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REPORTREPORT

ONON(Marketing Environment)(Marketing Environment)

PREPARED for…PREPARED for…

Ms. Nipa Saha

Lecturer

Department of Business Studies

PRESENTED BY:PRESENTED BY:

Shornali Maria KhanShornali Maria Khan

Pinki Rani DattaPinki Rani Datta

Kusum AkterKusum Akter

Umma Tasrin JarinUmma Tasrin Jarin

S TATE UNIVERSITY OF BANGLADESH

Date of submission: April 13, 2010

April 13, 2010

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Ms. Nipa Saha

Lecturer

Department Business Studies

State university of Bangladesh

Subject: LETTER OF TRANSMITTAL

Dear Sir,

With due respect we the students of Business Department have completed the Report on

“Marketing Environment” as a part of the course requirement of “Principles of Marketing.”

The preparation of this formal report is of a great expectation in our BBA program and we are

quite happy to submit it duly applying all that we think should have to be included and which

should not to be included. It was a great experience for us and though we are on the learning

curve but, this report has put an impression on our mind that, all that matters of the private

university of Bangladesh at one’s time, skills, experience, knowledge and finally reality. If we

are not asked to submit this report then it might be like that we are going out of our program

without having something so much important for our life and so much practical .

We hope that the analysis that we have carried out is up to your expectations. It has been an

insightful experience for us and we tried our best to follow the tenets of this report.

Sincerely yours

Acknowledgement

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First of all we would like to express our gratitude to the Almighty Allah for great kindness to us.

We want to give special thanks to our Course Instructor Nipa Saha for agree to be our supervisor

of the report and his great influence on our report. It is our greatest pleasure to get the

opportunity to do this report on Marketing Environment. And our special thanks to all of our

friends who were directly or indirectly involved with preparation of this report. During the

period we enjoyed very much. And this experience should be memorable to rest our life.

Table of Contents

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EXECUTIVE SUMMARY

INTRODUCTION

MACRO-ENVIRONMENT AND MICRO-ENVIRONMENT

MACRO-ENVIRONMENT

• Political and Legal

• Economic

• Social

• Technological

MICRO-ENVIRONMENT

• Suppliers

• Distributors

• Customers• Competitors

THE MARKETING ENVIRONMENT & COMPETITOR ANALYSIS

• PEST analysis

• Five forces analysis

SWOT ANALYSIS

• Strength

• Weakness• Opportunity

• Threat

• Simple rules for successful SWOT analysis.

CONCLUSION

RECOMMENDATION

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Executive Summary

The market environment is a marketing term and refers to factors and forces that affect a firm’sability to build and maintain successful relationships with customers. Two levels of theenvironment are: Micro (internal) environment - small forces within the company that affect itsability to serve its customers. ). Macro (national) environment - larger societal forces that affectthe microenvironment. The market environment comprises of the entire external factor as well asissues which directly or indirectly affect and impacts on the decision and performance of our organization.

It is important to use various marketing models defining environment which are divided intomicro environment and macro environment. Micro environment emanate from the day to dayinfluences the marketing activities as a result of unpredictable consumers, suppliers , distributorsand competitors ' activities since a organization may be not able to control them . Thisenvironment influences directly as it describes the relation of firm and the thrust that control therelationship at local level.

Macro environment involves influences which are broader than day to day influence in our business and in it carries a more intermittent effect in marketing activities. Macro environmentinvolves influences from factors such as politics, economics social trends and law and as well astechnology . All these factors are associated with asserting influence marketing activities.

Introduction

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In this report we discussed the marketing environment factors or forces. It includes micro

environment and macro environment. This report includes three parts. Firstly, it analyses the

macro-environment and micro-environment. Secondly, it uses the PEST analysis. Finally, it

draws a conclusion about the whole analysis and gives the recommendations.

MARKETING ENVIRONMENT

The market environment is a marketing term and refers to factors and forces that affect a firm’sability to build and maintain successful relationships with customers. Three levels of theenvironment are: Micro (internal) environment - small forces within the company that affect itsability to serve its customers. Meso environment – the industry in which a company operates andthe industry’s market(s). Macro (national) environment - larger societal forces that affect themicroenvironment. [1]

Macro-Environment (external environment)

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The Company’s Macro environment

The company and all of the other actors operate in a larger macro environment of forces that

shape opportunities and pose threats to the company. There are six major forces (outlined below)in the company’s macro environment. There are six major forces (outlined below) in thecompany’s macro environment.a. Demographic.

b. Economic.c. Natural.d. Technological.e. Political.f. Cultural.

Key steps in environmental analysis of the macro marketing environment;

1) Audit of environmental influences2) Assessment of the nature of the environment3) Identification of the key environmental forces4) Identification of the competitive position

5) Identification of the principal opportunities and threats (SWOT)6) Strategic position as a result

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a. Demographic Environment

Demography is the study of human populations in terms of size, density, location, age, sex, race,occupation, and other statistics. It is of major interest to marketers because it involves people and

people make up markets. Demographic trends are constantly changing. Some more interesting

ones are.

1). The world’s population (though not all countries) rate is growing at an explosive rate that willsoon exceed food supply and ability to adequately service the population. The greatest danger isin the poorest countries where poverty contributes to the difficulties. Emerging markets such asChina are receiving increased attention from global marketers.

2). The most important trend is the changing age structure of the population. The population is

aging because of a slowdown in the birth rate (in this country) and life expectancy is increasing.The baby boomers following World War II have produced a huge “bulge” in our population’sage distribution. The new prime market is the middle age group (in the future it will be the senior citizen group). There are many subdivisions of this group.

a). Generation X--this group lies in the shadow of the boomers and lack obvious distinguishingcharacteristics. They are a very cynical group because of all the difficulties that have surroundedand impacted their group.

b). Echo boomers (baby boomlets) are the large growing kid and teen market. This group is usedto affluence on the part of their parents (as different from the Gen Xers). One distinguishingcharacteristic is their utter fluency and comfort with computer, digital, and Internet technology(sometimes called Net-Gens).

c). Generational marketing is possible, however, caution must be used to avoid generationalalienation. Many in the modern family now “telecommute”--work at home or in a remote officeand conduct their business using fax, cell phones, modem, or the Internet In general, the

population is becoming better educated. The work force is be-coming more white-collar.Products such as books and education services appeal to groups following this trend. Technical

skills (such as in computers) will be a must in the future. The final demographic trend is theincreasing ethnic and racial diversity of the population. Diversity is a force that must berecognized in the next decade. However, companies must recognize that diversity goes beyondethnic heritage. One the important markets of the future are that disabled people (a market larger any of our ethnic minority groups).

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b. Economic Environment

The economic environment includes those factors that affect consumer purchasing power andspending patterns. Major economic trends in the United States include:1). Personal consumption (along with personal debt) has gone up (1980s) and the early 1990s

brought recession that has caused adjustments both personally and corporately in this country.Today, consumers are more careful shoppers

.2). Value marketing (trying to offer the consumer greater value for their dollar) is a very seriousstrategy in the 1990s. Real income is on the rise again but is being carefully guarded by a value-conscious consumer.

3). Income distribution is still very skewed in the U. S. and all classes have not shared in prosperity. In addition, spending patterns show that food, housing, and transportation still

account for the majority of consumer dollars. It is also of note that distribution of income hascreated a “two-tiered market” where there are those that are affluent and less affluent. Marketersmust carefully monitor economic changes so they will be able to prosper with the trend, notsuffer from it.

c. Natural Environment

The natural environment involves natural resources that are needed as inputs by marketers or that are affected by marketing activities. During the past two decades environmental concernshave steadily grown. Some trend analysts labeled the specific areas of concern were:

1). Shortages of raw materials.

Staples such as air, water, and wood products have been seriously damaged and non-renewablesuch as oil, coal, and various minerals have been seriously depleted during industrial expansion.

2). Increased pollution

is a worldwide problem. Industrial damage to the environment is very serious. Far-sightedcompanies are becoming “environmentally friendly” and are producing environmentally safe andrecyclable or biodegradable goods. The public response to these companies is encouraging.However, lack of adequate funding, especially in third world countries, is a major barrier.

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3). Government intervention

in natural resource management has caused environmental concerns to be more practical andnecessary in business and industry. Leadership, not punishment, seems to be the best policy for long-term results. Instead of opposing regulation, marketers should help develop solutions to the

material and energy problems facing the world.

4). Environmentally sustainable strategies.

The so-called green movement has encouraged or even demanded that firms produce strategiesthat are not only environmentally friendly but are also environmentally proactive. Firms are

beginning to recognize the link between a healthy economy and a healthy environment.

d. Technological Environment

The technological environment includes forces that create new technologies, creating new product and market opportunities.1). Technology is perhaps the most dramatic force shaping our destiny.2). New technologies create new markets and opportunities.3). The following trends are worth watching:a). Faster pace of technological change. Products are being technologically outdated at a rapid

pace. b). There seems to be almost unlimited opportunities being developed daily. Consider theexpanding fields of health care, the space shuttle, robotics, and biogenetic industries.c). The challenge is not only technical but also commercial--to make practical, affordableversions of products.d). Increased regulation. Marketers should be aware of the regulations concerning product safety,individual privacy, and other areas that affect technological changes. They must also be alert toany possible negative aspects of an innovation that might harm users or arouse opposition.

e. Political Environment

The political environment includes laws, government agencies, and pressure groups thatinfluence and limit various organizations and individuals in a given society. Various forms of legislation regulate business.1). Governments develop public policy to guide commerce--sets of laws and regulations limiting

business for the good of society as a whole.2). Almost every marketing activity is subject to a wide range of laws and regulations. Sometrends in the political environment include:

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1). Increasing legislation to:a). Protect companies from each other.

b). Protecting consumers from unfair business practices.c). Protecting interests of society against unrestrained business behavior.

2). Changing government agency enforcement. New laws and their enforcement will continue or increase.

3). Increased emphasis on ethics and socially responsible actions. Socially responsible firmsactively seek out ways to protect the long-run interests of their consumers and the environment.a). Enlightened companies encourage their managers to look beyond regulation and “do the rightthing.”

b). Recent scandals have increased concern about ethics and social responsibility.c). The boom in e-commerce and Internet marketing has created a new set of social and ethicalissues. Concerns are Privacy, Security, Access by vulnerable or unauthorized groups.

f. Cultural Environment

The cultural environment is made up of institutions and other forces that affect society’s basicvalues, perceptions, preferences, and behaviors. Certain cultural characteristics can affectmarketing decision-making. Among the most dynamic cultural characteristics are:

1). Persistence of cultural values. People’s core beliefs and values have a high degree of persistence. Core beliefs and values are passed on from parents to children and are reinforced byschools, churches, business, and government. Secondary beliefs and values are more open tochange.

2). Shifts in secondary cultural values. Since secondary cultural values and beliefs are open tochange, marketers want to spot them and be able to capitalize on the change potential. Society’smajor cultural views are expressed in:a). People’s views of themselves. People vary in their emphasis on serving themselves versusserving others. In the 1980s, personal ambition and materialism increased dramatically, withsignificant implications for marketing. The leisure industry was a chief beneficiary.

b). People’s views of others. Observers have noted a shift from a “me-society” to a “we-society.”Consumers are spending more on products and services that will improve their lives rather thantheir image.

c). People’s views of organizations. People are willing to work for large organizations but expectthem to become increasingly socially responsible. Many companies are linking themselves to

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worthwhile causes. Honesty in appeals is a must.d). People’s views of society. This orientation influences consumption patterns. “Buy American”versus buying abroad is an issue that will continue into the next decade.

e). People’s view of nature. There is a growing trend toward people’s feeling of mastery over nature through technology and the belief that nature is bountiful. However, nature is finite. Loveof nature and sports associated with nature are expected to be significant trends in the nextseveral years.

f). People’s views of the universe. Studies of the origin of man, religion, and thought-provokingad campaigns are on the rise. Currently, Americans are on a spiritual journey. This will probablytake the form of “spiritual individualism.

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Micro-Environment (internal environment)

The micro environment refers to the forces that are close to the company and affect its ability toserve its customers. It includes the company itself, its suppliers, marketing intermediaries,customer markets, competitors , and publics.

The company aspect of microenvironment refers to the internal environment of the company.This includes all departments , such as management, finance , research and development ,

purchasing , operations and accounting . Each of these departments has an impact on marketingdecisions. For example, research and development have input as to the features a product can

perform and accounting approves the financial side of marketing plans and budgets.

1. Companies

Marketing managers must work with all departments of a company.All Departments havean impact on the marketing department’s plans and actions.

2.suppliers

The suppliers of a company are also an important aspect of the microenvironment becauseeven the slightest delay in receiving supplies can result in customer dissatisfaction.Marketing managers must watch supply availability and other trends dealing with suppliersto ensure that product will be delivered to customers in the time frame required in order tomaintain a strong customer relationship.

3.Marketing intermediaries

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Marketing intermediaries refers to resellers, physical distribution firms, marketingservices agencies, and financial intermediaries . These are the people that help thecompany promote, sell, and distribute its products to final buyers. Resellers are those that

hold and sell the company’s product. They match the distribution to the customers andinclude places such as Wal-Mart , Target, and Best Buy . Physical distribution firms are places such as warehouses that store and transport the company’s product from its originto its destination. Marketing services agencies are companies that offer services such asconducting marketing research , advertising, and consulting. Financial intermediaries areinstitutions such as banks, credit companies and insurance companies .

4.Customers

Another aspect of microenvironment is the customers. There are different types of customer markets including consumer markets, business markets, government markets,international markets , and reseller markets. The consumer market is made up of individuals who buy goods and services for their own personal use or use in their household. Business markets include those that buy goods and services for use in

producing their own products to sell. This is different from the reseller market whichincludes businesses that purchase goods to resell as is for a profit. These are the samecompanies mentioned as market intermediaries. The government market consists of government agencies that buy goods to produce public services or transfer goods toothers who need them. International markets include buyers in other countries andincludes customers from the previous categories

5. Competitors.

Competitors are also a factor in the microenvironment and include companies with similar offerings for goods and services. To remain competitive a company must consider who their

biggest competitors are while considering its own size and position in the industry. The companyshould develop a strategic advantage over their competitors.

6. publics

The final aspect of the microenvironment is publics, which is any group that has an interest in or

impact on the organization’s ability to meet its goals. For example, financial publics can hinder acompany’s ability to obtain funds affecting the level of credit a company has. Media publicsinclude newspapers and magazines that can publish articles of interest regarding the companyand editorials that may influence customers’ opinions. Government publics can affect thecompany by passing legislation and laws that put restrictions on the company’s actions. Citizen-action publics include environmental groups and minority groups and can question the actions of a company and put them in the public spotlight. Local publics are neighborhood and communityorganizations and will also question a company’s impact on the local area and the level of

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responsibility of their actions. The general public can greatly affect the company as any changein their attitude, whether positive or negative, can cause sales to go up or down because thegeneral public is often the company’s customer base . And finally those who are employed withinthe company and deal with the organization and construction of the company’s product.

The Marketing Environment and Competitor Analysis

PEST analysis : It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feedall aspects of planning.

The organization's marketing environment is made up of:

• 1. The internal environment e.g. staff (or internal customers), office technology, wagesand finance, etc.

• 2. The micro-environment e.g. our external customers, agents and distributors, suppliers,our competitors, etc.

• 3. The macro-environment e.g. Political (and legal) forces, Economic forces,Sociocultural forces, and Technological forces. These are known as PEST factors.

PEST analysis

Political factors

Economic factors

Socio-cultural factors

Technological factors

Political/legal

Monopolies legislation

Environmental protection laws

Taxation policy

Employment laws

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Government policy

Legislation

Economic Factors

Inflation

Employment

Disposable income

Business cycles

Energy availability and cost

Sociocultural factors

Demographics

Distribution of income

Social mobility

Lifestyle changes

Consumerism

Levels of education

Technological

New discoveries and innovations

Speed of technology transfer

Rates of obsolescence

Internet

Information technology

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Five forces analysis:

Five Forces Analysis helps the marketer to contrast a competitive environment. It hassimilarities with other tools for environmental audit, such as PEST analysis, but tends to focus onthe single, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products. For example, Dell would analyses the market for Business Computers i.e. oneof its SBUs. Five forces analysis looks at five key areas namely the threat of entry, the power of

buyers, the power of suppliers, the threat of substitutes, and competitive rivalry.

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Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4.

The threat of entry.

• Economies of scale e.g. the benefits associated with bulk purchasing.

• The high or low cost of entry e.g. how much will it cost for the latest technology?

• Ease of access to distribution channels e.g. Do our competitors have the distributionchannels sewn up?

• Cost advantages not related to the size of the company e.g. personal contacts or knowledge that larger companies do not own or learning curve effects.

• Will competitors retaliate?

• Government action e.g. will new laws be introduced that will weaken our competitive position?

• How important is differentiation? e.g. The Champagne brand cannot be copied. Thisdesensitizes the influence of the environment.

• This is high where there a few, large players in a market e.g. the large grocery chains.

• If there are a large number of undifferentiated, small suppliers e.g. small farming businesses supplying the large grocery chains.

• The cost of switching between suppliers is low e.g. from one fleet supplier of trucks toanother.

The power of suppliers.

The power of suppliers tends to be a reversal of the power of buyers.

• Where the switching costs are high e.g. Switching from one software supplier to another.

• Power is high where the brand is powerful e.g. Cadillac, Pizza Hut, Microsoft.

• There is a possibility of the supplier integrating forward e.g. Brewers buying bars.

• Customers are fragmented (not in clusters) so that they have little bargaining power e.g.Gas/Petrol stations in remote places.

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The threat of substitutes

• Where there is product-for-product substitution e.g. email for fax Where there issubstitution of need e.g. better toothpaste reduces the need for dentists.

• Where there is generic substitution (competing for the currency in your pocket) e.g.Video suppliers compete with travel companies.

• We could always do without e.g. cigarettes.

Competitive Rivalry

• This is most likely to be high where entry is likely; there is the threat of substitute

products, and suppliers and buyers in the market attempt to control. This is why it isalways seen in the center of the diagram

SWOT Analysis

SWOT analysis is a tool for auditing an organization and its environment. SWOT analysis is thefirst stage of planning and helps marketers to focus on key issues. SWOT stands for strengths,weaknesses, opportunities, and threats. Strengths and weaknesses are internal SWOT factors.

Opportunities and threats are external SWOT factors. A strength is a positive internal factor. Aweakness is a negative internal factor. An opportunity is a positive external factor. A threat is anegative external factor.

The main purpose of SWOT analysis has to be to add value to our products and services so thatwe can recruit new customers, retain loyal customers, and extend products and services tocustomer segments over the long-term. If undertaken successfully, we can then increase our Return On Investment (ROI)

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.

In SWOT, strengths and weaknesses are internal factors.

For example:

A SWOT strength could be:

• Your specialist marketing expertise.

• A new, innovative product or service.

• Location of your business.

• Quality processes and procedures.

• Any other aspect of your business that adds value to your product or service.

A SWOT weakness could be:

• Lack of marketing expertise.

• Undifferentiated products or services (i.e. in relation to your competitors).

• Location of your business.

• Poor quality goods or services.

• Damaged reputation.

In SWOT , opportunities and threats are external factors.

For example:

A SWOT opportunity could be:

• A developing market such as the Internet.

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• Mergers, joint ventures or strategic alliances.

• Moving into new market segments that offer improved profits.

• A new international market.

• A market vacated by an ineffective competitor.

A SWOT threat could be:

• A new competitor in your home market.

• Price wars with competitors.

• A competitor has a new, innovative product or service.

• Competitors have superior access to channels of distribution.

• Taxation is introduced on your product or service.

Simple rules for successful SWOT analysis.

• Be realistic about the strengths and weaknesses of your organization when

conducting SWOT analysis.• SWOT analysis should distinguish between where your organization is today, and where

it could be in the future.

• SWOT should always be specific. Avoid grey areas.

• Always apply SWOT in relation to your competition i.e. better than or worse than your competition.

• Keep your SWOT short and simple. Avoid complexity and over analysis

• SWOT analysis is subjective.

CONCLUSION:

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The separate studies and the review section included in this dissertation are all dealing with thesame research problems: how environmental issues and social responsibility are (and should be)integrated into marketing planning. The principle assumption to be tested in this dissertation isthat environmental marketing functions (e.g. advertising) obtain their objectives from marketingstrategies which are based on the objectives of the business unit, in this case environmental

business values. Testing the model of marketing environment in this dissertation will supportthe development of theory in this area. Additionally, the results of the study can be used indeveloping strategic marketing of (forest) industry companies especially concerning integrationof environmental issues into marketing planning. However, as Crane (2000a) suggests, there is aneed for developing longitudinal research which not only identifies and explains enacted greenstrategies and their implementation, but investigates their subsequent success or failure withimplications both for those businesses and for the environment itself.

RECOMMENDATION:

http://www.marketingteacher.com

Anderberg, M.R. 1973. Cluster analysis for applications. Academic Press, New York.