The Global Marketing Environment

By Click to edit Master subtitle style Padmashree,Bharath, Dr. Marakkar.K.A MBA, M.TECH, LLB,PHD,FRCS,M.PHIL

Marketing Environment
Marketing Environment- consists of the actors and forces outside marketing that affect marketing managements ability to develop and maintain successful relationships with its target customers. Includes:
Microenvironment - forces close to the company that affect its ability to serve its customers. Macroenvironment - larger societal forces that affect the whole microenvironment.

The Marketing Environment

Demographic
Company

Cultural
Publics Competitors

Economic

Comp any

Suppliers Customers

Political
Intermediaries

Natural

Technological

Types of Customer Markets

Internation al Markets Consum er Markets

Company
Governme nt Markets Reselle r Market s Busine ss Market s

The Macroenvironment
Demographic Cultural

Economic

Political

Forces that Shape Opportunities and Pose Threats to a Company

Legal

Technologica l

Political Environment
Some Trends in the Political Environment Include:
Increasing Legislation Designed to Protect Groups Changing Government Agency Enforcement

Increasing Emphasis on Ethics and Socially Responsible Actions

Responding to the Marketing Environment

Environmental Management Perspective Taking a proactive approach to managing the microenvironment and the macroenvironment by taking aggressive (rather than passive) actions to affect the publics and forces in the marketing environment. How? Hire lobbyists , run advertorials, file law suits and complaints, and form agreements.

The Political/Legal Environment

The political/legal environment encompasses factors and trends related to governmental activities and specific laws and regulations that affect marketing practice.
Global Trends

Political Legal Environment Regulation Legislation

Global Political Trends

In todays world economy, international political events greatly affect marketing activities. For example the impact of the war on terrorism on the travel and security industries. A second important political trend is movement toward free trade and away from protectionism. Studies show that countries with the freest trade have the highest GDP growth.

Political-Legal Environment
Attitudes Toward International Buying Government Bureaucracy Political Stability Monetary Regulations

M o s t c o n t r o l s o

The legal environment

Political Environment - Individual Governmen

Structure of Government: Ideology Communism Socialism Capitalism Political Parties
Single-party-dominant countries Dual-party systems Multi-party systems

Government Policies and Regulations: Designed to promote a countrys interests in the international arena regarding national security, developing new industries, protecting declining industries. creating employment, etc.

Consequences Of Political Actions 1.

Indigenization/Domestication Nationalization (Acceptable according to international law if: satisfies public purpose & includes compensation) Expropriation (prompt, effective, fair compensation) Confiscation (no compensation) Local content/local buying/local hiring laws Discriminatory taxes Discriminatory pricing of resources
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Consequences Of Political Actions 2.

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Threat of equity dilution Joint-venture pressure Import/Export restrictions Profit repatriation restrictions Selective boycotts Price controls Terrorism Etc.

POLITICAL-RISK INDICATORS.
ECONOMIC - GDP, Inflation, Capital flight - Foreign debt, Food output - Commodity dependence... POLITICAL - Wars or involvement in foreign conflicts... - Relations with neighbors - Degree of authoritarianism (use of coercion to retain power) - Legitimacy of government/Mechanisms for transfer of power - Military or political control - Politically motivated violence SOCIETAL - Urbanization,, - Corruption, nepotism - Social Unrest (ethnic, language, religious fundamentalism) - Xenophobia, Extreme nationalism

Political Risk Assessment.

Risk Assessment Techniques - Grand Tour (include AmCham) - Old Hand - Delphi Technique - Quantitative Methods - Commercial services
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Risk Reduction Strategies.

Local Partners Invaluable Status Critical Technologies Frequent Tech. transfers Critical Parts from Home Country Vertical Integration Local Borrowing Minimizing Fixed Investments Political Risk Insurance Etc.

3. Terrorism and the World Economy

According to an IMF study, the September 11, 2001 terrorist attacks resulted in short-term lost economic output worth an estimated as $47billion, the stock market lost $1.7 trillion. In addition, 125,000 workers were laid off for 30 days. Terrorist activities disrupt international movement of supplies and merchandise and financial flows. Terrorists are active in many countries and often target large firms to get money for profit, weapons, payrolls, bribes, expenses, etc. Piracy has historically been practiced in most of the worlds seas. During 2008, Somali pirates captured 42 ships and received $30million in ransom. Have already captured about 40 ships in 2009.

International Legal Environment - 1

Types of Legal Systems: Common Law Code (written) Law Civil Law Commercial Law Islamic Law International Law (the law of nations) comes from three main sources: Customs, International treaties, Court decisions

International Legal Environment - 2

U. S. Laws - The Sherman Antitrust Act (1890) - The Clayton Act (1914) - Foreign Corrupt Practices Act (FCPA), 1977: prohibits the payment of any money or anything of value to a foreign official, political party, or any candidate for political office for purposes of obtaining, retaining, or directing business. FCPA does not prohibit so called facilitating or grease payments. It also does not prohibit bribery payments to nongovernmental personnel. Local laws governing business practices Competition, fraud, consumer protection, labor rights, routine business practices, etc.

Regulations and Regulatory Agencies

Most legislation in the United States is enforced through regulations developed by a variety of agencies, and marketers must often work with regulatory authorities at the federal, state, and local levels.

The Future
The only certainty about the future is that it will be uncertain, and change will occur at an increasing rate. It will also be more complex. Businesses and consumers now must operate in an era of terrorism and lack of trust.

Summar y
After studying this chapter, you should be able to: Understand the nature of the marketing environment and why it is important to marketers. Describe the major components of the social environment and how trends in the social environment affect marketing. Understand how the economic environment affects marketing. See how the political/legal environment offers opportunities and threats to marketers. Appreciate the importance of the technological environment to marketers. Understand differences in the competitive environment. Know how changes in the institutional environment affect marketers.