Marketing EnvironmentMarketing Environment

Maxwell RanasingheMaxwell RanasingheB.Sc. ( Business Administration) Hons. B.Sc. ( Business Administration) Hons.

MAAT, Attorney at Law, CPM ( New MAAT, Attorney at Law, CPM ( New Haven- USA) MSLIMHaven- USA) MSLIM

Marketing EnvironmentMarketing Environment

• All businesses are not alone in the market place.

• There are many factors that influence businesses

• These factors are called the “ Marketing Environment”

Marketing EnvironmentMarketing Environment

INTERNAL ENVIRONMENTINTERNAL ENVIRONMENT

STAFF RELATIONSHIPS

CORPORATE STRUCTURE ANDCULTURE

RESOURCE CONSTRAINTS

INTERNAL

Behavior of the company in dealing with others

Staff Relationships• Relationship among the staff affects the

operations of the organisation• Management should develop a conducive

environment to develop staff relationships• Employees should not convey a negative

image of the organisation to external sources

• Staff members• The message that is conveyed by staff to

others ( third parties) have a big impact rather than the paid advertisements of the organisation

• Members of the public consider staff members as the authoritative and they are far more likely to believe what staff members say

• Therefore an organization must do its internal marketing well to inform the company’s policies, and obtain the commitment and loyalty of the staff

• Staff is paid salaries by the organisation and staff should act to safeguard the organisation’s interest for their own benefit too.

• Organizational Structure• An organisation in general will have two

structures• Formal Structure ( As per the organizational

charts who is on the top of the hierarchy, what are the functional departments and who heads them and what they do and how many positions are under them, who is responsible for what and whom is under whom)

Formal HierarchyFormal Hierarchy

• Informal structure– It cannot be shown on an organisational structure

formally but there are many informal structures in organisations

– Friendships, alliances among staff members who go in the bus or train together, who take lunch together, whose wives or family members are friends, who are from the same town or village etc.

– These relationships are very strong and it could influence for positive and negative aspects in an organisation

Informal groupsInformal groups

• Corporate culture• Culture is a set of shared values, rules, and

perceptions in a given society.• There are such cultures in organisations too• This is called in a company “ the way we do

things around here” • It has a powerful influence on the actions and

behaviors of the members of the staff• It is not an easy task to change the

organizations culture if it is not conducive for an efficient operation

• Resource Constraints• All organisations operate within a limited amount

of resources• Men. Material, Money, Machines and

Technology are the limiting resources• Organisation should use systems where they

could get the maximum out of the existing resources

• The effective and efficient way of adopting resources is the key to success.

• Lets sing a song in a different format• Song අකුරු මුකී නෑ• Block A- අකුරු මුකී නෑ – 1st verse• Block B- අකුරු මුකී නෑ– 2nd verse• Block C- Lala Lala interlude• Block A and B- Me eeree• Block C – Lala lala interlude• Block A and B – Api duwamu api panimu• All – අකුරු මුකී නෑ

• ..\Akuru Maki Na - MusicTrack (Without Voice) අකුරු මුකී නෑ.mp4

Micro EnvironmentMicro Environment

• Micro environment is much closer to the marketer than the macro environment

• It directly deals with the operational environment

• It comprises of • Suppliers • Intermediaries• Competitors- Direct and Indirect • Customers of a business/marketer• Publics

Operational/Micro EnvironmentOperational/Micro Environment

SuppliersSuppliers

• Suppliers are called the “ Supply Chain” • They could be the suppliers of all the materials

and utilities to the marketer to make its value proposition ( product) to the market – machines and plants, raw materials, components, stationery, electricity, water, gas, other services, advertising agencies, consultancies, etc

• Company cannot survive without suppliers• Marketers should study about the suppliers

capacity, problems to have a good flow of supplies

IntermediariesIntermediaries• Marketing intermediaries- transport and logistics,

warehousing, dealers, distributors, wholesale and retail network ( more than 160,000 retail shops for FMCGs)

• The capacity and the efficiency of the intermediaries are very important for a marketer to serve its customers eg. Walls case

• They not only distribute but also stock, advertise, provide credit, after sales services, break the bulk, provide information

CompetitorsCompetitors

• Marketer is not alone in the market.• Every action of the marketer has a reaction from

the competitors• Knowing the competitors, their capacity, ability,

future moves, structure and operational systems, objectives, strategies and tactics, will provide so much of ammunition to the marketer to face the challenges in the market place.

• Simply a SWOT Analysis of Competitors is needed

Michael Porter’s Five Force Model Michael Porter’s Five Force Model in analyzing attractiveness of an in analyzing attractiveness of an

industryindustry

CustomersCustomers

• Customers are the most important element in the micro environment

• They can be individuals or organizations• A persons who makes the decision to buy the

product is called the customer and the person who consumes the product is called the consumer

• When customer and the consumer are different the marketer have to consider the needs of both

• customer.

• Many times customer and the consumer would be the same.

• Marketer should study the constantly changing needs of the customer and fine tune his value proposition accordingly to satisfy/delight the

PublicsPublics

Macro (External) EnvironmentMacro (External) Environment

• External environment is the elements in the periphery of the business.

• These elements are in the larger picture and the marketer has no control over them

• These elements are very important and have a tremendous influence on the operations of the marketer

• Marketer has to take all these factors in to consideration

Guideline to asses the customersGuideline to asses the customers

• Asses the customer’s current and potential needs and match that with the marketers capacity

• Ability to serve customers current and potential need in comparison to competitors

• Current status and Growth prospects of the customer• What can we learn from customer• How important is this customer in comparison to others• What is the profitability of serving this customer• Will serving this customer help attracting others

A list of main External Environment A list of main External Environment factors (PESTEEL)factors (PESTEEL)

• Political • Economic• Social and cultural• Technological• Ecological• Ethical• Legal

Political and Legal EnvironmentPolitical and Legal Environment

• Ploitical• Political stability• War and Peace• Internal conflicts and struggles• Strikes and stoppage of work• Globalisation and opening up of markets• Political affiliation and support to

governments

Economic EnvironmentEconomic Environment• General economic condition of the world and the

country• Income distribution -• Employment levels and its structure• Prices and inflation• Boom and recession• Balance of trade – surplus / deficit• Exchange rate and fluctuation• Stock market• Banking and Credit• Import and export duties• Saving and investment

Social and Cultural EnvironmentSocial and Cultural Environment• Society consists of large group of people with

shared customs and laws • Culture consists of art, thought, and customs,

religions, practices of a society at any given time• Any society will have its own culture. May be

unique or shared or mixed with other cultures.• Peoples relationships and behavior will have a

major influence of the societies beliefs, values and norms

• There could be different cultural groups within a society

• Some of the socio cultural factors can be listed as follows– Demographic factors- population structure- age,

family size, ethnicity, income, – Social Cultural behaviors- languages, religious

beliefs, mythology, gender roles, gift giving habits, Social responsibility and ethics

– The impact of war– Role of women in society– Attitudes towards credit– Concern about health

• The socio- cultural affect will influence peoples attitudes towards buying patterns, living patterns, dress codes, fashion, sports, savings, social behaviors, music, credit, marriage, and many areas of life styles.

• Marketers have to be aware of them to understand the customers and their behavior

Technological Technological

• Technology is changing always• Marketers have to be vigilant about it and

adapt to change• There are so many innovations taking

place in the world.• Some innovations make products and

processors improve dynamically and some times they even replaces the old products and make them obsolete

• What happened to typewriters, LP records, audio and video cassettes, analogue phones

• What happened to standard post with email and SMS

• What will happened to CDs• Nano technology is knocking doors• Genetic engineering• Robots doing dangerous factory processors• Development of many raw materials and

machines• Containerization and shipping

Ecological EnvironmentEcological Environment

• People have considered planet as a bundle of raw materials that could be used to satisfy the needs of the current generation

• That has made the exploitation of resources without any barriers

• As a result we have lost lot of resources and the bio diversity

• Main ecological issues are: Resource Depletion- Pollution Concerns- Health Related Concerns

• Therefore the marketers have to be very careful of the natural environment in their marketing activities such as production processors, usage, consumption and disposal

• Marketers should have an environment friendly attitude

Ethical EnvironmentEthical Environment

• Ethics are moral principles that define right or wrong behavior in marketing

• Laws are promulgated to safeguard most basic ethics

• However, there are many other ethics that marketers should adhere to although they are not in existence in the form of law

• Marketers should have their own self regulatory ethical standards if they are to become good corporate citizens of the society

• Some important ethical issues– Product issues : honest claims about effects of

products, use non hazadous raw material and component, additives, declare what is used, indicate nutritious values ( specially food items) and side effects ( specially drugs)

– Pricing issues : price fixing among competitors, predatory pricing ( pricing below cost to win over competitors) hiding or not divulging the operational cost or price of consumables, charging very high prices

– Promotional issues ; deceptive or misleading advertising, bribery and commissions, unfair advertising, using sex excessively as a strategy in advertising

– Place issues: blocking distribution channels, extending payment of credit beyond the agreed terms, using underworld elements to obtain orders and block competition

LegalLegal• Criminal and Civil laws will govern many

facets of society• Especially marketers have to obey and

respect them• Commercial laws, Company laws

employment laws, health and safety laws, Intellectual Property laws, Environment laws, directly affect the marketers, Consumer Protection Laws,

• Other Religious and Civil Society conventions, rights groups and practices also affect the operation of businesses.