Scanning the Marketing
Environment
Understanding the External
Environment
• “All businesses operate within an
environment, which directly or indirectly
affects the way in which they function, just as
we as consumers live within a cultural and
social environment which to a greater or
lesser degree determines the way in which we
behave as individuals.”
Elaine O’Brien, University of Strathclyde.
Marketing Environment
• The marketing environnent surrounds and
impacts upon the organisation.
• There are three key perspectives on the
marketing environment, viz.,
• Macro-environment
• Micro-environment and the
• Internal environment
Marketing Environment
• The internal environment refers to the company and
its existing products, marketing strategies.
• It also includes the strengths of the company with
regard to
• manufacturing abilities
• distribution capacities
• marketing abilities
• Internal resources should also be considered while
formulating a marketing strategy.
Marketing Environment
• External environment includes the competition, other
rivals, the market conditions, customer's tastes and
preferences. The list goes bigger than that.
• Anything can be included under competition.
• The existing rivals, the possible rivals, the product group
rivals, and alternative products to satisfy that particular
need also come under external environment.
• The government policies including trade policies,
restrictions, foreign trade policies also come under this.
• Availability of raw materials and even the customer
mindset at that particular period of time can also be
considered a part of the external environment.
SWOT Analysis
Strengths
• 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.
Weakness
• 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.
Opportunity
• A developing market such as the Internet.
• 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.
Threat
• 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.
Marketing Environment
Politico/Legal
• The political arena has a huge influence upon the regulation
of businesses, and the spending power of consumers and
other businesses. You must consider issues such as:
• Stablility of the political environment?
• Government policy influence on laws that regulate or tax your
business
• What is the government's policy on the economy?
• Is the government involved in trading agreements such as EU,
NAFTA, ASEAN, or others?
Economic Factors.
• Marketers need to consider the state of a trading
economy in the short and long-terms. This is
especially true when planning for international
marketing. You need to look at:
• Interest rates.
• The level of inflation Employment level per
capita.
• Long-term prospects for the economy Gross
Domestic Product (GDP) per capita, and so on.
Sociocultural Factors.
• The social and cultural influences on business vary from country
to country. Factors include:
• What is the dominant religion?
• What are attitudes to foreign products and services?
• Does language impact upon the diffusion of products onto
markets?
• How much time do consumers have for leisure?
• Are the older generations wealthy?
• Do the population have a strong/weak opinion on green issues?
• Festivals
Technological Factors.
• Technology is vital for competitive advantage, and is a major
driver of globalization. Consider the following points:
• Does technology allow for products and services to be made
more cheaply and to a better standard of quality?
• Do the technologies offer consumers and businesses more
innovative products and services such as Internet banking, new
generation mobile telephones, etc?
• How is distribution changed by new technologies e.g. books via
the Internet, flight tickets, auctions, etc?
• Does technology offer companies a new way to communicate
with consumers e.g. banners, Customer Relationship
Management (CRM), etc?
