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The Dynamic

MarketingEnvironment

Chapter 2

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Objectives

qThe concept of environment monitoring

q How external environment can affect theorganisations?

q How organisational external forces caninfluence a firm marketing program?

q How non marketer resource within a firmcan affect its marketing?

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MARKETING ENVIRONMENT

Definition of Environment:

The surroundings or conditions in which

a person, animal, or plant lives oroperates.

The marketing environment consists offactors that have a direct or indirectimpact on the organisations operations.It is dynamic in nature and presents bothopportunities (chances) and threats(fears).

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Direct and indirect Affects:

Example:The rise in price of seed will directly

affect the cost of wheat

ButThe rise in price of oil will indirectly

affect the cost of a wheatproduction.Because the fuel oil will be utilised ingetting water from tube well,ploughing (cultivation), spraying,cutting, carrying and storing thewheat.

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What do we dowhen a

change inweather is

likely tohappen?How do we get information about achange happening?

How do we deal these information?How do we react?

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Types of Environment

External Microenvironment:

Consists of factors in the immediate (and to someextent controllable) environmentExternal Macroenvironment:

Forces which have an impact (affect) on everyplayer in the environment (mainly uncontrollable).

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Organisation InternalEnvironment

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Organisation InternalEnvironment

q For example a company wants tointroduce a new product how its going toaffect the organisation internal

environment?q New product may require new Machinery

(production facility)

q

Finances required for the production of newproducts

q More employees will be required forproduction

q Location of the new facility

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External Micro-Environment

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External Micro-Environment

qThe Market:

q Market can be people organisations withneeds/wants to satisfy, money to spend

and willingness to spend it.qThree specific factors need to be

considered for the marketing of a productand service

q People or organisation needs

qTheir purchasing power

qTheir buying behaviour

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External Micro-Environment

q Suppliers

qThe people or firm that supply the goods orservices required by a producer to make

other products or services is important tomarketing organisation.

q For example Vaio requires Intel processors as araw material (component) for making

computers for their customer.q Its important for Vaio to maintain good relations

with Intel suppliers so as to effective satisfy thedemands of market

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External Micro-Environment

q Marketing Intermediaries (distributors):

q Distributors are those businessorganisations that directly help the flow of

goods and services between a marketingorganisation and its market.

q Distributors are of two kinds.

q

Retailers (Business firms who sells in units ofproducts)

q Wholesalers(Businesses who sells in bulk)

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Macro-Environment

Organisatio

n

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POLITICAL/LEGAL

q Every companys conduct is influencedby the political and legal processes inour society. The political and legal forces

on marketing can be grouped into fourcategories

1. Marketing efforts are affected bygovernment spending and tax regulation.

2. Laws affecting the environmentalpollution laws

3. Deregulation in public utilities e.g. Gas,

Electricity

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POLITICAL/LEGAL

The affect of marketing activitieson natural environment.Examples:1-The National EnvironmentalProtection Agency of Afghanistan.2-National Environmental AdvisoryCouncil

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POLITICAL/LEGAL

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POLITICAL/LEGAL

Examples of environmentalregulations in Afghanistan

Article 15. Prohibited activities1. No person may undertake an activity orimplement a project, plan or policy that is likelyto have a significant adverse effect on theenvironment...2. No ministry or national authority may grantan authorisation for the execution of an activityor implementation of a project, plan or policy

that is likely to have a significant adverse effect

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Economical

Change in Income: Any increase or decrease in income ofpeople will affect the buying power of consumer, therefore based onchange in income, business has to change their strategies.

Customers spending:- When the economic condition aregood customer spending will be high and if not people with focus onsaving money.

ProsperityThe period of economic growth

Inflation It is actually the decrease in value of money which iscaused due to increase demands and less supply. Inflation cause theproducts in the market to get expensive.

Deflation:The lowering of price due todecrease economic activity

Interest Rate: Increase in interests rates

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Economical

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Social and Cultural forces

qThe social and cultural pattern such aslifestyle, values and beliefs are changingquite rapidly. For marketers the

important changes are as follow:q Concern about natural environment

qThe concern about air and water pollution,holes in ozone layer, acid rain, solid waste

disposal and deforestation.

qThis is being seriously felt by businessorganisations and some of them are respondingquickly as well such as Toyota Hybrid Cars

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Social and Cultural forces

q Changing role of Gender:

q Due to certain reasons the Male-Femaleroles related to families, jobs, recreation,

and buying behaviour are changing.q Contrary to the past more men are buying

house hold products as more women arebuying cars, sports equipments houses etc

q Women attitude towards shopping willchange further in the future

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Social and Cultural forces

q Physical fitness and health

q People are getting more aware of theirphysical fitness and health. For this, people

are getting more conscious about theirdaily diets.

q Interests are increasing the foodconsumption pattern where buyers are

buying products such as Low Salt, Lowcholesterol, High vitamins minerals andfibre.

q Companies are recognising and respondingto the general public interests.

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Technological

qTechnology has a huge impact on our lifestyle consumption pattern. For examplethe technological development in

Airplane, plastic, television, computers,antibiotics, lasers and videos etc.

qTechnology affects in three ways

q Starting of entirely new industryq Or products bringing huge changes in

existing industry

q

Products related indirectly to technologybut may change the life-style of people

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Demographical

The study of human population is calledDemography1-Size: Increase in population means more production2-Density: The dense populated areas shall be given more prioritythan the thin populated area3-Location: The location of population whether cities, towns or

villages4-Age: change in the size of a particular age group means theneeds and wants of that age group is to be targeted.5-Gender: Gender difference would give priority to the need/wantsof increasing gender.6-Race: Different races have different likes and dislikes therefore

change in the composition of population means change in productstrategies.7-Occupation: Occupation is directly related to the income ofpeople earning therefore more jobs more earning more spendingwhile less jobs less earningless spending.

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In class Exercise

Identification of MicroEnvironment of KIHE

Micro: Who are the...1- Suppliers?2- Customers/Consumer?3- Distributors?