lecture # 2 - marketing enviorment

8/14/2019 Lecture # 2 - Marketing Enviorment

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Marketing environment

Forces that directly influence an organizations

capability to undertake its business

The trading forces operating in a market place over

which the business has no direct control but whichshape the manner in which the business functions & is

able to satisfy its customers


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Is it not just the externalenvironment?

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 environmenti.e. factors internal to

the firm which affect its marketing operations


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Components of the marketingenvironment 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 stakeholdersand other functional areas

inside a business

organization


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Controllability

A firm has:

- No control over its macroenvironment. It can

only respond to the changes taking place

- Some control over its microenvironment


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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 ofemerging strategic opportunities


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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 infuture

Evaluate: Impact of threats and opportunities on thefirms long term strategy


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Forecasts

Forecasts are integral to:- Marketing planning

- Analysis of market attractiveness

- Monitoring of marketing performance

- Resource allocation

- Product & stock management


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Internal or Organizationalenvironment

These include:- Human resource department

- Operations department

- Finance department- R & D department


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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


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Micro environment

Refers to the environment more closely

linked to the organization

It comprises of all those organizations &

individuals who directly affect the activities ofa company


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Elements of a microenvironment

Customers

Intermediaries

Suppliers

Competitors Local community

Local government

Employees

Trade unions

Co-operators (Partner

firms in alliance) Regulators


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Regulatory environment

Legal environment:

- Consumer law

- Planning laws

- Environmental law

Codes of practice:

- Advertising Standards

Authority

- Market research- Direct selling

- Trade associations


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Competitive environment

Starting point is to identify and categorize thecompetitors:

- Direct competitors: Firms that produce a similarproduct which is a direct rival e.g. Coke & Pepsi

- Close competitors: Firms producing similar products

e..g. Pharmaceutical products having the samebasic salt- Substitutes: Products that are different but can be

considered for buying as an alternative e.g. Brownieinstead of Black forest cake, Banaspati Ghee

instead of Oil- Indirect competitors: Firms that produce the same

products that fill the same needs as your ownproduct. E.g. book & e-book


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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


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Macroenvironment

Factors outside the area ofmarketing which impact on

but which cannot be

influenced by the marketing

effort including demographics, macro-

economic factors, changes

in lifestyles etc.


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Elements of macroenvironment

Macroeconomic environment

Political environment

Social & cultural environment

Demographic environment

Technical environment

Legal & regulatory environment


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Macroeconomic environment

Fall in the exchange rate boosts exports,

makes imports more expensive & causes cost

push inflation

Exchange rate

Direct impact on investment by business.

Indirect impact on consumer demand in termsof the amount of discretionary spending

Interest rates

Major impact on customer demand via

willingness & ability to buy

Unemployment

Direct impact on costs & prices charged.

Indirect impact on customer demand

Inflation

Fluctuations in the level of salesCyclical

fluctuations

Creates marketing opportunities.

A major factor in the marketing growth.

Economic

growth.


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Political environment

Marketing is affected by:- Government & local policies

- Tax regime the level & nature of taxes

-

The extent to which the government isbusiness friendly

- Trade policies

- Actions of special interest & pressure

groups


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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


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Technological environment

Invention of new goods & services

Development of CAD reduction in new product

development time

Use of data bases in market research & directmarketing e.g. Credit cards

New technology facilitates mass customization

More responsive operations shorter lead times

Development of e-commerce


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SWOT & PEST

Threats-

Resulting from

political, economic,

social, technological

environment

Opportunities-

Resulting from

changes in political,

economic, social,

technologicalenvironment

External factors

the PEST factors

Weaknesses-

Organizational

weaknesses

Strengths-

Organizational

strengths

Internal factors

the internal

environment

NegativePositive


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lecture # 2 - marketing enviorment

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