DM

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.