MARKETING

MANAGEMENT
The Marketing
Environment
At the end of this chapter, you should be able to:

 Understand that Value Delivery Rests on Proper Grasp of

Environment
 Understand that Strategic Response to Environment is Possible
only with Sound Knowledge of Environment
 Recognise that Environment carries Opportunities and Threats
 Comprehend the tasks Involved in Marketing Environment Analysis
 Identify the Components of the Environment to be Analysed
 Interpret Mega/Macro Environment
 Identify Environmental Components Specific to the Business
Concerned
 Understand the Influence of Society upon Businesses
Value Delivery Rests on Proper Grasp of Environment
 Consumer, technology, competitors, and many other similar
components are parts of an Environment.
 Insights obtained from the environment help in the formulation of the
right strategies for delivering the value.
(Example: GM and Sony)

Strategic Response to Environment, Possible only with

Sound Knowledge of Environment

 Environment Analysis gives the Needed Insights

Spotting the Opportunities and Threats
 Environment analysis enables firms to spot events and trends taking
place in the environment that are subsequently interpreted as
opportunities or threats.
 Opportunity- threat profile
 Summing up the opportunities and threats that are cropping up.

The Tasks Involved in Marketing Environment Analysis

 Analysis of macro environment factors as well as
environmental factors specific to the business concerned.
 Study the customer.
 Examine alternative technologies that are available/emerging.
Components of the Environment to be Analysed
 Mega/Macro environment
 Technological, socio-cultural, economic, political, and
demographic environment.
 The environment that is specific to the business the firm is
engaged in.
 Position of the industry concerned
 Competition
 Consumer
1. Mega/Macro Environment
 The Sequence is Reversed; PEST Becomes TSEP
 Technology Environment
 Options available in technology
 Government’s approach in respect of technology
 Technology selection
 Spheres where technology breakthroughs are happening
 Technology breakthroughs in ICE
 Digital revolution
 Homes go digital- digitalisation of entertainment
• TV becomes smarter
• Digital cameras and E-cinema
 Technology Environment
 The Convergence Phenomenon
• Convergence of IT and CT brings forth ICT
• Convergence of ICT and Entertainment technologies brings forth ICE
• Devices too converge
• PC journeys from a utility device to a connectivity device to an entertainment device
• Processors, protocols and standards too converge
• Breakthrough in telecom technology – main enabler of the convergence
• WAP
o The WAP mobile phone

o The WAP broadband

 Breakthroughs in technology foster a new type of competition

Mega/Macro Environment
 Socio-Cultural Environment
 Culture
 Social class
 Developments on the global socio-cultural scene
 The ‘Techno intoxication’ of consumer communities
 Spread of consumerist culture and Americanisation
• Pace of life gets ever more rapid.
 The New iGen and the New Tweens
Mega/Macro Environment
 Socio-Cultural Environment
 The Advent of the ‘Next Society’
• People’s work pattern will change.
• A flexible working system.
(Example of British telecom)
 Economic Environment
Mega/Macro Environment
 Political Environment
 Economic environment is often a by-product of the political
environment.
 Form of Govt a major factor
 Political stability another
 Includes elements like social and religious organisations, media,
pressure groups and lobbies of various kinds.

 Demographic Environment
 Size of population, growth rate, age distribution, religious
composition and literacy levels
 Composition of workforce, household patterns, regional
characteristics and population shifts
Mega/Macro Environment
 Natural Environment
 Natural resources
 Ecology
 Climate
 Legal Environment/ Business Legislation
 Corporate affairs
 Consumer protection
 Employee protection
 Sectoral protection
 Corporate protection
 Protection of society as a whole against unbridled business
behaviour
 Regulations on products, prices and distribution
 Controls on trade practices
 Protecting national firms against the onslaught of foreign firms
2. Environmental Components Specific to the
Business Concerned
 Market/Demand
 Nature of demand, size of demand, patterns of consumption,
buying habits, invasion of substitute, etc.
 The Consumer
 Tastes and preference of the consumer keep fluctuating.
Environmental Components Specific to the
Business Concerned
 Industry and Competition
 Knowledge about industry and competition is a fundamental
requirement for strategy
 Government Policies
 Profoundly affect the specific environment of any industry/
business
 Supplier Related Factors
 Suppliers constitute one of the five forces shaping competition
 Their Bargaining power affects costs and profits of the firm
Influence of Society upon Businesses
 Society has its concerns over product/service/marketing schemes of
corporates
 Attack on McDonald’s

 Pressure on Microsoft to have a shared platform with other

operating systems
 Greenpeace campaign against Nestle dealing GM foodstuffs

Techniques Used in Environment Analysis

 We will see in the chapters on Marketing Planning, MR, and Sales
Forecasting

Insights Gained from Environment must Govern

Strategy
Environment Analysis, a Continuous Affair