THE MARKETING

ENVIRONMENT

KRISHAN ABEYRATHNE
Title: The Marketing Environment

Course: International Higher Diploma in

Marketing Management – Level 5
Student Name: T.M.K.H. Abeyrathne

Student Registration Number:

Email Address: [email protected]

Lecturer:

Name of College: METROPOLITAN COLLEGE

Semester/Year:

Assigned submission Date:

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 Table of Contents

TASK 01 03-09

Introduction

Introduction to the company

What is marketing and marketing environment

Components of marketing environment

Internal Environmental Analysis

TASK 02 10-12

External Environmental Analysis

Porter’s five forces

Conclusion………………………………………………………………………………………………………………………….

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TASK 01

1.1 Introduction
The business environment is never constant, it keeps changing every minute. Every business
must face this environmental change and must handle it tactfully to survive in the industry.
When the environment of a business changes, it affects a firm's ability to build and maintain
successful customer relationships. Therefore, identifying this business environment properly
is crucial for every organization.

1.2 Introduction to the company

To talk about the Marketing environment and other related
concepts in a more detailed manner I have selected organization
name as CBL Foods International (Pvt) Ltd.
CBL Food International (Pvt) Ltd is one of the renowned
manufacture company and fully owned subsidiary of Ceylon
Biscuit Limited. It’s located in Ranala, Sri Lanka. CBL provides
over 40 years of world class services to their local customers as
well as international customers. They manufacture confectionary products such as Chunky
Choc, Chit Chat and Pebbles etc. in Sri Lanka and they produce most reliable and dominant
brand called “Ritzbury”. Ritzbury enjoys a 70% market share in chocolate based
confectionary market in Sri Lanka. Further to that, they are responsible for 30% of the
revenue in CBL Group. Since CBL group is a huge company with hundreds of products I
decided to focus my study mainly on the “Ritzbury” operation of CBL International Foods
(Pvt) Limited.

1.3 What is marketing and marketing environment

Before analysing the business environment of a company, having a proper idea of what is
marketing and how it’s environment is made of is important. Then only the organization will
be able to identify both opportunities and threats that can have an impact on the organization
and its performance.
If we take the simple meaning of what marketing is, Marketing can be known as the process
that involves identifying existing customer needs and requirements with anticipating future
changes. So, when the environment of business changes that’s when marketing steps in. right
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marketing will help the organization to influence and educate their customers while
promoting their products or services among consumers.
According to Philip Kotler, Marketing Environment is defined as “A company's marketing
environment consists of the internal factors & forces, which affect the company's ability to
develop & maintain successful transactions & relationships with the company's target
customers.” (Kotler, P. and Armstrong, G. (2012). Principles of marketing. 14th ed. Boston: Pearson Prentice
Hall.).

2.1 Components of marketing environment

 Internal or External Environment

The marketing environment can be classified as internal and external environments. The
internal environment is known as the environment that can be controlled and this
environment comprises those factors that operate within the firm. company's internal
environment includes the resources, capabilities and competencies held by the company and
these internal factors will help the organization in gaining and sustaining competitive
advantage.
- Resources includes assets that are visible like production facilities, raw materials,
financial resources, and other physical assets. Also, this includes invisible assets
such as the brand, reputation, moral enterprise, technical knowledge, patents,
trademarks etc.
So according CBL they have latest machineries installed within their production
houses and fully automated systems that make their production process effective
and efficient also CBL has a strongly built brand and reputation in the market and
it’s a company that is financially very stable.
- Capabilities and competencies include Capability of the organization, the skills
and the ability of people, and processes that can be used by companies to
transform inputs into outputs etc.
When it comes to people and processes of CBL, they hold a strong competitive
advantage because CBL hires the best people that fits for the job role perfectly.
they always make sure that all the employees who work there are well trained and
guided. Also, CBL management never hesitates to pool up the best experts in the

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 market and to utilize their skills and capabilities perfectly in a way that company
transforms its inputs into outputs in a well effective manner

The external environment consists of forces and factors which are external to the business
and on which the organization has little or no control. The external environment is of two
types:

- Micro Environment
- Macro Environment

Micro environment of a company consists of factors that are close to the business
organization and influence its functioning and its ability to serve its customers. This has
factors like,
 The suppliers: Suppliers play an important role in every business. suppliers
can control the success of the business if the supplier holds a considerable
power to influence the business and its operations.
 The customers: Customers of an organization are considered as the most
important group of people and their reasons for buying the product will play
an important role in how the company approach the marketing of their
products and services to them.
 The competition: Those who sell same or similar products and services as your
organisation are your market competition, by observing the marketing moves

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 and decisions of competitors an organization can predict their competitors
marketing strategies and they can prepare the organization to face the
competition in a better way to reap better results and get ahead of competitors.
Every company needs to have a competition around them because good
competition always bring good results to the company in the long run and
competition is what, makes an organization running for its success.

 The public: every organization has a duty to satisfy the public which includes
media public, government public, citizens, internal public etc. Any actions of a
company must be considered from the angle of the public and how they are
affected. The public are the people who have power to help any organization
reach their goals as well as public can also prevent an organization from
achieving them. Therefore, the reactions and opinion of public should be
considered before making any rash decisions that will build a bad reputation
about the organization before public eyes.

Macro Environment consist the major and uncontrollable factors that can affect the
organization’s decision making, performance and strategies. The company and all the other
factors operate in a larger macroenvironment of forces that shape opportunities and pose
threats to the company. these factors include the economic factors, demographics, legal,
political, and social conditions, technological changes and natural forces.

3.1 Internal Environmental Analysis

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SWOT Analysis of the CBL Ritzbury

SWOT Analysis is known as a very useful technique that is being used to get a better
understanding of a company’s Strengths and Weaknesses, and for identifying both the
Opportunities open to the company and the Threats that the company will have to face. why
SWOT is considered as a powerful tool is because SWOT analysis helps the organization to
uncover opportunities that can be very beneficial to the organization also this analysis gives a
clear understanding about the weaknesses of the company which will help the organization to
eliminate future threats that can affect the organization. The SWOT framework also provides
a good understanding about the competition that the organization is facing, and this will help
the organization to compete successfully in the market.

Strengths Weaknesses

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 Developing Indo Lanka free trade -After opening up more plants in north and
policy is good opportunity which can east area, they can avoid the limited
Opportunitie
s be considered as one of the great factory space in Ranala Plant.
strengths of Ritzbury. The main
-In Ritzbury chocolate coated product
reason that helped CBL to Achieve
market already achieved 70% of market
this opportunity was mainly because
share; production capacity is insufficient to
of the strong brand image they have in
meet forecasted demand for products in the
the market.
local market. Ritzbury can use their
After the war was ended, Ritzbury
machineries and other capital resources to
opened up more plants in north and
avoid this weakness
east areas, this is mainly about
strengthening their network which
will generate good opportunities to the
company. Strengthening their network
around the country will help the
organization in maintaining and
organizing sales and distribution
Network Island wide in a more
effective and efficient manner.

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 Other manufactures like “Nestle” -Ritzbury is mainly focused on young
gives a tough competition, because in market segment. Therefore, it’s highly
Threats the chocolate market Nestle plays a possible for other competitors to capture
role of an excellent global player but other market segments which Ritzbury is
still Ritzbury, they use quality not focusing on presently
machinery which are brand new and
-The certain product groups has involved
imported to produce chocolates.
in a price competition with other
Ritzbury is the only company which
competitors in the local market (Chunky
invests in such machines in Sri Lanka.
Choc, Chit Chat). It means the capacity of
Therefore, the machines are more
these product groups are continuously
efficient in energy consumption. They
growing, but it cannot be achieved that
focus on quality raw materials and
important growth in profit. But they can
maintaining high standards in the
use their high technology machineries and
entire production process. Therefore,
reduce the cost of the product and increase
challenges are easily avoided.
their profits.

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TASK 02

3.2 External Environmental Analysis

3.2.1 PEST Analysis of the CBL Ritzbury

Political Forces
 Sri Lanka is a democratic country. It is governed by a parliamentary and presidential
system. The government actions and activities are directly impact to the chocolate
industry, it includes government policies, taxes on raw materials (tax on coco butter),
regulation on the labelling and packaging and tax on the imported brands. And change
in government party is directly impact to the any industry in the country because the
policies will help to run the business effectively.
 The food Act No 43 of 2003 came into effect in July 2014. With the flow of the new
Food act, the Sri Lanka Food Act No 26 of 1980, which was in effect for the past 24
years, was replaced. New regulations on packaging, storage, distribution as well as
contents were imposed, and it has become mandatory to all organizations to follow
these regulations.
Environmental Factors
 Most of times organizations try to ensure their sustainable business to achieve high
energy consumption, reduced waste and pollution.
Social Factors
 Buyer’s knowledge about health concerns has increased, therefore customers trend to
demanding more in dark chocolates and low-fat chocolate. So, organization make sure
that their products are contribute more health, energy and happiness. And, Chocolates
is an impulse category, and people’s first prominence goes to necessities.

Technological Forces
 The food manufacturing organizations investing more in modernization of machines,
tools and achieving technological improvement, therefore they can achieve energy
consumption, reduced wastage; provide technical support from their groups,
technology transfer (online) and availability of secret technics to manufacture
competitive products.

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  currently set up ERP system, to monitor their factories and spread network in their
other plants and connect in local and international suppliers to the organizations
through the same network.
Economic Forces
 In Sri Lanka it has an open economy and the Gross Domestic product grew at an
average annual rate of 5.5% in the country. Economic impacts are also become crucial
factors in marketing and management decisions which are directly affecting. The GDP
rate, Import taxes, inflation rate, interest rate, labour cost and influence of
globalization are directly affect to the business.
 When considering Ritzbury, they purchase raw materials in international market
therefore they must be aware on the global supply and exchange rates.

Legal Forces
 All organizations conducting their business operations under the Sri Lanka
government’s rules and regulations. also, they follow appropriate legal conditions
including consumer law, employment law, health and safety and advertising law.
These
factors can affect how a factory operates, its costs, and the demand for its products in
food industry

3.2.2 Porter’s five forces

Porter's Five Forces is known as a model that identifies the five competitive forces that shape
every industry and helps a company to determine an industry's weaknesses and strengths.
Five forces are one of the techniques that can be used to identify its existing competitors
(Lynch, 2006)
These forces are,
 Competition in the industry

 Potential of new entrants into the industry

 Power of suppliers

 Power of customers

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  Threat of substitute products.
When applying the 5-force analysis to CBL,

 Threat of new entity

When it comes to CBL the impact of a new entity entering into the market is
low. There are five barriers that a new entrant should face when he’s entering
to the market. They are, economy of scale, product differentiation, capital
requirements, switching cost and access to distribution channel.
Current market is more challenging because products like Kandos, Edna and
Diana play a major role in the local market and products coming from Nestle,
and Cadbury mainly focus the international market. Therefore, starting up a
new business is much more difficult while there are market giants like this.
Also, profitable companies like Ceylon chocolate limited and Edna group have
a high production output, therefore they can get low cost chocolates and
chocolate related products (Coco butter) to the market. So, when new
manufactures enter the market they cannot produce a large quantity and put them
into the market for a lower cost. Because of this reason many companies would
not want to take the risk of entering this new market after investing a huge capital.
Therefore, local market has a less threat of new entity entrance.
 Threat of substitutes
Threat of substitutes is high because there are some quality brands of chocolates
are available in the local market. Substitution is easy and feasible in the food
industry.
 Bargaining power of buyers
Bargaining power is comparatively high, because branded chocolates are
available in the local and international markets.
 Bargaining power of suppliers
Since there are so many suppliers in the current market, organizations have a
chance to select quality suppliers. There is no considerable switching cost due to
the nature of the raw materials. Therefore, the impact of Bargaining power of
suppliers is low.
 Competitive Rivalry within an industry
The impact of competitive Rivalry within the industry is considerably high
because all the local suppliers as well as the agents of the international brands
are on a head on rivalry in terms of price, promotions, offers and functional

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 benefits. Any action in terms of marketing is followed by many reactions from
several competitors

Conclusion
In this project I mainly examined Marketing environment of Ritzbury which is
coming under CBL Food International (Pvt) Ltd. This assignment explains the
changing nature of marketing environment, how the internal and external market
environments affect the organization and how analysis like SWOT, PESTEL and
Porter’s five forces modules are useful to the company to find out how
environmental factors are affecting the Ritzbury. However, with this assignment I
would like to conclude that A business organization will have to keep observing
and analysing their marketing environment and implement good strategies and
decisions in order to become a successful organization.

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