II.

III. DISCUSSION
The Marketing Environment
The marketing environment is the
culmination of all the internal and external
factors that influence how a company
conducts business, particularly in terms of
establishing and sustaining connections with
its target clients.
The Micro Environment and Macro
Environment are two different types of
environments that are both under your
control and out of it.
POLYTECHNIC UNIVERSITY OF THE
We start off by breaking down the
PHILIPPINES
main components of our business
College of Business Administration
environment:
The term "internal environment"
Bachelor of Science Entrepreneurship
refers to the business itself, including the
products you are selling, the way your
CHAPTER II.THE ENVIRONMENT AND ITS
organization is structured, its strengths and
OPPORTUNITIES
weaknesses, the resources you have
COMPREHENSIVE WRITTEN REPORT
available, your company's basic beliefs and
mission, and pretty much anything else that
1. Analyzing the Environment
counts.
2. Market Research Methods
Here is a checklist of things that you
3. Demand Forecasting
may want to assess in your company’s
internal environment:
Presented by:
 Company cash flow. How much money
1. Gomez,Ken C.
does it have and how much does it expect
2. Santiago, Katherine
to flow in over time?
3. Saluta, Sophia Clare
 Organizational structure. What personnel
Presented to:
are available and who is accountable for
Prof. Leonardo G. Adap
marketing initiatives?
TOPIC 1: ANALYZING THE ENVIRONMENT
 Assets and other resources. What property
I. LEARNING OBJECTIVES
and equipment would it have access to?
1. Know the different layers of the marketing
 Strategic alliances. Which entities
environment;and
(organizations or influential individuals) do
2. be able to perform basic environmental
analyses.
 the business currently have good working For example you are building your
relations with? business and another company are
 Products and services. What products are threatened in your product, they can buy you
already being offered, if any? and your product you know. Your competitors
 On the other hand the competitive can spend large sums of money to steal
environment, this refers to the immediate market share from the firm or even alter the
industry in which your company is doing market’s perceptions about the firm’s
business. If you are running a bank, for products.
instance, then your competitive environment A firm also faces risks from new
may consist of all the competing bank entrants possibly joining the industry,
branches in your territory and possibly even especially if the industry offers attractive
substitutes such as pawnshops and even growth prospects.
sketchy loan sharks who lend money to small In tiktok guys, there’s so much
entrepreneurs in your area. beauty products are always trending, it’s like
Here is a checklist of what to look out for in when a new product releases, for example
your competitive environment: bleaching cream then if it becomes a trend
• Competitors. Who they are and what their there will be more bleaching cream will
respective strengths and weaknesses may be. comes in, with just different brands, and most
• Competing products and services. What of the time, they have the same manufacturer
these are, what their target markets are, and but just differs in branding.
what their respective strengths and A firm also faces risks due to
weaknesses are. substitutes that threaten to steal market
• Substitutes. What alternative products or share from its industry.
services your markets might be considering The firm’s own suppliers can pose a
rather than your core product. threat as well if the firm is too dependent on
Porter’s Five Forces Framework of these suppliers and the suppliers know it.
Competitive Forces model implies that it is They can use it to take advantage to
not just rivalry from competitors that you, suppliers can decide to increase their
threatens a firm’s existence, but even its prices or to even become potential entrants
suppliers, buyers, new players, and product to the industry as well.
substitutes. If the firm is too dependent on its
In fact, Porter notes that the buyers buyers, the buyers may sense this. They might
and the suppliers can be potential entrants band together and threaten the firm through
themselves.  additional demands. Buyers may also become
The risk faced by a firm due to its potential entrants into the industry if they
competitors is the most obvious form of feel that entering the industry is a simple
operational risk.  matter after all.
 Macroenvironment  Social. refers to the belief, practices,
Macroenvironment consists of the norms, customs, and traditions that may
various factors which affect not only the firm affect business operations. 
itself, but also the entire industry of the The society they have different
region or country.. perception, they have their own stories, they
There are far too many elements in have behaviors that act in a certain way. So
the macro environment. That is why there are you have to find out those and act
mnemonics which can help break down this accordingly.
complexity into more digestible parts. One of Example is the Loreal, a cosmetic brand, it’s
the most popular mnemonics is PEST, which advertising in an arab country for example in
stands for: saudi arabia, they’re selling their product
As in PEST , take note for this overthere, they do not advertise  in the same
Political, Economic, Social, and Technological. way as they’re doing it in europe country
 Political. forces refer to groups of people because they have differences in culture.
which may influence the stability of a Is the population growing or shrinking? Is it
country and affect the production, aging or is the broad demographic getting
promotion and selling of goods and younger? What are their interests? What are
services. the lifestyles that they lead? How do the
What are the different pieces of markets behave, especially in terms of
legislation, including tax rates, that affect the assessing and consumin industry’s products?
business? How likely is it for the government  Technological. refer to development in
to intervene in the industry? How stable is the technology which may affect consumers,
working environment in terms of political businesses, and society at large.
stability and overall predictability?  It is the most important factor in the
 Economic. refers to the influence of the macro environment, that affect the marketing
purchasing power of the peso on spending activities, the company itself, technology is
patterns in the context of inflation and changing everyday, you have to keep up to
other economic forces that may affect the the pace, you have to find out how’s
economy.-Changes in income. technology is bringing up opportunities for
Is the market growing or shrinking? yourself, your organization, product that
What is the savings rate of the population, you’re offering.
and how is the employment situation? Is What are the new technologies that
consumer spending increasing or decreasing? are changing the business landscape? What
Do people feel that their quality of life is new ideas are gaining momentum? What new
improving? How volatile is the exchange rate, products and practices could threaten to
inflation, interest rate, and other essential make your current business obsolete?
indicators?
 So overall this PEST analysis manages cultural factors that play a key part in
to cover quite a lot of what is essential to determining the tastes and preferences of
monitor in the macro environment. consumers and to which companies need to
Example of a company that has cater to.
reacted successfully to a fast changing digital TOPIC II: MARKET RESEARCH METHODS
environment is microsoft. Microsoft is making I. LEARNING OBJECTIVES
fresh moves to re-establish itself as a brand 1. To keep the track of your business on a
consumers can’t live without in a post-pc regular basis.
world. II. DISCUSSION
In the end, environmental scanning The Market Information System (MIS)
is all about identifying important trends in the is the people, equipment, and procedures used
environment. Why trends? because trends to gather, sort, analyze, evaluate, and distribute
become the reality of the near future. Since it needed, timely, and accurate information to
also takes time to mobilize a new product marketing decision-makers. 
concept, you would want your product As you can see base on the figure
concept to be viable in the near future where showed , the internal records is:
it belongs. Knowledge of relevant trends can Internal Record
lead to insights into possible opportunities It refers to documents in the
and threats to a firm’s operations. company’s Order-to-Payments cycle, such as
Is there a difference between a trend and a fad? invoices, shipping orders, etc. It also avails
FAD- is any form of behavior that is intensely documents and resources that comprise the
followed by a population for a short period of sales information system, such as sales
time. Fad certainly have a value, utilizing fads in forecasts, information from sales personnel,
marketing and programs can increase top of and information culled from automated sales
mind awareness, it can demonstrate the system.
timeliness of your organization and it can serve Marketing Intelligence
as a gateway for new audiences. Again The set of procedures and sources
however, Fads don’t stick around. used by managers to obtain everyday
Trend- Gets stronger over time and does stick information about developments in the
around. Trend have identifiable and explainable marketing environment. This includes
rises that are driven by audience needs.  newspapers, intermediaries, social networks,
You would want to ride on trends and not just trade conferences, suppliers, ad agencies, the
on fads because fads do not last. Trends, on the reverse engineering of competitor products,
other hand, are all about momentum: it is published reports, purchased information, etc.
where the market is going for the long haul.     In layman’s terms, intelligence is gathered by
That is what is worth investing in. simply “putting yourself out there.” Having a
The external environment, however, network of people and sources of information in
includes the matter of cultural and socio- the right places, in general, is the easiest way to
get potentially useful knowledge. Being part of  How do our customers shop and with
the right social network of friends or groups on whom?
Facebook, for instance, can lead to getting a  What do our customers buy?
potential useful insider tips faster than your  Why do customers refuse to buy our
competitors can. Encouraging your sales team products?
to do small talk with clients is often a quick way The processes involved in conducting
to gather insights about what their future needs market research can be outlined as follows:
are.
Market Research • Define the Problem and Research Objectives.
The systematic design, collection, The problem should not be defined too broadly
analysis, and reporting of data and findings nor too narrowly. In fact, great care should be
relevant to a specific marketing situation facing taken when defining the problem as this will
the company. This includes taking surveys or determine the very nature and direction of the
conducting exploratory studies of a market. research.
Market research is scientific in nature, utilizing Develop the Research Plan. The Research plan
the scientific method to gain insights on how to is composed of the following 
solve real world problems. In this case, components:
problems usually involve resolving questions – Data Sources. Secondary data involves the
about how to best provide value to customers gathering of prior and related research works
or about understanding how consumers since it is possible that other parties have
behave. already developed useful findings on the matter
being studied.
And that is the part of the formal system for – Primary data involves actually undertaking the
marketing information. And next let's proceed research itself in order to get first-hand
to a research process . As a college students i knowledge on the matter.
know that research is very familiar to us but this – Research Approaches. Research can be
time let's find out more information about conducted through observation, focus groups,
research process in marketing industry. survey research, behavioral data, and
Research Process experimental research.
         Market research is primarily concerned – Research Instruments. These include
with understanding the nature of a market. questionnaires or mechanical instruments such
Some of the questions that a market research as video recorders.
typically seeks to answer are: – Sampling Plan. This addresses (1) sampling
 Who are our typical buyers? unit (Who is to be surveyed?), (2) sampling size
 Where do our buyers come from? (How many people should be surveyed?), and
 How big is our market? (3) sampling procedure (How should they be
 What are our customers’ aspirations? chosen?).
– Contact Methods. Contact with the survey behaves. the wide-ranging set of methods
sample could be done via personal or businesses use to collect information by directly
impersonal means. Methods include the use of or indirectly “watching” consumers act in
mail questionnaires, telephone surveys, natural (and sometimes planned) environments.
personal interviews, or the internet. Being an observant in different scenarios in th
• Collect the information. This involves the specific place .
actual gathering of the data. For surveys, for Survey research is best to use when trying to
instance, this would involve mobilizing a determine a market’s opinions, perceptions,
suitable number of field workers who will then and basic demographic data. Surveys are best
find respondents according to the sampling for situations such as the following:
plan. For a research that involves the conduct of • identifying discrete factual data such as the
interviews, field workers will have to be trained person’s age, gender, level of education, place
first to be responsive enough to properly of residence, occupation, hobbies, etc.;
interact with respondents. • knowing a person’s opinions about a
• Analyze the data. Once all the data have particular product; and
come in (whether in the form of surveys, • determining a person’s likes and dislikes.
interviews, group discussions, or through
electronic means such as online ballots), the Focus groups are useful for gathering strong
next step involves the actual processing of the opinions and beliefs from a given target market.
data. Focus groups are actually a subset of survey
• Present the findings. Once processed, the research except that, unlike surveys which tend
data can now become useful information. to be composed of individual opinions, focus
However, its usefulness will still be a function of groups are composed of a set of people
how well it is presented. Quantitative (belonging to the same target market) who are
information, for instance, may best be digested placed together in a closed, controlled
in the form of graphs and charts so that trends environment to discuss a product or issue with a
can be more easily seen. Qualitative data, on moderator. The idea here is that by getting the
the other hand, may best be presented in the group to discuss and critique their own
form of clear examples and case studies. opinions, the resulting answers to questions
would more reliably reflect their reality as
Research Methods compared to answers obtained via surveys or
As a rule, it is generally expensive to interviews.
collect primary data. That is why firms with The downside, however, is that focus
smaller budgets generally resort to accessing groups tend to reinforce any commonalities in
secondary data and extrapolating conclusions the group’s opinions, leading to
from them. “sensationalized” findings. Moderators of focus
Observation is best to use when trying groups should therefore be skilled in analyzing
to answer questions involving how a market the entire process in order to weed out
questionable findings and extract information I. LEARNING OBJECTIVES
properly. To this extent, a key critique about 1. To know the different market categories;
focus group studies is that its output and quality and
is too dependent on the skills of the moderator. 2. have essential skills for estimating market
demand both for existing and new products.
Experimental research is a means of
answering a hypothesis through the use of an II. DISCUSSION
experiment. Experimental research is a scientific If you have a new product idea in mind
process of testing our hypotheses by and you are intent on putting together a
controlling, manipulating, and measuring a set business to bring it to the market, then one of
of variables. Our hypotheses are really just our the first things that you need to know is how big
ideas about how things work or why people do your potential market would be. If you over
something estimate the market size, then you may end up
investing far too much into your production and
Bias inventory capacity, leading you to lose money
on your investment.
An important issue to address in market On the other hand, if you
research is the matter of bias. Bias is the underestimate the market size, then you may
tendency of data to skew toward a particular end up being stuck with a limited capacity that
direction. It is normal for any research to have a will not service the volume of demand, leading
certain amount of bias, but it is the job of you to lose out on the growth opportunity and,
researchers to minimize bias to the best of their at worst, having some other business steal
abilities.Bias is normal for researches because, potential market away from you. This is why a
by definition, a sample is a small portion of a careful estimate of the potential market size can
population that tries to explain the entire be crucial for ensuring success.
population but this sample may not perfectly But let us start with the bad news.
represent the population. Aside from this, the There is no way for us to predict the future with
process of research itself can introduce biases 100 percent accuracy (and if ever you do, then
as well. that is just pure luck!). Nobody can truly predict
Example the future, especially for products that are yet
A survey is conducted and the question is “Do to be launched. 
you actually think that Brand X is better than Below are some examples of
Brand Y?” In such a question, the word predictions that were not accurate.
“actually” becomes a loaded word that may bias “The horse is here to stay but the
or influence respondents toward saying “No” automobile is only a novelty,” said an
due to its subtle intimidation. investment banker in 1903 when asked about
the viability of investing in the Ford Motor
TOPIC III: DEMAND FORCASTING Company.
 “Television won’t last. It’s a flash in the  Qualified available market. This is a
pan,” said Mary Somerville, a pioneer of radio further refinement of the available market
broadcasting, in 1948. since it may be possible that those who
“There is no reason anyone would have interest, income, and access,
want a computer in their home,” said Ken nevertheless cannot get the product due
Olsen, head of business computer firm Digital to technical issues such as laws (e.g.,
Equipment Corporation, in 1977. In that same minimum age requirements for liquor) or
year, the Apple II computer was launched, distribution constraints (e.g., remoteness
heralding the phenomenal rise of home of their location).
computing (Lutz, 2012).  Served market. Also known as the
serviceable available market. This is the
The fact is, predicting the future is market that the company can actually
purely an exercise in guesswork. Therefore, service with its current state of logistics.
properly forecasting demand for a new product  Penetrated market. This is the subset of
will actually be a matter of making one’s guess the market that is already actively using
as objective, as educated, and as scientific as the product.
possible. Before we get to how to do proper The market demand for a product or
predictions though, some terms are to be service, on the other hand, is the total volume
defined first. of the sales that is generated by a defined
customer group in a defined geographical area,
The Market time period, and marketing environment under
The market for a product can be categorized as a defined marketing program. It is a factual
follows: number, meaning that market demand by
 Potential market. These are those who definition is something that has already
express some level of interest in a product. happened.
For example, this can be determined from
a survey where, for instance, 30 percent of Forecasting Demand for an Existing Product
respondents say they are interested in
your product. Extrapolating forward, you If the firm already has an existing
may conclude that 30 percent of the product in the market, then estimating what the
population is a potential market. future demand for the product would be will be
 Available market. Just because someone is a matter of assessing the following:
interested does not mean that the person  Listening to what people say. This includes
will actually buy or can even afford to. So, sales force opinions, expert opinion, and
the available market is the subset of the buyers’ opinions.
potential market which has interest,  Assessing what people have done. This
income, and access to the product. generally involves the statistical analysis of
past-sales data or related data.
 years, then the forecast would be last year’s
Salesforce opinion generally involves getting a sales multiplied by a factor of 1.05. More
composite of what each sales person, sales statistically-based analyses can be performed
team, or sales unit estimates to be its possible using statistical software packages.
sales volume for the upcoming period based on
past history. Regression analysis is a more
sophisticated statistical method for predicting
Expert opinions regarding the potential market an outcome based on multiple possible factors.
size and the acceptability of the proposed A regression model works by using statistical
product can be taken from industry watchers or models to determine the correlation between a
people with experience in the industry. This can hypothetical cause and the effect (in this case,
include technical resource people from the level of sales), again based on historical data.
Department of Trade and Industry, industry
veterans, observers, and insiders. Forecasting Demand for a New Product
An expert truly understands the
potential market of a new product, most likely Predicting the demand for a new
due to years of experience and exposure to the product is far more challenging than predicting
market (i.e., the expert understands how the demand for an existing or established product.
market thinks and behaves). Perhaps the expert In fact, to be very candid, there is no clear way
is someone who has done extensive research on to predict the demand for a product that has
the potential market or has spent years selling never yet seen the light of the market day.
related products to them. To be even more forthright, forecasting
In the end, however, the expert who is demand for a new product can be seen by
asked for an opinion regarding the potential skeptics as an exercise in futility. There simply is
sales of a new product is still giving a guess. The no way to predict the future, so this is where
only difference is that, because of the expert’s educated guess-work becomes stretched to its
experience, the guess may be a little more limits. A common technique for predicting
grounded than that of a nonexpert’s.  demand for a new product is through the use of
the chain ratio method. It is a method with a
Time series analysis uses data from very simple operational logic and requires
previous periods to forecast the following simple math abilities. The premise here is that if
period’s sales. The simplest example of this is you define your target market well enough,
the use of a status quo assumption: if sales last then you can calculate how big this market can
year were 1,000 units, then expected sales this be.
year could also be 1,000. More likely, however,
some form of trending analysis would be Example:
factored in: if data shows an average growth
rate of 5 percent per annum over the past three
 Estimate the demand for a new Therefore, even when all indicators show
toothpaste, Powerglow. Powerglow is initially otherwise, the expert will refuse to believe
targeted to appeal to males aged 13 to 18, these and instead make a prediction based
residing in Metro Manila, and who want to feel on what was hoped for.
like they are already real men.  The expert is unaware of shifting industry
A = Number of teenagers aged 13 to 18 in the or market trends. The expert may base all
Philippines (based on Census) analyses on a status quo perspective when,
x B = Percentage of population residing in Metro in fact, the environment has been shifting
Manila (based on Census) and changing all along, rendering the
x C = Percentage of males in the population expert’s experiences irrelevant for the
(based on Census) prediction.
x D = Percentage of teenagers who want to feel So, if predicting future demand is such
like adults (this one is tricky and will have to be an impossible task, why even bother doing so in
based on a survey research) the first place?
Multiply A x B x C x D to produce an The answer: you need to justify the
estimate of the potential market. product’s existence. Most likely, you will need
As seen in the example, the chain ratio to justify why the product can be a good
method relies on simple multiplication to fine- business to invest in, so that you can raise
tune a market size based on available data. sufficient financing from potential investors. The
Generally, the best way to predict dark side of this approach, of course, is that
demand for a new product is to first set up a product proponents may zealously seek to
test market for it—launching the product in a overestimate the size of the potential demand
smaller location and conducting an exact but (on purpose), seeking experts who agree with
smaller-scale market strategy in order to assess them (and ignoring those who do not), and
the actual sales that will occur. These figures “fudging” the data in order to make it appear as
can then be extrapolated toward the larger if the product has a huge potential demand.
market as a whole. However, not all firms can There is an alternative approach to
afford test marketing. relying on forecasted market demand. It is an
Will expert opinion work for predicting approach that is best summed up by the
new product demand? Again, experts will offer following slogan: “Start small, scale fast, think
the added advantage of experience into their big.” It can also be referred to as the strategy of
analysis, but even then they are not necessarily incremental growth.
reliable.
There are many reasons why expert Incremental Growth
opinion cannot be reliable, two of which are:
Entrepreneurs want to have an idea
 The expert is already emotionally invested about how big the demand could be for their
in an outcome that he or she wishes for. product so that they can plan how much to
invest for their operations, logistics, and References
working capital requirements. But if the
entrepreneur only has a limited pool of capital
to invest, then a practical alternative will be to
simply start small initially and then build up
capacity as needed.

The process can be outlined as follows:

 Start small, producing small quantities of
the product at first.
 Test the market’s reaction and if the
demand has the potential to grow.
 If a favorable market response is detected,
scale fast by immediately investing in
additional production capacity in
incremental and manageable steps.
The advantage of the above strategy is
that financial risks are minimized since a failed
product would mean minimal capital exposure.
The disadvantage, however, is that if the
product turns out to be a huge success, the firm
may not be quick enough to generate a capacity
size that can maximize cost advantages or,
worse, the firm may be crippled by an innate
inability to satisfy demand (which is an opening
for competitors to come in).

In the end, regardless of what the

forecasts say, an effective marketing manager is
someone who manages demand proactively: if
plant capacity is too big, then the marketer’s job
is to find ways to increase the demand for the
product.

III. CONCLUSION