The Marketing Environment

Marketing Environment

Marketing Environment consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers.Includes:MicroenvironmentMacroenvironment

Microenvironment- forces close to the company that affect its ability to serve its customers.

Macroenvironment- larger societal forces that affect the microenvironment

The Company’s Microenvironment

Company’s Internal Environment: Functional areas inside a company that have an impact on the marketing department’s plans.In designing marketing plans, marketing management takes other company groups into account-groups such as top management, finance, R&D, purchasing etc.Marketing management must work closely with other company departments. e.g. finance is concerned with funding for marketing plans.R & D focuses on designing safe and attractive products.

Company’s Internal Environment

Accounting

Manufacturing

Purchasing

R & D

Top Management

Finance

Marketing

The Company’s Microenvironment

Suppliers: Provide the resources needed to produce goods and services and are an important link in the “value delivery system”.

Marketing Intermediaries: help the company to promote, sell and distribute its goods to final buyers. They include resellers, physical distribution firms, marketing service agencies and financial intermediaries.

The Company’s Microenvironment

Customers: Five types of markets that purchase a company’s goods and services.

Consumer Markets

International Market Government Markets

Reseller Markets

Business Markets

Company

Competitors: Those who serve a target market with similar products and services against whom a company must gain strategic advantage.Publics: Any group that perceives itself having an interest in a company’s ability to achieve its objectives.

Type of Publics

Financial Publics: Banks, investment houses which influence ability to obtain funds.Media Publics: carry news, features, and editorial opinion.Government PublicsCitizen Action Publics: Consumer groups, environmental groups etcLocal Publics: neighbourhood residentsGeneral publicInternal Publics: include workers, managers and board of directors.

Company’s Macro environment:

It includes all the external forces in a larger macro environment which shape opportunities and pose threats to the company. These are:Demographic forcesEconomic forcesNatural forcesTechnological forcesPolitical forcesCultural forces

The Company’s Macro environment

Demographic: studies populations in terms of size, density, location, age, gender, race, occupation and other statistics.

Economic: Factors that affect consumer purchasing power and spending patterns.

Natural: natural resources needed as inputs by marketers or that are affected by marketing activities.

The Company’s Macro environment

Technological: forces that create new technologies, creating new product and market opportunities.Political: laws, agencies and pressure groups that influence and limit organisations and individuals in a given society.Cultural: institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviours.

Demographic Trends

Changing Age Structure (In US, population is aging, in India young population)

Changing family structure: late marriage, fewer children, working women, single parent)

Geographic shift

Better educated, dual income

Increasing diversity (US, more of a “salad bowl” than a melting pot)

Economic Environment

The economic environment consists of factors that affect consumer purchasing power and spending patterns.Nations vary greatly in their levels and distribution of income. Some countries have subsistence economies, while others are industrial economies.Industrial economies constitute rich markets for different kinds of goods.Key Economic Concerns for marketers are:Economic developmentChanges in IncomeChanging Consumer spending patterns.

Factors affecting Natural Environment

Shortage of raw materials

Increased pollution

Governmental Intervention

Environmentally sustainable strategies

Technological environment

Faster pace of technological change, products are outdated at a rapid pace.Almost unlimited opportunities being developed daily in health care, space industry, robotics, and bio-genetic field.Challenge is not only technical, but also commercial-make practical, affordable versions of the product.Increased regulation concerning product safety, individual privacy and other areas that affect technological changes.

Technological environment

The technological environment is perhaps the most dramatic force shaping our destiny.Technology has released wonders like antibiotics, organ transplants, computers and internet.It has also released horrors such as nuclear missiles, weapons and rifles.New Technology creates new markets and opportunities. However, every new technology replaces existing technology.Television hurt transistors, photo copiers hit carbon-paper business, digital cameras have replaced traditional cameras etc.When old industries ignored new technologies, their business declined.Thus marketers should watch the technological environment closely.

Political Environment

Marketing decisions are strongly affected by developments in the political environment

Includes laws, Government agencies, etc that influence & limit organisations/ individuals in a given society.

Increasing legislation

Increased emphasis on ethics and socially responsible actions.

Cultural Environment

Cultural environment consists of institutions and forces that affect a society’s values, perceptions, preferences and behaviours.

Changing values of society.

Impact of religious and cultural values: example of McDonald in India, Kelloggs.

Responding to the marketing environment

Taking a proactive approach to managing the microenvironment and the macroenvironment by taking aggressive actions to affect the forces in the marketing environment.