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(Marketing Environment)


Ms. Nipa Saha Lecturer Department of Business Studies

PRESENTED BY: Shornali Maria Khan Pinki Rani Datta Kusum Akter Umma Tasrin Jarin

STATE UNIVERSITY OF BANGLADESH Date of submission: April 13, 2010

April 13, 2010

Ms. Nipa Saha Lecturer Department Business Studies State university of Bangladesh Subject: LETTER TRANSMITTAL


Dear Sir,

With due respect we the students of Business Department have completed the Report on Marketing Environment as a part of the course requirement of Principles of Marketing. The preparation of this formal report is of a great expectation in our BBA program and we are quite happy to submit it duly applying all that we think should have to be included and which should not to be included. It was a great experience for us and though we are on the learning curve but, this report has put an impression on our mind that, all that matters of the private university of Bangladesh at ones time, skills, experience, knowledge and finally reality. If we are not asked to submit this report then it might be like that we are going out of our program without having something so much important for our life and so much practical.

We hope that the analysis that we have carried out is up to your expectations. It has been an insightful experience for us and we tried our best to follow the tenets of this report.

Sincerely yours


First of all we would like to express our gratitude to the Almighty Allah for great kindness to us. We want to give special thanks to our Course Instructor Nipa Saha for agree to be our supervisor of the report and his great influence on our report. It is our greatest pleasure to get the opportunity to do this report on Marketing Environment. And our special thanks to all of our friends who were directly or indirectly involved with preparation of this report. During the period we enjoyed very much. And this experience should be memorable to rest our life.

Table of Contents


Political and Legal Economic Social Technological Suppliers Distributors Customers Competitors PEST analysis Five forces analysis Strength Weakness Opportunity Threat Simple rules for successful SWOT analysis.





Executive Summary
The market environment is a marketing term and refers to factors and forces that affect a firms ability to build and maintain successful relationships with customers. Two levels of the environment are: Micro (internal) environment - small forces within the company that affect its ability to serve its customers. ). Macro (national) environment - larger societal forces that affect the microenvironment. The market environment comprises of the entire external factor as well as issues which directly or indirectly affect and impacts on the decision and performance of our organization. It is important to use various marketing models defining environment which are divided into micro environment and macro environment. Micro environment emanate from the day to day influences the marketing activities as a result of unpredictable consumers, suppliers , distributors and competitors ' activities since a organization may be not able to control them . This environment influences directly as it describes the relation of firm and the thrust that control the relationship at local level. Macro environment involves influences which are broader than day to day influence in our business and in it carries a more intermittent effect in marketing activities. Macro environment involves influences from factors such as politics, economics social trends and law and as well as technology . All these factors are associated with asserting influence marketing activities.


In this report we discussed the marketing environment factors or forces. It includes micro environment and macro environment. This report includes three parts. Firstly, it analyses the macro-environment and micro-environment. Secondly, it uses the PEST analysis. Finally, it draws a conclusion about the whole analysis and gives the recommendations.

The market environment is a marketing term and refers to factors and forces that affect a firms ability to build and maintain successful relationships with customers. Three levels of the environment are: Micro (internal) environment - small forces within the company that affect its ability to serve its customers. Meso environment the industry in which a company operates and the industrys market(s). Macro (national) environment - larger societal forces that affect the microenvironment.[1]

Macro-Environment (external environment)

The Companys Macro environment The company and all of the other actors operate in a larger macro environment of forces that shape opportunities and pose threats to the company. There are six major forces (outlined below) in the companys macro environment. There are six major forces (outlined below) in the companys macro environment. a. Demographic. b. Economic. c. Natural. d. Technological. e. Political. f. Cultural.

Key steps in environmental analysis of the macro marketing environment; 1) Audit of environmental influences 2) Assessment of the nature of the environment 3) Identification of the key environmental forces 4) Identification of the competitive position 5) Identification of the principal opportunities and threats (SWOT) 6) Strategic position as a result

a. Demographic Environment Demography is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other statistics. It is of major interest to marketers because it involves people and people make up markets. Demographic trends are constantly changing. Some more interesting ones are.

1). The worlds population (though not all countries) rate is growing at an explosive rate that will soon exceed food supply and ability to adequately service the population. The greatest danger is in the poorest countries where poverty contributes to the difficulties. Emerging markets such as China are receiving increased attention from global marketers. 2). The most important trend is the changing age structure of the population. The population is aging because of a slowdown in the birth rate (in this country) and life expectancy is increasing. The baby boomers following World War II have produced a huge bulge in our populations age distribution. The new prime market is the middle age group (in the future it will be the senior citizen group). There are many subdivisions of this group. a). Generation X--this group lies in the shadow of the boomers and lack obvious distinguishing characteristics. They are a very cynical group because of all the difficulties that have surrounded and impacted their group. b). Echo boomers (baby boomlets) are the large growing kid and teen market. This group is used to affluence on the part of their parents (as different from the Gen Xers). One distinguishing characteristic is their utter fluency and comfort with computer, digital, and Internet technology (sometimes called Net-Gens). c). Generational marketing is possible, however, caution must be used to avoid generational alienation. Many in the modern family now telecommute--work at home or in a remote office and conduct their business using fax, cell phones, modem, or the Internet In general, the population is becoming better educated. The work force is be-coming more white-collar. Products such as books and education services appeal to groups following this trend. Technical skills (such as in computers) will be a must in the future. The final demographic trend is the increasing ethnic and racial diversity of the population. Diversity is a force that must be recognized in the next decade. However, companies must recognize that diversity goes beyond ethnic heritage. One the important markets of the future are that disabled people (a market larger any of our ethnic minority groups).

b. Economic Environment The economic environment includes those factors that affect consumer purchasing power and spending patterns. Major economic trends in the United States include: 1). Personal consumption (along with personal debt) has gone up (1980s) and the early 1990s brought recession that has caused adjustments both personally and corporately in this country. Today, consumers are more careful shoppers . 2). Value marketing (trying to offer the consumer greater value for their dollar) is a very serious strategy in the 1990s. Real income is on the rise again but is being carefully guarded by a valueconscious consumer. 3). Income distribution is still very skewed in the U. S. and all classes have not shared in prosperity. In addition, spending patterns show that food, housing, and transportation still account for the majority of consumer dollars. It is also of note that distribution of income has created a two-tiered market where there are those that are affluent and less affluent. Marketers must carefully monitor economic changes so they will be able to prosper with the trend, not suffer from it.

c. Natural Environment The natural environment involves natural resources that are needed as inputs by marketers or that are affected by marketing activities. During the past two decades environmental concerns have steadily grown. Some trend analysts labeled the specific areas of concern were: 1). Shortages of raw materials. Staples such as air, water, and wood products have been seriously damaged and non-renewable such as oil, coal, and various minerals have been seriously depleted during industrial expansion. 2). Increased pollution is a worldwide problem. Industrial damage to the environment is very serious. Far-sighted companies are becoming environmentally friendly and are producing environmentally safe and recyclable or biodegradable goods. The public response to these companies is encouraging. However, lack of adequate funding, especially in third world countries, is a major barrier.

3). Government intervention in natural resource management has caused environmental concerns to be more practical and necessary in business and industry. Leadership, not punishment, seems to be the best policy for long-term results. Instead of opposing regulation, marketers should help develop solutions to the material and energy problems facing the world. 4). Environmentally sustainable strategies. The so-called green movement has encouraged or even demanded that firms produce strategies that are not only environmentally friendly but are also environmentally proactive. Firms are beginning to recognize the link between a healthy economy and a healthy environment.

d. Technological Environment The technological environment includes forces that create new technologies, creating new product and market opportunities. 1). Technology is perhaps the most dramatic force shaping our destiny. 2). New technologies create new markets and opportunities. 3). The following trends are worth watching: a). Faster pace of technological change. Products are being technologically outdated at a rapid pace. b). There seems to be almost unlimited opportunities being developed daily. Consider the expanding fields of health care, the space shuttle, robotics, and biogenetic industries. c). The challenge is not only technical but also commercial--to make practical, affordable versions of products. d). Increased regulation. Marketers should be aware of the regulations concerning product safety, individual privacy, and other areas that affect technological changes. They must also be alert to any possible negative aspects of an innovation that might harm users or arouse opposition. e. Political Environment The political environment includes laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society. Various forms of legislation regulate business. 1). Governments develop public policy to guide commerce--sets of laws and regulations limiting business for the good of society as a whole. 2). Almost every marketing activity is subject to a wide range of laws and regulations. Some trends in the political environment include:

1). Increasing legislation to: a). Protect companies from each other. b). Protecting consumers from unfair business practices. c). Protecting interests of society against unrestrained business behavior. 2). Changing government agency enforcement. New laws and their enforcement will continue or increase. 3). Increased emphasis on ethics and socially responsible actions. Socially responsible firms actively seek out ways to protect the long-run interests of their consumers and the environment. a). Enlightened companies encourage their managers to look beyond regulation and do the right thing. b). Recent scandals have increased concern about ethics and social responsibility. c). The boom in e-commerce and Internet marketing has created a new set of social and ethical issues. Concerns are Privacy, Security, Access by vulnerable or unauthorized groups. f. Cultural Environment The cultural environment is made up of institutions and other forces that affect societys basic values, perceptions, preferences, and behaviors. Certain cultural characteristics can affect marketing decision-making. Among the most dynamic cultural characteristics are:

1). Persistence of cultural values. Peoples core beliefs and values have a high degree of persistence. Core beliefs and values are passed on from parents to children and are reinforced by schools, churches, business, and government. Secondary beliefs and values are more open to change. 2). Shifts in secondary cultural values. Since secondary cultural values and beliefs are open to change, marketers want to spot them and be able to capitalize on the change potential. Societys major cultural views are expressed in: a). Peoples views of themselves. People vary in their emphasis on serving themselves versus serving others. In the 1980s, personal ambition and materialism increased dramatically, with significant implications for marketing. The leisure industry was a chief beneficiary. b). Peoples views of others. Observers have noted a shift from a me-society to a we-society. Consumers are spending more on products and services that will improve their lives rather than their image. c). Peoples views of organizations. People are willing to work for large organizations but expect them to become increasingly socially responsible. Many companies are linking themselves to

worthwhile causes. Honesty in appeals is a must. d). Peoples views of society. This orientation influences consumption patterns. Buy American versus buying abroad is an issue that will continue into the next decade. e). Peoples view of nature. There is a growing trend toward peoples feeling of mastery over nature through technology and the belief that nature is bountiful. However, nature is finite. Love of nature and sports associated with nature are expected to be significant trends in the next several years. f). Peoples views of the universe. Studies of the origin of man, religion, and thought-provoking ad campaigns are on the rise. Currently, Americans are on a spiritual journey. This will probably take the form of spiritual individualism.

Micro-Environment (internal environment)

The micro environment refers to the forces that are close to the company and affect its ability to serve its customers. It includes the company itself, its suppliers, marketing intermediaries, customer markets, competitors, and publics. The company aspect of microenvironment refers to the internal environment of the company. This includes all departments, such as management, finance, research and development, purchasing, operations and accounting. Each of these departments has an impact on marketing decisions. For example, research and development have input as to the features a product can perform and accounting approves the financial side of marketing plans and budgets.

1. Companies
Marketing managers must work with all departments of a company.All Departments have an impact on the marketing departments plans and actions. 2.suppliers The suppliers of a company are also an important aspect of the microenvironment because even the slightest delay in receiving supplies can result in customer dissatisfaction. Marketing managers must watch supply availability and other trends dealing with suppliers to ensure that product will be delivered to customers in the time frame required in order to maintain a strong customer relationship. 3.Marketing intermediaries

Marketing intermediaries refers to resellers, physical distribution firms, marketing services agencies, and financial intermediaries. These are the people that help the company promote, sell, and distribute its products to final buyers. Resellers are those that hold and sell the companys product. They match the distribution to the customers and include places such as Wal-Mart, Target, and Best Buy. Physical distribution firms are places such as warehouses that store and transport the companys product from its origin to its destination. Marketing services agencies are companies that offer services such as conducting marketing research, advertising, and consulting. Financial intermediaries are institutions such as banks, credit companies and insurance companies.

4.Customers Another aspect of microenvironment is the customers. There are different types of customer markets including consumer markets, business markets, government markets, international markets, and reseller markets. The consumer market is made up of individuals who buy goods and services for their own personal use or use in their household. Business markets include those that buy goods and services for use in producing their own products to sell. This is different from the reseller market which includes businesses that purchase goods to resell as is for a profit. These are the same companies mentioned as market intermediaries. The government market consists of government agencies that buy goods to produce public services or transfer goods to others who need them. International markets include buyers in other countries and includes customers from the previous categories 5. Competitors. Competitors are also a factor in the microenvironment and include companies with similar offerings for goods and services. To remain competitive a company must consider who their biggest competitors are while considering its own size and position in the industry. The company should develop a strategic advantage over their competitors. 6. publics The final aspect of the microenvironment is publics, which is any group that has an interest in or impact on the organizations ability to meet its goals. For example, financial publics can hinder a companys ability to obtain funds affecting the level of credit a company has. Media publics include newspapers and magazines that can publish articles of interest regarding the company and editorials that may influence customers opinions. Government publics can affect the company by passing legislation and laws that put restrictions on the companys actions. Citizenaction publics include environmental groups and minority groups and can question the actions of a company and put them in the public spotlight. Local publics are neighborhood and community organizations and will also question a companys impact on the local area and the level of

responsibility of their actions. The general public can greatly affect the company as any change in their attitude, whether positive or negative, can cause sales to go up or down because the general public is often the companys customer base. And finally those who are employed within the company and deal with the organization and construction of the companys product.

The Marketing Environment and Competitor Analysis

PEST analysis: It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning. The organization's marketing environment is made up of:

1. The internal environment e.g. staff (or internal customers), office technology, wages and finance, etc. 2. The micro-environment e.g. our external customers, agents and distributors, suppliers, our competitors, etc. 3. The macro-environment e.g. Political (and legal) forces, Economic forces, Sociocultural forces, and Technological forces. These are known as PEST factors. PEST analysis Political factors Economic factors Socio-cultural factors Technological factors

Political/legal Monopolies legislation Environmental protection laws Taxation policy Employment laws

Government policy Legislation Economic Factors Inflation Employment Disposable income Business cycles
Energy availability and cost

Sociocultural factors Demographics Distribution of income Social mobility Lifestyle changes Consumerism Levels of education

Technological New discoveries and innovations Speed of technology transfer Rates of obsolescence Internet Information technology

Five forces analysis: Five Forces Analysis helps the marketer to contrast a competitive environment. It has similarities with other tools for environmental audit, such as PEST analysis, but tends to focus on the single, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products. For example, Dell would analyses the market for Business Computers i.e. one of its SBUs. Five forces analysis looks at five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry.

Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4.

The threat of entry.

Economies of scale e.g. the benefits associated with bulk purchasing. The high or low cost of entry e.g. how much will it cost for the latest technology? Ease of access to distribution channels e.g. Do our competitors have the distribution channels sewn up? Cost advantages not related to the size of the company e.g. personal contacts or knowledge that larger companies do not own or learning curve effects. Will competitors retaliate? Government action e.g. will new laws be introduced that will weaken our competitive position? How important is differentiation? e.g. The Champagne brand cannot be copied. This desensitizes the influence of the environment. This is high where there a few, large players in a market e.g. the large grocery chains. If there are a large number of undifferentiated, small suppliers e.g. small farming businesses supplying the large grocery chains. The cost of switching between suppliers is low e.g. from one fleet supplier of trucks to another.

The power of suppliers. The power of suppliers tends to be a reversal of the power of buyers.

Where the switching costs are high e.g. Switching from one software supplier to another. Power is high where the brand is powerful e.g. Cadillac, Pizza Hut, Microsoft. There is a possibility of the supplier integrating forward e.g. Brewers buying bars. Customers are fragmented (not in clusters) so that they have little bargaining power e.g. Gas/Petrol stations in remote places.

The threat of substitutes

Where there is product-for-product substitution e.g. email for fax Where there is substitution of need e.g. better toothpaste reduces the need for dentists. Where there is generic substitution (competing for the currency in your pocket) e.g. Video suppliers compete with travel companies. We could always do without e.g. cigarettes.

Competitive Rivalry

This is most likely to be high where entry is likely; there is the threat of substitute products, and suppliers and buyers in the market attempt to control. This is why it is always seen in the center of the diagram

SWOT Analysis
SWOT analysis is a tool for auditing an organization and its environment. SWOT analysis is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal SWOT factors. Opportunities and threats are external SWOT factors. A strength is a positive internal factor. A weakness is a negative internal factor. An opportunity is a positive external factor. A threat is a negative external factor. The main purpose of SWOT analysis has to be to add value to our products and services so that we can recruit new customers, retain loyal customers, and extend products and services to customer segments over the long-term. If undertaken successfully, we can then increase our Return On Investment (ROI)

. In SWOT, strengths and weaknesses are internal factors. For example: A SWOT strength could be:

Your specialist marketing expertise. A new, innovative product or service. Location of your business. Quality processes and procedures. Any other aspect of your business that adds value to your product or service.

A SWOT weakness could be:

Lack of marketing expertise. Undifferentiated products or services (i.e. in relation to your competitors). Location of your business. Poor quality goods or services. Damaged reputation.

In SWOT, opportunities and threats are external factors. For example: A SWOT opportunity could be:

A developing market such as the Internet.

Mergers, joint ventures or strategic alliances. Moving into new market segments that offer improved profits. A new international market. A market vacated by an ineffective competitor.

A SWOT threat could be:

A new competitor in your home market. Price wars with competitors. A competitor has a new, innovative product or service. Competitors have superior access to channels of distribution. Taxation is introduced on your product or service.

Simple rules for successful SWOT analysis.

Be realistic about the strengths and weaknesses of your organization when conducting SWOT analysis. SWOT analysis should distinguish between where your organization is today, and where it could be in the future. SWOT should always be specific. Avoid grey areas. Always apply SWOT in relation to your competition i.e. better than or worse than your competition. Keep your SWOT short and simple. Avoid complexity and over analysis SWOT analysis is subjective.


The separate studies and the review section included in this dissertation are all dealing with the same research problems: how environmental issues and social responsibility are (and should be) integrated into marketing planning. The principle assumption to be tested in this dissertation is that environmental marketing functions (e.g. advertising) obtain their objectives from marketing strategies which are based on the objectives of the business unit, in this case environmental business values. Testing the model of marketing environment in this dissertation will support the development of theory in this area. Additionally, the results of the study can be used in developing strategic marketing of (forest) industry companies especially concerning integration of environmental issues into marketing planning. However, as Crane (2000a) suggests, there is a need for developing longitudinal research which not only identifies and explains enacted green strategies and their implementation, but investigates their subsequent success or failure with implications both for those businesses and for the environment itself. RECOMMENDATION:
Anderberg, M.R. 1973. Cluster analysis for applications. Academic Press, New York.