ANALYZING THE MARKETING ENVIRONMENT Chapter 3 ANALYZING THE MARKETING ENVIRONMENT

Marketing environment Marketing environment: the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. Microenvironment: the actors close to the company that affect its ability to serve its customers- the company, suppliers, marketing intermediaries, customer markets, and competitors and publics. Macro environment: the larger societal forces that affect the micro environment- demographic, economic, natural, technological, political and cultural forces.

The company’s microenvironment The company: the top management, finance, R&D, purchasing, operations and accounting departments. All of these functions must “think consumer”. They should work in harmony to provide superior customer value and relationships. 2. Suppliers: the company’s overall customer value delivery system. Most marketers today treat their suppliers as partners in creating and delivering customer value. Marketing managers must watch supply ability and costs. Supply shortages or delays, labor strikes and other events can cost sales in the short run and damage customer satisfaction in the long run. 3. Marketing intermediaries: help the company to promote, sell and distribute its goods to final buyers. These include resellers, physical distribution firms, marketing service agencies and financial intermediaries.

The company’s microenvironment 4. Competitors: companies must provide greater customer value and satisfaction than its competitors do. They also must gain strategic advantage by positioning their offerings strongly against competitors'’ offerings in the minds of consumers. 5. Publics: any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. 6. Customers: customers are the most important actors in the company's microenvironment. The company might target any or all 5 types of customer markets. Five types of consumer markets: consumer markets, business markets, reseller markets, government markets and international markets.

The company’s macro-environment Six major forces: Demographic environment Economic environment Natural environment Technological environment Political and social environment Cultural environment

1. Demographic environment Demography: the study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics.

Contd.. Recent demographic changes in urban areas of Bangladesh which are important for marketers to consider: A changing family system: The changing role of women A better educated, more white-collared, more professional population

2. Economic environment Economic environment: factors that affect consumer buying power and spending patterns. Nations vary in terms of their levels and distribution of income: Industrial economies: constitutes rich markets of many different kinds of goods. Subsistence economies: consume most of their own agricultural and industrial output and offer few market opportunities. Developing economies: can offer outstanding marketing opportunities for the right kinds of products. What is Engel’s laws? Differences noted over a century ago by Ernst Engel in how people shift their spending across food, housing, transportation, health care and other goods and services categories as family income rises.

3. Natural environment Natural environment: natural resources that are needed as inputs by marketers or that are affected by marketing activities. Recent trends in the natural environment: Growing shortage of raw materials Increased pollution Increased government intervention

Contd.. The Kumbhakarna syndrome: a question of responding to market changes (pg. 69, 3.1) Environmental sustainability: developing strategies and practices that create a world economy that the planet can support indefinitely

Example of Environmental sustainability Google’s environmental innovations: Widely recognized as a business innovator, Google is also leading the way to a greener future with its environmental sustainability and green supply chain management practices. The company has demonstrated a commitment to existing in concert with the environment rather than at odds with it. Through initiatives such as powering its facilities with renewable energy sources, bringing in goats to trim the grass, and hosting farmer’s markets and sustainable-cooking seminars, Google has established an environmentally aware corporate culture and solidified its reputation as one of the world’s most forward-thinking companies.

4. Technological environment Technological environment: forces that create new technologies, creating new product and market opportunities Technological environment is the most dramatic force now shaping our destiny. Technology has released wonders like antibiotics, surgery, technological devices and the Internet. It has also released horrors such as nuclear missiles, chemical weapons and assault rifles. It also released mixed blessings such as automobile, television, and credit cards. Technology changes rapidly and new technologies create new markets and opportunities.

5. Political and social environment Political environment: laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society. Reasons why business legislation has been enacted: to Protect companies Protect consumers Protect the interests of society

Social environment Social: being socially responsible In an effort to draw positive attention to the organization as a solid corporate citizen, one committed to social responsibility, various organizations pursue: Green Marketing and Pro-environmental activities Cause related marketing. Green marketing: Coca-Cola is involved in various recycling programs. Toyota Prius is a fuel efficient and an environment friendly car.

Social environment Cause Related Marketing is a program in which a firm ties a marketing program in with some type of charity in order to generate goodwill. Many marketers use cause related marketing to help develop stronger brand ties and to move consumers towards brand loyalty.

PESTEL analysis A PESTEL analysis is a framework or tool used by marketers to analyze and monitor the macro-environmental(external marketing environment) factors that have an impact on an organization. The result of which is used to identify threats and weaknesses which is used in a SWOT analysis.

6. Cultural environment Cultural environment: institutions and other forces that affect society’s basic values, perceptions, preferences and behaviors. Persistence of cultural values: Core beliefs Secondary beliefs

PESTEL Analysis

Responding to the marketing environment There are three kinds of companies: Those who make things happen Those who watch things happen Those who wonder what has happened Companies should always try to be proactive in order to tackle in unforeseen situations.