MARKETING ENVIRONMENT

THE MARKETING ENVIRONMENT

• The forces that directly and indirectly influence an organization’s capability to undertake its business.

• The trading forces operating in a market place over which a business has no direct control ,but which shape the manner in which the business function and is able to satisfy its customers.

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

MICRO ENVIRONMENT

• The factors in the immediate environment .

MACRO ENVIRONMENT

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

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 rivals.

• Assists in the identification of opportunities and threats.

• Enables an organization to take advantage of emerging strategic opportunities.

THE INTERNAL ENVIRONMENTTHE INTERNAL ENVIRONMENTAll factors that are internal to the organization are known All factors that are internal to the organization are known as the 'internal environment'. They are generally audited as the 'internal environment'. They are generally audited by applying the 'Five Ms' which are by applying the 'Five Ms' which are MMen, en, MMoney, oney, MMachinery, achinery, MMaterials and aterials and MMarkets. The internal arkets. The internal environment is as important for managing change as the environment is as important for managing change as the external. As marketers we call the process of managing external. As marketers we call the process of managing internal change 'internal marketing.‘internal change 'internal marketing.‘

THE INTERNAL ENVIRONMENT

It includes the following:

• The human resource department.• The operations department.• The accounting and finance department.• The research and development department.

INTERNAL PROCESSES AND INTERNAL PROCESSES AND PROCEDURESPROCEDURES

•Allocation of responsibilities within the organization.Allocation of responsibilities within the organization.•Resources availability .Resources availability .•The extent to which the major functional areas work The extent to which the major functional areas work together supporting the marketing function to be together supporting the marketing function to be customer oriented .customer oriented .•The culture of organization. The culture of organization. •The attitude of internal stakeholders.The attitude of internal stakeholders.

Micro environment• The forces close to the company that affects

its ability to serve.• It comprises 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

SUPPLIERS

•Suppliers are either individuals or business houses.•.They provide resources needed by the company .•.The developments in the suppliers environment have a substantial impact on the marketing operations of the company .•.Companies can lower their supply costs and increase product quality to gain competitive advantage in the market.•.supply shortages have to be fully monitored and plans should be made to avoid it.

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.

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.

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 host of competitors with confidence .

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

• The competitive environment consists of certain basic things which every marketing manager has to take note of.

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

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.

Macro environment

Macro environment refers to those factors which are external to company’s activities and do not concern the immediate environment.

It comprises general forces that affect all business activities in market .

Factors affecting Macro environment 1.POLITICAL FORCES

2.ECONOMIC FORCES

3.SOCIAL AND CULTURAL FORCES

4.NATURAL FORCES

5.TECHNOLOGICAL FORCES

6.DEMOGRAPHIC FORCES

Political and Legal forces

• Includes laws, government agencies and pressure groups that influence or limit various organizations and individuals in a given society.

– Increasing legislation.– Changing government agency enforcement.– More emphasis on ethics and socially

responsible actions.

Economic environment• The economic environment consists of factors that affect

consumers purchasing and spending power.

• Under economic environment manager generally studies1.trends of gross national product

2.patterns of real growth in income

3.variations in geographical income distribution.

4.borrowing pattern ,trends and governmental and legal restrictions.

5.major economic variables

Social and cultural forces

• Social responsibility has crept 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

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.

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.

Natural Forces

• Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities.

Natural Environment Trends

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

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

• Increased government intervention.– Kyoto and other initiatives.

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

Pest Analysis• 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.

• A PEST Analysis fits into an overall environmental scan, which includes Political, Economical, Social, and Technological environment.

PURPOSE OF ANALYSING THE MARKET

• To know where the environment is heading

• To discern which events and trends are favorable

• To assess the scope of various opportunities

• To help secure the right fit between the environment and the business unit

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.