Marketing Environment - Group 3 Chapter 2

Marketing EnvironmentUnit II

Introduction• Various environmental forces influence an

organization’s marketing system. Some are external to the firm and thus are largely uncontrollable by the organization. Other forces are within the firm and generally controllable by management. An organization must plan, implement, and evaluate its marketing system within this external and internal environment.

• Marketing environment could either be Actors and Forces outside marketing that affect marketing management’s ability to develop and maintain successful transactions with its target customers.

2 groups of marketing environment forces

• 1. External Environment force– 1.1 Macroenvironment– 1.2 Microenvironment

• 2. Internal Environment force

2 External environment forces of marketing• 1.1 Macroenvironment– All firms are affected

• 1.1.1 Demography• 1.1.2 Economic conditions• 1.1.3 Competition• 1.1.4 Social and Cultural forces• 1.1.5 Political and Legal forces• 1.1.6 Technology

• 1.2 Microenvironment– Particular firms are affected

• 1.2.1 Producers / Suppliers• 1.2.2 Marketing Intermediaries• 1.2.3 The Market

Demography• The Statistical study of human population and its

distribution.

Common demographic survey questions:> What is your age?> Ethnicity origin (or Race): Please specify your

ethnicity.> What is the highest degree or level of school you

have completed?

> What is your marital status?> Are you currently…? (professional employment

status)

Economic Conditions• The state of the economy in a country or region.• Changes over time inline with the economic and

business cycle

• Economic Considerations– Business cycle– Inflation– Interest Rates

Stages of business cycle

• Prosperity– Period of economic growth

• Recession– Period of retrenchment of consumers and businesses

• Recovery– Finds the economy moving from

recession to prosperity

Inflation• The rate at which the general level of prices for

goods and services is rising, and, subsequently, purchasing power is falling.

• Demand Pull Inflation

• Cost Push Inflation– Rising wages– Import Prices– Raw material prices– Profit push inflation– Declining productivity– Higher taxes

Demand pull inflation

Cost push inflation

Inflation- general increase in the price of goods and services

Deflation- general decrease in the price of goods and services

Stagflation- slow economic growth with general increase in the price of goods and services

Inflation VS Deflation VS Stagflation

Interest rates• A rate which is charged or paid for the use of money• When interest rates are high, consumers tend to

hold back on long-term purchases such as housing.

• Interest rate formulaSimple Interest = P x I x N

Compound Interest = P x [ ( 1 + (I)(N)) - 1 ]

WHERE: P = Principal I = Annual interest rate N = Years (Simple) N = Months (Compound)

Competition• Is the rivalry among sellers trying to achieve such

goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix: Price, Product, Distribution, and Promotion.

• Types of Competition– Brand Competition

• Competitors are marketers of directly similar products– Substitute Products

• Competitors with other products but satisfy the same needs

– Every Company• Every company is a rival for the customers limited buying power.

Social and Cultural Forces• The task facing marketing executives is

becoming more complex because our cultural patterns life-styles, social values, beliefs are changing much more quickly than they used to.

• Emphasis on quality of life• Role of men and women• Attitudes toward health and fitness• Impulse Buying• Desire for convenience

Emphasis on quality of life• “Not more – but better”• Our emphasis is increasingly on the quality of life

rather that the quantity of goods. Consumers seed value, durability, and safety in the products they buy.

Role of men and women• One of the most dramatic shifts in our culture

has been the changing role of women. What is especially significant is the erosion of stereotypes regarding the male-female roles in families, jobs, recreation, and product use.

Attitudes toward health and fitness• An increase interest in health and physical

fitness in recent years seems to have cut across most demographic and economic segments of society. As a result, sporting goods stores, fitness centers, and other firms catering to this trend have multiplied.

Impulse Buying• Consumers seems to be doing more and more

impulse buying purchases made without advanced planning.

• Done on every rational basis

Desire for convenience• Consumers wants products packaged in a variety

of sizes, quantities, and forms.• Consumers wants stores to be close by and open

24/7

Successful convenience stores

Political and Legal forces• Every company’s conduct is influenced more and

more by political and legal processes in our society.

• 5 Categories– Monetary and fiscal policies– Social legislation and regulation– Governmental relationships with industries– Legislation related specifically to marketing– Source of information and buyer of products

Technology• Tremendous impact on out lives, life-styles,

consumption patterns, and our economic well-being.

• Major technology developments– Computers / Internet– Smartphones / Iphones– SmartTV– IP Appliances– Hybrid Automobiles– Robots / Nanobots – Heavy equipment machineries– Latest Games– Social networking sites (Facebook)

External Micro Environmental Forces

Market• Place where buyers and sellers meet, goods or

services are offered for sale, and transfers of ownership occur.

• Demand made by a certain group or potential buyers for a good or service

• 3 factors to consider for any given product or service in the market demand

– People / Organization with wants (needs)– Their purchasing power– Their buying behavior

Suppliers• A party that supplies goods or services. A

supplier may be distinguished from a contractor or subcontractor, who commonly adds specialized input to deliverables. Also called vendor.

• Suppliers are the one who focuses in a company’s marketing system in occurrence of shortages.

Marketing Intermediaries• Independent business organizations that directly

aid in the flow of goods and services between a marketing organization and its markets.

2 institutions- Resellers / Middlemen

( wholesalers and retailers)- various Facilitating Organizations

Note: some situations may be more efficient for a company to operate on a “Do-it-yourself” basis without using marketing intermediaries – a producer can deal directly with its suppliers or sell directly to its customers and do its own shipping, financing, and so on.

Production facilities• eq.

– If the company is considering adding a new brand of soap, for example, it must determine whether existing production facilities and expertise can be used.

Financial capability• eq.

– If the new product requires a new plant or machinery, financial team/department will handle it.

Company’s location• Its research and development (R&D) strength as evidenced

by the patents it holds, and the overall image the firm projects to the public.

• Plant location often determines the geographic limits of a company’s market, particularly if high transportation costs or perishable products are involved

Financial capability• eq.

– If the new product requires a new plant or machinery, financial team/department will handle it.

Aldrin TadeoJake Jacobo

Serge Leonard RaguiniJune Michael Arellano

Camille Edmin GoMarry Jeanne Figg

Mark Armor Lord Jayzle SuanRobelyn Gonzalez

Group III