1. Marketing Environment

2. Definition
“The actors and forces outside marketing that affect marketing mgt’s ability to build and maintain successful relationships with target customers” – Kotler
Today's markets change rapidly and marketers need to adopt their strategies and to meet new challenges and opportunities

3. The Environmental forces
Marketing Environment -Macro-
Technological
factors
Legal
factors
Marketing Environment -Micro-
The Internal Environment
COMPANY
PESTLE
Consumer
PESTLE
Supplier
Political
factors
Economic
factors
Stakeholder
Environmental
factors
Socio- Cultural
factors
The Marketing Environment

4. Micro Environment Macro Environment
The actors close to the company that affect its ability to serve its customers
Macro Environment
The larger societal forces that affect the micro environment

5. Exercise :Internal Environment
Money
Material
Machinery
Markets
(Analyzing in the context of Sri Lankan Airlines)

6. Micro Environment- Key Stakeholders
Company
Suppliers
Competitors
Customers
Channel Partners
Share holders & creditors
Employees & Unions
Pressure groups
(Intermediaries)

8. Strengths
Brand
Product portfolio
Financial Resources
Managerial ability
Knowledge/Skill
Economies of scale
Technology
Weakness
Lack of skilled labor
High labor turn over
Overcapacity
Poor internal communication
Supplier relationships
Opportunity
Investments
Diversifying portfolio
Global markets
Internet
Innovation
Demand for high quality products
Threats
Competitor activity
Supplier desertion
Market saturation
Substitute products
Resistance to change

9. (Threat of Substitutes)
Porters 5 Forces
Potential Entrant
(Threat of Mobility)
Substitutes
(Threat of Substitutes)
Buyer
(Buyer Power)
Supplier
(Supplier Power)
Industry Rivalry

10. Industry Rivalry Sustainable competitive advantage through innovation
Competition between online and offline companies
Level of advertising expense
Powerful competitive strategy
Apple vs Anroid

11. Bargaining Power of Suppliers
Supplier switching costs relative to firm switching costs
Degree of differentiation of inputs
Impact of inputs on cost or differentiation
Presence of substitute inputs
Strength of distribution channel
Supplier concentration to firm concentration ratio
Employee solidarity (e.g. labor unions)
Supplier competition – ability to forward vertically integrate and cut out the BUYER

12. Bargaining Power of Buyers
Buyer concentration to firm concentration ratio
Degree of dependency upon existing channels of distribution
Bargaining leverage, particularly in industries with high fixed costs
Buyer switching costs relative to firm switching costs
Buyer information availability
Availability of existing substitute products
Buyer price sensitivity
Differential advantage (uniqueness) of industry products
Key Accounts Chains

13. Threat of Substitutes Buyer propensity to substitute
Relative price performance of substitute
Buyer switching costs
Perceived level of product differentiation
Number of substitute products available in the market
Ease of substitution
Substandard product
Quality depreciation
Water vs Cola

14. Threat of New Competition
The existence of barriers to entry (patents, rights, etc.)
Economies of product differences
Brand equity
Switching costs
Capital requirements
Access to distribution
Customer loyalty to established brand
Absolute cost
Industry profitability; the more profitable the industry the more attractive it will be to new competitors.

15. Analyzing the Macro EnvironmentP
Political E
Economic S
Social T
Technological L
Legal E
Environmental

16. Political factors
Main concern for business is for stability in political decision making, a dependable planning horizon and a positive climate
Alert management to impending legislation
Mobilize efforts to represent stakeholder interest to the legislators
Develop awareness of the intentions of those public bodies that can make decisions affecting business operations
Identify changes out of electoral shifts
Implications of Political manifestos and philosophies of the party

17. Economic factors Business cycle Inflation GDP Economic policies
Employment levels
Disposable income

18. Social factors Trends in population Dependency ratio
Population structure
Occupational structure
Regional distribution
Marital status and household structure
(Case: BMW)

19. Technological factors
Technology is a primary driving force for social change
Computer, mobile media and telecommunications are converging
Credit transfers rather than cash based society
Rise of the knowledge worker
Rising proportion of IT and tele communications ownership
(Case: Nike)
90’s. Bookshops generally just did not see AMAZON coming – until it was too late. Bookshops seemed to be convinced that people wanted to browse. They did want to browse – so Amazon included this feature in their Web Site.

20. Ecological factors
What are the issues that will directly and indirectly impact the business
How will the business mitigate this challenge?
Assess stakeholder impact
Can the environmental issues be used to ones advantage?
What should be our strategic positioning?
(Case: Marks & Spencer)

21. Legal factors Legislation governing business
Legislation governing trade practices
Laws governing packaging
Price ceiling