Marketing

Sandra Misiak-Kwit
The analysis of market
environment
II Lecture
 The market environment

is a marketing term and refers to factors and

forces that affect a firm’s ability to build and
maintain successful relationships with customers
 Marketing Environment
All the actors and forces influencing the company’s ability to transact business
effectively with it’s target market.

Includes:

1. Micro-environment

Consists of factors close to the company that affect its ability to serve its
customers: the company itself, marketing channel, firms, customer markets
& a broad range of publics

2. Macro-environment
Components of Marketing Environment
Macro
Environment

Micro
Environment

Internal
Environment
 demographic

publics
cultural economic

competitors suppliers

company

intermediaries company

natural political
customers

technological
 Company’s Macro environment

The larger societal forces that affect the

whole microenvironment - demographic,
economic, natural, technological, political
and cultural forces
 Macro environment

demographic

cultural economic

company
natural political

technological
 Macro environment
• monitors population in terms of age, sex, race,
Demographic occupation, location and other statistics

• factors that affect consumer buying power and

Economic patterns

• natural resources needed as inputs by marketers

Natural or that are affected by marketing activities

• forces that create new product and market

Technological opportunities

• laws, agencies and groups that influence or limit

Political marketing actions

• forces that affect a society’s basic values,

Cultural perceptions, preferences, and behaviors
 Key Demographic Trends

Changing Age Structure; population is getting older

Changing Family Structure, marrying later, fewer children, working

women, a one-person households

Increased Education
Increased college attendance and white-collar workers

Geographic Shifts, moving to the urban and suburbs

Growing Ethnic and Racial Diversity

 Economic Environment

Changes in
Income

Economic
Concerns
Changes in
for
Consumer Marketers Economic
Spending Development
Patterns
 General Economic Conditions
• Business cycle: fluctuations in the economy that follow the
general pattern of prosperity, recession, depression and recovery.
– Prosperity: A period during which unemployment is low and
total income is relatively high.
– Recession: A period during which unemployment rises and
total buying power declines.
– Depression: A period during which unemployment is
extremely high, wages are very low, total disposable income is
at a minimum and consumers lack confidence in the economy.
– Recovery: The stage of the business cycle in which the
economy moves from depression or recession to prosperity.
 Consumer Demand and Spending Behaviour
• Buying power: Resources such as goods, services and financial holdings that
can be traded in an exchange situation.
• Income: The amount of money received through wages, rents, investments,
pensions and subsidy payments for a given period.
• Disposable income: After-tax income, which is used for spending or saving.
• Discretionary income: Disposable income that is available for spending and
saving after an individual has purchased the basic necessities of food, clothing
and shelter.
• Wealth: The accumulation of past income, natural resources and financial
resources.
• Willingness to spend : A disposition towards using buying power, influenced
by the ability to buy, expected satisfaction from a product and numerous
psychological and social forces.
 Consumer Demand and Spending Behaviour
• Consumer spending patterns: Information indicating the relative
proportions of annual family expenditures or the actual amount of
money spent on certain goods and services.

• Comprehensive spending patterns: The percentages of family income

allocated to annual expenditures for general classes of goods and
services.

• Product-specific spending patterns: The annual monetary amounts

families spend for specific products from within a general product class
 Natural Environment
Natural resources that are needed as inputs by marketers or
that are affected by marketing activities.

Issues:

• Shortage of raw materials

• Increased cost of energy

• Increased pollution

• Government intervention in natural resource management

 Natural Environment

Shortages
of Raw
Material

Factors
Increased More
Affecting the
Costs of Government
Energy Natural Intervention
Environment

Higher
Pollution
Levels
 Technological Environment

• Technology: the knowledge of how to accomplish tasks and goals

• Forces that create new technologies, creating new products and
market opportunities
Issues:
• Fast pace of technological change
• High R&D budgets
• Concentration on minor improvements
• Increased regulation
• Effect of technology on society
• Effect of technology on marketing
• Technology assessment
 Technological Environment

Increased High R & D

Regulation Budgets

Focus on
Rapid Pace of
Minor
Change
Improvements Issues in the
Technological
Environment
 Political Environment

Increased
Legislation

Key Trends in
the Political
Environment
Changing Greater
Enforcement Concern for
Ethics
 Cultural Environment

of Others

Of of the
Organizations Universe
Views That
Express
Values
of Nature
of Society

of Oneself
 Elements of Culture

1. Language

2. Manners & Customs

3. Technology & Material Culture

4. Social Institutions

5. Education – transmitting values, skills, attitudes etc

6. Aesthetics – attitude toward beauty, art, music etc

7. Religion
 Micro environment
The micro-environment affects the organization directly. It
refers to the environment that is most closely linked to the
company.

This environment is also not under the full control of

business. BUT:

The business can influence this environment.

 Micro Environment

Customer

Competitor Public

Components

Marketing Supplier
Intermediares
 Company’s microenvironment

Company
Marketing
Suppliers intermedia- Customer
ries
Competittors

Public
 Customers

• Customers are the actual buyers of our goods and services.

• The company must study its customer markets closely since

each market has its own special characteristics.
 Customer market
Consumer • individuals and households that buy goods and services
Consumer Market - for personal consumption
market
• buy goods and services for further processing or for use
Business market in their production process

Resseler market • buy goods and services in order to resell them at a profit

Government • agencies that buy goods and services in order to produce

public services or transfer them to those that need them
market
International • buyers of all types in foreign countries
market
 Suppliers
• Suppliers are firms and individuals that provide the resources
needed by the company.

• They are an important link in the company’s overall customer

“value delivery system.”
 Competitors …

… those who serve a target market with similar products and

services

• Conducting competitor analysis is critical for success of the

firm

• A marketer must monitor its competitors’ offerings to create

strategic advantage
 Marketing Intermediaries
Marketing intermediaries are firms that help the company to
promote, sell, and distribute its goods to final buyers.

Physical Marketing
Marketing Financial
Reseller distribution servicies
intermediaries intermediaries
firms agencies
 Marketing Intermediaries

- They are those who hold and sell company’s product.

Reseller
- Wholesaler and retailer.

Physical - They help the company to stock and move goods

Distribution from their points of origin to their destinations.
Firm - Transportation and warehousing.

- They help the company target and promote its

Marketing products.
Service
Agencies - Advertising agencies. Media agency, marketing
research firms, etc.

Financial They help finance transactions and insure against risks.

Intermediaries Banks, credit companies, insurance company, ect.
 Public

• A public is any group that has an actual or

potential interest in or impact on an
organization’s ability to achieveits objectives.

• A company should prepare a marketing plan

for all of their major publics.
 Public

Financial

Internal Govermment

Public
Citizen group Media

General Local
Porter's Five Forces analysis
 Threats high Threats low
Profits low Profits high

Five-
Forces
Model

Five-Forces
Model
Example: Wine Industry Analysis
 Environmental Analysis
PEST (STEP) analysis
• POLITICAL
• ECONOMIC
• SOCIAL/CULTURAL
• TECHNOLOGICAL

SLEPT analysis
• SOCIAL/CULTURAL
• LEGAL
• ECONOMIC
• POLITICAL
• TECHNOLOGICAL
 Environmental Analysis

BPEST analysis
• BUSINESS
• POLITICAL
• ECONOMIC
• SOCIAL/CULTURAL
• TECHNOLOGICAL
PESTLE analysis
• POLITICAL
• ECONOMIC
• SOCIAL/CULTURAL
• TECHNOLOGICAL
• LEGAL
• ENVIRONMENTAL/ECOLOGICAL
 Analysis Tool: PESTEL (example)

– POLITICAL: e.g. coming election in U.S.

– ECONOMIC: e.g. falling Canadian dollar
– SOCIAL: e.g. attitudes towards gay marriage
– TECHNOLOGICAL: e.g. information technology
– ENVIRONMENTAL: e.g. climate change
– LEGAL: e.g. food and safety regulations
 Analysis Tool: SWOT

strengths weaknesses

opportunities threats
For many years, the Bobovita company has been producing, among
others, porridges for babies in one-size packaging. Based on your
review of the marketing environment, identify three trends or factors
that may have a significant impact on the company's future operations.
Then suggest how BoboVita could react to these changes
 Task II
Gillette has been producing disposable razors for men for many years.
Based on your review of the marketing environment, identify three
trends or factors that may have a significant impact on the company's
future operations. Then suggest how Gillette might respond to these
changes.
McDonalds has been serving products in plastic packaging for many
years. Based on your review of the marketing environment, identify
three trends or factors that may have a significant impact on the
company's future operations. Then suggest how McDonalds could
respond to these changes.
 Additional Task
Analyse the environment for the new mobile
network operator who wants to enter the
Polish market. Vodafone is one
of the top 10 networks in the world.

OR

Conduct analyses: 5 Forces, PESTEL, SWOT

for a chosen company