Marketing environment and marketing information

system

CHAPTER TWO
MARKETING ENVIRONMENT
 A marketing environment consists of the actors and forces outside
marketing that affect marketing management's ability to develop
and maintain successful transactions with its target customers.

 The environment may be internal/or external.

 The external environment consists of all the factors outside the
organization that provide opportunities and pose threats to the
organization.

 On the other hand the internal environment refers to all the factors
within the organization, which impart strengths or cause weakness
of the strategic nature.
STRENGTH:
 are internal and positive attributes of the given
company. These things are within your control.

 What business processes are successful?

 What assets do you have in your team such as

knowledge, education, network, skills and reputation?

 What physical assets do you have such as customers,

equipment, technology, cash, and patents?

 What competitive advantage do you have over your

competition?
WEAKNESS
 are negative factors that detract from your
strengths. These are things that you might
need to improve on to be competitive.

 Are there things that your business needs to

be competitive?
 What business processes need to

improvement?
 Are there tangible assets that your company

needs such as money or equipment?

 Are there gaps on your team?

 Is your location ideal for your success?

OPPORTUNITIES
 are external factors in your business environment that
are likely to contribute to your success.

 Is your market growing and are there trends that will

encourage people to buy more of what you are selling?

 Are there upcoming events that your company may be

able to take advantage of to grow the business?

 Are there upcoming changes to regulations that might

impact your company positively?

 If your business is up and running, do customers think

highly of you?
THREATS
 are external factors that you have no control
over. You may want to consider putting in
place contingency plans for dealing them if
they occur.
 Do you have potential competitors who may

enter your market?

 Will suppliers always be able to supply the

raw materials you need to at the prices you

need?
 Could future developments in technology

change how you do business?

 Are there market trends that could become a

threat?
INTERNAL ENVIRONMENT
 Internal environment are controllable because they are under
the control of the firm’s management. For example,

 Human resource:

 The characteristics of the human resource like skills, quality,

morale commitment, attitude etc could contribute to the
strength or weakness of an organization.
INTERNAL ENVIRONMENT
 Company image and brand equity :
 the image of company matters while raising finance,
forming joint ventures or other forms of alliance, soliciting
marketing intermediaries, entering purchase or sale
contracts, launching products etc.
 R&D and technological capabilities:

 are among other things that increasingly determine

company’s ability to innovate and complete in the market.

 Marketing mix; these are the company’s 4p’s.
EXTERNAL ENVIRONMENT

 A major purpose of environmental scanning is to

discern/detect new marketing opportunities and threats.
 A marketing opportunity: is an area of buyer need in

which a company can perform profitability.

 An environmental threat: is a challenge posed by

unfavorable trend or development that would lead, in the

absence of defensive marketing action, to deterioration in
sales or profit.
THE COMPANY'S
MICROENVIRONMENT

 Marketing management's job is to create attractive offers for

target markets.

 However, marketing managers cannot simply focus on the

target market's needs.

 Their success will also be affected by actors in the

company's microenvironment.

 These actors include other company departments, suppliers,

marketing intermediaries, customers, competitors and
various publics
THE COMPANY'S
MICROENVIRONMENT
 The Company
 In designing marketing plans, marketing management should

take other company groups, such as

 top management, finance, research and development (R& D),

purchasing, manufacturing and accounting, into
consideration.
 Marketing manager’s plans are subject to the influence of the

following groups:
THE COMPANY'S
MICROENVIRONMENT

 Top Management/executives- set the company’s

mission, objectives, broad strategies and policies.

 The marketing manager’s objectives, strategies and

policies are derived from top management’s objectives,
strategies and policies.

 Finance Department-is responsible to find and raise

funds to carry out the marketing plan.
.
THE COMPANY'S
MICROENVIRONMENT
 If finance department is incapable to search for and
allocate adequate budget to each respective marketing
activity,

 The planned activities will not be carried out

appropriately and in turn the promised customer value
may not be delivered.
THE COMPANY'S
MICROENVIRONMENT
 Research and Development-

 is responsible to design safe and attractive products.

 Unfortunately if this department does the other way round,
the burden goes to marketing personnel.

 If the product looks unsafe and unattractive, customers will

not pay premium price and will decide to shift to
competitors.

 In order to tackle this problem if there will be any, the

marketing manager adds marketing personnel into the
research and development team.
PROCUREMENT DEPARTMENT

 is responsible to search for alternative input suppliers

and deliver the desired quality and quantity of raw
materials.
 For example, if the marketing objective of the
company is to become quality leader, the purchasing
department should supply right quality inputs.

 If not, the salability of the output will be in question.

 On the other extreme, if the marketing objective of

the company is cost leadership, the purchasing
department needs to search for suppliers that offer
low price
THE COMPANY'S
MICROENVIRONMENT

 Operations Department-is responsible to process or

produce the desired quality and quantity of the marketing
offer in the required form.
 Accounting Department-is responsible to measure total

costs incurred and total revenues earned. This will help

marketing knowhow cost effectively it is achieving its
objectives.
SUPPLIERS

 Suppliers are an important link in the company's

overall customer 'value delivery system".

 They provide the resources needed by the

company to produce its goods and services.
Supplier developments can seriously affect
marketing.

 Marketing managers must watch supply

availability - supply shortages or delays, labor
strikes and other events can cost sales in the
short run and damage customer[Satisfaction in
the long run.
MARKETING INTERMEDIARIES

 Marketing intermediaries are firms that help the

company to promote, sell and distribute its goods
to final buyers.

 They include resellers, physical distribution firms,

marketing services agencies and financial
intermediaries.

 Resellers are distribution channel firms that help

the company find customers or make sales to
them).

 These include wholesalers and retailers which buy

and resell merchandise.
CUSTOMERS

 The company must study its customer

markets closely. Consumer markets consist of
individuals and household that buys goods
and services for personal consumption.
 Business markets buy goods and services for

further processing or for use in their

production process,
 whereas reseller markets buy goods and

services to resell at a profit.

 Institutional markets are made up of schools,

hospitals, nursing homes, prisons and other

institutions that provide goods and services to
people in their care.
COMPETITORS

 The marketing concept states that, to be successful,

a company must provide greater customer value
and satisfaction than its competitors do.

 Thus, marketers must do more than simply adapt to

the needs of target consumers.

 They must also gain strategic advantage by

positioning their offerings strongly against
competitors’ offerings in the minds of consumers.

 No single competitive marketing strategy is best for

all companies.
PUBLICS/PR

 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 (banks, investment houses,

stockholders, etc)

 Media publics (newsletters, magazines, radio and TV

stations)
PUBLICS/PR
 Citizen-action-publics (consumer organizations,
environmental groups, minority groups, etc)

 Local publics (neighborhood residents, opinion leaders,

community organizations)

 Genera publics (the entire society)

 Government publics (various government agencies which

formulate and enforce laws and regulations)

 Internal publics include workers, managers, volunteers, and

the board of directors
THE COMPANY'S MACRO ENVIRONMENT
 Demographic Environment

 Demography is the study of human populations in terms

of size, density, location, age, gentler, race, occupation
and other statistics.

 The demographic environment is of considerable interest

to marketers because it involves people, and people
make up markets.
THE COMPANY'S MACRO
ENVIRONMENT
 Physical and technological environment:
 Physical factors such as geographical factors,

weather and climatic condition may call for

modifications in the product etc to suit the
environment because these environmental
factors are uncontrollable.

 According to [Link], technology is a systematic

application of scientific or other organized knowledge to
practical tasks
THE COMPANY'S MACRO ENVIRONMENT
 Natural environment:
 It includes natural resource endowments, weather
and climatic conditions, port facilities topographical
factors, are all relevant to business.

 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 which include growing shortage
of raw materials, increased pollution and increased
government intervention in natural resource
management.
THE COMPANY'S MACRO
ENVIRONMENT
 Growing shortage of raw materials
 infinite resources like water, forests, and

minerals are threatened.

 Water shortage, depletion of forests and

scarcity of nonrenewable resources such as

oil, coal, etc has become today’s serious
phenomenon.

 Thus, firms which use those scarce

resources as inputs face large cost increment
even if the materials seem available.
INCREASED POLLUTION

 Various industries emit wastes which damage

the quality of the natural environment.
 Consider the disposal of chemical and
nuclear wastes, the quantity of chemical
pollutants in the soil and food supply, the
littering of the environment with non-
biodegradable bottles, plastics and other
packaging materials.
 By-products of several processing plants

which are dumped into rivers and in the road

side affect the conducive environment of the
society.
THE COMPANY'S MACRO ENVIRONMENT
 Increased government intervention in
natural resource management
 Some countries’ governments pursue
environmental quality
 whereas others especially many poorer
nations do little about pollution because they
lack funds.

 The general hope is that companies around

the world will accept more social
responsibility and that less expensive devices
can be found to control and reduce pollution.
THE COMPANY'S MACRO
ENVIRONMENT
 Economic Conditions
 People alone do not make a market. They must

have money to spend and be willing to spend it.

 The available purchasing power in an economy

depends on current income, savings, debt, and

credit availability.
 Marketers must pay close attention to major

trends in income and consumer spending

patterns.
THE COMPANY'S MACRO ENVIRONMENT
 Social and Cultural Forces

 The society in which people grow up shapes

their beliefs, values, and norms people
absorb, almost unconsciously, a worldview
that defines their relationship to themselves,
to others, to nature, and to the universe.

 The people living in a particular society hold

many core beliefs and values that tend to
persists.
THE COMPANY'S MACRO ENVIRONMENT
 Political and Legal Forces

 Every company's conduct is influenced more and

more by the political and legal process in the society.
 The political and legal forces on marketing can be

the following:-

 Monetary and fiscal policies- Government spending,

tax legislation etc.
 Social legislation and regulation-Anti pollution law.

 Government relationship with industries- Tariffs and

import quotas etc.

Marketing Information System and Marketing Research

A marketing information system consists of

people, equipment, and procedures to gather,
sort, analyze, evaluate, and distribute needed,
timely, and accurate information to marketing
decision makers.

A marketing information system is developed

from internal company records, marketing
intelligence activities, and marketing
research.