WHAT IS MARKETING ENVIRONMENT

 Marketing Environment concerns the influences or

variables of the external and internal environment of a
firm that controls the marketing management’s
capability to construct and preserve the flourishing
relationships with the consumer.

 According to Philip Kotler,

“A company’s marketing environment consists of the
internal factors & forces, which affect the company’s
ability to develop & maintain successful transactions &
relationships with the company’s target customers.”

 Micro-factors inside the firm

 Macro-factors linked to economic, social, cultural
aspects, etc.
MARKETING ENVIRONMENT
 Micro Environment in Marketing
The Micro-environment elements are close to the firm and
incorporate the suppliers, showcasing delegates, consumer
markets, public, competition, and marketing
intermediaries. Micro-environment likewise concerns the
inward environment of the organization and influences
marketing as well as all the departments like management,
R&D, finance, Human assets, purchasing, operations, and
bookkeeping.
 Macro Environment in Marketing
The Macro environment is the uncontrollable factor of the
company. For this reason, it has to structure its policies in
the limits set by these factors. Macro-environment on the
whole deals with the demographic, economic,
technological, natural, socio-cultural and politico-legal
environment aspects of the markets. Let us now look into
these elements in detail.
MARKETING ENVIRONMENT
MICRO ENVIRONMENT
COMPONENTS OF MICRO
ENVIRONMENT
 Customers– Every business revolves around
fulfilling the customer’s needs and wants.
Thus, each marketing strategy is customer
oriented that focuses on understanding the
need of the customers and offering the best
product that fulfills their needs.
 Employees– Employees are the main
component of a business who contributes
significantly to its success. The quality of
employees depends on the training and
motivation sessions given to them. Thus,
Training & Development is crucial to
impart marketing skills in an individual.
COMPONENTS OF MICRO
ENVIRONMENT
 Suppliers– Suppliers are the persons from
whom the material is purchased to make a
finished good and hence are very important for
the organization. It is crucial to identify the
suppliers existing in the market and choose the
best that fulfills the firm’s requirement.
 Retailers & Distributors– The channel
partners play an imperative role in determining
the success of marketing operations. Being in
direct touch with customers they can give
suggestions about customer’s desires
regarding a product and its services.
COMPONENTS OF MICRO
ENVIRONMENT
 Competitors– Keeping a close watch on
competitors enables a company to design its
marketing strategy according to the trend
prevailing in the market.
 Shareholders– Shareholders are the owners

of the company, and every firm has an

objective of maximizing its shareholder’s
wealth. Thus, marketing activities should be
undertaken keeping in mind the returns to
shareholders.
COMPONENTS OF MICRO
ENVIRONMENT
 Government– The Government departments
make several policies viz. Pricing policy,
credit policy, education policy, housing
policy, etc. that do have an influence on the
marketing strategies. A company has to keep
track on these policies and make the
marketing programs accordingly.
 General public– The business has some

social responsibility towards the society in

which it is operating. Thus, all the marketing
activities should be designed that result in
increased welfare of the society as a whole.
MACRO ENVIRONMENT
COMPONENTS OF MACRO
ENVIRONMENT
 Political & Legal Factors– With the change
in political parties, several changes are seen
in the market in terms of trade, taxes, and
duties, codes and practices, market
regulations, etc. So the firm has to comply
with all these changes and the violation of
which could penalize its business operations.
 Economic Factors– Every business operates

in the economy and is affected by the

different phases it is undergoing. In the case
of recession, the marketing practices should
be different as what are followed during the
inflation period.
COMPONENTS OF MACRO
ENVIRONMENT
 Social Factors– since business operates in a
society and has some responsibility towards
it must follow the marketing practices that do
not harm the sentiments of people. Also, the
companies are required to invest in the
welfare of general people by constructing
public conveniences, parks, sponsoring
education, etc.
 Technological Factors– As technology is

advancing day by day, the firms have to keep

themselves updated so that customers needs
can be met with more precision.
WHAT IS ENVIRONMENTAL ANALYSIS?
 Environmental analysis is a strategic tool. It is
a process to identify all the external and
internal elements, which can affect the
organization’s performance.
 The analysis entails assessing the level of

threat or opportunity the factors might

present. These evaluations are later translated
into the decision-making process. The analysis
helps align strategies with the firm’s
environment
 Environmental analysis is a process that begins

from identification of environmental factors,

assessing their nature and impact, auditing
them to find their impact to the business, and
making various profiles for positioning.
STRATEGY
 Strategy can be defined as “unified,
comprehensive and integrated plan that
relates to the strategic advantages of the
firm to the challenges of the environment. It
is designed to ensure that the basic
objectives of the enterprise are achieved
through the proper execution by the
organization.” (Jauch and Glueck 1988)
TECHNIQUES OF ENVIRONMENTAL
ANALYSIS
 SWOT Analysis
 PEST Analysis

 Michael E. Porter 5 Forces Model

 Survey

 MIS
 PESTEL ANALYSIS
 A PESTEL analysis is an acronym for a tool used to
identify the macro (external) forces facing an
organisation. The letters stand for Political,
Economic, Social, Technological, Environmental and
Legal. Depending on the organisation, it can be
reduced to PEST or some areas can be added (e.g.
Ethical)
 In marketing, before any kind of strategy or tactical

plan can be implemented, it is fundamental to

conduct a situational analysis. And the PESTEL forms
part of that and should be repeated at regular
stages (6 monthly minimum) to identify changes in
the macro-environment.
 Organisations that successfully monitor and respond

to changes in the macro-environment are able to

differentiate from the competition and create a
competitive advantage.
PESTEL ANALYSIS
PESTEL ANALYSIS
 ELEMENTS OF A PESTEL ANALYSIS
 Political Factors:
These determine the extent to which
government and government policy may
impact on an organisation or a specific
industry. This would include political policy and
stability as well as trade, fiscal and taxation
policies too.
 Economic Factors:

These factors impact on the economy and its

performance, which in turn directly impacts on
the organisation and its profitability. Factors
include interest rates, employment or
unemployment rates, raw material costs and
foreign exchange rates.
 ELEMENTS OF A PESTEL ANALYSIS
 Social Factors:
These factors focus on the social environment and identify
emerging trends. This helps a marketer to further
understand their customers’ needs and wants. Factors
include changing family demographics, education levels,
cultural trends, attitude changes and changes in
lifestyles.

 Technological Factors:
These factors consider the rate of technological innovation
and development that could affect a market or industry.
Factors could include changes in digital or mobile
technology, automation, research and development.
There is often a tendency to focus on developments only
in digital technology, but consideration must also be
given to new methods of distribution, manufacturing and
also logistics.
 ELEMENTS OF A PESTEL ANALYSIS
 Environmental Factors:
These factors relate to the influence of the surrounding
environment and the impact of ecological aspects. With
the rise in importance of CSR (Corporate Sustainability
Responsibility), this element is becoming more
important. Factors include climate, recycling procedures,
carbon footprint, waste disposal and sustainability

 Legal Factors:
An organisation must understand what is legal and allowed
within the territories they operate in. They also must be
aware of any change in legislation and the impact this
may have on business operations. Factors include
employment legislation, consumer law, healthy and
safety, international as well as trade regulation and
restrictions.
WHAT ARE PORTER'S FIVE FORCES?

 Porter's Five Forces is a model that identifies

and analyzes five competitive forces that
shape every industry and helps determine an
industry's weaknesses and strengths.
 Five Forces analysis is frequently used to

identify an industry's structure to determine

corporate strategy. Porter's model can be
applied to any segment of the economy to
understand the level of competition within
the industry and enhance a company's long-
term profitability. The Five Forces model is
named after Harvard Business School
professor, Michael E. Porter.
 Porter’s Five Forces analysis is a framework
that helps analyzing the level of competition
within a certain industry.
THREAT OF NEW ENTRANTS

 According to Porter’s 5 forces, threat of new

entrants is one of the forces that shape the
competitive structure of an industry. Thus,
Porters threat of new entrants definition
revolutionized the way people look at
competition in an industry.
 In Porters five forces, threat of new
entrants refers to the threat new
competitors pose to existing competitors in
an industry. Therefore, a profitable industry
will attract more competitors looking to
achieve profits.
HIGH THREAT OF ENTRY OF NEW
COMPETITORS WHEN:

 Profitability does not require economies of scale

 Products are undifferentiated

 Brand names are not well-known

 Initial capital investment is low

 Consumer switching costs are low

 Accessing distribution channels is easy

 Location is not an issue

 Proprietary technology is not an issue

 Proprietary materials is not an issue

 Government policy is not an issue

 Expected retaliation of existing firms is not an

issue
THREAT OF NEW ENTRY IS LOW
IF:

 Profitability requires economies of scale

 Products are differentiated

 Brand names are well-known

 Initial capital investment is high

 Consumer switching costs are high

 Accessing distribution channels is difficult

 Location is an issue

 Proprietary technology is an issue

 Proprietary materials is an issue

 Government policy is an issue

 Expected retaliation of existing firms is an

issue
BARGAINING POWER OF
SUPPLIERS
BARGAINING POWER OF
SUPPLIERS

 The presence of powerful suppliers reduces the

profit potential in an industry. Suppliers
increase competition within an industry by
threatening to raise prices or reduce the quality
of goods and services. As a result, they reduce
profitability in an industry where companies
cannot recover cost increases in their own
prices.
 This force analyzes how much power and

control a company’s supplier (also known as the

market of inputs) has over the potential to raise
its prices or to reduce the quality of purchased
goods or services, which in turn would lower an
industry’s profitability potential.
BARGAINING POWER OF BUYERS
BARGAINING POWER OF BUYERS

 The bargaining power of buyers is also

described as the market of outputs. This
force analyzes to what extent the customers
are able to put the company under pressure,
which also affects the customer’s sensitivity
to price changes. The customers have a lot of
power when there aren’t many of them and
when the customers have many alternatives
to buy from. Moreover, it should be easy for
them to switch from one company to
another.
THREAT OF SUBSTITUTE
PRODUCTS
THREAT OF SUBSTITUTE
PRODUCTS

 The existence of products outside of the area

of the common product boundaries increases
the propensity of customers to switch to
alternatives. In order to discover these
alternatives one should look beyond similar
products that are branded differently by
competitors. Instead, every product that
serves a similar need for customers should
be taken into account.
RIVALRY AMONG EXISTING COMPETITORS

 Competitive rivalry is a measure of the

extent of competition among existing firms.
Intense rivalry can limit profits and lead to
competitive moves, including price cutting,
increased advertising expenditures, or
spending on service/product improvements
and innovation.
 MARKETING MIX
 Definition: The marketing mix refers to the set of actions,
or tactics, that a company uses to promote its brand or
product in the market.
 The 4Ps make up a typical marketing mix - Price, Product,
Promotion and Place. ... Pricing can also be used a
demarcation, to differentiate and enhance the image of a
product.
 Marketing mix is a set of actions a business takes to build
and market its product or service to its customers.
 It helps to make sure that you are able to offer your
customers the right product, at the right time and at the
right place for the right price.
 Whereas traditionally the marketing mix was executed
through the 4 Ps of marketing, nowadays 3 more additional
tools have been added to the mix, making it the 7 Ps of
marketing. Businesses use a blend of these marketing mix
elements to generate the response they want from their
audience.
CHARACTERISTICS / NATURE OF MARKETING
MIX

 Marketing mix is the crux of marketing

process:
 Marketing mix has to be reviewed
constantly in order to meet the changing
requirements:
 Changes in external environment
necessitate alterations in the mix:
 Changes taking place within the firm also

necessitate changes in marketing mix:

 Applicable to business and non-business

organization:
 Helps to achieve organizational goals:

 Concentrates on customers:
IMPORTANCE OF MARKETING MIX

 Helps understand what your product or service

can offer to your customers
 Helps plan a successful product offering

 Helps with planning, developing and executing

effective marketing strategies

 Helps businesses make use of their strengths and

avoid unnecessary costs

 Helps be proactive in the face of risks

 Help determine whether your product or service is

suitable for your customers

 Helps identify and understand the requirements of

customers
 Helps learn when and how to promote your

product or service to your customers

 ELEMENTS OF MARKETING MIX

Product
 Goods manufactured by organizations for the

end-users are called products.

 Products can be of two types - Tangible Product

and Intangible Product (Services)

 An individual can see, touch and feel tangible

products as compared to intangible products.

 A product in a market place is something which

a seller sells to the buyers in exchange of

money.
 ELEMENTS OF MARKETING MIX

Price
 The money which a buyer pays for a product is called as

price of the product. The price of a product is indirectly

proportional to its availability in the market. Lesser its
availability, more would be its price and vice a versa.
 Retail stores which stock unique products (not available at

any other store) quote a higher price from the buyers.

Place
 Place refers to the location where the products are available

and can be sold or purchased. Buyers can purchase products

either from physical markets or from virtual markets. In a
physical market, buyers and sellers can physically meet and
interact with each other whereas in a virtual market buyers
and sellers meet through internet.
 ELEMENTS OF MARKETING MIX
Promotion
 Promotion refers to the various strategies and ideas implemented by the
marketers to make the end - users aware of their brand. Promotion includes
various techniques employed to promote and make a brand popular amongst the
masses.
 Promotion can be through any of the following ways:
Advertising
 Print media, Television, radio are effective ways to entice customers and
make them aware of the brand’s existence.
 Billboards, hoardings, banners installed intelligently at strategic locations like
heavy traffic areas, crossings, railway stations, bus stands attract the passing
individuals towards a particular brand.
 Taglines also increase the recall value of the brand amongst the customers.

Word of mouth
 One satisfied customer brings ten more customers along with him whereas
one dis-satisfied customer takes away ten more customers. That’s the
importance of word of mouth. Positive word of mouth goes a long way in
promoting brands amongst the customers.
 ELEMENTS OF MARKETING MIX
Lately three more P’s have been added to
the marketing mix. They are as follows:
 People - The individuals involved in the sale

and purchase of products or services come

under people.
 Process - Process includes the various
mechanisms and procedures which help the
product to finally reach its target market
 Physical Evidence - With the help of physical

evidence, a marketer tries to communicate the

USP’s and benefits of a product to the end users
 FOUR C’S OF MARKETING MIX
Now a days, organizations treat their customers
like kings. In the current scenario, the four C’s
has thus replaced the four P’s of marketing
making it a more customer oriented model.
Koichi Shimizu in the year 1973 proposed a four
C’s classification.
 Commodity - (Replaces Products)

 Cost - (Replaces Price) involves manufacturing

cost, buying cost and selling cost

 Channel - The various channels which help the

product reach the target market.

 Communication - (Replaces Promotion)
 NEW CONSUMER CAPABELITIES
In today's scenario, the basic products of almost all the companies
are similar. This is the reason why customers are less loyal
towards any particular brand. The factors towards which the
customers pay attention are price quality of the product. Some of
the new customer capabilities are as follows,
Significant Increase in Purchasing Power
Wide range of Products and Services are Available
Richness of Information among Customers
Easy Ordering and Delivering Process
Ability to Compare the Products and Share the Reviews with Others
Speed of Communication is Very Fast
 NEW COMPANY CAPABILITIES
Similar to customers, companies also have developed various new
capabilities Some of them are as follows:

1) Detailed and Widespread Marketing Communication

2) Online Researches
3) Effective Communication within the Organisation
4) Promotion through Brand Advocates
5) Two-way Communication
6) Tracking Customers
7) New Marketing Techniques
8) Customized Offerings
9) Feedbacks are Valued
10) Ability to Compare Similar Products
11) Online Recruitment and Training
 NEW COMPANY CAPABILITIES
Similar to customers, companies also have developed various new
capabilities Some of them are as follows:

1) Detailed and Widespread Marketing Communication

2) Online Researches
3) Effective Communication within the Organisation
4) Promotion through Brand Advocates
5) Two-way Communication
6) Tracking Customers
7) New Marketing Techniques
8) Customized Offerings
9) Feedbacks are Valued
10) Ability to Compare Similar Products
11) Online Recruitment and Training
 FUNCTIONS OF MARKETING MANAGER
Functions of marketing manager are as follows
1) Defining Marketing Objectives
2) Planning
3) Organising
4) Staffing
5) Directing
6) Coordinating
7) Motivation
8) Controlling
9) Analysis and Evaluation
10) Promotion
11) Research and Development