1) What is Marketing?

The New Marketing Realities

Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target
market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the
size of the identified market and the profit potential. It pinpoints which segments the company is capable of
serving best and it designs and promotes the appropriate products and services.Marketing is often performed
by a department within the organization. This is both good and bad. Its good because it unites a group of
trained people who focus on the marketing task. Its bad because marketing activities should not be carried
out in a single department but they should be manifest in all the activities of the organization.
Network information technology. The digital revolution has created an Information Age that
promises to lead to more accurate levels of production, more targeted communications, and
more
relevant
pricing.
Globalization. Technological advances in transportation, shipping, and communication have
made it easier for companies to market in, and consumers to buy from, almost any country in
the world. International travel has continued to grow as more people work and play in other
countries.
Deregulation. Many countries have deregulated industries to create greater competition
and growth opportunities. In the United States, laws restricting financial services,
telecommunications, and electric utilities have all been loosened in the spirit of greater
competition.
Privatization. Many countries have converted public companies to private ownership and
management to increase their efficiency, such as the massive telecom company Telefnica CTC
in Chile and the international airline British Airways in the United Kingdom.
Heightened competition. Intense competition among domestic and foreign brands raises
marketing costs and shrinks profit margins. Brand manufacturers are further buffeted by powerful retailers that market their own store brands. Many strong brands have become
megabrands and extended into a wide variety of related product categories, presenting a significant
competitive
threat.
Industry convergence. Industry boundaries are blurring as companies recognize new
opportunities at the intersection of two or more industries. The computing and consumer
electronics industries are converging, for example, as Apple, Sony, and Samsung release a
stream of entertainment devices from MP3 players to plasma TVs and camcorders. Digital
technology
fuels
this
massive
convergence.
Retail transformation. Store-based retailers face competition from catalog houses; directmail firms; newspaper, magazine, and TV direct-to-customer ads; home shopping TV;
and e-commerce.

Define Marketing Environment

The marketing environment represents a mix between the internal and external forces which surround an
organization and have an impact upon it, especially their ability to build and maintain
successful relationships with target customers.
The marketing environment consists of the micro and macro environment.
Macro environmental factors include social, economic, political and legal influences, together
with demography and technological forces. These are sometimes referred to as the PESTLE factors and are
discussed in more detail in PESTLE analysis. The organization cannot control these forces, it can only
prepare for changes taking place.
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Micro environment refers to the forces closely influencing the company and directly affect the
organizations relationships. The factors include the company and its current employees, its suppliers,
marketing intermediaries, competitors, customers and the general public. These forces can sometimes be
controlled or influenced and are explained in more detail in Porters 5 Forces.
Environmental Contexts
Familiarity with the different types of markets helps marketers to better understand the
marketing environment they operate within.
The main types of customers are businesses, consumers, government bodies and employees.
Several transactions can occur between them, leading to the concept of consumer or B2C markets,
Business or B2B markets, export markets, government or G2C markets, with each having their own
specific profile.
Business to business (B2B) marketing represents the sales process between organizations or institutions.
Transactions in these markets are often more complex, the distribution channels are shorter and more direct
with stricter product standards and specifications.
Consumer markets (B2C) are represented by individuals who purchase goods, products or services for their
own consumption.
They can be segmented into various groups taking into account factors such as age, education,
location, attitudinal values, income, etc., meaning that various marketing strategies can be applied.
G2C markets (government to citizen) develop when governmental institutions become sellers and citizens
assume the role of buyers.
These interactions are becoming increasingly more specialized. For example, we can have B2E (business to
employee), a transaction that reflects what businesses do attract and keep their employees in terms of
recruitment tactics, benefits and opportunities, plus E2B(employee to business). Others from the
digital arena include C2C (consumer-to-consumer) or P2P (peer-to-peer), which represent the ability
of online users to interact directly with each other, without the need for an intervening organization
other than to facilitate the communication.
The PESTLE Factors
We start with the Political forces. First of all, political factors refer to the stability of the
political environment and the attitudes of political parties or movements. This may manifest in
government influence on tax policies, or government involvement in trading agreements. Political factors
are inevitably entwined with Legal factors such as national employment laws, international trade regulations
and restrictions, monopolies and mergers rules, and consumer protection. The difference between Political
and Legal factors is that Political refers to attitudes and approaches, whereas Legal factors are those which
have become law and regulations. Legal needs to be complied with whereas Political may represent
influences, restrictions or opportunities, but they are not mandatory.
Economic factors represent the wider economy so may include economic growth rates, levels
of employment and unemployment, costs of raw materials such as energy, petrol and steel, interest rates and
monetary policies, exchange rates and inflation rates. These may also vary from one country to another.
Socio-cultural factors represent the culture of the society that an organization operates within. They may
include demographics, age distribution, population growth rates, level of education, distribution of wealth
and social classes, living conditions and lifestyle.

Technological factors refer to the rate of new inventions and development, changes in information
and mobile technology, changes in internet and e-commerce or even mobile commerce, and
government spending on research. There is often a tendency to focus Technological developments on digital
and internet-related areas, but it should also include materials development and new methods
of manufacture, distribution and logistics.
Environmental impacts can include issues such as limited natural resources, waste disposal and
recycling procedures.
Porters 5 Forces model is an excellent tool to analyze the structure of the competitive environment. Two
important forces are the bargaining power of customers and the bargaining power of suppliers.
Supplier power is represented by their ability to determine the terms and price of supply and will increase if
there are fewer suppliers than buyers, if the organization is not a key customer for the supplier, or if their
industry is not attractive for suppliers.
Buyer power refers to the pressure that customers exert on companies to obtain high quality products and
services at lower prices. Buyer power increases when there are few buyers and many sellers in the field, or
when products are not significantly differentiated and can be easily substituted. For the seller, buyers
demands represent costs. This means that the stronger the buyer is, the less profit available for the seller,
which is why many companies try to develop strategies that reduce the power of buyers.
Another set of forces included in this model are the threats of new competition and substitute
new products.
Profitable markets are more likely to attract new entrants, especially if there is considerable profit to be
earned and barriers to entry are low. Newcomers increase the level of competition and also decrease
profitability for existing companies. However, there are methods to control this threat, such as through
regulation, patents, capital requirements, access to distribution, brand identity, absolute cost advantages and
government policy.
Substitute products are viable, alternative choices of products or services that the customer can make which
meet the same needs as the original product. An example would be MP3 downloads which meet the same
need as CDs, or mobile phones with cameras which satisfy the same need as digital cameras.
As with reducing the threat from new competitors, companies can use different strategies to protect their
products using trademarks, patents or strong branding to differentiate them from substitute products.
Competitive Rivalry
The last force involved in this model is the intensity of competitive rivalry, which is the major determinant of
competitiveness of the industry for most companies. It also relates to the rest of the forces described above.
If an industry is easily accessible to new entrants or if it is easy for customers to choose substitute products,
we can say that competitive rivalry is likely to be high.
Competitive rivalry also depends on factors such as the structure of competition, degree of differentiation, or
strategic objectives. As is mentioned in the video, two more forces can be added; social factors and the
economic environment. These can sometimes be seen in government actions which have an important
influence on business in some countries, and the internal rivalry which occurs between departments of the
same company.
Using the Model

In order to turn this model into an efficient tool, we need to work with real figures, otherwise it is
a subjective and abstract framework. We need to justify and quantify statements otherwise it will
remain purely conceptual