M. Usman Aleem 1 The Marketing Environment Chapter # 03 M.Usman Aleem

2 What is the marketing environment? The marketing environment surrounds and impacts upon the organization. There are three key perspectives on the marketing environment, namely  The ‘Macro-environment,  The ‘Micro-environment' and  The ‘Internal environment'.

M. Usman Aleem 3 The Micro-Environment This environment influences the organization directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small, but this can be misleading. In this context, micro describes the relationship between firms and the driving forces that control this relationship. It is a more local relationship, and the firm may exercise a degree of influence.

M. Usman Aleem 4 The Macro-Environment This includes all factors that can influence and organization, but that are out of their direct control. A company does not generally influence any laws (although it is accepted that they could lobby or be part of a trade organization). It is continuously changing, and the company needs to be flexible to adapt. There may be aggressive competition and rivalry in a market. Globalization means that there is always the threat of substitute products and new entrants. The wider environment is also ever changing, and the marketer needs to compensate for changes in culture, politics, economics and technology.

M. Usman Aleem 5 The Internal Environment All factors that are internal to the organization are known as the 'internal environment'. They are generally audited by applying the 'Five Ms' which are Men, Money, Machinery, Materials and Markets. The internal environment is as important for managing change as the external. As marketers we call the process of managing internal change 'internal marketing.‘ Essentially we use marketing approaches to aid communication and change management. The external environment can be audited in more detail using other approaches such as SWOT Analysis, Michael Porter's Five Forces Analysis or PEST Analysis.

M. Usman Aleem 6 SWOT Analysis SWOT analysis is a tool for auditing an organization and its environment. It 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 factors. Opportunities and threats are external factors. In SWOT, strengths and weaknesses are internal factors.

M. Usman Aleem 7 Strength could be: Internal Factors 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.

M. Usman Aleem 8 A Weakness could be: Internal Factors 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.

M. Usman Aleem 9 An Opportunity could be: External Factors 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.

M. Usman Aleem 10 A Threat could be: External Factors 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.

M. Usman Aleem 11 SWOT Analysis: word of caution SWOT analysis can be very subjective. Do not rely on SWOT too much. Two people rarely come-up with the same final version of SWOT. TOWS analysis is extremely similar. It simply looks at the negative factors first in order to turn them into positive factors. So use SWOT as guide and not a prescription.

M. Usman Aleem 12 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 is subjective.

M. Usman Aleem 13 The Organization as a System It is useful to conceptualize the organization as a system or a whole with interdependent and interrelated parts. The systems approach solves problems by diagnosing them within a framework of inputs, transformation processes, outputs, and feedback. Inputs are the labor (human), money (financial), materials, and equipment resources that enter a transformation process. Transformation processes comprise the technologies used to convert inputs into outputs. Outputs are the original inputs as changed by a transformation process, products and services. Feedback is information about a system's status and performance.

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M. Usman Aleem 15 External Macro environment Competitive Environment Economic Environment Technological Environment Political and Legal Environment Demographic Environment Cultural Environment Ecosystem Environment

M. Usman Aleem 16 External Micro environment The Market Suppliers Marketing Intermediaries Marketing Information

M. Usman Aleem 17 Marketing Intermediaries Customers: Competitors: Publics  Financial Publics  Media Publics  Government Publics  Citizen-action Publics  Local Publics  General Public  Internal Public

M. Usman Aleem 18 Company's Microenvironment Demegraphic Environment Read Pg Economic Environment : Changes in Income Natural Environment Technological Environment Political Environment

M. Usman Aleem 19 Cultural Environment Values Shifts in Secondary Values Peoples Views of Others, Peoples Views of Organizations Peoples Views of Society Peoples Views of Nature Peoples Views of The Universe

M. Usman Aleem 20 Next Week DHAMAKA Wish You All The Best