THE MARKETING ENVIRONMENT :THE MARKETING ENVIRONMENT


Marketing environment :Marketing environment Forces that directly influence an organization’s capability to undertake its business The trading forces operating in a market place over which the business has no direct control but which shape the manner in which the business functions & is able to satisfy its customers


Is it not just the external environment? :Is it not just the external environment? The environment external to the firm which constitutes a large part of the marketing environment but is not the whole of the environment Included in the marketing environment is the Internal environment i.e. factors internal to the firm which affect its marketing operations


Components of the marketing environment :Components of the marketing environment External environment:- Consists of: Macroenvironment: Broad forces which shape up the opportunities & threats Microenvironment: Forces in the immediate environment Internal environment:- Forces inside the firm that affect its operations Composed of stakeholders and other functional areas inside a business organization


Controllability :Controllability A firm has: No control over its macroenvironment. It can only respond to the changes taking place Some control over its microenvironment


Why is it important? :Why is it important? An understanding of macro and micro environment forces: Essential for planning Helps a business to compete effectively Assists in the identification of opportunities and threats Enable an organization to take advantage of emerging strategic opportunities


Environmental scanning :Environmental scanning Monitor: trends, issues and events Identify: trends, issues, events that are significant to the organization Evaluate: the impact of trends, issues and events upon the organization in the current market Forecast: where are the trends heading? Examine the threats & opportunities they are likely to bring in future Evaluate: Impact of threats and opportunities on the firm’s long term strategy


Forecasts :Forecasts Forecasts are integral to: Marketing planning Analysis of market attractiveness Monitoring of marketing performance Resource allocation Product & stock management


Internal or Organizational environment :Internal or Organizational environment These include: Human resource department Operations department Finance department R & D department


Internal environment :Internal environment Marketing is affected by: Internal processes and procedures Allocation of responsibilities within the organization Resource availability Culture of the organization Attitude of internal stakeholder


Micro environment :Micro environment Refers to the environment more closely linked to the organization It comprises of all those organizations & individuals who directly affect the activities of a company


Elements of a micro environment :Elements of a micro environment Customers Intermediaries Suppliers Competitors Local community Local government Employees Trade unions Co-operators (Partner firms in alliance) Regulators


Regulatory environment :Regulatory environment Legal environment: Consumer law Planning laws Environmental law Codes of practice: Advertising Standards Authority Market research Direct selling Trade associations


Competitive environment :Competitive environment Starting point is to identify and categorize the competitors: Direct competitors: Firms that produce a similar product which is a direct rival e.g. Coke & Pepsi Close competitors: Firms producing similar products e..g. Pharmaceutical products having the same basic salt Substitutes: Products that are different but can be considered for buying as an alternative e.g. Brownie instead of Black forest cake, Banaspati Ghee instead of Oil Indirect competitors: Firms that produce the same products that fill the same needs as your own product. E.g. book & e-book


Market environment :Market environment Refers to the type of market the firm is operating in The main types are: - Consumer or B2C markets - Business or B2B markets - Government markets - Reseller markets: Buyer is an intermediary


Macroenvironment :Macroenvironment Factors outside the area of marketing which impact on but which cannot be influenced by the marketing effort including – demographics, macro-economic factors, changes in lifestyles etc.


Elements of macroenvironment :Elements of macroenvironment Macroeconomic environment Political environment Social & cultural environment Demographic environment Technical environment Legal & regulatory environment


Macroeconomic environment :Macroeconomic environment


Political environment :Political environment Marketing is affected by: Government & local policies Tax regime – the level & nature of taxes The extent to which the government is “business friendly” Trade policies Actions of special interest & pressure groups


Social environment :Social environment Consumer demand is affected by changes in: Population size and growth Demographic profile or the country (age distribution, family size, income level etc.) Culture, beliefs and values of the community Lifestyle


Technological environment :Technological environment Invention of new goods & services Development of CAD – reduction in new product development time Use of data bases in market research & direct marketing e.g. Credit cards New technology facilitates mass customization More responsive operations – shorter lead times Development of e-commerce


SWOT & PEST :SWOT & PEST