THE MARKETING ENVIRONMENT• The forces that directly and indirectly influence an organization’s capability to undertake its business.• The trading forces operating in a market place over which a business has no direct control ,but which shape the manner in which the business function and is able to satisfy its customers.
COMPONENTS OF MARKETING ENVIRONMENT• Internal environment : Forces and actions inside the firm that affect the marketing operation composed of internal stake holders and the other functional areas within the business organization.• External environment • Macro environment • Micro environment
MICRO ENVIRONMENT• The factors in the immediate environment . MACRO ENVIRONMENT• Broad forces which shape the character of opportunities and threats.
WHY IS IT IMPORTANT?• An understanding of macro and micro marketing environment forces is essential for planning.• Helps a business to compete more effectively against its rivals.• Assists in the identification of opportunities and threats.• Enables an organization to take advantage of emerging strategic opportunities.
THE INTERNAL ENVIRONMENTAll factors that are internal to the organization are knownas the internal environment. They are generally auditedby applying the Five Ms which are Men, Money,Machinery, Materials and Markets. The internalenvironment is as important for managing change as theexternal. As marketers we call the process of managinginternal change internal marketing.‘
THE INTERNAL ENVIRONMENTIt includes the following:• The human resource department.• The operations department.• The accounting and finance department.• The research and development department.
INTERNAL PROCESSES AND PROCEDURES•Allocation of responsibilities within the organization.•Resources availability .•The extent to which the major functional areas worktogether supporting the marketing function to becustomer oriented .•The culture of organization.•The attitude of internal stakeholders.
Micro environment• The forces close to the company that affects its ability to serve.• It comprises all those organizations and individuals who directly affect the activities of a company.• All factors which impact directly on a firm and its activities in relation to a particular market.1. Suppliers2. The market channel3. Customers.4. Competitors5. Public
SUPPLIERS•Suppliers are either individuals or business houses.•.They provide resources needed by the company .•.The developments in the suppliers environment have asubstantial impact on the marketing operations of thecompany .•.Companies can lower their supply costs and increaseproduct quality to gain competitive advantage in themarket.•.supply shortages have to be fully monitored and plansshould be made to avoid it.
Market intermediates• They are either business houses or individuals .• They help the company in promoting, selling and distributing the goods to customers.• They are middlemen, distributing agencies, market service agencies and financial institutions.
Customers• The target market of the company is usually of five types:1.Consumer market i.e. individual and householders2.Industrial market i.e. organizations buying for producing other and services.3.Reseller market i.e. organizations buying goods and services with a view to sell them to others.4.Government and other non profit markets.i.e.those buying goods and services in order to produce public services.5.International market i.e. individuals and organizations of nations other then home land who buy for either consumption or industrial use.
Competitors• No company stands alone in serving and satisfying the needs of a customer market. It faces competition.• This helps the company in facing a host of competitors with confidence .• The company in order to come out successfully has to adopt means which may help it to outmaneuver.• The competitive environment consists of certain basic things which every marketing manager has to take note of.• Philip Kotler ‘the best way for a company to grasp the full range of its competition is to take view point of a buyer.”
Public• Public is defined as ‘any group that has an actual or potential interest in or impact on a company’s ability to achieve it’s objective.• The actions of the company do affect the interest of other groups i.e., those who form general public for the company who must be satisfied along with the consumers of the company.• According to Kotler ‘companies must put their primary energy into effectively managing their relationships with their customers.
Macro environmentMacro environment refers to thosefactors which are external tocompany’s activities and do notconcern the immediate environment.It comprises general forces that affect allbusiness activities in market .
Factors affecting Macroenvironment1.POLITICAL FORCES2.ECONOMIC FORCES3.SOCIAL AND CULTURAL FORCES4.NATURAL FORCES5.TECHNOLOGICAL FORCES6.DEMOGRAPHIC FORCES
Political and Legal forces• Includes laws, government agencies and pressure groups that influence or limit various organizations and individuals in a given society. – Increasing legislation. – Changing government agency enforcement. – More emphasis on ethics and socially responsible actions.
Economic environment• The economic environment consists of factors that affect consumers purchasing and spending power.• Under economic environment manager generally studies1.trends of gross national product2.patterns of real growth in income3.variations in geographical income distribution.4.borrowing pattern ,trends and governmental and legal restrictions.5.major economic variables
Social and cultural forces• Social responsibility has crept into the marketing literature as an alternative to the market concept.• Socially responsible marketing is that business firms should take the lead in eliminating socially harmful products
DEMOGRAPHIC FORCES• Demographic data helps in preparing geographical marketing plans, household marketing plans, age and sex wise plans.• It influences behavior of consumers which in turn will have direct impact on market place.• A marketer must communicate with consumers anticipate problems ,respond to complaints and make sure that the firm operates properly.
Technological Environment• Most dramatic force now shaping our destiny.• Changes rapidly.• Creates new markets and opportunities• Challenge is to make practical, affordable products.• Safety regulations result in higher research costs and longer time between conceptualization and introduction of product.
Natural Forces• Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities.
Natural Environment Trends• Shortage of raw materials. – Limited quantities of non-renewable resources.• Increased pollution. – Waste disposal, air/water pollutants.• Increased government intervention. – Kyoto and other initiatives.• Environmentally sustainable strategies. – G.R.E.E.N. movement.
Pest Analysis• A scan of the external macro environment in which the firm operates can be expressed as a pest analysis.• The acronym PEST (or sometimes rearranged as “STEP”) is used to describe a framework for the analysis of these macro environmental factors.• A PEST Analysis fits into an overall environmental scan, which includes Political, Economical, Social, and Technological environment.
PURPOSE OF ANALYSING THE MARKET• To know where the environment is heading• To discern which events and trends are favorable• To assess the scope of various opportunities• To help secure the right fit between the environment and the business unit
CONTROLLABILITY• The organization has no control over the macro environment. It can only respond to the changes taking place.• The organization has some degree of influence over the micro environment but by no means complete control.• The organization controls its own internal environment although this does not mean the marketing department or marketing manager has control.