THE BUSINESS ENVIRONMENT 3-1

The Marketing Business Environment Non Market Environment Global Suppliers Customers Economic Political The Organization Public Pressure Groups Competitors Demographic Sociocultural Market Environment Specific Environment Technological © 3-2

The Environment Defining the Marketing Business Environment forces and institutions outside the organization that may affect organizational performance Market environment - includes those constituencies that have a direct and immediate impact on managers’ decisions and actions directly relevant to goal achievement is unique to each organization, including: customers - absorb organization’s output suppliers - provide material and equipment competitors – pressure groups - special-interest groups © Prentice Hall, 2002 3-3

The Environment (cont.) Non Market environment - includes the broad conditions that may affect organizations Economic conditions - interest rates, changes in disposable income, and stage of the business cycle Legal conditions - federal, state, and local regulation substantial expense entailed to meet regulations limit choices available to organizations Political conditions - general stability of country attitudes of governmental officials toward business © Prentice Hall, 2002 3-4

EXHIBIT 3.6: SELECTED U.S. LEGISLATION AFFECTING BUSINESS © Prentice Hall, 2002 3-5

The Environment (cont.) Non market environment (cont.) Sociocultural conditions - expectations of society values, customs, and tastes Demographic conditions - trends in the physical characteristics of a population e.g., “baby boomers” influential because of their numbers e.g., “digital” or “net” generation - immersion and acceptance of computers © Prentice Hall, 2002 3-6

The Environment (cont.) External environment (cont.) General environment (cont.) Technological conditions - most rapidly changing aspect of the general environment changing the ways that organizations are structured information is the basis of important competitive advantages Global conditions - increasing number of global competitors and consumer markets major factor affecting organizations © Prentice Hall, 2002 3-7

The Environment (cont.) How the Environment Affects Managers Assessing environmental uncertainty - determined by: degree of unpredictable change dynamic - frequent change stable - minimal change environmental complexity the number of components in the environment amount of information available or required about those components managers attempt to minimize uncertainty © Prentice Hall, 2002 3-8

EXHIBIT 3.7: ENVIRONMENTAL UNCERTAINTY MATRIX © Prentice Hall, 2002 3-9

The Environment (cont.) Stakeholder Relationship Management Who are stakeholders? any constituencies that are affected by the organization’s decisions and actions include internal and external groups can influence the organization © Prentice Hall, 2002 3-10

The Environment (cont.) Stakeholder Relationship Management (cont.) Why is stakeholder relationship management important? the more secure the relationship, the more influence managers will have over organizational outcomes it’s the “right” thing to do © Prentice Hall, 2002 3-11

EXHIBIT 3.8: ORGANIZATIONAL STAKEHOLDERS © Prentice Hall, 2002 3-12

The Environment (cont.) Stakeholder Relationship Management (cont.) How can these relationships be managed? four steps identify the stakeholders determine real and potential concerns of each stakeholder group determine whether stakeholder is critical determine specific approach to manage the relationship approach to a stakeholder group based on the importance of the group and the degree of environmental uncertainty © Prentice Hall, 2002 3-13

EXHIBIT 3.9: MANAGING STAKEHOLDER RELATIONSHIPS © Prentice Hall, 2002 3-14

Marketing Mix P l a c e Product Price Promotion Marketing Mix Convenience Cust. Solution Price Promotion Communication Customer Cost

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