the marketing environment

Marketing environment

Seminar by, Clincy cleetus

S1.M.Com. Dept of

commerce Uty of Kerala Kariavattom Campus.

Value delivery and marketing environment.

• The task, as well as the challenge, of marketing is value delivery.

• Marketing secure the idea and clues of value delivery from an arena

outside the firm.

• The consumer, technology, competitors and many other similar

components are part of this arena .

• This is what we refer to as the Environment.

According to Philip Kotler, “A company’s

marketing environment consists of

the internal factors & forces, which

affect the company’s ability to

develop & maintain successful

transactions & relationships with the

company’s target customers”.

Purpose of marketing environment analysis.

• To know where the environment is heading.• To figure out the opportunities and threats.• To draw necessary clues on value delivery.• To assess the scope of various opportunities.• To help secure the right fix between the environment and the firm.• To help formulate an appropriate overall marketing strategy- in line

with the trends in the environment.• To project how the environment- each factor of the environment-will

turn out to be at a future point of time.

Components of marketing environment.

Marketing environment

Internal External

Micro MacroHR dept

Operations dept

Accounts & Finance dept

R&D dept

Top mgt

Market/ Demand

Consumer

Industry

competition

suppliers

Govt policies that are specific to the

business

Technology

Socio-cultural

Economic

Political

Natural

DemographicLegal

Govt policies

INTERNAL ENVIRONMENT

• All factors that are internal to the organization are known as the

internal environment.

• They are generally audited by the five Ms which are Men, Money,

Machinery, Materials and Market.

• Marketers call the process of managing internal environment as

Internal marketing.

Process and procedures in internal marketing are:

• Allocation of responsibilities within the organization.

• Resources availability

• The extend to which major functional areas work together

supporting the marketing function to be customer oriented.

• Culture of the organization.

• The attitude of internal stake holders.

External Environment.

A. Micro environment.

1. Market/ Demand.

2. The consumer.

3. Industry and Competition.

4. Government policies.

5. Suppliers.

1.Market/Demand

The aspects to be studied here includes,• Nature of demand.• Size of demand, present and potential.• Changes taking place in demand.• Invasion of substitute products.• Changes taking place in the consumption

pattern or buying habits.

For:

• Entry into the market• Expansions• Disinvestment• Decisions on marketing strategy etc……..

2. The consumer

CONSUMER IS THE KING.• Taste and preference keeps fluctuating.• Aim in providing value to customers

according to their perception.• A perpetual process of customer analysis

is therefore needed to make marketing planning effective.

3. Industry and Competition

• Knowledge about industry and competition is a fundamental

requirement for developing the marketing strategy.

• A prudent marketing manager has to be in constant touch

regarding the information relating to the competitors strategy.

• He has to build his plans to overtake them in the market to

attract competitor’s consumers towards his products.

4. Government policies that are specific to the business

concerned.• Besides influencing the mega environment, government

policies profoundly affect the specific environment of any business/industry.

• This is particularly true for economies that are regulated to a significant degree.

• Even in market economies , government policies are an important factor, though their restraining influence is relatively less.

Government do play roles which have a bearing on the functioning

of firms, eg:-

• Governments are often large purchasers of goods and services.

• Governments subsidize select firms and industries.

• Government protect home producers against foreign competition.

• Governments ban fresh entry in select industries.

• Governments ban off and on, certain technologies and products.

• Governments happen to be producers, and therefore, function as

competitors.

5. Suppliers.

• Suppliers constitute one of the five forces shaping competition in any industry.

• They have their own bargaining power; they influence the cost of raw materials and other inputs to a firm, and hence impact the profits of the firm.

• Sometimes suppliers suddenly become direct competitors to a firm, by themselves becoming the end product manufacturers. obviously firms have to closely monitor the supplier environment.

B. The Macro Environment.

1. Technology environment.

2. Socio- cultural environment.

3. Economic environment.

4. Political environment.

5. Demographic environment.

6. Natural environment.

7. Legal environment.

1. Technology Environment

•Technology affects not only its final products but also its raw materials, processes

and operations.

•Customer segments too are impacted by the technological developments.

•The three aspects of particular significance for business firms in the matter of

technology management are:

Options available in the technology.

Government’s approach in respect of technology.

Technology selection.

2. Socio-Cultural EnvironmentCulture• Culture is the combined result of factors like religion, education and

upbringing.• In any given society, some of the cultural values are deep rooted;

they do not change easily and they are termed as core cultural values.

• There are also other values and practices, which constitute the secondary cultural values. These are more amenable to change and can be moulded and manipulated relatively more easily.

• Cultural shifts carry with them marketing opportunities as well as threats.

Social class

• A social class is determined by income, occupation, location of residence etc of its members.

• Each class has its own standards with respect to life style, behaviour, etc.

• These are known as class values or class norms.• These values/ norms have strong bearing on the

consumption pattern and buying behaviour of the members of the class.

3. Economic Environment.

The factors to be considered under the economic environment are:• General economic conditions.• Economic conditions of different segments of the population; their disposable income,

purchasing power etc. • Size and pattern of income, prices and consumption expenditure.• Credit availability and interest rates.• Savings rate/ capital formation.• Inflation rate. • Tax rates.• Prices of important materials.• Energy scene.• Labour scene.• Exchange rates. • Rate of growth of the economy, rate of growth of each sector of the economy.

4. Political Environment.• Since economic policies of nations depend on the political set up,

the economic environment is often a by-product of the political environment.

• Political environment has several aspects:

Form of government adopted.

Political stability.• Elements like social and religious organizations, media, pressure

groups and lobbies of various kinds, are all part of the political environment.

5.Demographic Environment

6. Natural Environment.Natural resources

•Business firms also depend on natural resources.•Raw materials is a major part of these resources and firms are concerned with their availability and cost.•Energy , its availability and cost is also a major factor.

Ecology Firms are concerned with ecology. In modern times all societies are very much concerned aboutecology , especially about issues like:

• wild life protection•Environmental pollution•Ocean wealth.

• Business firms will have to know the nature and dimensions of environmental regulations and to what extend these factors will affect their business prospects.

• Firms also need to know the role of environmental activists in the region.

Climate

• Firms with products whose demand depend on climate, and firms depending on climate dependent raw materials will be particularly concerned with this factor

• These firms have to exhaustively study the climate and appropriately decide their production locations and marketing territories.

7. Legal Environment.• Businesses have to operate within the framework of the prevailing legal environment. • They have to understand the implications of all the legal provisions relating to their business.

Based on the area covered by them, business legislation can be classified into:• Corporate affairs• Consumer protection• Employee protection• Sectoral protection• Corporate protection

Business firms have to understand these legislations and adapt to them.

Environment analysis , a continuous affair.

• Environment and all its components included are constantly in a flux.

• This reality compels the firm to keep analyzing the environment on a continuous basis.

• Else, the firm will not be in a position to respond properly to the changes taking place around it.