1. The Commercial Environment Meaning, Concept, Significance & Nature

2. Objective After reading this section you should be able to describe the environmental forces that affect the company’s ability to serve its customers & understand the significance of Commercial Environment in Business

3. Commercial Environment The actors and forces outside business/marketing that affect marketing management’s ability to develop and maintain successful transactions and relationships with its target customers.

4. INTRODUCTION  Business enterprises cannot function in isolation  Open systems interact with their environment  Business enterprises exist in and are surrounded by an ‘environment’ – the business or commercial environment

5. INTRODUCTION  Society and business enterprises are mutually dependent Business enterprises satisfy societal needs Business enterprises satisfy societal needs  Relationship between society and business enterprises takes place in a changing environment

6. COMPONENTS OF THE BUSINESS ENVIRONMENT  Different environmental variables exist internally and externally to the business enterprise  Environmental variables have a positive or negative influence on the enterprise

7. COMPONENTS OF THE BUSINESS ENVIRONMENT  Business environment consists of two sub- environments: Internal (micro) environment Internal (micro) environment External environment External environment Market environmentMarket environment Macro environmentMacro environment  Mutual relationships exist between these environments

8. Significance of Commercial Environment  First Mover Advantage  Warning Signals  Sensitize the Management  Basis of Strategy  Source of intellectual Simulation  Image Building  Continuous Learning

9. The Company’s Micro - Environment In designing business/marketing plans, marketing management must take other company groups, such as top management, finance, research and development (R&D), purchasing, manufacturing and accounting, into consideration.

10. The Company In designing business/marketing plans, marketing management must take other company groups, such as top management, finance, research and development (R&D), purchasing, manufacturing and accounting, into consideration. Suppliers Firms and individuals that provide the resources needed by the company and its competitors to produce goods and services.

11. Marketing Intermediaries Firms that help the company to promote, sell and distribute its goods to final buyers; they include physical distribution firms, marketing-service agencies and financial intermediaries. Resellers The individuals and organizations that buy goods and services to resell at a profit. Physical distribution firms warehouse, transportation and other firms that help a company to stock and move goods from their point of origin to their destinations. warehouse, transportation and other firms that help a company to stock and move goods from their point of origin to their destinations.

12. Financial intermediaries Banks, credit companies and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods. Customers  The company must study its customer markets closely and keep up to date with changing customer requirements.  The company must communicate with its customers, and must listen to them closely.

13. Competitors The marketing concept states that, to be successful, a company must provide greater customer value and satisfaction than its competitors. Thus, marketers must do more than simply adapt to the needs of target consumers. The marketing concept states that, to be successful, a company must provide greater customer value and satisfaction than its competitors. 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. They must strive to anticipate competitor activity and strategy. They must also gain strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of consumers. They must strive to anticipate competitor activity and strategy.

14. Publics Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives.  Financial publics: Influence the company’s ability to obtain funds. Banks, investment houses and stockholders are the principal financial publics.  Media publics: Are those that carry news, features and editorial opinion. They include newspapers, magazines and radio and television stations.  Government publics:Management must take government developments into account. Marketers must often consult the company’s lawyers on issues of product safety, truth in advertising and other matters.

15. Publics  Citizen action publics A company’s marketing decisions may be questioned by consumer organizations, environmental groups, minority groups and other pressure groups.  Local publics Every company has local publics, such as neighborhood residents and community organizations.  General public A company needs to be concerned about the general public’s attitude towards its products and activities. The public image of the company affects its buying.  Internal publics A company’s internal publics include its workers, managers, volunteers and the board of directors.

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

17. General Environment General Environment General Environment Economic Political/Legal Technological Global Demographic Sociocultural The External Environment IndustryEnvironment Threat of new entrants Power of suppliers Power of buyers Product substitutes Intensity of rivalry CompetitorEnvironment

18. General Environment  Sociocultural Segment Women in the workplace Women in the workplace Workforce diversity Workforce diversity Attitudes about quality of worklife Attitudes about quality of worklife Concerns about environment Concerns about environment Shifts in work and career preferences Shifts in work and career preferences Shifts in product and service preferences Shifts in product and service preferences

19.  Economic segment General Environment Inflation rates Inflation rates Interest rates Interest rates Trade deficits or surpluses Trade deficits or surpluses Budget deficits or surpluses Budget deficits or surpluses Personal savings rate Personal savings rate Business savings rates Business savings rates Gross domestic product Gross domestic product

20. General Environment  Political/Legal Segment Antitrust laws Antitrust laws Taxation laws Taxation laws Deregulation philosophies Deregulation philosophies Labor training laws Labor training laws Educational philosophies and policies Educational philosophies and policies

21. General Environment  Technological Segment Product innovations Product innovations Applications of knowledge Applications of knowledge Focus of private and government-supported R&D expenditures Focus of private and government-supported R&D expenditures New communication technologies New communication technologies

22. General Environment  Global Segment Important political events Important political events Critical global markets Critical global markets Newly industrialize countries Newly industrialize countries Different cultural and institutional attributes Different cultural and institutional attributes

23. General Environment  Demographic Segment Population size Population size Age structure Age structure Geographic distribution Geographic distribution Ethnic mix Ethnic mix Income distribution Income distribution