Chapter 2: Marketing Environment and Marketing Information

2.1 Introduction
Marketing does not operate in a vacuum but, instead, in a complex and changing environment.
Indeed, marketers operate in an increasingly connected world. As the prelude case shows,
companies today have to be alert and responsive to the interests and concerns of various actors in
their marketing environment, not just its immediate customers.
In order to correctly identify opportunities and monitor threats, the company must begin with a
thorough understanding of the marketing environment in which the firm operates.
2.2 Marketing environment
The marketing environment consists of all the actors and forces outside marketing that affect the
marketing management’s ability to develop and maintain successful relationships with its target
customers. The marketing environment offers both opportunities and threats. Successful
companies know the vital importance of constantly watching and adapting to the changing
environment. Though these factors and forces may vary depending on the specific company and
industrial group, they can generally be divided into broad micro environmental and macro
environmental components. The wise marketing manager knows that he or she cannot always
affect environmental forces. However, smart managers can take a proactive, rather than reactive,
approach to the marketing environment.
1. Being successful means being able to adapt the marketing mix to trends and changes this
environment.
2). Changes in the marketing environment are often quick and unpredictable.
3). The marketing environment offers both opportunities and threats.
4). The company must use its marketing research and marketing intelligence systems to monitor
the changing environment.
5). Systematic environmental scanning helps marketers to revise and adapt marketing strategies
to meet new challenges and opportunities in the marketplace.

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1. Micro environmental
The microenvironment consists of six forces close to the company that affect its ability to serve
its customers:
a. The company itself (including departments).
b. Suppliers.
c. Marketing channel firms (intermediaries).
d. Customer markets.
e. Competitors.
f. Publics (which combine to make up the firm’s value delivery system and any interested
group).

A, the Company
The first force is the company itself and the role it plays in the microenvironment, Such as top
management, finance, research and development (R&D), purchasing, manufacturing and
accounting. All these interrelated groups from the internal environment.
B, Suppliers
Suppliers are firms and individuals that provide the resources needed by the company and its
competitors to produce goods and services.

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C, Marketing intermediaries
Firms that 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.
I. Resellers—the individuals and organisations that buy goods and services to resell at a
profit.
II. Physical distribution firms—Warehouse, transportation and other firms that help a
company to stock and move goods from their points of origin to their destinations.
III. Marketing services agencies—Marketing research firms, advertising agencies, media
firms, marketing consulting firms and other service providers that help a company to
target and promote its products to the right markets.
IV. Financial intermediaries— Banks, credit companies, insurance companies and other
businesses that help finance transactions or insure against the risks associated with the
buying and selling of goods.
D, Customers
The company must study its customer markets closely since each market has its own special
characteristics. These markets normally include:

1). Consumer markets (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 in order to resell them at a profit).
4). Government markets (agencies that buy goods and services in order to produce public
services or transfer them to those that need them).
5). International markets (buyers of all types in foreign countries).
E. Competitors
Those who serve a target market with similar products and services.

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Every company faces a wide range of competitors. A company must secure a strategic advantage
over competitors by positioning their offerings to be successful in the marketplace. No single
competitive strategy is best for all companies.
F. 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. Generally, publics can be identified as being:
1). Financial publics--influence the company’s ability to obtain funds.
2). Media publics--carry news, features, and editorial opinion.
3). Government publics--take developments into account.
4). Citizen-action publics--a company’s decisions are often questioned by consumer
organizations.
5). Local publics--includes neighborhood residents and community organizations.
6. General publics-a company must be concerned about the general public’s attitude toward its
products and services.
7). Internal publics--workers, managers, volunteers, and the board of directors.
2. Macro-environment.
The larger societal forces that affect the whole microenvironment – demographic, economic,
natural, technological, political and cultural forces.

A Demographic environment
Demography is the study of human populations in terms of size, density, location, age, sex, race,
occupation, and other statistics. It is of major interest to marketers because it involves people and
people make up markets.

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B, Economic environment
The economic environment includes those factors that affect consumer purchasing power and
spending patterns.

C, Natural Environment
The natural environment involves natural resources that are needed as inputs by marketers or
that are affected by marketing activities. Marketers should be aware of four trends in the natural
environment.
I. Shortages of raw materials.
II. Increased pollution
III. Government intervention
IV. Environmentally sustainable strategies.
D. Technological Environment
The technological environment includes forces that create new technologies, creating new
product and market opportunities. Marketers should watch the following trends in technology.
I. Fast pace of technological change
II. High R&D budgets
III. Concentration on minor improvements
IV. Increased regulation
E. Political Environment
The political environment includes laws, government agencies, and pressure groups that
influence and limit various organizations and individuals in a given society. Various forms of
legislation regulate business.

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F. Cultural Environment
The cultural environment is made up of institutions and other forces that affect society’s basic
values, perceptions, preferences, and behaviors. Certain cultural characteristics can affect
marketing decision-making. Among the most dynamic cultural characteristics are:
1. Persistence of cultural values.
2. Shifts in secondary cultural values.
The principal cultural values of a society are expressed in people’s views of themselves and
others, as well as in their views of organisations, society, nature and the universe.
2.3Marketing Information System and Marketing Research
2.3.1 Marketing Information System:
A marketing information system (MIS) consists of people, equipment and procedures to gather,
sort, analyze, evaluate and distribute needed, timely and accurate information to marketing
decision makers.

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The MIS begins and ends with marketing managers. First, it interacts with these managers to
assess their information needs. Next, it develops the needed information from internal company
records, marketing intelligence activities and the marketing research process. Information
analysis processes the information to make it more useful. Finally, the MIS distributes
information to managers in the right form at the right time to help them in marketing planning,
implementation and control.
The information needed by marketing managers comes from internal company records,
marketing intelligence and marketing research.
Internal records information—Information gathered from sources within the company to
evaluate marketing performance and to detect marketing problems and opportunities.
Marketing intelligence— Everyday information about developments in the marketing
environment that helps managers prepare and adjust marketing plans.
The marketing intelligence system determines the intelligence needed, collects it by searching
the environment and delivers it to marketing managers who need it.
Sources for intelligence may vary according to needs but may include both internal and external
sources like from the company’s personnel – executives, engineers and scientists, purchasing
agents and the sales force.
Marketing research—The function that links the consumer, customer and public to the
marketer through an exchange information that is used to identify and define marketing
opportunities and problems, to generate, refine and evaluate marketing actions, to monitor
marketing performance, and to improve understanding of the marketing process.
Functions of a MIS
I. Assessing information needs:
It is key feature of the MIS that underscores the importance of information
II. Developing information: MIS organizes and summaries information
III. Distributing Information: Information must be distributed to the right
managers(person) at the right time.
Subsystems of Marketing Information System:
A well-designed market information system consists of four subsystems.
A. Internal records system
It provides current data on sales, costs, inventories, cash flows, and accounts receivable and
payable. Many companies have developed advanced computer-based internal reports systems
to allow for speedier and more comprehensive information.

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 B. Marketing intelligence system
It supplies marketing managers with everyday information about developments in the external
marketing environment. It characterized by the scientific method, creativity, multiple
methodologies, model building, and cost/benefit measures of the value of information.
C. Marketing research
Marketing Research is a Systematic & objective process of designing, gathering, analyzing &
reporting information that is used to solve a specific problem.
Steps in the Marketing Research Process

1. Defining the Problem and Research Objectives

Defining the problem and research objectives is often the hardest step in the process. The three
general types of objectives marketing research are:
1). Exploratory research where the objective is to gather preliminary information that will help
to better define problems and suggest hypotheses for their solution.
2). Descriptive research is where the intent is to describe things such as the market potential for
a product or the demographics and attitudes of customers who buy the product.
3). Casual research is research to test hypotheses about cause-and-effect relationships.
2. Developing the Research Plan
It is calls for determining the information needed, developing a plan for gathering it efficiently
and presenting the plan to marketing management. The plan outlines sources of existing data and

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explains the specific research approaches, contact methods, sampling plans and instruments that
researchers will use to gather new data.
Developing the research plan involves of the following:
1. Determining Specific Information Needs
2. Planning data and information gathering, analysis and interpretation
1). Determine specific information needs.
For example, determine the demographic, economic, and lifestyle characteristics of a target
audience.
2). Gathering data.
A). Secondary data is information that already exists somewhere, having been collected for
another purpose. Sources of secondary data include both internal and external sources.
b). Primary data is information collected for the specific purpose at hand.
Planning Primary Data Collection.
A plan for primary data collection calls for a number of decisions on research approaches,
contact methods, sampling plans, and research instruments.
Research approaches
Qualitative research
Exploratory research used to uncover consumers’ motivations, attitudes and behaviour. Focus-
group interviewing, elicitation interviews and repertory grid techniques are typical methods used
in this type of research.
Quantitative research
Research which involves data collection by mail or personal interviews from a sufficient volume
of customers to allow statistical analysis.
Observational research
The gathering of primary data by observing relevant people, actions and situations.
Survey research
The gathering of primary data b asking people questions about their knowledge, attitudes,
preferences and buying behavior
Experimental research
The gathering of primary data by selecting matched groups of subjects, giving them different
treatments, controlling related factors and checking for differences in group responses.

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 Contact methods (instruments)
Observation
Interview
Questionnaire
Experiment
3. Implementing the Research Plan
It involves collecting, processing, and analyzing the information.

4. Interpreting and Reporting the Findings

Researchers should present important findings that are useful in the major decisions faced by
management.
Why to Conduct Business Research?
It Provides information for aid in making business related decisions, to identify opportunities and
generate & refine actions. It is important for the mangers for many decisions like:
 Helps reduce risk inherent in decision-making
 Provides an important link to customers
 Allows implementation of the business concept
 Enables managers to identify & understand stakeholders’ wants & needs and to develop
appropriate strategies to meet these needs
Uses & Application of Research in Marketing:
Major uses of the marketing research in the organizations are as following:
 Measurement of market potential.
 Analysis of market share.
 Determination of market characteristics
 Sales analysis.
 Product testing.
 Forecasting.
 Studies of business trends
 Studies of competitors' products
D. Marketing Decision Support System (MDSS marketing system)
It consists of statistical and decision tools to assist marketing managers in making better
decisions. MDSS is a coordinated collection of data, systems, tools, and techniques with
supporting software and hardware.

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