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MARKETINGMANAGEMENT

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The MarketingEnvironment

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At the end of this chapter, you should be able to:

Understand that Value Delivery Rests on Proper Grasp of EnvironmentUnderstand that Strategic Response to Environment is Possibleonly with Sound Knowledge of Environment

Recognise that Environment carries Opportunities and ThreatsComprehend the tasks Involved in Marketing Environment AnalysisIdentify the Components of the Environment to be AnalysedInterpret Mega/Macro EnvironmentIdentify Environmental Components Specific to the Business

ConcernedUnderstand the Influence of Society upon Businesses

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V alue Delivery Rests on Proper Grasp of EnvironmentConsumer, technology, competitors, and many other similar components are parts of an Environment.Insights obtained from the environment help in the formulation of theright strategies for delivering the value.(Example: GM and Sony)

S trategic Response to Environment, Possible only with

S ound Knowledge of Environment

Environment Analysis gives the Needed Insights

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S potting the Opportunities and ThreatsEnvironment analysis enables firms to spot events and trends taking

place in the environment that are subsequently interpreted asopportunities or threats.

The Tasks Involved in Marketing Environment Analysis

Analysis of macro environment factors as well asenvironmental factors specific to the business concerned.

Study the customer.

Examine alternative technologies that are available/emerging .

Opportunity- threat profileSumming up the opportunities and threats that are cropping up.

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C omponents of the Environment to be Analysed

Mega/Macro environmentT echnological, socio-cultural, economic, political, and demographic environment.

The environment that is specific to the business the firm isengaged in.

P osition of the industry concerned CompetitionConsumer

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1. Mega/Macro Environment

The Sequence is Reversed; PEST Becomes TSEP

Technology EnvironmentO ptions available in technology Governments approach in respect of technology T echnology selectionSpheres where technology breakthroughs are happening T echnology breakthroughs in ICE Digital revolutionHomes go digital- digitalisation of entertainment

TV becomes smarter Digital cameras and E-cinema

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Technology EnvironmentThe Convergence Phenomenon

Convergence of IT and CT brings forth ICT

Convergence of ICT and Entertainment technologies brings forth ICEDevices too convergePC journeys from a utility device to a connectivity device to an entertainment deviceProcessors, protocols and standards too convergeBreakthrough in telecom technology main enabler of the convergenceW AP

o The W AP mobile phoneo The W AP broadband

B reakthroughs in technology foster a new type of competition

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Mega/Macro EnvironmentSocio-Cultural Environment

CultureSocial classDevelopments on the global socio-cultural scene

T he T echno intoxication of consumer communitiesSpread of consumerist culture and Americanisation

Pace of life gets ever more rapid.T he New iGen and the New T weens

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Socio-Cultural EnvironmentT he Advent of the Next Society

Peoples work pattern will change. A flexible working system.

(Example of British telecom)

Economic Environment

Mega/Macro Environment

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Mega/Macro EnvironmentPolitical Environment

Economic environment is often a by-product of the political environment.Form of Govt a major factor P olitical stability another Includes elements like social and religious organisations, media,

pressure groups and lobbies of various kinds.

Demographic EnvironmentSize of population, growth rate, age distribution, religiouscomposition and literacy levelsComposition of workforce, household patterns, regional characteristics and population shifts

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Mega/Macro EnvironmentNatural Environment

Natural resourcesEcology Climate

L egal Environment/ Business L egislationCorporate affairs

Consumer protectionEmployee protectionSectoral protectionCorporate protectionP rotection of society as a whole against unbridled businessbehaviour Regulations on products, prices and distributionControls on trade practicesP rotecting national firms against the onslaught of foreign firms

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2 . Environmental C omponents S pecific to theBusiness C oncerned

Market/DemandNature of demand, size of demand, patterns of consumption,buying habits, invasion of substitute, etc.

The Consumer T astes and preference of the consumer keep fluctuating.

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Industry and CompetitionK nowledge about industry and competition is a fundamental requirement for strategy

Government PoliciesP rofoundly affect the specific environment of any industry/ business

Supplier Related FactorsSuppliers constitute one of the five forces shaping competitionT heir Bargaining power affects costs and profits of the firm

Environmental C omponents S pecific to theBusiness C oncerned

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Influence of S ociety upon Businesses

Society has its concerns over product/service/marketing schemes of

corporates Attack on McDonaldsP ressure on Microsoft to have a shared platform with other operating systemsGreenpeace campaign against Nestle dealing GM foodstuffs

Techniques Used in Environment AnalysisW e will see in the chapters on Marketing Planning, MR, and Sales

Forecasting

Insights Gained from Environment must GovernS trategyEnvironment Analysis, a C ontinuous Affair