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MARKETING MARKETING ENVIRONMENTENVIRONMENT
PRESENTED BY:Dr. Bhupendra patel
MBA(HA)
““It is useless to tell a river to stop It is useless to tell a river to stop running; the best thing is to learn running; the best thing is to learn how to swim in the direction it is how to swim in the direction it is
flowing.”flowing.”--AnonymousAnonymous
Chapter ObjectivesChapter Objectives List and discuss the importance of the elements of
the company’s microenvironment
Describe the macroenvironmental forces that
affect the company’s ability to serve its customers
Explain how changes in demographic and
economic environments affect marketing and describe the levels of competition
Chapter ObjectivesChapter Objectives Identify the major trends in the firm’s natural and
technological environments
Explain the key changes that occur in the political and cultural environments
Discuss how companies can be proactive rather
than reactive when responding to environmental trends
Includes:– Microenvironment: actors close to the
company that affect its ability to serve its customers.
– Macro environment: larger societal forces that affect the microenvironment.
Considered to be beyond the control of the organization.
MarketingMarketing Environment Environment
Actors in the Actors in the MicroenvironmentMicroenvironment
– Marketing must consider other parts of the organization including finance, R&D, purchasing, operations and accounting
– Marketing decisions must relate to broader company goals and strategies
MicroenvironmentMicroenvironment
1. The company
Goal 1: Describe environmental factors
The Company
Marketing managers must work with all departments of a company
All Departments have an impact on the marketing department’s plans and actions
“Think Consumer”
– Provide resources needed to produce goods and services.
– Important link in the “value delivery system.”
– Most marketers treat suppliers like partners.
Suppliers:Suppliers:
Marketing IntermediariesMarketing Intermediaries
Marketing intermediaries help the company promote, sell, and distribute its goods to the final buyers
Marketing service agencies help formulate and implement marketing strategies
Financial intermediaries help hospitality companies finance their transactions
Partnering With IntermediariesPartnering With Intermediaries
5 Types of Customers5 Types of Customers
1. Consumer markets
2. Business markets (B to B)
3. Reseller markets
4. Government markets
5. International markets
CompetitorsCompetitors
To be successful, a company must satisfy needs and wants of consumers better than competitors
A company should monitor three variables when analyzing each of its competitors – Share of Market– Share of Mind– Share of Heart
Levels of Competition (Adapted from Analysis for Market Planning), Donald R. Lehmann and Russell S. Winer, p.22, ©1994 by Richard D. Irwin
Competitors…Competitors…
Must understand competitor’s strengthsMust differentiate firm’s products and
offerings from those of competitors• Competitive strategies should emphasize
firm’s distinctive competitive advantage in marketplace
Types of PublicsTypes of Publics
The Company’s Macro environmentThe Company’s Macro environment
Demographic EnvironmentDemographic Environment
Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics
Demographics change over time and companies must keep up with them
Age Distribution of the U.S. Age Distribution of the U.S. PopulationPopulation
(78 million people born 1946-1964) One of the most powerful forces shaping
the marketing environment, 30% of population
(45 million people born 1965-1976) More skeptical, cynical of frivolous marketing pitches promising easy
success (72 million people born 1977-1994)
Fluent and comfortable with computer, digital, and Internet
technology (Net-Gens)
Key U.S. Demographic Key U.S. Demographic TrendsTrends
Key U.S. Demographic Key U.S. Demographic TrendsTrends
Changing Age StructurePopulation is getting older
Changing Age StructurePopulation is getting older
Changing Family StructureMarrying later, fewer children,
working women, and nonfamily households
Changing Family StructureMarrying later, fewer children,
working women, and nonfamily households
Geographic ShiftsMoving to the Sunbelt and suburbs (MSA’s)
Geographic ShiftsMoving to the Sunbelt and suburbs (MSA’s)
Increased EducationIncreased college attendance
and white-collar workers
Increased EducationIncreased college attendance
and white-collar workers
Growing Ethnic and Racial Diversity72% Caucasian, 13% African-American,
11% Hispanic & 3% Asian
Growing Ethnic and Racial Diversity72% Caucasian, 13% African-American,
11% Hispanic & 3% Asian
Changing American FamilyChanging American Family
Household makeup:– Married couples with children = 34%, and falling– Married couples and people living with other relatives =
22%– Single parents = 12%– Single persons and adult “live-togethers” = 32%
Better Educated PopulationBetter Educated Population
1980:– 69% of people over age 25 completed high school– 17% had completed college
2002:– 84% of people over age 25 completed high school– 27% had completed college
Currently, ⅔ of high school grads start college
Economic EnvironmentEconomic Environment
Changes in Income– 1980’s – consumption
frenzy– 1990’s – “squeezed
consumer”– 2000’s – value marketing
Income Distribution– Upper class– Middle class– Working class– Underclass
Consists of factors that affect consumer purchasing power and spending
patterns.
Global EconomicDevelopment
Global EconomicDevelopment
Changes in IncomeChanges in Income
Changing ConsumerSpending Patterns
Changing ConsumerSpending Patterns
KeyEconomic
Concerns forMarketers
KeyEconomic
Concerns forMarketers
Economic EnvironmentEconomic Environment
•Economic FactorsEconomic Factors(a)Gross national product.(b)Per capita income.(c)Balance of payments position.(d)Industry life cycle and current phase through which the
industry is passing. The different phases of this life cycle could be classified as recovery, boom, recession and depression.
(e)Trends in the prices of goods and services—specifically, whether the inflationary or deflationary trends are visible.
(f)Fiscal policies and prime rate of interest charged by commercial banks.
Rich (Rs.5lakh<Income<Rs.10lakh)
Delhi14%
Gujarat8%
Maharshtra24%
Others40%
Punjab7%
Tamil Nadu7%
Statewise depiction of different classes of Rich
The Super Rich (Rs. 10lakh<Income<Rs.20lakh)
Others34%
Maharshtra28%
Delhi16%Gujarat
8%Punjab
7%
Tamil Nadu7%
Obscenely Rich (Rs.Income>1Crore)
Maharshtra39%
Delhi25%
Gujarat6%
Punjab6%
Tamil Nadu5%
Others19%
Natural EnvironmentNatural Environment
Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities.
Natural Natural EnvironmentEnvironment
Natural Natural EnvironmentEnvironment
ConservationOf Resources
ConservationOf Resources
EcotourismEcotourism
Recycle andReduce Waste
Recycle andReduce Waste
Factors Affectingthe
NaturalEnvironment
Factors Affectingthe
NaturalEnvironment
Natural EnvironmentNatural Environment
Natural Environment:– Involves the natural resources that are needed
as inputs by marketers or that are affected by marketing activities
Trends– Shortages of raw materials– Increased pollution– Increased government intervention
Goal 3: Identify trends in natural and technological environments
Technological EnvironmentTechnological Environment
Most dramatic force now shaping our destiny.
Technological ForcesTechnological Forces
Changes in technology may make business obsolete; e.g.,– buggy whips (automobile)– airport at Gander, Newfoundland
(longer range aircraft)– Federal Express (fax machine;
Internet)
New opportunities—e.g., specialty online retailers, mass customization
Cultural EnvironmentCultural Environment
The institutions and other forces that affect a society’s basic values, perceptions, preference, and behaviors.
Marketing ManagementMarketing ManagementThemselves
Identify with brands for self-expression
Others Recent shift
from “me” to “we” society
Organizations Trend of decline
in trust and loyalty to companies
Society Patriotism on the
rise
Nature “lifestyles of
health and sustainability” (LOHAS) consumer segment
Universe Includes religion
and spirituality
Cultural Environment Includes people’s views
of…
Goal 4: Explore political and cultural environments
Increasing LegislationIncreasing Legislation
Changing Government
AgencyEnforcement
Changing Government
AgencyEnforcement
Includes Laws, Government Agencies, Etc. that Influence & Limit Organizations/ Individuals in a Given Society
Includes Laws, Government Agencies, Etc. that Influence & Limit Organizations/ Individuals in a Given Society
IncreasedEmphasis on
Ethics &Socially
ResponsibleActions
IncreasedEmphasis on
Ethics &Socially
ResponsibleActions
Political EnvironmentPolitical Environment
Political TrendsPolitical Trends
Increased legislation and regulation affecting business
Changing government Agency Enforcement
Increased emphasis on socially responsible actions and ethics e.g. MADD and PETA
Legal and Regulatory Legal and Regulatory EnvironmentEnvironment
Laws and Regulations– for safety– for consumer protection– to protect special interests
Dangers of litigation--anyone can sue, and juries often buy it!
Examples:– Antitrust
Fair competition Pricing
– “Truth in Lending”--have to tell people real costs of financing; car leases now regulated
The Marketing Environment The Marketing Environment and Competitor Analysisand Competitor Analysis
SWOT analysis
PEST analysis
Five forces analysis
SWOT analysisSWOT analysis
Strengths (internal)Weaknesses (internal)Opportunities (external)Threats (external)
PEST analysisPEST analysis
Political factors Economic factors Socio-cultural factors Technological factors
Political/legalPolitical/legal
Monopolies legislationEnvironmental protection lawsTaxation policyEmployment lawsGovernment policyLegislationOthers?
Economic FactorsEconomic Factors
InflationEmploymentDisposable incomeBusiness cyclesEnergy availability and costOthers?
Sociocultural factorsSociocultural factors
DemographicsDistribution of incomeSocial mobilityLifestyle changesConsumerismLevels of educationOthers?
TechnologicalTechnological
New discoveries and innovationsSpeed of technology transferRates of obsolescenceInternetInformation technologyOthers?
Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4.
Threat ofThreat ofsubstitutessubstitutes
Potentialentrants
Threat ofThreat ofentrantsentrants
Suppliers
BargainingBargaining powerpower
Substitutes
Buyers
BargainingBargaining powerpower
COMPETITIVE RIVALRY
Five forces analysis
Five Forces Analysis: Key Questions and Implications
• What are the key forces at work in the competitive environment?
• Are there underlying forces driving competitive forces?
• Will competitive forces change?• What are the strengths and weaknesses of
competitors in relation to the competitive forces?• Can competitive strategy influence competitive forces
(eg by building barriers to entry or reducing competitive rivalry)?
Environmental Scanning and Environmental Scanning and AnalysisAnalysis
SCANNING ANALYSIS
ACTION
Environmental ScanningEnvironmental Scanning
Determine Environmental Areas That Need to Be Monitored
Determine How the Information Will Be Collected
Implement the Data Collection Plan
Anaylze and Use the Data in Planning
Responding to the Responding to the Marketing EnvironmentMarketing Environment
Many companies feel the marketing environment is uncontrollable
An environmental management perspective takes action to sway the marketing environment
Take a proactive rather than a reactive approach
THANKS…….THANKS…….