MARKETING

ENVIRONMENT
Introduction
Businesses do not operate in a vacuum. They are affected in some way
by the environment in which they operate. This environment defines the
opportunities for developing new businesses as well as indicating areas in
which the businesses are threatened or weakened.
 Marketing environment can be defined as the factors and
forces within and outside the marketing environment that may
facilitate or hinder the management ability to develop and
maintain successful transactions with its target consumers.

 Therefore, successful companies know the vital importance of

constantly watching and adapting to the changing environment
which keeps on changing to the extent that both the marketers
and the consumers wonder what the future may hold (the
environment is coupled with many uncertainties for most
businesses).
Categories of a Marketing Environment

The marketing environment of an organization falls into two

categories:
 Macro (External) Environment-Uncontrollable
 Micro (Internal) Environment- Controllable
Micro Environment
These are the forces close to the company that affect its ability to serve
its customers- the company itself, the suppliers, the distributors, competitors
and the publics. The forces may include:
Company itself
In designing the marketing plan, the management takes into account the
various groups. For example, finance, personnel and equipment, R & D,
purchasing, manufacturing, and so on. This implies that management must
work closely with other departments of the company. It includes the
organization culture, values, beliefs and corporate objectives, etc.
 Customers
The marketers must be able to target each and every customer group and

tailor-make a product that suit their needs taking into consideration

affordability of their offers.

Intermediaries
These are firms that help the companies to promote, sell and distribute
their goods to final buyers. They include resellers, physical distribution
firms, marketing service agencies and financial intermediaries as partners
rather than simply as channels through which they sell their products.
 Suppliers
 These are important links in the company’s overall customer value
delivery system. They are the providers of inputs for the organization to
produce its goods and services. Marketers must therefore watch supply
availability (supply shortages or delays), labor strikes and other factors
that may affect the supply causing customer inconveniences
Competitors
Due to the ever-increasing competition, marketers must provide greater
customer value and satisfaction than its competitors. Thus they must simply
adapt to the needs of a target market and must strive to gain competitive
advantage by positioning their offerings strongly against competitors’
offerings.
 Employees
The employees always look for a better pay and better conditions of work.

Other Publics
This is any group that has an actual or potential interest in or impact on
organization’s ability to achieve its objectives. The group may include
financial publics, media publics, government bodies and trade union local
community among others.
Macro Environment

This concerns the broad trends and patterns that take place within a
society, which affects all firms equally. These are factors beyond the control
of the organization which if analyzed can provide invaluable assistance in
the process of designing marketing strategies, identifying profitable
products and the best distribution channels to reach the consumer.
Macro environment of a firm can be broken down into the following
variables:
Economic Factors
This is the most important component of macro environment because it
consists of factors that affect consumer’s spending patterns. Marketers
must focus their attention on the developments within the economy, which is
likely to have an impact on their businesses directly or as a result of impact
on the consumer spending. The key aspects of economic environment are:
Inflation, Demand for a particular product, Total income and income distribution, Changing
Consumers’ spending patterns, Unemployment, Natural Environment
Demographic Factors
This refers to the study of human population in terms of size, density,
location, occupation and other characteristics. It includes components like:

Total Population, Population Distribution, Changing Age Structure of

the Population, Population Growth, Dependency Ration, Geographic
Shifts in Population, Level of Education,
 Total Population: The higher the population, the higher the demand for the products.

 Population Distribution: In areas that are densely populated, the demand for the products is
assumed to be high.

 Changing Age Structure of the Population: The higher the number of people within an age bracket,
the higher the demand for certain goods. Marketers have a challenge of creating products that suit
every age group.

 Population Growth: Growth rates exert pressure on the available resources as well as having
marketing implications in terms of production of goods and services.

 Dependency Ration: In Kenya, there are fewer wage earners with a very high dependency level. This
is coupled with unemployment and older parents normally depend on working children. This reduces
the amount of disposed income per wage earner.
 Geographic Shifts in Population: Moving to towns creates congestion, pressure on
the available social amenities which reduce the standards of living. It also includes
migration from one country to another.

 Level of Education: Dictates the behaviour of the consumer. The more affluent a
society is, the higher the status, lifestyle, consumption pattern among others.

 The Working Woman Concept: More women are now found in working places, which
creates additional income to the family, increased demand for products required by
these women.
Political-legal Factors
This sis concerned with government policies and regulations governing
certain areas of the economy. When a government makes a policy
statement, it becomes law and the concern of the marketer is to scan the
environment and make use of laws that are favourable to him/her and may
sometimes lobby to make the government act in his/her favor.
The political environment consists of laws, government agencies and
pressure groups that influence and limit various organizations and
individuals in a society.
 Laws Regulating Business: Well-conceived legislation encourages
competition and ensures free markets for goods and services. Therefore,
the government develops public policy to guide commerce. That is, every
marketing activity is subject to laws and regulations.

 Increasing Legislation: Legislation affecting business activity has

increased over the years. They include areas like competition, fair trade
practices, environmental protection, product safety, truth in advertising,
packaging and labeling, pricing and other important areas.
 Changing Government Agency Enforcement: Marketers operating
across the borders will encounter numerous agencies put up to enforce
trade policies and regulations. For example, the International Standards
Organizations, Food and Poison’s Act, Workman’s Compensation Policy,
Employment Act, Consumer Product Safety Act, Children’s Act,
Environmental protection Act, Export Compensation Act among other
laws.

 Increased Emphasis on Ethics and Socially Responsible Actions:

Business organizations are governed by social codes and rules or
professional ethics. Companies go beyond the regulatory framework and
‘does the right thing’
Socio-cultural Factors
These are institutions and other forces that affect the society’s basic
values, perceptions, preferences and behaviour.
The market’s behaviour and consumption patterns are shaped by the
society’s values and beliefs. The major cultural values of a society are
expressed in people’s views of themselves and others as well as in their
views of organizations, society, nature and universe.
The socio-cultural aspect of a society has led to the development of
social institutions e. g. Consumer Movement, Green Belt Movement and
Select Committees among others.
It helps to check the standards of goods and services and even fairness
of policies. That is, these bodies advocate for fairness, which may be
contained by the following:
 Cultural values: What the society believes I quality, image fairness, etc.
 Moral Values: What is acceptable to the society
 Attitudes/beliefs/perceptions: these factors are subjective and hard to
quantify
Technological Environment
Technology is a dramatic force now shaping the destiny of most
organizations. That is, it changes rapidly.

It has released such wonders as the mobile phones, computers, organ
transplants, human cloning, automobiles, T. Vs; aeroplanes and so on have
created such horrors as chemical weapons, nuclear missiles, assault rifles,
etc.
 Technological advances focus on the way the technology (both the level
and rate of change) will affect the way an organization undertakes its
business.
 It’s of great implication to marketers in the area of new product
development, customer satisfaction and also its role in controlling and
standardizing quality of products and services.
Competitive Factors
 With globalization, liberalization and computerization, stiff competition
has set in various sectors of the economy.
 Many economies have opened up their doors for free trade increasing
the number of competitors in every sector.
 Customers have also become knowledgeable due to high education and
increased awareness hence demand high quality products
Geographical Factors
The concern of marketers is to design strategies that suit the need of
each geographical region, for example location, district, neighborhoods,
countries and continents.

Consumers are found in different regions of the world and have different
tastes and preferences.

Marketers must be able to target them with different strategies for

example customer characteristics (income, size, growth potential, etc),
climatic conditions, behaviour patterns, etc.
MARKETING INFORMATION SYSTEM (MIS)

 MIS consists of people, equipment and procedures to gather, sort, analyze, evaluate and
distribute needed, timely and accurate information to marketing decision makers.

 Note: MIS starts and ends with the marketing managers.

 The MIS interacts with managers to:

Assess information needs

Develop needed information

Information Analysis

Distribute information to managers

1. Assessing Information Needs

 A good MIS should balance the information the managers require against what
they really need and what is feasible to offer given the organization’s
resources.

 This can be ascertained through interviews with managers. Care should be

taken on too much information as well as too little information: both can be
dangerous.

 The company also looks at the cost of obtaining the information from
elsewhere in terms of affordability.
2.Developing Information
 The information the marketers require may be obtained from:

i) Internal record system

 This consists of information gathered from operations within the company, to evaluate
marketing performance and to identify marketing problems and opportunities. Many
companies now build extensive databases, computerized collections of information obtained
from data sources within the company.

 I.R.S includes sales figures, receivables, payables, costs and cash flows and other sources.
This information is vital for day-to-day planning, implementation and control of decisions and
can be used to evaluate company performance, detect problems and create new marketing
opportunities.
ii. Marketing Intelligence System (MIS)

 It is the systematic collection and analysis of publicly available information about competitors
and developments in the marketing environment.

 It is therefore the every day information about developments in the environment. It determines
what intelligence is needed, gathers, analyses and distributes the information about the
company’s competitive, technological, customer, economic, social, political and regulatory
environments and delivers it to the marketing managers for decision making.

 The main goal of marketing intelligence is to improve strategic decision-making process in

organizations, assess and track competitors’ actions and provide an early warning of
opportunities and threats.
iii. Marketing Research

 This is the function that links the consumer or customer and the public to the marketer
through information used to identify and define marketing opportunities and problems: to
generate, refine and evaluate marketing actions to monitor marketing performance and to
improve understanding of the marketing process.
3. Information Analysis

 Information gathered from the marketing intelligence and the company

research systems requires more analysis in order for managers to apply the
information to their marketing problems and decisions.

 This might involve more advanced statistical tools to find out the relationship
between variables as well as mathematical tools to enable them come up with
quality information vital for effective decision making.
4. Distributing the Information

 Marketing Information has no value until the managers use it to make better
decisions. The information gathered from all these processes must be
distributed to the marketing managers at the right time.

 With the recent developments in information technology, most companies are

decentralizing their marketing operations and most of the times; the
managers have direct access to information network through personal
computers and outside sources.
Discussion
 How do changes in the macro environmental factors, such as
political, economic, social, technological, environmental, and legal
(PESTEL), influence the marketing strategies of global
corporations?