2nd Chapter

MARKETING ENVIRONMENT

By

Asst Prof. Venkatesh.N

Koshys Institute of Management Studies

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Marketing Environment • The marketing environment surrounds and impacts

upon the organization. • There are three key elements to the marketing

environment which are the internal environment, the microenvironment and the macro environment. Why are they important? Well marketers build both internal and external relationships. Marketers aim to deliver value to satisfied customers, so we need to assess and evaluate our internal business/corporate environment and our external environment which is subdivided into micro and macro.

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The market environment• The market environment refers to all of the forces

outside of marketing that affect marketing managements ability to build and maintain successful relationships with target customers.

• It also entails to the factors in the market which impact business, like government policies, and competition intensity. The market environment consists of both the macro environment and the microenvironment.

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COMPONENTS OF MARKETING ENVIRONMENT

• Internal environment : Forces and actions inside the firm that affect the marketing operation composed of internal stake holders and the other functional areas within the business organization.

• External environment• Macro environment

• Micro environment

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MICRO ENVIRONMENT

• The factors in the immediate environment .

MACRO ENVIRONMENT

• Broad forces which shape the character of opportunities and threats.

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WHY IS IT IMPORTANT?

• An understanding of macro and micro marketing environment forces is essential for planning.

• Helps a business to compete more effectively against its competitors.

• Assists in the identification of opportunities and threats.

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THE INTERNAL ENVIRONMENTTHE INTERNAL ENVIRONMENT

All factors that are internal to the organization are known as the 'internal environment'. They are generally audited by applying the 'Five Ms' which are Men, Money, Machinery, Materials and Markets. The internal environment is as important for managing change as the external. As marketers we call the process of managing internal change 'internal marketing.‘

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THE INTERNAL ENVIRONMENT

It includes the following:

• The human resource department.

• The operations department.

• The accounting and finance department.

• The research and development department.

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Micro environment• The forces close to the company that affects its

ability to serve.• It contain all those organizations and individuals

who directly affect the activities of a company.• All factors which impact directly on a firm and its

activities in relation to a particular market.

1. Suppliers2. The market channel 3. Customers. 4. Competitors 5. Public

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SUPPLIERS•Suppliers are either individuals or business houses.•.They provide resources needed by the company .•.The developments in the suppliers environment have a large impact on the marketing operations of the company .•.Companies can minor their supply costs and increase product quality to gain competitive advantage in the market.

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Market intermediates

• They are either business houses or individuals .

• They help the company in promoting, selling and distributing the goods to customers.

• They are middlemen, distributing agencies, market service agencies and financial institutions.

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Customers

• The target market of the company is usually of five types:

1.Consumer market i.e. individual and householders2.Industrial market i.e. organizations buying for

producing other and services.3.Reseller market i.e. organizations buying goods and

services with a view to sell them to others.4.Government and other non profit markets.i.e.those

buying goods and services in order to produce public services.

5.International market i.e. individuals and organizations of nations other then home land who buy for either consumption or industrial use.04/21/23 12Koshys Institute of Management

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Competitors

• No company stands alone in serving and satisfying the needs of a customer market. It faces competition.

• This helps the company in facing a mass of competitors with confidence .

• The company in order to come out successfully has to adopt means which may help it to outsmart

• Philip Kotler ‘the best way for a company to grasp the full range of its competition is to take view point of a buyer.”

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Public

• Public is defined as ‘any group that has an actual or potential interest in or impact on a company’s ability to achieve it’s objective.

• The actions of the company do affect the interest of other groups i.e., those who form general public for the company who must be satisfied along with the consumers of the company.

• According to Kotler ‘companies must put their primary energy into effectively managing their relationships with their customers.

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Macro environment

• The macro environment is less controllable. The macro environment consists of much larger wide-ranging influences (which impact the microenvironment) from the broader global society. Here we would consider culture, political issues, technology, the natural environment, economic issues and demographic factors amongst others.

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Factors affecting Macro environment 1. POLITICAL FORCES

2. ECONOMIC FORCES

3. SOCIAL AND CULTURAL FORCES

4. NATURAL FORCES

5. TECHNOLOGICAL FORCES

6. DEMOGRAPHIC FORCES

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Political Environmental

• Government actions which affects the operations of a company or business. These actions may be on local, regional, national or international level. Business owners and managers pay close attention to the political environment to judge how government actions will affect their company

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Economic environment

• Economic Environment are the economic factors that have effects on the working of the business. It includes system, policies and nature of an economy, trade cycles, economic resources, level of income, distribution of income and wealth. It is very dynamic and complex in nature and does not remain the same.

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Social and cultural forces

• Social responsibility has move slowly into the marketing literature as an alternative to the market concept.

• Socially responsible marketing is that business firms should take the lead in eliminating socially harmful products

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DEMOGRAPHIC FORCES

• Demographic data helps in preparing geographical marketing plans, household marketing plans, age and sex wise plans.

• It influences behavior of consumers which in turn will have direct impact on market place.

• A marketer must communicate with consumers anticipate problems ,respond to complaints and make sure that the firm operates properly.

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Technological Environment

• Most dramatic force now shaping our destiny.

• Changes rapidly.

• Creates new markets and opportunities

• Challenge is to make practical, affordable products.

• Safety regulations result in higher research costs and longer time between conceptualization and introduction of product.

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Natural Forces

• Involves the natural resources that are needed

as inputs by marketers or that are affected by

marketing activities.

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Natural Environment Trends

• Shortage of raw materials.– Limited quantities of non-renewable resources.

• Increased pollution.– Waste disposal, air/water pollutants.

• Increased government involvement.– Kyoto and other initiatives.

• Environmentally sustainable strategies.– G.R.E.E.N. movement.

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Pest Analysis• A PEST Analysis fits into an overall environmental

scan, which includes PPolitical, EEconomical, SSocial, and TTechnological environment.

• A scan of the external macro environment in which the firm operates can be expressed as a pest analysis.

• The acronym PEST (or sometimes rearranged as “STEP”) is used to describe a framework for the analysis of these macro environmental factors.

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CONTROLLABILITY

• The organization has no control over the macro environment. It can only respond to the changes taking place.

• The organization has some degree of influence over the micro environment but by no means complete control.

• The organization controls its own internal environment although this does not mean the marketing department or marketing manager has control.

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THANK YOU THANK YOU