MARKETING ENVIRONMENT
Marketing
Management
M
ARKETING
E
NVIRONMENT
Market
and
Environmental
Analysis
Int
r
o
d
u
c
tion
p.
03
The
marketing environment consists of
external factors
and
forces
that
directly
and/or
indirectly
impact
the
organization
to
develop
and
maintain
successful relationships
with its
target
customers.
There
are
two
perspectives
(sometimes
three)
namely:
1.
the
macro-environment,
2.
the
micro-environment,
3.
the
internal
environment.
The
external
environment, which
includes
all the
external
factors—competitive, economic,
political,
legal/regulatory,
technological, and
sociocultural—that
can exert
considerable direct and indirect
pressures
on
both domestic
and
international
marketing
activities.
consists
of
the
forces
close
to the
company
that
affect its ability to
serve
its
customers,
e.g.,
the
company,
suppliers,
marketing
channel
firms,
customer
markets,
competitors
and
publics.
p.
04
Introduction:
Marketing Environment
Micro-
e
n
vi
r
onment
consists
of
the
large
societal forces
that
affect
the
micro-environment:
Demographic
environment,
Economic environment,
Natural
environment,
Technological
environment,
Political environment, and
Cultural
forces.
Macro-
e
n
vi
r
onment
T
h
e
O
r
g
a
n
i
z
a
t
i
o
n
C
o
m
p
e
t
i
t
o
r
s
C
u
s
t
o
m
e
r
s
S
u
p
p
l
i
e
r
s
D
i
s
t
r
i
b
u
t
o
r
s
S
u
p
p
l
y
c
h
a
i
n
D
e
m
o
g
r
a
p
h
y
E
c
o
n
o
m
i
c
f
a
c
t
o
r
N
a
t
u
r
a
l
f
o
r
c
e
T
e
c
h
n
o
l
o
g
i
c
a
l
c
h
a
n
g
e
C
u
l
t
u
r
a
l
&
S
o
c
i
a
l
C
o
m
p
a
n
y
’
s
I
n
t
e
r
n
a
l
E
n
v
i
r
o
n
m
e
n
t
p.
05
Marketing
Environment
P
o
l
i
t
i
c
a
l
i
s
s
u
e
F
i
g
:
M
a
r
k
e
t
i
n
g
E
n
v
i
r
o
n
m
e
n
t
i
n
c
l
u
d
i
n
g
m
i
c
r
o
,
m
a
c
r
o
a
n
d
i
n
t
e
r
n
a
l
e
n
v
i
r
o
n
m
e
n
t
All factors
that
are
internal
to the organization
are
known
as
the
'internal
environment'.
They
are generally
audited by
applying the
'
Five
M
s'
which
are
Men,
Money,
Machinery,
Materials
and
Markets
.
The internal
environment
is
as
important
for
managing
change
as
the external.
The internal
environment can be
audited
using
other
approaches
such
as
SWOT
Analysis
,
Mi
c
hael
P
o
r
te
r
's
Fi
v
e
F
o
r
ces
An
a
l
ys
is
or
PEST
Analysis
.
p.
06
Internal
e
n
vi
r
onment
Introduction:
Marketing Environment
Marketing
Environment
p.
07
With
regard
to the question of
how
the organization
monitors
the
environment,
there
are
two
types of
environments
are:
1.
Dynamic
environment
2.
Complex
environment
In
a
dynamic
environment
,
organization is typically
faced
with
major
change
in the areas
of technology and markets,
with
the result
that
decisions
can no
longer
be
based
upon
the
assumption,
rather
than
that
of
scientific
basis.
The
focus
needs
to
be upon
the future with a
far
greater
degree
of inspirational
interpretation.
Idea of
alternative
futures
can
then
be
used to identify the
likely
impact
upon
consumers, suppliers,
competitors,
government,
the
financial
institutions, their probable
responses.
For
organizations
faced
with a
complex
environment,
many
of
the issues
and
problems to
which
reference
has been
made
are
exacerbated.
Marketing analysis is based upon the
answers
to six
questions:
1.
H
o
w
c
o
m
p
l
e
x
i
s
t
h
e
e
n
v
i
r
o
n
m
e
n
t
?
(
C
o
m
p
l
e
x
i
t
y
i
s
a
m
e
a
s
u
r
e
m
e
n
t
o
f
t
h
e
n
u
m
b
e
r
o
f
d
i
f
f
e
r
e
n
t
e
n
v
i
r
o
n
m
e
n
t
a
l
f
o
r
c
e
s
w
h
i
c
h
h
a
v
e
a
n
i
m
p
a
c
t
,
o
r
p
o
t
e
n
t
i
a
l
i
m
p
a
c
t
)
2.
How
routine
and
standardized
are
org
n
interactions
with
elements
of
the
environment?
3.
How
interconnected and
how
remote,
initially,
are
the
significant
environmental
variables?
4.
How
dynamic and
how
unpredictable
are
the
changes
taking
place
around the
organization?
5.
How
receptive
is mgt to the
ways
in
which environmental
pressures
adversely affect input
and
output
processes?
6.
How
is
flexibility
of
choice
and to what
extent
is the
org
n
constrained
from
moving
into new
areas?
p.
08
Questions in
Environment
Based
Marketing
Micro
Environment
The
micro-environment
is made
up of
those
elements
that
are
closest
to the
company
and
that
exert
the greatest
and
most direct
influence
over
its ability to
deal
with its
markets.
The
micro-environment
includes:
the organization
itself,
other
company
departments,
suppliers,
marketing
intermediates,
customers,
competitors,
and
various publics,
which
make
up
the
company’s
market.
Marketing
management’s
job is to attract and build
relationships
with
customers
by
creating
value and
satisfaction.
p.
09
Micro
Environment:
The
Company
In
designing
marketing
plans,
marketing
management
takes
other
company
groups
into
account
–
groups
such
as:
Top
management,
Finance,
Research
and
development
(R&D),
Purchasing,
Manufacturing,
and
Accounting.
All those
interrelated groups
form
the
internal
environment.
T
o
p
m
a
n
a
g
e
m
e
n
t
,
F
i
n
a
n
c
e
,
R
e
s
e
a
r
c
h
a
n
d
d
e
v
e
l
o
p
m
e
n
t
,
P
u
r
c
h
a
s
i
n
g
,
M
a
n
u
f
a
c
t
u
r
i
n
g
,
a
n
d
A
c
c
o
u
n
t
i
n
g
.
p.
9
Micro
Environment:
The
Company
p.
10
The
responsibilities of all
departments:
Top
management
sets
the company’s
mission,
objectives,
broad
strategies
and policies. Marketing
plans must
be
approved
by
top management
before be
implemented.
Finance
is
concerned
with
finding and using funds
to
carry
out
the
marketing
plan.
Research and development
(R&D)
department
focuses
on
designing
safe
and attractive
products;
Purchasing
worries
about getting
suppliers
and
materials,
Manufacturing
is
responsible
for
producing
the
desired
quality and
quantity
of
products.
Account
measures
revenues
and
costs to help
marketing.
Micro
Environment:
Suppliers
Suppliers
provide
the
resources
needed by the
company
to
provide
its
goods and
services,
therefore, they
are
linked
in the
company’s
overall
customer value
delivery
system
.
Suppliers sometimes
are
treated as
partners
to
provide
customer value
Marketing
managers
must
watch
supply
availability
,
supply
shortage
or delays
,
labor
strikes
,
and
other
events
Marketers
must
watch
supply
availability
and
pricing
Effective
partnership
relationship
management with
suppliers
is
essential
p.
11
Micro
Environment: Marketing
Intermediates
Marketing intermediates help the
company
to:
promote,
sell,
and
its
goods
to
final
buyers.
p.
12
dis
t
ribu
t
e
They
include:
resellers,
physical distribution
firms,
marketing
services
agencies,
and
financial
intermediates.
R
e
s
elle
r
s
a
r
e
dis
t
ribu
t
i
on
c
hannel
fi
r
ms
th
a
t
help
company
find
consumers
or
make
sales to them.
These
include:
wholesalers,
and
retailers.
Ph
ys
ical
d
i
s
t
ribu
t
ion
fi
r
ms
help
t
h
e
compan
y
t
o
s
to
c
k
a
nd
move
goods
from their
profits
of
origin
to their
destinations.
Micro
Environment:
Customers
Con
s
umer
ma
r
k
ets
c
o
nsi
s
t
o
f
i
n
di
v
iduals
a
nd
households
that
buy goods and
services
for
personal
consumption;
Bu
sines
s
ma
r
k
ets
b
uy
good
s
an
d
se
r
vi
c
es
f
or
fu
r
t
her processing
or
for
use in their production
process;
Reseller markets
buy goods and
services
to resell
at
a
profit;
R
e
s
e
l
l
e
r
M
a
r
k
e
t
C
o
n
s
u
m
e
r
M
a
r
k
e
t
B
u
s
i
n
e
s
s
M
a
r
k
e
t
G
o
v
e
r
n
m
e
n
t
M
a
r
k
e
t
I
n
t
e
r
n
a
t
i
o
n
a
l
M
a
r
k
e
t
Govt. markets
are
made
up of
govt
agencies
that
buy goods
&
services
to produce public
services
or
transfer
the
goods and
services
to
other;
International
markets
consist
of
buyers
in
other
countries,
plus consumers,
producers,
resellers
and
governments.
F
i
g
.
D
i
f
f
e
r
e
n
t
t
y
p
e
s
o
f
c
o
n
s
u
m
e
r
s
p.
14
Micro
Environment:
Competitors
cus
t
omer
value
and
A
compan
y
mu
s
t
p
r
o
v
ide
g
r
e
a
ter
satisfaction
than
competitors
do.
Marketers
must:
do
more
than
simply
adapt
to the
needs of
target
consumers,
also must gain strategic advantage
by
positioning
their offerings
strongly
against
competitor’s
offerings in the minds
of
consumers.
provide
better customer satisfaction than
competitors
do.
consider
its
own
size and
industry
position
compared to those
of
its
competitors.
No single
marketing
strategy
is best
for
all
companies.
p.
14
Micro
Environment:
Competitors
Three
types
of
competitors
are:
Brand
Competitors
-
Market
similar
products
to
same
customers
at
similar prices,
e.g.,
pharmaceutical
products
Category
Competitors
- Market different products
that
solve
same problem
or satisfy
same basic
customer need, e.g.,
stationary
products, software
service
etc
Total
Budget
Competitors
-
Other
competitors
for
the
disposable income
of
the
customer
Benefit
Provided:
Brand
Compe
t
ito
r
s
Category
Compe
t
ito
r
s
Generic
Compe
t
ito
r
s
Self
Study
p.
15
Micro
Environment:
Publics
t
h
e
company
’
s
a
bili
t
y
to
o
b
t
a
i
n
i
n
v
e
s
t
m
e
n
t
s
t
o
c
k
h
o
l
d
e
r
s
funds.
h
o
u
s
e
s
,
a
r
e
t
h
e
B
a
n
k
s
,
a
n
d
m
a
j
o
r
f
i
n
a
n
c
i
a
l
p
u
b
l
i
c
s
.
M
edia
publ
i
cs
ca
r
r
y
n
ew
s
,
f
e
a
tu
r
es,
an
d
editorial
o
p
t
i
o
n
.
N
e
w
s
p
a
p
e
r
s
,
m
a
g
a
z
i
n
e
s
,
a
n
d
r
a
d
i
o
-
t
e
l
e
v
i
s
i
o
n
s
t
a
t
i
o
n
s
a
r
e
i
n
c
l
u
d
e
d
i
n
t
h
i
s
g
r
o
u
p
.
A public is
any
group
that
has an
actual
or potential
interest
in
or impact on an
organization’s
ability
to
achieve
its
objectives.
There
are
seven
types
of
publics:
Financial
publics
influence
G
o
v
e
r
n
m
e
n
t
p
u
b
l
i
c
M
e
d
i
a
p
u
b
l
i
c
I
n
t
e
r
n
a
l
p
u
b
l
i
c
F
i
n
a
n
c
i
a
l
p
u
b
l
i
c
G
e
n
e
r
a
l
p
u
b
l
i
c
L
o
c
a
l
p
u
b
l
i
c
C
i
t
i
z
e
n
a
c
t
i
o
n
p
u
b
l
i
c
F
i
g
:
D
i
f
f
e
r
e
n
t
t
y
p
e
s
o
f
p
u
b
l
i
c
s
p.
16
Micro
Environment:
Publics
Government
publics
take
government
developments
into
account.
Marketers
often
consult
company’s
lawyers
on
issues
of
product
safety,
advertising
truth
& other
matters.
Citizen action public
-
company’s marketing
decisions may
be questioned by consumer organizations, environmental
groups,
minority
groups
and
others.
Local
publics
,
include
neighborhood residents
and
community organizations.
Large
company
usually appoints
a
community relations
officer to
deal
with
the
community,
attend
meetings
and
contribute to
worthwhile
causes.
General public
-
company needs
to be
concerned
about the
general
public’s
attitude toward
its products
and
activities.
Internal
public
,
includes
workers,
managers,
volunteers,
and
board
of
directors.
When
employees feel
good
about
their
company,
this
positive attitude
spills
over
to
external
publics.
p.
17
Macro
Environment
The
company and all
of
the other
actors
operate
in a
larger
macro-environment
of
forces
that
shape
opportunities
and
pose
threats
to the
company.
Six
major
forces
in the
company’s
macro-environment
are:
1.
Demographic
environmental,
2. Economic
forces,
3.
Natural
issues,
4.
Technological
issue,
5.
Political
forces, and
6.
Cultural
forces.
DE
p.
19
EF
NI
TI
PF
CF
Macro
E
n
vi
r
on
m
ent
Demography
is
the
study of
human
populations in
terms
of
size,
density,
location,
age,
gender,
race,
occupation
and
other
statistics.
Demographic
environment is of major
interest
to
marketers
because
it
involves
people, and
people
make
up
markets.
The
world
population is
growing
at
an
explosive
rate.
It
now
totals
more
than 6 billion
and
will
exceed
7.9
billion
by
the
year
2025.
A growing
population
means growing
human needs
to
satisfy.
E
x
a
m
:
P
e
o
p
l
e
i
n
S
S
W
D
(
s
i
n
g
l
e
,
s
e
p
a
r
a
t
e
d
,
w
i
d
o
w
e
d
,
d
i
v
o
r
c
e
d
)
g
r
o
u
p
n
e
e
d
s
m
a
l
l
e
r
a
p
a
r
t
m
e
n
t
s
,
&
f
o
o
d
p
a
c
k
e
d
i
n
s
m
a
l
l
e
r
s
i
z
e
.
p.
19
Macro
Environment:
Demography
region
(less
comfortable)
p.
20
P
eople
a
r
e
f
r
equent
l
y
mi
g
r
a
ting
f
r
om
le
s
s
d
e
v
elo
p
ed
to
compa
r
a
ti
v
e
l
y
mu
c
h
d
e
v
eloped
(com
f
o
r
t
a
b
l
e
)
region.
In
Bangladesh, most
poor
people tend to shift in
Dhaka city
for
a
work.
g
a
r
m
e
n
t
s
i
n
d
u
s
t
r
y
o
f
f
e
r
s
w
o
r
k
f
o
r
w
o
m
e
n
a
n
d
c
h
i
l
d
r
e
n
.
M
e
n
a
r
e
e
n
g
a
g
e
d
i
n
d
i
f
f
e
r
e
n
t
w
o
r
k
s
,
a
t
l
e
a
s
t
t
h
e
y
p
u
l
l
r
i
c
k
s
h
a
w
,
p
u
l
l
n
o
n
-
p
o
w
e
r
e
d
c
a
r
s
e
t
c
.
Migration:
Two
main factors
involved
are:
1.
Migration,
and
2.
Diversity
Exam:
R
e
a
s
o
n
:
T
h
e
Macro
Environment:
Demography
Ame
r
icans
a
r
e
a
mob
i
le
people
with
a
bout
1
2
million
US
households (more than
one out
of every ten)
moving
each
year.
Such
population
are
of
interest to marketers because
people
in different
regions
buy
differently.
Pleas
e
see
t
w
o
countries.
J
a
pan
,
w
he
r
e
almost
everyone
is
Japanese.
The
united
States
,
with people from
virtually
all
nations.
USA
has
often
been
called a ‘melting pot’ in
which
diverse
groups
from
any
nations
and
cultures
have
melted into a single,
more
homogeneous
whole,
seems to
become
a
Salad
Bowl.
Di
v
e
r
si
t
y:
Macro
Environment:
Demography
p.
21
Exam:
The
US
population
is:
72
percent
13
percent
11
percent
3
percent
1
percent
White,
African
Americans
Hispanic
Asian
native
(
Eskimos
and
Aleut
s
)
The
US-Asian
population
also
has
grown
rapidly
in
recent years and
now
totals
about 3
percent
of
the
population.
During the
next
half
century,
the
proportions
of
both Hispanic
and
Asians will
more
than
double.
Such
population
shifts interest marketers
because
people
in different
regions
buy
differently.
Also Americans
have
been
moving
from
rural
to metropolitan
areas
continuously.
Macro
Environment:
Demography
p.
22
Macro
Environment:
Demography
Therefore,
more
people
are:
•
Divorcing
or
separating
•
Choosing not to
marry
•
Choosing to
marry
later
•
Marrying
without intending to
have
children
•
Increased number of working
women
•
Stay-at-home
dads
Bangladesh
Issue
:
•
Living in
: Rural 72%, Urban 21%, Semi-urban
7%
•
People
:
about 57% of population is
below
25 years of
age
•
Birth
rate
: High population
growth
rate-
1.57%
•
Religion
:
mostly
Muslim, with about 10%
from
other
religions
•
Literacy
: 47.9%, 15+
year
old literacy rate
increased
12% in 10
yrs.
•
Family
:
Trend
of
nuclear
families in urban
areas.
•
Population
density
: highest population density in the
world
•
Facilities
:
most public facilities
are
in urban
area,
i.e.,
internet.
p.
23
Macro
Environment:
Demography
People
make
up
the
market
,
the basis
for
any
market:
Pre- and
early
adolescents,
age
upto
12
View
TV
ads as “just
advertising”
Baby &
Tw
eens
Teens
Spend approximately
72
hours
per
week
tuned
in
electronically
View
shopping as a social
sport
Adapting online
shopping
Born
between
1979 and
later
Surpassed
population
of baby
boomers
in
2010
Two
Stages: 1)
Just
passed
teenage,
2)
On
careers
and
started
families.
G
e
n
Y
f
o
u
n
d
t
o
b
e
:
i
n
q
u
i
s
i
t
i
v
e
,
q
u
i
c
k
s
h
o
p
p
e
r
s
,
o
p
i
n
i
o
n
a
t
e
d
,
d
i
v
e
r
s
e
,
m
u
l
t
i
-
t
a
s
k
e
r
s
,
g
o
o
d
t
i
m
e
m
a
n
a
g
e
r
s
,
e
n
v
i
r
o
n
m
e
n
t
a
l
l
y
a
w
a
r
e
.
Generation
Y
Born
between 1965 and
1978
Independent,
tough, adaptable, cautious, and
skeptical
Max buying
capability,
home
owner,
ought to
goal
Avid
buyers of the
latest
technology and
recreation
Generation
X
p.
25
Macro
Environment:
Economic
p.
25
E
conomic
e
n
vi
r
onment
consi
s
ts
o
f
f
acto
r
s
t
h
a
t
a
f
f
ect
consumer
purchasing
power
and
spending
patterns
.
Ma
r
k
et
e
r
s
need
t
o
consider
the
s
t
a
te
o
f
a
t
r
ading
economy
in the
short
and
long-terms.
S
o
me
co
u
ntries
h
a
v
e
subsis
t
e
n
ce
ec
o
no
m
ics
–
they
consume
most
of
their
agricultural
and
industrial
output
e
.
g
.
In
d
ia.
T
hese
count
r
ies
o
f
f
er
f
ew
ma
r
k
et
opportunities.
Marketers must
pay
close
attention
to major trends
and
consumer spending
patterns
both across & their
markets.
Industrial economies
are
richer
markets
V
alue
ma
r
k
eting,
ways
to
offer
i
n
v
ol
v
es
fina
n
cial
l
y
careful buyers greater
value
- right
combination of
quality
and
service
at
a
fair
price
Macro
Environment:
Economic
p.
26
The
marketers
should
have
to look
at:
•
Interest
rates,
•
The
level
of
inflation employment
level
per
capita,
•
Long-term
prospects
for
the economy GDP per
capita.
Also
on
:
Changes
in
income
Macro
Environment:
Economic
p.
27
Economic situation
changes
in
consumer
spending
patterns
Ernst
Engel: ‘Engel
’
s
law’
As income
rises:
•
The
percentage
spent on
food
declines
•
The
percentage
spent on housing remains
constant
•
The
percentage
spent on
savings
increases
Bangladesh
Issue
:
GDP
6.7%
Inflation
~10%
Exchange
Rate
BDT
82 per
USD
Steady
economic performance despite global
slowdown.
Macro
Environment:
Natural
p.
28
Natural
environment
involves
the natural
resources
that
are
needed as
inputs
by
marketers
or
that
are
affected
by
marketing
activities.
Marketing
trends:
Shortages
of
raw
materials
Increased
pollution
Increase
government
intervention
Environmentally sustainable
strategies
Marketing
Issues:
1.
First
issue
involves
growing
shortage
of
raw
materials. Air
and
water
seem to
be
infinite
resources,
but
some
non-
renewable
resources,
such
as
oil,
coal
etc.
are
limited.
Macro
Environment:
Natural
p.
29
2
.
T
he
second
is
s
ue
is
i
n
c
r
easing
pollutio
n
.
In
d
us
t
r
y
will
almost
al
w
ays
dam
a
ge
the
quality
environment.
Consider
the
disposal
o
f
the
n
a
tu
r
al
o
f
c
he
m
ical
and
nuclear
wastes,
the dangerous
mercury
level
in the
ocean,
etc.
3.
A
third
issue
is increased
governmental
intervention in
natural
resource
management.
The
governments
of
different countries
vary
in their
concern
and
efforts
to
promote a
clean
environment. Example: In
Germany,
government
vigorously pursue
environmental
quality.
Otherwise, many
poor nations,
like
Bangladesh,
do
little
about pollution.
4.
Environmentally sustainable
strategies
a
n
d
r
ea
d
y
-
m
a
de
A
r
on
g
,
a
f
am
o
us
sh
o
w
-
pie
c
e
garment
selling
division;
Kumudini,
as
like
as
Arong
-
elimin
a
ted
po
l
ysty
r
e
ne
an
d
po
l
y
e
t
h
y
le
n
e
p.
30
ca
r
ton
an
d
shop
p
ing
b
a
gs
smaller,
recyclable
paper
an
d
n
o
w
uses
w
r
a
p
pings
and
napkins.
Bata,
a worldwide shoe
manufacturing company
uses
such
type of
cartons
in place
of
polyethylene
bags.
McDonald’s eliminated
polystyrene
cartons
and
now
uses
smaller,
recyclable,
biodegradable
paper
wrapping
and
napkins
Example:
Macro
Environment:
Natural
Macro
Environment:
Technology
Technological
environment is perhaps
the
most
dramatic forces
that
create new technologies
,
creating new
product
and
market
opportunities
.
Examples:
New
antibiotics
(saving lives),
Organ
transplants
(Enhancing
lives),
Notebook
computers
(making
easy
life),
Cell
phone
&
Internet
(easy
communication).
Marketing
stimulating
innovation
are:
Build
scenarios
Cater
to
entrepreneurs
p.
31
Macro
Environment:
Technology
did
not
know
about automobiles, air phones,
radios,
or
the electric
light.
did
not
know
about
television,
aerosol cans,
autom
a
tic
dish
w
ashe
r
s,
r
oom
ai
r
-
pills,
or
earth
satellites.
did
not
know
about
personal
computers,
CD
players,
VCRs,
or
the World
Wide
Web.
e
v
e
r
y
n
e
w
te
c
hnolo
g
y
r
eplaces
a
n
older
te
c
hnolo
g
y
;
old
indus
t
ries
a
r
e
fightin
g
to
survive,
adapting
new technologies…
.
p.
32
The
technological environment
changes
rapidly.
Example:
Abraham
Lincoln
Woodrow
Wilson
conditioners, antibiotics
or
computers.
F
r
ankl
i
n
D
.
R
oos
ev
elt
did
no
t
kn
o
w
a
bo
u
t
X
e
r
o
g
r
a
ph
y
,
synthetic
dete
r
gen
t
s,
t
a
pe
r
eco
r
de
r
s,
bi
r
th
cont
r
ol
John
F.
Kennedy
Barak
Obama
??
Macro
Environment:
Political
Marketing
decisions
are strongly
affected
by
developments
in
the political
environments,
that
consists
of laws, government
agencies
and
pressure groups
that
influence and
limit
various
organizations
and
individuals in a
given
society.
The
political
arena
has
a
huge influence upon
the regulation
of
businesses,
and the spending
power
of
consumers
and
other businesses. Therefore, considering
issues:
Stability
in
the political
environment;
Government
policy
and
laws
on
rules
& regulations,
tax;
Government's
position
on
marketing
ethics;
Government's
policy
on
the total
economy;
Government’s
view
on
culture
and
religion;
Trading
agreements
between
governments
such
as
EU,
SAFTA, NAFTA,
ASEAN,
or
others?
p.
33
Macro
Environment:
Political
Political and
legal
environment
of
marketing:
Laws and regulations on
technology
New
technology
Society
Businesses
Consumers
L
e
g
i
s
l
a
t
i
o
n
a
f
f
e
c
t
s
m
a
r
k
e
t
i
n
g
v
a
r
i
e
s
s
t
a
t
e
b
y
s
t
a
t
e
O
r
e
g
o
n
:
l
i
m
i
t
s
u
t
i
l
i
t
y
a
d
v
e
r
t
i
s
i
n
g
t
o
0
.
5
p
e
r
c
e
n
t
o
f
n
e
t
i
n
c
o
m
e
.
C
a
l
i
f
o
r
n
i
a
:
b
a
n
s
f
a
t
s
i
n
r
e
s
t
a
u
r
a
n
t
s
a
n
d
b
a
k
e
r
i
e
s
.
State
or
regional
laws
Regulatory
agencies
Consumer product
safety
commission
Federal
trade
commission
Food
&
Drug
administration
p.
34
Macro
Environment:
Culture
The
cultural
environment
is made
up
of
institutions
and
other
forces
that
affect a
society’s
basic
values
,
perceptions,
preferences
and
behaviors.
The
major
cultural
values
of
a society
are
expressed:
people’s
view
of themselves and
others,
views
of
organizations,
society,
nature, and
the
universe.
Some
people
seek
personal
pleasure,
wanting
fun,
change,
and
escape.
Other seek
self-realization
through religion, recreation,
or the
avoid
pursuit
of
careers
of
other
life
goals.
E
x
a
m
p
l
e
:
I
n
t
e
r
n
a
t
i
o
n
a
l
L
u
x
s
o
a
p
h
a
s
f
o
u
r
c
o
l
o
r
f
u
l
a
n
d
n
a
t
u
r
a
l
c
o
n
t
a
m
i
n
a
t
i
o
n
s
p.
35
Evaluation
of
Environmental
Analysis
SWOT
analysis:
SWOT
analysis
is a tool
for
auditing
an
organization
and
its
environment. It is
the
first stage
of
planning
and helps
marketers
to
focus
on
key
issues.
SWOT
stands
for
strengths,
weaknesses,
opportunities
,
and
threats
.
Strengths
and weaknesses
are
internal
factors.
Once
key
issues
have
been
identified, they
feed
into
marketing
objectives.
It can be
used in conjunction with other tools
for
audit
and
analysis,
such
as
PEST
analysis
and
Porter's
Five-Forces
analysis
.
It
is
a
very
popular
tool
with
marketing
students
because
it
is
quick
and
easy to
learn.
p.
37
SWOT
analysis:
A
strength
could
be:
Your
specialist
marketing
expertise,
A
new,
innovative
product or
service,
Location of
business,
Quality processes
and
procedures,
Any
oth
e
r
aspe
c
t
o
f
b
usiness
th
a
t
a
d
ds
val
u
e
to
product
or
service.
A
weakness
could
be:
Lack
of marketing
expertise,
s
e
r
vices
(
i.
e
.
in
Undi
f
f
e
r
ent
i
a
ted
p
r
oducts
or
relation
to
competitors),
Location of
business,
Poor
quality
goods or
services,
Damaged
reputation.
Environmental
Analysis:
SWOT
p.
38
A
threat
could be:
A
new
competitor in
home
market,
Price
wars
with
competitors,
Competitor
has
a
new,
innovative
product or
service,
Compe
t
it
o
r
s
h
a
v
e
supe
r
ior
access
t
o
c
hann
e
ls
of
distribution,
Taxation
is introduced
on
product
or
service.
Opportunities
and threats
are
external factors.
o
f
f
er
M
o
ving
into
ne
w
ma
r
k
et
s
e
g
ments
th
a
t
improved
profits,
A
new
international
market,
A
market vacated by an ineffective
competitor.
SWOT
analysis:
An
opportunity
could
be:
A
developing
market
such
as
the
internet,
Mergers,
joint
ventures or
strategic
alliances,
p.
39
Environmental
Analysis:
SWOT
1.
T
h
e
i
n
t
e
r
n
a
l
e
n
v
i
r
o
n
m
e
n
t
e
.
g
.
s
t
a
f
f
(
o
r
i
n
t
e
r
n
a
l
c
u
s
t
o
m
e
r
s
)
,
o
f
f
i
c
e
t
e
c
h
n
o
l
o
g
y
,
w
a
g
e
s
a
n
d
f
i
n
a
n
c
e
,
e
t
c
.
2.
T
h
e
m
i
c
r
o
-
e
n
v
i
r
o
n
m
e
n
t
e
.
g
.
o
u
r
e
x
t
e
r
n
a
l
c
u
s
t
o
m
e
r
s
,
a
g
e
n
t
s
a
n
d
d
i
s
t
r
i
b
u
t
o
r
s
,
s
u
p
p
l
i
e
r
s
,
o
u
r
c
o
m
p
e
t
i
t
o
r
s
,
e
t
c
.
3.
T
h
e
m
a
c
r
o
-
e
n
v
i
r
o
n
m
e
n
t
e
.
g
.
P
o
l
i
t
i
c
a
l
(
a
n
d
l
e
g
a
l
)
f
o
r
c
e
s
,
E
c
o
n
o
m
i
c
f
o
r
c
e
s
,
S
o
c
i
o
-
c
u
l
t
u
r
a
l
f
o
r
c
e
s
,
a
n
d
T
e
c
h
n
o
l
o
g
i
c
a
l
f
o
r
c
e
s
.
These are
known
as
PEST
factors.
PEST
analysis:
Org's
marketing
environment
is made up
from:
P
o
l
i
t
i
c
a
l
E
c
o
n
o
m
i
c
S
o
c
i
o
-
c
u
l
t
u
r
a
l
T
e
c
h
n
o
l
o
g
i
c
a
l
The
economic factor holds
the
followings-
Interest
rates,
The
level
of
inflation employment
level
per
capita,
Long-term
prospects
for
the economy
Gross
Domestic
Product
(GDP)
per capita, and so
on.
R
e
c
a
p
p
i
n
g
s
l
i
d
e
2
7
p.
39
Environmental
Analysis:
PEST
Environmental
Analysis:
PEST
p.
40
Political Environment:
The
political
environment answers
the
following
questions-
How
stable is the political
environment?
Will
government
policy
influence
laws
that
regulate
or
tax
on
business?
W
h
a
t
is
the
g
o
v
e
r
nment
'
s
pos
i
t
i
on
o
n
ma
r
k
eting
ethics?
What is the
government's
policy
on
the
economy?
Does
the
g
o
v
e
r
nment
h
a
v
e
a
vi
e
w
o
n
cultu
r
e
and
religion?
I
s
the
g
o
v
e
r
nment
i
n
v
ol
v
ed
in
t
r
a
d
ing
a
g
r
ee
m
ents
such
as
EU,
NAFTA,
ASEAN,
or
others?
Socio-Cultural
Environment:
Social
and
cultural
env.
influences
on
business
vary
from
country
to
country.
Factors
include:
What is the dominant
religion?
What
are
attitudes
to
foreign
products
and
services?
Does
lan
g
u
a
ge
imp
a
ct
upo
n
the
di
f
f
u
sion
o
f
p
r
od
u
cts
onto
markets?
How
much
time
do
consumers
have
for
leisure?
What
are
the
roles
of
men
and
women
within
society?
How
long
are
the
population
living?
Are
the older
generations
wealthy?
Does
the
p
opul
a
ti
o
n
h
a
v
e
a
s
t
r
o
ng/
w
eak
o
p
inion
on
green
issues?
p.
41
Environmental
Analysis:
PEST
p.
43
Environmental
Analysis:
PEST
communicate
with consumers
e.g.
banners,
customer
relationship
management
(CRM),
etc.?
Technological
Environment:
Technology
is vital
for
competitive
advantage,
and
is a major
driver
of globalization.
Consider the
following
points:
Does
technology
allow
for
products
and
services
to
be
made
more
cheaply and
to a better standard
of
quality?
Do
technologies
offer
consumers
and businesses
more
innovative
products
and
services
such
as
internet
banking,
new generation
mobile telephones,
etc.?
How
is
distribution
changed
by new technologies e.g.
books
via the
Internet,
flight
tickets,
auctions,
etc?
Does
technology
offer companies a
new
way
to
Evaluation
of
Environmental
Analysis
Michael
Porter's
Five Forces
Analysis
Five
forces
analysis,
is
similar to
other
tools
for
environmental
audit,
such
as PEST
analysis,
but tends
to
focus
on
the
single,
stand alone, business
or
SBU
(Strategic
Business
Unit)
rather
than a single product
or
range
of
products.
Fi
v
e
f
o
r
ces
looks
a
t
fi
v
e
k
ey
areas namely
the
1.
Threat
of
entry,
2.
The
power
of
buyers,
3.
The
power
of
suppliers,
4.
The
threat of
substitutes,
5.
Competitive
rivalry.
T
h
r
e
a
t
o
f
e
n
t
r
y
p.
43
T
h
r
e
a
t
o
f
s
u
b
s
t
i
t
u
t
e
s
P
o
w
e
r
o
f
b
u
y
e
r
s
P
o
w
e
r
o
f
s
u
p
p
l
i
e
r
s
C
o
m
p
e
t
i
t
i
v
e
r
i
v
a
l
r
y
Environmental
Analysis:
Five
Forces
p.
44
The
threat of
entry.
Benefits associated
with bulk
purchasing
in economies
scale.
H
i
g
h
o
r
l
o
w
c
o
s
t
o
f
e
n
t
r
y
e
.
g
.
h
o
w
m
u
c
h
w
i
l
l
i
t
c
o
s
t
f
o
r
l
a
t
e
s
t
t
e
c
h
n
o
l
o
g
y
?
E
a
s
e
o
f
a
c
c
e
s
s
t
o
d
i
s
t
r
i
b
u
t
i
o
n
c
h
a
n
n
e
l
s
e
.
g
.
d
o
c
o
m
p
e
t
i
t
o
r
s
h
a
v
e
t
h
e
d
i
s
t
r
i
b
u
t
i
o
n
c
h
a
n
n
e
l
s
h
e
m
m
e
d
u
p
?
C
o
s
t
a
d
v
a
n
t
a
g
e
s
e
.
g
.
p
e
r
s
o
n
a
l
c
o
n
t
a
c
t
s
o
r
k
n
o
w
l
e
d
g
e
t
h
a
t
l
a
r
g
e
r
c
o
m
p
a
n
i
e
s
d
o
-
w
i
l
l
c
o
m
p
e
t
i
t
o
r
s
r
e
t
a
l
i
a
t
e
?
G
o
v
e
r
n
m
e
n
t
a
c
t
i
o
n
e
.
g
.
w
i
l
l
n
e
w
l
a
w
s
a
r
e
i
n
t
r
o
d
u
c
e
d
t
h
a
t
w
i
l
l
w
e
a
k
e
n
o
u
r
c
o
m
p
e
t
i
t
i
v
e
p
o
s
i
t
i
o
n
?
H
o
w
i
m
p
o
r
t
a
n
t
i
s
d
i
f
f
e
r
e
n
t
i
a
t
i
o
n
e
.
g
.
c
h
a
m
p
a
g
n
e
b
r
a
n
d
s
.
The
power
of
buyers
T
h
e
r
e
i
s
a
f
e
w
,
l
a
r
g
e
p
l
a
y
e
r
s
i
n
a
m
a
r
k
e
t
e
.
g
.
l
a
r
g
e
g
r
o
c
e
r
y
c
h
a
i
n
s
.
T
h
e
r
e
a
r
e
a
l
a
r
g
e
n
u
m
b
e
r
o
f
u
n
d
i
f
f
e
r
e
n
t
i
a
t
e
d
,
s
m
a
l
l
s
u
p
p
l
i
e
r
s
e
.
g
.
s
m
a
l
l
f
a
r
m
i
n
g
b
u
s
i
n
e
s
s
e
s
s
u
p
p
l
y
i
n
g
t
h
e
l
a
r
g
e
g
r
o
c
e
r
y
c
h
a
i
n
s
.
The
cost
of
switching
between
suppliers is
low
e.g.
from
one
fleet supplier of trucks
to
another.
Environmental
Analysis:
Five
Forces
p.
45
The
power
of
suppliers
Power
of
suppliers
tends to
be
a
reversal of
power
of
buyers.
W
h
e
r
e
t
h
e
s
w
i
t
c
h
i
n
g
c
o
s
t
s
a
r
e
h
i
g
h
e
.
g
.
s
w
i
t
c
h
i
n
g
f
r
o
m
o
n
e
s
o
f
t
w
a
r
e
s
u
p
p
l
i
e
r
t
o
a
n
o
t
h
e
r
.
P
o
w
e
r
i
s
h
i
g
h
w
h
e
r
e
b
r
a
n
d
i
s
p
o
w
e
r
f
u
l
e
.
g
.
M
i
c
r
o
s
o
f
t
,
P
i
z
z
a
H
u
t
.
Possibility of
supplier
integrating
forward.
Customers are
fragmented
(not
in clusters)
so
that
they
h
a
v
e
l
i
t
t
l
e
b
a
r
g
a
i
n
i
n
g
p
o
w
e
r
e
.
g
.
G
a
s
/
P
e
t
r
o
l
s
t
a
t
i
o
n
s
i
n
r
e
m
o
t
e
p
l
a
c
e
s
.
Threat
of
substitutes
W
h
e
r
e
t
h
e
r
e
i
s
p
r
o
d
u
c
t
-
f
o
r
-
p
r
o
d
u
c
t
s
u
b
s
t
i
t
u
t
i
o
n
e
.
g
.
e
m
a
i
l
f
o
r
f
a
x
,
w
h
e
r
e
t
h
e
r
e
i
s
s
u
b
s
t
i
t
u
t
i
o
n
,
b
e
t
t
e
r
t
o
o
t
h
p
a
s
t
e
r
e
d
u
c
e
s
t
h
e
n
e
e
d
f
o
r
d
e
n
t
i
s
t
s
.
W
h
e
r
e
t
h
e
r
e
i
s
g
e
n
e
r
i
c
s
u
b
s
t
i
t
u
t
i
o
n
,
e
.
g
.
,
C
D
,
D
V
D
a
n
d
f
l
a
s
h
d
r
i
v
e
.
C
o
u
l
d
a
l
w
a
y
s
d
o
w
i
t
h
o
u
t
e
.
g
.
c
i
g
a
r
e
t
t
e
s
.
Competitive
Rivalry
This
is to be high
where
entry
is
likely,
there
is a
threat
of
substitute
products, suppliers
&
buyers
in the market attempt to
control.
Evaluation
of
Environmental
Analysis
Diffenbach has
identified
three
distinct
stages
in
the
evolution
of
corporate
environmental
analysis:
1.
Appreciation
stage
,
starts
from emergence
of
books
and
articles
that
argue
the looking
beyond
the
short
term
and
for
considering wider
implications of
economic, social
and
political,
technological
factors
that
make
up
business
envt.
2.
Analysis
stage,
involves
finding
reliable sources
of
data,
compiling
and
examining data,
develop
and discuss
trends,
developments
and
key
relationships.
3.
Application
stage,
very
real
attempts
are
made to monitor
the
environment, assess
the
implications
for
change
and
incorporate staff
evaluations
into
strategy
and
plans.
p.
46
T
h
r
e
e
a
p
p
r
o
a
c
h
e
s
t
o
s
c
a
n
n
i
n
g
(
w
i
t
h
t
h
e
s
e
b
e
i
n
g
c
h
a
r
a
c
t
e
r
i
z
e
d
b
y
a
n
i
n
c
r
e
a
s
i
n
g
d
e
g
r
e
e
o
f
s
t
r
u
c
t
u
r
e
,
s
y
s
t
e
m
i
z
a
t
i
o
n
,
s
o
p
h
i
s
t
i
c
a
t
i
o
n
a
n
d
r
e
s
o
u
r
c
e
i
n
t
e
n
s
i
t
y
)
:
Continuous
models,
represent
a
further
development
and
involve
focusing
upon
business
envt
generally
and
upon
the
Periodic models,
represent
a
general
development
of
the
irregular
system and
are more
systematic,
resource
intensive and sophisticated.
The
environment
is
reviewed
regularly
and
a
longer-term
perspective is
developed.
Irregular
systems
,
predominate
with a
poorly
developed
planning culture
and focusing upon
responding
to
environmentally generated
crises.
The
net effect is
that
is
simply
placed finding solutions
to
short-term
problems,
with
little
attention
paid to identifying
and
assessing the
impact.
long
term
as
opposed to
short-term
and
specific
issues.
p.
47
Evaluation
of
Environmental
Analysis
➡
Poorly
structured
➡
Opinion
based
➡
Ambiguous in its
definitions
➡
Based on an insecure
methodology
p.
48
➡
Qualitative
in
nature
➡
Poorly
quantified
➡
Likely
to
change.
➡
Available
only
on an
irregular
basis
➡
Often
provided
by unofficial
sources
Evaluation
of
Environmental
Analysis
Continuous
env.
analysis is based
on
3 basic
premises:
1.
T
he
dete
r
minants
o
f
success
a
r
e
dict
a
ted
b
y
the
business
environment;
2.
The
firm’s
response
to
environmental
change
therefore
represents
a
fundamental
strategic
choice;
3.
A
knowledge
of
the
business environment
must precede
the acquisition
of any
degree
of
control
over
it.
The barriers
associated
with continuous
env
analysis
are:
The marketing environment comprises external factors impacting an organization's relationship with customers. It includes macro-environment (legal, technological, sociocultural), micro-environment (demographic, economic, natural, technological, political, cultural forces), and internal environment. Analyzing these environments helps in strategic decision-making and managing change effectively.
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Marketing Management MARKETING ENVIRONMENT Market and Environmental Analysis
Introduction The marketing environment consists of external factors and forces that directly and/or indirectly impact the organization to develop and maintain successful relationships with its target customers. There are two perspectives (sometimes three) namely: 1. the macro-environment, 2. the micro-environment, 3. the internal environment. The external legal/regulatory, technological, and sociocultural that can exert considerable direct and indirect pressures on both domestic and international marketing activities. external environment, factors competitive, which includes economic, all political, the p.03
Introduction: Marketing Environment consists of the forces close to the company that affect its ability to serve its customers, e.g., the company, suppliers, marketing channel firms, customer markets, competitors and publics. Micro- environment consists of the large societal forces that affect the micro-environment: Demographic environment, Economic environment, Natural environment, Technological environment, Political environment, and Cultural forces. Macro- environment p.04
Marketing Environment Demography Cultural & Social Customers Suppliers Economic factor The Distributors Organizati on Company s Internal Environment Natural force Competitors Supply chain Technological change Political issue Fig: Marketing Environment including micro, macro and internal environment p.05
Introduction: Marketing Environment All factors that are internal to the organization are known as the 'internal environment'. Internal environment They are generally audited by applying the 'Five Ms' which are Men, Money, Machinery, Materials and Markets. The internal environment is as important for managing change as the external. The internal environment can be audited using other approaches such as SWOT Analysis, Michael Porter's Five Forces Analysis or PEST Analysis. p.06
Marketing Environment With regard to the question of how the organization monitors the environment, there are two types of environments are: 1. Dynamic environment 2. Complex environment In a dynamic environment, organization is typically faced with major change in the areas of technology and markets, with the result that decisions can no longer be based upon the assumption, rather than that of scientific basis. The focus needs to be upon the future with a far greater degree of inspirational interpretation. Idea of futures can then be used to identify the likely impact upon consumers, suppliers, competitors, government, the financial institutions, their probable responses. alternative For organizations faced with a complex environment, many of the issues and problems to which reference has been made are exacerbated p.07
Questions in Environment Based Marketing Marketing analysis is based upon the answers to six questions: 1. How complex is the environment? (Complexity is a measurement of the number of different environmental forces which have an impact, or potential impact) 2. How routine and standardized are orgn interactions with elements of the environment? 3. How interconnected and how remote, initially, are the significant environmental variables? 4. How dynamic and how unpredictable are the changes taking place around the organization? 5. How receptive is mgt to the ways in which environmental pressures adversely affect input and output processes? 6. How is flexibility of choice and to what extent is the orgn constrained from moving into new areas? p.08
Micro Environment The micro-environment is made up of those elements that are closest to the company and that exert the greatest and most direct influence over its ability to deal with its markets. The micro-environment includes: the organization itself, other company departments, suppliers, marketing intermediates, customers, competitors, and various publics, which make up the company s market. Marketing management s job is to attract and build relationships with customers by creating value and satisfaction. p.09
Micro Environment: The Company In designing marketing plans, marketing management takes other company groups into account groups such as: Top management, Finance, Research and development (R&D), Purchasing, Manufacturing, and Accounting. All those interrelated groups form the internal environment. Top management, Finance, Research and development, Purchasing, Manufacturing, and Accounting. p.9
Micro Environment: The Company The responsibilities of all departments: Top management sets the company s mission, objectives, broad strategies and policies. Marketing plans must be approved by top management before be implemented. Finance is concerned with finding and using funds to carry out the marketing plan. Research and development (R&D) department focuses on designing safe and attractive products; Purchasing worries about getting suppliers and materials, Manufacturing is responsible for producing the desired quality and quantity of products. Account measures revenues and costs to help marketing. p.10
Micro Environment: Suppliers Suppliers company therefore, they are linked in the company s overall customer value delivery system. provide to the resources its goods needed and by the provide services, Suppliers sometimes are treated as partners to provide customer value Marketing managers must watch supply availability, supply shortage or delays, labor strikes, and other events Marketers must watch supply availability and pricing Effective partnership relationship management with suppliers is essential p.11
Micro Environment: Marketing Intermediates Marketing intermediates help the company to: promote, sell, and distribute its goods to final buyers. They include: resellers, physical distribution firms, marketing services agencies, and financial intermediates. Resellers are distribution channel firms that help company find consumers or make sales to them. These include: wholesalers, and retailers. Physical distribution firms help the company to stock and move goods from their profits of origin to their destinations. p.12
Micro Environment: Customers Consumer markets consist of individuals and households that buy goods and services for personal consumption; Business markets further processing or for use in their production buy goods and services for process; Reseller markets buy goods and services to resell at a profit; Resell er Marke t Busine ss Marke t Govt. markets are made up of govt agencies that buy goods & services to produce public services or goods and services to other; Governm ent Market transfer the International markets consist of buyers in other countries, plus consumers, resellers and governments. Internatio nal Market Consum er Market Fig. Different types of consumers producers, p.14
Micro Environment: Competitors A company must provide greater satisfaction than competitors do. customer value and Marketers must: do more than simply adapt to the needs of target consumers, also must gain strategic advantage by positioning their offerings strongly offerings in the minds of consumers. provide better customer competitors do. consider its own compared to those of its competitors. against competitor s satisfaction than size and industry position No single marketing strategy is best for all companies. p.14
Micro Environment: Competitors Three types of competitors are: Brand Competitors customers at similar prices, e.g., pharmaceutical products - Market similar products to same Category Competitors - Market different products that solve same problem or satisfy same basic customer need, e.g., stationary products, software service etc Total Budget disposable income of the customer Competitors - Other competitors for the Benefit Provided: Brand Competitors Category Competitors Generic Competitors Self Study p.15
Micro Environment: Publics A public is any group that has an actual or potential interest in or impact on an organization s ability to achieve its objectives. There are seven types of publics: Financial publics influence Medi a publi c Financi al public the obtain investment stockholders financial publics. company s ability to funds. houses, are Banks, and major the Citizen action public Governm ent public Loca l publi c Media publics carry news, features, and option. Newspapers, magazines, and radio-television stations are included in this group. Gener al publi c Fig: Different types of publics Intern al publi c editorial p.16
Micro Environment: Publics Government publics take government developments into account. Marketers often consult company s lawyers on issues of product safety, advertising truth & other matters. Citizen action public - company s marketing decisions may be questioned by consumer organizations, environmental groups, minority groups and others. Local community organizations. Large company usually appoints a community relations officer to deal with the community, attend meetings and contribute to worthwhile causes. publics, include neighborhood residents and General public - company needs to be concerned about the general public s attitude toward its products and activities. Internal public, includes workers, managers, volunteers, and board of directors. When employees feel good about their company, this positive attitude spills over to external publics. p.17
Macro Environment The company and all of the other actors operate in a larger macro-environment opportunities and pose threats to the company. of forces that shape Six major forces in the company s macro-environment are: 1. Demographicenvironmental, DE 2. Economicforces, 3. Natural issues, EF CF 4. Technological issue, Macro Environment 5. Political forces, and PF NI 6. Cultural forces. TI p.19
Macro Environment: Demography Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics. Demographic marketers because it involves people, and people make up markets. environment is of major interest to The world population is growing at an explosive rate. It now totals more than 6 billion and will exceed 7.9 billion by the year 2025. A growing population means growing human needs to satisfy. Exam: People in SSWD (single, separated, widowed, divorced) group need smaller apartments, & food packed in smaller size. p.19
Macro Environment: Demography Two main factors involved are: 1. Migration, and 2. Diversity Migration: People developed comparatively region. are frequently migrating from less region much (less developed comfortable) (comfortable) to In Bangladesh, most poor people tend to shift in Dhaka city for a work. Exam: garments industry offers work for women and children. Men are engaged in different works, at least Reason: The they pull rickshaw, pull non-powered cars etc. p.20
Macro Environment: Demography Americans are a mobile people with about 12 million US households (more than one out of every ten) moving each year. Such population are of interest to marketers because people in different regions buy differently. Please see two countries. Japan, where almost everyone is Japanese. Diversity: The united States, with people from virtually all nations. USA has often been called a melting pot in which diverse groups from any nations and cultures have melted into a single, more homogeneous whole, seems to become a Salad Bowl. p.21
Macro Environment: Demography Exam: The US population is: White, African Americans Hispanic 72 percent 13 percent 11 percent 3 percent 1 percent Asian native (Eskimos and Aleuts) The US-Asian population also has grown rapidly in recent years and now totals about 3 percent of the population. During the next half century, the proportions of both Hispanic and Asians will more than double. Such population shifts interest marketers because people in different regions buy differently. Also Americans have been moving from rural to metropolitan areas continuously. p.22
Macro Environment: Demography Therefore, more people are: Divorcing or separating Choosing not to marry Choosing to marry later Marrying without intending to have children Increased number of working women Stay-at-home dads Bangladesh Issue: Living in: Rural 72%, Urban 21%, Semi-urban 7% People: about 57% of population is below 25 years of age Birth rate: High population growth rate- 1.57% Religion: mostly Muslim, with about 10% from other religions Literacy: 47.9%, 15+ year old literacy rate increased 12% in 10 yrs. Family: Trend of nuclear families in urban areas. Population density: highest population density in the world Facilities: most public facilities are in urban area, i.e., internet. p.23
Macro Environment: Demography People make up the market, the basis for any market: Pre- and early adolescents, age upto 12 View TV ads as just advertising Baby & Tweens Teens Spend approximately 72 hours per week tuned in electronically View shopping as a social sport Adapting online shopping Born between 1979 and later Surpassed population of baby boomers in 2010 Two Stages: 1) Just passed teenage, 2) On careers and started families. Gen Y found to be: inquisitive, quick shoppers, opinionated, diverse, multi-taskers, good time managers, environmentally aware. Independent, tough, adaptable, cautious, and skeptical Max buying capability, home owner, ought to goal Avid buyers of the latest technology and recreation Generation Y Born between 1965 and 1978 Generation X p.25
Macro Environment: Economic Economic environment consists of factors that affect consumer purchasing power and spending patterns. Marketers economy in the short and long-terms. need to consider the state of a trading Some consume most of their agricultural and industrial output e.g. India. These countries opportunities. countries have subsistence economics they offer few market Marketers must pay close attention to major trends and consumer spending patterns both across & their markets. Industrial economies are richer markets p.25
Macro Environment: Economic The marketers should have to look at: Interest rates, The level of inflation employment level per capita, Long-term prospects for the economy GDP per capita. Also on: Changes in income Value ways marketing, to offer involves financially careful buyers greater value - right combination of quality and service at a fair price p.26
Macro Environment: Economic Economic situation changes in consumer spending patterns Ernst Engel: Engel s law As income rises: The percentage spent on food declines The percentage spent on housing remains constant The percentage spent on savings increases Bangladesh Issue: GDP 6.7% Inflation ~10% Exchange Rate BDT 82 per USD Steady economic performance despite global slowdown. p.27
Macro Environment: Natural Natural environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Marketing trends: Shortages of raw materials Increased pollution Increase government intervention Environmentally sustainable strategies Marketing Issues: 1. First issue involves growing shortage of raw materials. Air and water seem to be infinite resources, but some non- renewable resources, such as oil, coal etc. are limited. p.28
Macro Environment: Natural 2. The second issue is increasing pollution. Industry will almost always damage environment. Consider the disposal nuclear wastes, the dangerous mercury level in the ocean, etc. the quality of the natural and of chemical 3. A third issue is increased governmental intervention in natural resource management. different countries vary in their concern and efforts to promote a clean environment. Example: In Germany, government vigorously pursue Otherwise, many poor nations, like Bangladesh, do little about pollution. The governments of environmental quality. 4. Environmentally sustainable strategies p.29
Macro Environment: Natural Example: Arong, garment selling division; Kumudini, as like as Arong - eliminated carton and smaller, napkins. a famous show-piece and ready-made polystyrene shopping recyclable and polyethylene and now wrappings bags paper uses and Bata, a worldwide shoe manufacturing company uses such type of polyethylene bags. cartons in place of McDonald s eliminated polystyrene cartons and now uses smaller, recyclable, paper wrapping and napkins biodegradable p.30
Macro Environment: Technology Technological dramatic creating new product and market opportunities. environment is perhaps the most forces that create new technologies, Examples: New antibiotics (saving lives), Organ transplants (Enhancing lives), Notebook computers (making easy life), Cell phone & Internet (easy communication). Marketing stimulating innovation are: Build scenarios Enlist the Web Talk to early adopters Use marketing research Create an innovative environment Cater to entrepreneurs p.31
Macro Environment: Technology The technological environment changes rapidly. Example: did not know about automobiles, air phones, radios, or the electric light. Abraham Lincoln did not know about television, aerosol cans, automatic dishwashers, conditioners, antibiotics or computers. Woodrow Wilson room air- Franklin D. Roosevelt did not know about Xerography, synthetic detergents, tape recorders, birth control pills, or earth satellites. John F . Kennedy did not know about personal computers, CD players, VCRs, or the World Wide Web. Barak Obama ?? every new technology technology; old industries are fighting to survive, adapting new technologies . replaces an older p.32
Macro Environment: Political Marketing decisions are strongly affected by developments in the political environments, that consists of laws, government agencies and pressure groups that influence and limit various organizations and individuals in a given society. The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. Therefore, considering issues: Stability in the political environment; Government policy and laws on rules & regulations, tax; Government's position on marketing ethics; Government's policy on the total economy; Government s view on culture and religion; Trading agreements between governments such as EU, SAFTA, NAFTA, ASEAN, or others? p.33
Macro Environment: Political Political and legal environment of marketing: Laws and regulations on technology New technology Society Businesses Consumers State or regional laws Legislation affects marketing varies state by state Oregon: limits utility advertising to 0.5 percent of net income. California: bans fats in restaurants and bakeries. Regulatory agencies Consumer product safety commission Federal trade commission Food & Drug administration p.34
Macro Environment: Culture The cultural environment is made up of institutions and other forces that affect a society s preferences and behaviors. basic values, perceptions, The major cultural values of a society are expressed: people s view of themselves and others, views of organizations, society, nature, and the universe. Some people seek personal pleasure, wanting fun, change, and escape. Other seek self-realization through religion, recreation, or the avoid pursuit of careers of other life goals. Example: International Lux soap has four colorful and natural contaminations p.35
Evaluation of Environmental Analysis SWOT analysis: SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Once marketing objectives. key issues have been identified, they feed into It can be used in conjunction with other tools for audit and analysis, such as PEST analysis and Porter's Five-Forces analysis. It is a very popular tool with marketing students because it is quick and easy to learn. p.37
Environmental Analysis: SWOT SWOT analysis: A strength could be: Your specialist marketing expertise, A new, innovative product or service, Location of business, Quality processes and procedures, Any other aspect of business that adds value to product or service. A weakness could be: Lack of marketing expertise, Undifferentiated relation to competitors), Location of business, Poor quality goods or services, Damaged reputation. products or services (i.e. in p.38
Environmental Analysis: SWOT SWOT analysis: An opportunity could be: A developing market such as the internet, Mergers, joint ventures or strategic alliances, Moving improved profits, A new international market, A market vacated by an ineffective competitor. into new market segments that offer A threat could be: A new competitor in home market, Price wars with competitors, Competitor has a new, innovative product or service, Competitors have superior access to channels of distribution, Taxation is introduced on product or service. Opportunities and threats are external factors. p.39
Environmental Analysis: PEST PEST analysis: Org's marketing environment is made up from: Political 1. The internal environment e.g. staff (or internal customers), office technology, wages and finance, etc. 2. The micro-environment e.g. our external customers, agents and distributors, suppliers, our competitors, etc. 3. The macro-environment e.g. Political (and legal) forces, Economic forces, Socio-cultural forces, and Technological forces. Interest rates, The level of inflation employment level per capita, Long-term prospects for the economy Gross Domestic Product (GDP) per capita, and so on. Economic Socio- cultural Technologi These are known as PEST factors. cal The economic factor holds the followings- Recappi ng slide 27 p.39
Environmental Analysis: PEST Political Environment: The political environment answers the following questions- How stable is the political environment? Will government policy influence laws that regulate or tax on business? What is the government's position on marketing ethics? What is the government's policy on the economy? Does the government have a view on culture and religion? Is the government involved in trading agreements such as EU, NAFTA, ASEAN, or others? p.40
Environmental Analysis: PEST Socio-Cultural Environment: Social and cultural env. influences on business vary from country to country. Factors include: What is the dominant religion? What are attitudes to foreign products and services? Does language impact upon the diffusion of products onto markets? How much time do consumers have for leisure? What are the roles of men and women within society? How long are the population living? Are the older generations wealthy? Does the population have a strong/weak opinion on green issues? p.41
Environmental Analysis: PEST Technological Environment: Technology is vital for competitive advantage, and is a major driver of globalization. Consider the following points: Does technology allow for products and services to be made more cheaply and to a better standard of quality? Do technologies offer consumers and businesses more innovative products and services such as internet banking, new generation mobile telephones, etc.? How is distribution changed by new technologies e.g. books via the Internet, flight tickets, auctions, etc? Does technology offer companies a new way to communicate with consumers e.g. banners, customer relationship management (CRM), etc.? p.43
Evaluation of Environmental Analysis Michael Porter's Five Forces Analysis Five forces analysis, is similar to other tools for environmental audit, such as PEST analysis, but tends to focus on the single, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products. Threat of entry Five areas namely the 1. Threat of entry, 2. The power of buyers, 3. The power of suppliers, 4. The threat of substitutes, 5. Competitive rivalry. forces looks at five key Power of supplie rs Power of buyer s Competiti ve rivalry Threat of substitut es p.43
Environmental Analysis: Five Forces The threat of entry. Benefits associated with bulk purchasing in economies scale. High or low cost of entry e.g. how much will it cost for latest technology? Ease of access to distribution channels e.g. do competitors have the distribution channels hemmed up? Cost advantages e.g. personal contacts or knowledge that larger companies do - will competitors retaliate? Government action e.g. will new laws are introduced that will weaken our competitive position? How important is differentiation e.g. champagne brands. The power of buyers There is a few, large players in a market e.g. large grocery chains. There are a large number suppliers e.g. small farming businesses supplying the large of undifferentiated, small p.44
Environmental Analysis: Five Forces The power of suppliers Power of suppliers tends to be a reversal of power of buyers. Where the switching costs are high e.g. switching from one software supplier to another. Power is high where brand is powerful e.g. Microsoft, Pizza Hut. Possibility of supplier integrating forward. Customers are fragmented (not in clusters) so that they have little bargaining power e.g. Gas/Petrol stations in remote places. Threat of substitutes Where there is product-for-product substitution e.g. email for fax, where there is substitution, better toothpaste reduces the need for dentists. Where there is generic substitution, e.g., CD, DVD and flash drive. Could always do without e.g. cigarettes. p.45
Evaluation of Environmental Analysis Diffenbach has identified three distinct stages in the evolution of corporate environmental analysis: 1. Appreciation stage, starts from emergence of books and articles that argue the looking beyond the short term and for considering wider implications of economic, social and political, technological factors that make up business envt. 2. Analysis stage, involves finding reliable sources of data, compiling and examining data, develop and discuss trends, developments and key relationships. 3. Application stage, very real attempts are made to monitor the environment, assess the implications for change and incorporate staff evaluations into strategy and plans. p.46
Evaluation of Environmental Analysis Three approaches to scanning (withthesebeingcharacterized by an increasing degree of structure, systemization, sophistication and resource intensity): Irregular systems, predominate with a poorly developed planning culture and focusing environmentally generated crises. The net effect is thatis simply placed finding solutions to short-term problems, with little attention paid to identifying and assessing the impact. responding upon to Periodic models, represent a general development of the irregular system and are intensive and sophisticated. The environment is reviewed regularly and a longer-term perspective is developed. more systematic, resource Continuous models, represent a further development and involve focusing upon business envt generally and upon the long term as opposed to short-term and specific issues. p.47
Evaluation of Environmental Analysis Continuous env. analysis is based on 3 basic premises: 1. The determinants of business environment; 2. The firm s response to environmental change therefore represents a fundamental strategic choice; 3. A knowledge of the business environment must precede the acquisition of any degree of control over it. success are dictated by the The barriers associated with continuous env analysis are: Poorlystructured Opinionbased Ambiguous in its definitions Available only on an irregularbasis Often provided by unofficial sources Qualitative in nature Poorlyquantified Likely tochange. Based on an insecure methodology p.48
