University of Sri Jayewardenepura 1st Semester 2014 University of Sri Jayewardenepura

 

Session Outline The Company’s Microenvironment The Company’s Macroenvironment Demographic Environment Economic Environment Natural Environment Technological Environment Political and Legal Environment Cultural Environment Responding to the Marketing Environment

The Marketing Environment The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers.

Analyzing Methods of Environment Internal & External Environmental Analysis Micro & Macro Environmental Analysis

Marketing Environment Analyzing Methods (Cont.) Marketing Environment Internal Environment External Environment Forces External Stakeholders Internal Stakeholders

Marketing Environment Analyzing Methods (Cont.) Marketing Environment Micro Environment Macro Environment External Stakeholders Internal Stakeholders Forces

The Company’s Microenvironment The actors close to the company that affect its ability to serve its customers – the company, suppliers, marketing intermediaries, customer markets, competitors and publics. 8

Actors in the Microenvironment

Actors in the Microenvironment The company Top management, finance, R&D, purchasing, operations and accounting. Affect the marketing department’s plans. Suppliers Provide resources needed to produce goods and services. Important link in the “value delivery system”. Marketing intermediaries Help the company to promote, sell, and distribute its goods to final buyers. 10

Competitors Publics Actors (Cont.) Those who serve a target market with similar products and services. Company must gain strategic advantage against these organizations. Publics Groups that has an actual or potential interest in or impact on an organization's ability to achieve its objectives. Seven Types of Publics.

Customers 1. Consumer markets Actors (Cont.) Customers are the most important actors in the company’s micro environment. Five Types of Markets 1. Consumer markets 2. Business markets 3. Reseller markets 4. Government markets 5. International markets 12

The Company’s Macroenvironment The larger societal forces that affect the microenvironment - demographic, economic, natural, technological, political and cultural forces.

Major Forces in the Company’s Macroenvironment

Fads, Trends and Mega Trends Fad - Unpredictable, short-lived, and without social, economic, and political significance. Trend - A direction or sequence of events with momentum and durability. Trends are more predictable and durable than a fad; trends reveal the shape of the future and can provide strategic direction. Megatrend - Large social, economic, political, and technological changes (that) are slow to form, and once in place, influences us for some time between seven and ten years, or longer. 15

Demographic Environment Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. 16

Trends in Demographic Environment Increasing Population Growing Middle Class Growth in the Rural Population A Changing Family System The Changing Role of Women Better-Educated , More White-Collared, More Professional Population Increasing Diversity

Economic Environment Economic environment consists of factors that affect consumer purchasing power and spending patterns.

Stages of Business Cycle Outsourcing and free trade Inflation Income Distribution Unemployment Stages of Business Cycle Economic Environment Spending patterns Savings, credit availability Outsourcing and free trade Interest rates 19

Natural Environment This CTR relates to the material on pp. 116-118. Natural Environment The natural environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Natural Environment There are several areas affecting marketing that stem from the natural environment. Shortages of Raw Materials. Shortages both increase demand and sprout counter-movements aimed at conservation. Discussion Note: Both sides of the "green" movement utilize sophisticated database marketing and lobbying techniques. Energy Costs. The cost of energy makes long-term growth of high energy industries and goods difficult to predict. Increased Pollution. Industrial growth almost always damages the natural environment. The so-called “green movement” seeks to operate businesses in such a way so as not to damage the natural environment. The varying political power of “greens” in different countries is a consideration in global marketing efforts. Government Intervention in Natural Resource Management. Changing philosophies on the role of government in managing natural resources also blends into the legal environment. Marketers must take care in identifying natural environmental trends. Discussion Note: You might further expand this discussion by pointing out that even agencies like the EPA vary greatly in the amount of environmental regulation they perform depending upon funding and the agenda of whoever occupies the White House. 20

Key Areas of Concern in the Natural Environment Shortage of Raw Materials Increased pollution Increased government intervention Environmental sustainability Anti pollution pressures Increased energy costs

Technological Environment Forces that create new technologies, creating new product and market opportunities.

Technological Trends Accelerating pace of change Unlimited opportunities for innovation Varying R & D budgets Increased regulation of technological change

Political - Legal Environment Laws, government agencies and pressure groups that influence and limit various organizations and individuals in a given society. To protect companies To protect consumers To protect society 24

Trends in Political & Legal Environment Legislation Regulating Business Increasing Legislation Changing Government Agency Enforcement New Forms of Nontariff Barriers in Trade Growth of Special Interests Groups

Social-Cultural Environment Institutions and other forces that affect society’s basic values, perceptions, preferences and behaviours.

Trends in the Social-cultural Environment Increased Emphasis on Ethics and Socially Responsible Actions Socially Responsible Behaviour Cause-Related Marketing Persistence of Cultural Values Shifts in Secondary Cultural Values Existence of Subcultures The major cultural values of a society are expressed in people’s views of themselves and others, as well as in their views of organizations, society, nature, and the universe.

Responding to the Marketing Environment

Summary and Conclusions