Marketing Environment and External Influences

Marketing Environment Overview

• Definition: The marketing environment encompasses all external and internal factors that influence a firm's ability to develop and maintain successful relationships with target customers.

Internal vs. External Environment

• Internal Environment: Direct control and responsibility over factors affecting marketing, including objectives, planning, and marketing mix (4 Ps).

• Components:

  • Marketing goals and objectives
  • Planning and execution of marketing processes
  • Marketing mix (Product, Price, Place, Promotion)

• External Environment: Factors that are outside of a firm’s direct control but can significantly impact its performance.

• Components:

  • Business mission and objectives
  • Operational management
  • Financial management
  • Human resource management
  • Public relations management

Concept of Target Market

• Target Market: A fairly homogeneous group of consumers that marketing managers believe are most likely to buy a firm's products.

Understanding the External Environment

• Environmental Scanning: Continual collection and evaluation of information from the external environment to identify opportunities and threats.
• Opportunities: Consumer needs that a firm can profitably meet.
• Threats: Challenges from unfavorable trends that could potentially harm the firm.

Techniques for Environmental Scanning

• Attend seminars and conferences.
• Analyze political speeches and consult reports from financial institutions.
• Follow social media discussions relevant to market trends.
• Gather and analyze economic and national trade data.

SWOT Analysis

• Considered a valuable tool to identify internal strengths (S) and weaknesses (W), and external opportunities (O) and threats (T).
• Key Questions:
  • Is this an environmental variable a threat or opportunity?
  • Do we possess the strengths required to capitalize on the opportunity or mitigate the threat?
  • What are our weaknesses in addressing these?

Key Environmental Factors (PESTLE Analysis)

• Political Factors: Impact of government actions on marketing strategies, including consumer rights and advertising regulations.
• Economic Factors:
• Inflation decreasing purchasing power.
• Recession affecting consumer demand.
• Strategies during recession:
  • Improving products and services
  • Emphasizing value and targeting new market segments.
• Social Factors: Changes in consumer values, family structures, and emergence of new trends.
• Demographic Factors: Study of population statistics influencing market segmentation (age, location, ethnicity).
• Technological Factors: Emerging technologies that can be opportunities or threats.
• Legal Factors: Laws that influence business practices, including competition laws and consumer protection regulations.

Living Standards Measure (LSM) and Socio-Economic Measure (SEM)

• LSM: A non-racial measurement tool that categorizes consumers based on living standards without regard for ethnicity.
• Variables: Access to utilities, ownership of appliances, and type of housing.
• SEM: Focuses on durable products and reflects consumer lifestyles through various indicators like household amenities and security.

Competitive and Physical Forces

• Competitive Factors: Number of competitors, their size, and level of market interdependence.
• Physical Forces: Environmental changes such as climate change, resource scarcity, and trends towards recycling and sustainable practices.