of marketing environment
 Identification of opportunities
Helps an organization to exploit chances and prospects for its own benefit. E.g. Do
customers appreciate my products compared to competitor‘s products – give discount
on product to boost sale

 Identification of threats
Gives warning signals to organizations to take required steps before it is too late. E.g.
Is a foreign multinational firm entering into the industry – adopt strategies to reduce
products prices or adopt aggressive promotional strategies

 Managing changes
Helps in coping with the dynamic marketing environment. E.g. A need to adapt to the
changes occurring in the marketing environment to ensure survival in the long run
 Types of marketing environment
A firm is exposed to both internal and external environments
 Internal Environment: consists of company‘s resources such as production /operations,
finance, HR, research and development, location, and image. It affects the marketing
department‘s planning strategies. All departments must work together to provide superior
customer value and satisfaction

 External Environment: has two components – micro and macroenvironment

Microenvironment: actors close to the company that directly affect its ability to serve its customers.
It affects a particular firm and consists of consumers, marketing intermediaries like distributors,
wholesalers, dealers, supplies and competitors

Macro-environment: larger societal forces considered to be beyond the control of the organization
that affect the micro-environment. It affects all the firms and include demographic factors, economic
conditions, social and cultural forces, political and legal forces, technology and ecological factors.
Changes in macroenvironment bring opportunities and threats in an organization. The
macroenvironment is subject to constant change
 MACRO-ENVIRONMENT

ECONOMIC CONDITIONS

MICRO-ENVIRONMENT

SUPPLIERS

SOCIAL & CULTURAL DEMOGRAPHIC

FORCES
INTERNAL ENVIRONMENT
MARKETING CONSUMERS /
INTERMEDIARIES COMPANY’S RESOURCES – CUSTOMERS

PRODUCTION

NATURAL/ FINANCE POLITICAL & LEGAL

ECOLOGICAL FORCES
COMPETITORS HR PUBLICS
FACTORS
R&D

LOCATION

IMAGE

TECHNOLOGY

A company‘s marketing environment

Microenvironment
 Suppliers
 Provision of raw materials to produce goods and services

 Can influence profit of an organization – price of raw materials

determines the final price of the product

 Organization need to monitor suppliers on regular basis - to know supply

shortages and changes in the price of inputs

 Mostly treated as partners to provide customer value/satisfaction

Important link in the „value delivery system“
Most marketrs treat suppliers like partners
 Marketing intermediaries
 Help organizations in establishing link with customers – promoting, selling and
distributing products

Resellers: Purchase the products from the organizations and sell to customers e.g. Wholesalers and
retailers

Physical distribution firms/centers: distribution channel/firms that help companies stock and move
goods from point of origin to final destination e.g. A warehouse is an example of a distribution center

Marketing agencies: promote an organization‘s products by making the customers aware about
benefits of the product and also help in targetting the right markets e.g. Marketing research firms,
advertizing agencies, media firms, and marketing consulting firms

Financial intermediaries: provide finance for business transactions and help to insure against risks
associated with buying and selling of goods. E.g. Banks, credit organizations, and insurance
organization/companies
 Customers
 Customer 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
- Three types of markets that purchase a company‘s goods and services
Resellers markets – buy goods and services to resell at a profit
Government markets – buy goods and services to produce public
services or transfer goods and services to others who need them
International markets – consist of buyers in other countries including
consumers, producers, resellers, and governments
 Competitors
 Those who serve a target market with products and services that are
viewed by consumers as being reasonable substitutes

Company must gain strategic advantage against these organizations

Firms must gain strategic advantage by positioning their offerings

against competitors‘ offerings

Each firm should consider its own size and industry position
compared to those of its competitors
 Publics
 Publics: refer to any group with actual or potential interest in or impact
on an organization‘s ability to achieve its objective
Types of publics
 Financial publics –influence the company‘s ability to obtain funds-
banks, investment houses, and stockholders
 Media publics – carry news, features, and editorial opinion –
newspapers, magazines, and radio and television stations
 Government publics – influence product safety and truth in advertizing
 Citizen-action publics – include consumer organizations, environment
groups, and minority groups
 Local publics - include neighborhood residents and community
organizations
 General publics – influence the company‘s public image
 Internal publics – include workers, managers, volunteers, and directors
Macroenvironment
 Demographic environment
 Demographic environment is the scientific study of human population in terms of
elements such as age, gender, education, density, size, location, occupation,
income and race.

Before marketing a product, a marketer gathers information to find the suitable

market for the product

Demographic environment is responsible for the variation in the tastes and

preferences and buying patterns of individuals.

Changes in demographic environment persuades an organization to modify

marketing strategies to address altering needs of customers
 Demographic environment is important because it involves people, and people
make up markets.

 Demographic trends include age, family structure, geographic population shifts,

educational characteristics, and population diversity. Marketers track these
changes.

 These factors affect the buying behavior of generations for example your behavior
and that of your parents and grand parents differ

 This also has a telling effect on the kind of marketing strategy to use.
 Geographic shifts in population Increasing diversity
Trends include:  Markets are becoming
o Migratory movements between and within countries more diverse
o Moving from rural to metropolitan areas o International
o National
o Changes in where people work o Local
o Regional
 Changes in the workforce
Trends include: Trends include:
o More educated o Ethnicity
o Gay and lesbian
o More white collar
o Disabled
o More professional o Transgender
 Economic environment

 Economic environment affects the organization’s cost structure and customers’

purchasing power. Customers purchasing power depends on current income,
prices of the product, savings, and credit availability
Among the factors usually considered under economic environment are
o Inflation: influences the customers‘ demand for different product. E.g. High
prices lead to a fall in demand
o Interest rates: determines the borrowing activities of an organization. E.g.
Increase in interst rates for loan may lead organizations to cut their important
activities
o Unemployment: leads to a no income state, which affects purchasing power of
individuals
o Customer income: regulates the buying behavior of a customer. A change in
customer‘s income leads to chaged spending paterns for food, clothing, etc.
o Monetary and fiscal policy: Affects all the organizations. Monetary policy
stabilizes economy by controlling interest rates and money supply in an economy,
while fiscal policy regulates government spending in various areas by collecting
revenue from citizen via taxing their income
 Natural/ecological environment
 Natural environment consists of natural resources, which are needed as raw materials to
manufacture products by the organization. Marketing activities affect these resources,..e.g. depletion
of ozone layer due to the use of chemicals
The following natural factors affect marketing activities in a great ways:
Natural resources: raw materials for manufacturing various products. Organizations have now
realized the problem of depletion of resources and are trying their best to use these resource
judiciously

Weather: leads to opportunities or threats for the organization. E.g. High demand for water coolers,
cotton clothes, air conditioners and water in summer. High demand for woolen clothes and room
heaters in winter

Pollution: includes air, water, and noise pollution, which leads to environmental degradation. Some
organizations now promote environmentally friendly products through their marketing activities.
E.g. promotion of the use of jute and paper bags instead of plastic bags (environmentally
sustainable strategies)
 Socio-cultural environment
 Socio-cultural environment: forces, such as society’s basic values, attitudes, perceptions, and
behavior.

Helps in determining what type of products customers prefer, what influences the purchase
attitude or decision, which brand they prefer, and at what time they buy the products

The socio-cultural environment explains the characteristics of the society in which the
organization exists.

The analysis of socio-cultural environment helps an organization in identifying the threats

and opportunities in an organization.
e.g. if all members of a family are working, the family has less time to spend for shopping. This
has lead to development of shopping malls and supermarkets, where one could get everything
under one roof to save time
 Technological environment
 Technology has become an indispensable part of our lives
Organizations that fail to tract ongoing technological changes find it difficult to
survive in today’s competitive environment

Technology acts as a rapidly changing forces, which creates new opportunities

for marketers to acquire market share.

With the help of technology, markets can create and deliver products matching
the lifestyle of customers
 Technological trends that affect the marketing environment
Pace of technological change: it leads to product obsolescence at a rapid pace. At
a very rapid pace of technological change, organizations need to modify their
products as and when required. No need to bring constant changes in product if
technology is not changing at a rapid pace

Research and development: helps in increasing growth opportunities for an

organization

Increased regulation: government guidelines to ban unsafe products. Marketers

should be aware of these regulations to prevent their violation.
 Political/legal environment
 Legal bodies and government agencies that influence and limit the organizations
and individuals.
Marketing activities should not harm the political and legal environment in a
country
Political and legal environment has a serious impact on the economic
environment of a country

 Various legislations affecting the marketing activities are as follows:

Anti-pollution laws, which affect the production or manufacturing of various
products.
Customer legislation, which tries to protect the customer’s interest.
Includes Laws,
Increasing Legislation
Government
Agencies, and
Pressure Groups that
Changing Government
Influence or Limit Agency Enforcement
Various Organizations
and Individuals In a
Given Society. Increased Emphasis on Ethics
& Socially Responsible Actions
• Legislation regulating business
• Public policy to guide commerce—sets of laws and regulations that limit
business for the good of society at large
• Increasing legislation to:
• Protect companies
• Protect consumers
• Protect the interests of society
Increased Emphasis on Ethics and Socially Responsible Actions

• Socially responsible behavior occurs when firms actively seek out ways to
protect the long-term interests of their consumers and the environment

• Cause-related marketing
 Responding to the marketing environment

Uncontrollable Proactive Reactive

• React and adapt to • Aggressive actions • Watching and

forces in the to affect forces in reacting to forces in
environment the environment the environment