Unit Two

Analyzing the Marketing

Environment
 YouTube: Adapting to the Fast-
Changing Marketing Environment
• video entertainment industry
• Consumers now have choices of what they watch, when, and where.
• YouTube’s mission is to provide a distribution platform by which
people can discover, watch, and share video entertainment.
• more than 1 trillion video views worldwide
• More video is uploaded to YouTube in one month than the three major
U.S. channels
• From low quality home videos to the HD quality long hour shows
• YouTube is thriving, leading the way in shaping how video is
produced, distributed, and monetized.
• Creating partner all around the world by encouraging video makers to
make unique innovative videos
• It wants to provide something for everyone by making special interest
videos not available on cables and TVs
• Mobile Apps for better distribution
Analyzing the Marketing
Environment
Topic Outline
• The Company’s Microenvironment
 Company
 Suppliers
 Marketing Intermediaries
 Customers
 Competitors
 Publics
• The Company’s Macroenvironment
 The Demographic Marketing Environment
 The Economic Environment
 The Natural Environment
 The Technological Environment
 The Political and Social Environment
 The Cultural Environment
• Responding to the Marketing Environment
 The Marketing Environment

The marketing environment includes the

actors and forces outside marketing that
affect marketing management’s ability to
build and maintain successful relationships
with customers
ME

Micro Environment Macro Environment

 The Marketing Environment

• Companies should constantly watch and

adapt to the changing environment – or in
many cases, lead those changes.
• Marketers must be environmental trend
trackers and opportunity seekers.
• Use marketing research and marketing
intelligence to collect information about
the marketing environment.
• You- tube , Barnes and nobles
 The Marketing Environment

Microenvironment consists of the actors

close to the company that affect its ability
to serve its customers: the company,
suppliers, marketing intermediaries,
customers, competitors, and publics
 The Company’s
Microenvironment
Actors in the Microenvironment
 The Company’s
Microenvironment
The Company
• Top management
• Finance
• R&D
• Purchasing
• Operations
• Accounting and many other departments
The Company’s Microenvironment
Company's other depts
Mktg managers must work closely with other company depts.
a. Finance : releases funds to carry out the mktg plan,
analyses the cost & profit of the plan.
b. Quality : ensures the quality of the product, focuses on
designing new designs, safe & attractive product.
c. Purchase : worries about getting reliable suppliers & raw
materials.
d. Production : responsible for on time production of the
required units of products.
e. Sales : responsible for distributing the products in the mkt.,
responsible for the execution of the mktg. plans.
The Company’s Microenvironment
Suppliers
• Suppliers form an important link in the overall customer
value delivery system
• Provide the resources to produce goods and services
• Most marketers treat their suppliers as their partners in
creating & delivering customer value.
• Supplier problem can seriously affect mktg.
- Supplier delay, labor strikes, shortage of raw materials lead
to disruption in mktg. plans.
- Supplier price trend, a sudden increase in price affects the
sales.

Walmart, IKEA
 The Company’s
Microenvironment
Marketing Intermediaries

Help the company to promote,

sell and distribute its products
to final buyers.
• Mc Donald's internationally
sells only Coca-Cola
• Pizza Hut sells Pepsi
 The Company’s
Microenvironment
Types of Marketing Intermediaries

Resellers
Physical distribution
(wholesalers, firms
retailers)

Marketing services Financial

agencies intermediaries
(research co. , media (Banks, insurance
agency) co.)
 The Company’s
Microenvironment
Marketing Intermediaries
• Facilitating organizations; they provide
service : transportation, warehousing,
financing.
• Distributor & wholesalers : help the company
to store and move goods from their points of
origin to their destination.
• Emphasis is given on proper storage &
shipment of goods, on time delivery, safety.
 The Company’s
Microenvironment
Competitors
• Firms must gain strategic advantage by
positioning their offerings against competitors’
offerings
• Knowledge about industry & competition is a
fundamental requirement for developing mktg.
strategy.
• Our product should have a “Competitive
Advantage”
• Competition is just a click away with online
purchasing.
 The Company’s
Microenvironment
Publics
• Any group that has an actual or potential interest in or
impact on an organization’s ability to achieve its
objectives
1. Financial—banks, stock-brokers, financial institutions.
2. Media—Newspaper, magazines, TV.
3. Government—Government departments.
4. Citizen—Consumer Organizations; environment groups.
5. Local—neighborhood residents, community groups.
6. General—General Public, public opinions.
7. Internal—Workers, officers, Board of Directors.
The Company’s Microenvironment
Customers
• Consumer tastes and preferences keep fluctuating.
• They may prefer one thing today & may prefer
entirely different tomorrow.
e.g Industries like cosmetics, personal care products,
garments & entertainment products.
 Consumer markets
 Business markets
 Reseller markets
 Government markets
 International markets
 The Company’s
Macroenvironment
 The Company’s
Macroenvironment
Demographic Environment
Demography: the study of human populations-
size, density, location, age, gender, race,
occupation, and other statistics
• Demographic environment: involves people,
and people make up markets
• Demographic trends: shifts in age, family
structure, geographic population, educational
characteristics, and population diversity
• Marketers are keenly interested in the size &
growth rate of population in different regions &
nations.
 The Company’s
Macroenvironment
Demographic Environment
• Global Population: The world population is
showing “explosive” growth.
• A growing population means growing
human needs to satisfy.
• Depending on the purchasing power, it
may also mean growing mkt. opportunities.
 The Company’s
Macroenvironment
Demographic Environment
• If the growing population presses too hard
on the limited / available resources, costs
will shoot up & profit margins will decline.
• Marketers need to find opportunities after
analyses.
• eg : Chinese govt. legislation one child per
family. (recent development Oct, 2015: two
child policy)
Demographic Environment

Pop Age Mix: Marketers need to analyze the age mix of the
market.

Each group has a specific need.

Therefore, marketers fine tune their mktg. efforts accordingly.

eg : Mexico is a young population, thus products of high

importance are milk, diapers, school supplies, toys etc.

Japan has one of worlds oldest population, thus Japan will

consume more of older products.

21
Demographic Environment

Increasing Diversity - Ethnic Groups : Countries vary in their

ethnic & racial makeup.

Eg: In Japan almost everyone is Japanese.

In America people from virtually all nations exist.

Thus referred to as “salad bowl”.

Household Patterns : Emerging nuclear families.

Traditional joint families falling apart. Thus, marketers should consider
the special needs of these non-traditional families.

Eg : Increase in small sized private homes : 2 bedroom / 3 bedroom flats.

Kitchen equipments targeting small families.

23
 The Company’s
Macroenvironment
Demographic Environment
More people are:
• Divorcing or separating
• Choosing not to marry
• Choosing to marry later
• Marrying without intending to have children

Increasing number of working women

Increasing number of stay-at-home dads

 The Company’s
Macroenvironment
Demographic Environment

• Move from rural to metropolitan

areas
• Changes in the Workforce
– More educated (more choosy
customers/ higher income)
– More white collar
 The Company’s
Macroenvironment
Economic Environment

Economic environment consists of factors that affect

consumer purchasing power and spending patterns.
Income Distribution : Marketers must pay a close
attention to the major trends in income & the
consumer spending pattern.
• Industrial economies are richer markets
• Subsistence economies consume most of their own
agriculture and industrial output
• Developing economies in between: offer great mkt
opportunity for right kind of products
Economic Environment

E.g : Upper Class : spends as and when it wants.

Middle Class : spending has increased all of a

sudden. Spends on clothes, cars, restaurants etc.

Lower Class : still very cautious and count their

pennies when making basic purchases. But the
need remains so does the demand.

25
 The Company’s
Macroenvironment
Economic Environment
Value marketing
offering financially cautious
buyers greater value—
the right combination of
quality and service at a
fair price

• TATA Nano targeted to

India’s growing middle
class.
 The Company’s
Macroenvironment
Economic Environment
Economic health
• Income
• Cost of living
• Interest rate
• Inflation rate
• Saving and borrowing patterns
 The Company’s
Macroenvironment
Natural Environment
Natural environment: natural resources that
are needed as inputs by marketers or that
are affected by marketing activities
• Trends
– Increased shortages of raw materials
– Increased pollution
– Increased government intervention
– Increased environmentally sustainable
strategies

• Green Management
Natural Environment
E.g. : Water & Air

Water : Manufacturing industries use tons & tons of underground water,

leading to shortage of drinking water.

Air Pollution : Polluted gases being emitted by industries & vehicles.

McDonalds have started using recyclable paper wrappings & napkins.

Also, it now works in close collaboration with PETA on systematically
reforming its business practices to be more humane and friendly to the
environment in which they operate.

KFC and Lavazza : edible cup

28
Natural Environment
Wal-Mart is committed to using its waste-eliminating corporate
philosophy to make its own operations more eco-friendly
than ever.

Companies today are recognizing the link between healthy

ecology and healthy economy.

Govt Rules : Govt in many countries play a major role in

promoting a clean environment.

Recent development: Nepal banned the use of polythene

bags .
(Bhat-Bhateni – Hamri Bahini Bags)
St. Xaviers School,Jawalakhel – Plastic free zone

29
 The Company’s
Macroenvironment
Technological Environment
• Most dramatic force in changing the
marketplace

• New technology can provide new

opportunities to marketers

• Concern for the safety of new products

• Concern for the safety of customers

information and privacy

• RFID(Radio frequency identification)- Many

companies have started using RFID to track
their products in the distribution channel
Technological Environment

Technology changes rapidly. Every new technology

replaces an old technology.

Eg : Xerography hurt the carbon paper business

Television hurt newspapers
Telephones affected the postal services
Digital cameras hurt the film camera business

Companies that do not keep up with the technological

changes soon will find their products outdated.

Thus will miss new products & mkt. opportunities.

30
 The Company’s
Macroenvironment
Political and Social Environment
Political environment :laws, government agencies, and
pressure groups that influence or limit various
organizations and individuals in a given society
• Well conceived regulations can encourage
competition and ensure fair markets for goods &
services.
• Businesses have to operate within the framework of
the prevailing legal environment
• Marketers must work hard to keep up with the
changes in regulations and their interpretations.
 The Company’s
Macroenvironment
Political and Social Environment
• Legislation regulating business
– Many countries have laws covering issues such as competition, fair
trade practices, environmental protection, product safety, truth in
advertisement, consumer privacy, packaging and labeling, pricing and
other important areas.
– Increased legislation (competition, fair trade, environment protection,
product safety, truth in advertising, consumer privacy, packaging and
labeling, pricing) for protecting companies from each other, protect
consumers and to protect the interests of the society.
– Changing government agency enforcement(New laws and enforcement
will continue to increase)
– Marketers must work hard to keep up with the changes in regulation
and their interpretation.
 The Company’s
Macroenvironment
Political and Social Environment
• Increased emphasis on ethics
– Beyond laws and regulations, businesses are also governed by
social codes and rules of professional ethics.
– Socially responsible behavior (ethically utilizing customers
information.)
– Cause-related marketing (Viber on earthquake time, 1 rupees
donated to education sector for every purchase of Surf Excel)
– Buy our products and we fund a charity- negative meaning
– If used properly, charitable organizations will gain more visibility
and many source of funding.
– Engageforgood.com/halo-awards
 The Company’s
Macroenvironment
Cultural Environment

Cultural environment consists of institutions

and other forces that affect a society’s
basic values, perceptions, preferences and
behaviors.
 The Company’s
Macroenvironment
Cultural Environment
Persistence of Cultural Values
Core beliefs and values are persistent and are passed on from parents to
children and are reinforced by schools, churches, businesses, and government
Getting married, having faith in religion

Secondary beliefs and values are more open to change and include people’s
views of themselves, others, organization, society, nature, and the universe
Getting married early or later in life, dressing in Burka
Marketer can change secondary beliefs but not core beliefs.
Child activist marketer can argue about stopping child marriage and getting married
later in life.

Shifts in Secondary Cultural Values (cultural swings- hairstyle and style acc.
to music stars, celebrities; more health conscious market)
 Responding to the Marketing
Environment
Views on Responding
Reactive Proactive

• React and adapt to • Aggressive actions to

forces in the affect forces in the
environment environment.
• Watching and reacting to
forces in the
environment

Rather than simply watching and reacting, companies should take proactive
steps with respect to the marketing environment.