Unit-2 The Marketing Environment

 Marketing environment consists of

the actors and forces outside
marketing that affects marketing
management’s ability to build and
maintain successful relationships with
target customer.
Marketing environment in general offers
both opportunities and threats.
 These environmental forces enables the
marketers to make marketing strategies to meet
new marketing trends, challenges and
opportunities.

 The marketers must be good at customer

relationship management and partner relationship
management.

 The firm should understand the major

environmental forces that surround all these
relationships.
 2.1. The External Environment
• These are the factors up on which the manager has
no full control.
• These environments contain forces that can have a
major impact on the actors in the task
environments.

• They are interrelated dynamic forces that are

subjected to change and at an increasing rate.

• The general environmental forces that can have a

major impact include:
 1. Demographic Environment

• Demography is the study of human

populations in terms of size, density,
location, age, gender, race, occupation, and
other statistics.
• It involves people, and people make up
markets.
• The characteristics in this environment are
important to marketers because they are
closely related to the demand for many
products.
 2. Economic Environment
• The economic environment consists of factors
that affect consumer purchasing power and
spending patterns.

• People must have money to spend and be

willing to spend it.
• The economic environment is a significant
force that affects the marketing activities of
any organization.
• A marketing program is affected especially by
such economic factors as the current and
anticipated stage of the business cycle,
inflation, unemployment, interest rates, and
income.

• Changes in major economic variables have a

significant impact on the market place.
• How people deal with their money is
important to marketers.
 3. Natural Environment -Ecosystem
• The natural environment involves the natural
resources that are needed as inputs by marketers
or that are affected by marketing activities.
• Marketers should be aware of several trends in the
natural environment .
– The first involves growing shortages of raw materials.
Air and water may seem to be infinite resources, but
some groups see long-run dangers.
– A second environmental trend is increased pollution.
Industry will almost always damage the quality of the
natural environment.
– A third trend is increased government intervention in
natural resource management. The governments of
different countries vary in their concern and efforts to
promote a clean environment.
 4. Technological Environment
• The technological environment refers to new
technologies, which create new product and market
opportunities.

• The technological environment is perhaps the most

dramatic force now shaping our future.

• It has tremendous impact on our life-styles, our

consumption patterns, and our economic well
being.

• New technologies create new markets and

opportunities.
• Technological breakthrough can affect
markets in different ways:-
• By starting entirely new industries.
• By radically altering, or virtually
destroying existing industries.
• Advance in technology; also affect how
marketing is carried out by firms .
• Technology is mixed blessings
– improve our lives
– creating environmental and social problems
 5. Political Environment
• The political environment consists of laws,
government agencies, and pressure groups that
influence or limit various organizations and
individuals in a given society.

• Well-conceived legislation can encourage

competition and ensure fair markets for goods and
services.

• Governments develop public policy to guide

commerce.
• Marketers must work hard to keep up with changes
in regulations and their interpretations

• Business legislation has been enacted for a number

of reasons.
– to protect companies from each other.
– to protect consumers from unfair business
practices.
– to protect the interests of society against
unrestrained business behavior.

Open-minded companies encourage their managers

to look beyond what the regulatory system
allows and simply “do the right thing.”
 6. Cultural Environment
• The cultural environment is made up of institutions
and other forces that affect a society’s basic values,
perceptions, preferences, and behaviors.
• People grow up in a particular society that shapes
their basic beliefs and values.
– Core beliefs and values are passed on from parents to
children and are reinforced by schools, churches, business,
and government.
* For example, religion is a core values .
– Secondary beliefs and values are more open to change
and include people's views of themselves, others,
organization, society, nature, and the universe.
* For example marriage is a secondary belief.
• Marketers want to predict cultural shifts in order to
spot new opportunities or threats in the environment .
 2.1.2 The Task Environment

• The task environment includes the immediate

actors involved in producing, distributing
and promoting the offering.

• The main actors are the suppliers,

distributors, dealers, the target customers,
the competitors and the public.
 1. Suppliers
• Suppliers form an important link in the
company’s overall customer value delivery system.
• Suppliers are organizations and individuals that
provide the resources needed to produce goods
and services.
• Marketing managers must watch supply
availability.
• They also monitor the price trends of their key
inputs.
• Most marketers today treat their suppliers as partners in
creating and delivering customer value.
 2. Marketing Intermediaries
• Marketing intermediaries help the company to
promote, sell, and distribute its goods to final
buyers.
• The intermediaries between an organization and its
markets constitute a channel of distribution.
These include:
– Resellers are distribution channel firms that help the
company find customers or make sales to them.
– Physical distribution firms help the company to stock
and move goods from their points of origin to their
destinations.
– Marketing services agencies are the marketing
research firms, advertising agencies, media firms, and
marketing consulting firms that help the company target
and promote its products to the right markets.
 – Financial intermediaries help finance
transactions or insure against the risks
associated with the buying and selling of
goods.
• Marketing intermediaries form an important
component of the company’s overall value
delivery system.
• Today’s marketers recognize the importance
of working with their intermediaries as
partners rather than simply as channels
through which they sell their products.
 3. Customers
• Organizations closely monitor their customer
markets in order to adjust to changing tastes and
preferences of the customers .
• Each target market has distinct needs, which
need to be monitored.
• It is imperative for an organization to know their
customers, how to reach them and when
customers' needs change in order to adjust its
marketing efforts accordingly.
• The company needs to study five types of
customer markets closely.
1. Consumer markets consist of individuals and
households that buy goods and services for personal
consumption.
2. Business markets buy goods and services for
further processing or for use in their production
process.
3. Reseller markets buy goods and services to
resell at a profit.
4. Government markets are made up of
government agencies that buy goods and
services to produce public services or transfer
the goods and services to others who need them.
5. International markets consist of buyers in
other countries, including consumers,
producers, resellers, and governments.
 4. Competitors
– Marketers must gain strategic advantage by
positioning their offers strongly against
competitors’ offerings in the minds of
consumers.
– No single competitive marketing strategy is
best for all companies.
– Each firm should consider its own size and
industry position compared to those of its
competitors.
• Adopting the marketing concept mean that
an organization must provide greater
customer value than its competitors.
• Competition maybe in the form of :-
1. Direct competitors: are firms competing
for the same customers with the similar
products .
2. Competition exists between products that
can be substituted for one another .
 5. 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.
• Financial publics influence the company’s
ability to obtain funds.
• Media publics carry news, features, and
editorial opinion.
• Government publics regulate public safety,
truth in advertising, and other matters.
• Local publics include neighborhood
residents and community organizations.
• The general public may be concerned
about the company’s products and
activities.
• Internal publics include workers,
managers, volunteers, and the board
of directors
 2.2. The Internal Environment (The
Company)
– The internal environment is the culture, members,
events and other factors within an organization that has
the ability to influence the decisions of the organization,
especially the behavior of its human resource.
– All departments need to think its customer and work
together.
– Marketing managers must work closely with other
company departments
– The marketing man need to :-
• Coordinate company internal marketing activities
• Coordinate marketing with other functional areas
 Responding to the Marketing
Environment
– Many companies view the marketing environment as an
uncontrollable element in which they must react and
adapt.
– They passively accept the marketing environment and
do not try to change it.
– Other companies take a proactive stand toward the
marketing environment.
A. Rather than simply watching and reacting , these firms
take aggressive actions to affect the publics and
forces in their marketing environment.
B. Such companies hire lobbyists to influence
legislation affecting their industries and stage media
events to gain favorable press coverage.