THE MARKETING ENVIRONMENT
Recall that we are interested in an organization's internal resources,
the marketing mix, and the external environment.
The marketing mix, or 4Ps, are typically all under the control of
the marketer, and so are considered to be internal controllable factors.
The external environment is dynamic - constantly changing - and elements
in the external environment are typically not under the direct control of
The marketer could, for example, lobby the local town council to change
zoning laws to permit a new kind of business, but this is still an external
factor that is not under the direct control of the marketer.
dynamic, uncontrollable factors outside of an organization
that affect a marketer's ability to develop and maintain its
These factors include:
- legal and regulatory
- - etc.
Environmental forces are dynamic, creating
uncertainty, threats, and
opportunities for marketers.
- direct competition
- firms that market products that are similar or are
- e.g., if you own a pizza shop, then other pizza shops in
the area are competitors as are, perhaps, shops which
sell sub sandwiches
- competition is defined by defining your core business
as making pizza or as making fast food
- indirect competition
- anything that competes for consumer dollars
- e.g., if you own a pizza shop, prospective customers
might prefer to spend their money to see a movie or
to play a round of miniature golf
- competition is defined in this case by defining your
core business as entertainment
- e.g., if you own a pizza shop in certain neighborhoods,
you might also notice that your business drops off when
customers are more concerned about making the rent payment
while waiting for the next pay check - competition can
include anything that competes for customers.
Note that competition provides for opportunities as well as
threats. For example, another pizza shop, a sub shop, a
movie theater, and a miniature golf course on the same block
might attract potential customers away from your business,
but they might collectively function to attract potential
customers into the area.
only one player in an industry
few competitors in an industry
- monopolistic competition
many competitors in an industry
- pure competition
a very large number of players in an industry
The state of the economy affects people's ability and
willingness to spend. Some general related factors
the amount of money received through wages,
investments, pensions, etc.
- disposable income
income left after paying taxes
- different cities states in the US leave residents
with more or less disposable income
- discretionary income
income left after paying for basic necessities (food,
clothing, and shelter)
- different locations can leave residents
with more of less disposable income
- consumer confidence
consumer perceptions of the state of the economy
which affect their willingness to spend money
POLITICAL, LEGAL, AND REGULATORY FACTORS
- Regulation occurs at federal, state, and local levels.
- Industry self-regulation can also occur within non-governmental agencies
- - e.g., Better Business Bureau, National Advertising Review Board
- Deregulation is just as influential!
- Political forces can be influential in absence of regulation.
SOME REGULATORY AGENCIES IN THE US
- Federal Trade Commission (FTC)
administers regulation associated with a variety of business practices
that protect consumer rights, including false advertising, deception, and
- Food and Drug Administration (FDA)
administers regulation associated with the production, labeling, and
distribution of food
- Consumer Product Safety Commission (CPSC)
administers regulation associated with product safety
have to do with such population factors as size, density,
location, age, gender, race, occupation, and other statistics.
examples of demographic environmental factors of
interest to marketers include:
- geographic population shifts
- changing education levels
- changing ethnic diversity
- changing family structures
- bulges in age distributions (e.g., "baby boomers")
MONITORING THE MARKETING ENVIRONMENT
the process of collecting information about factors in
the marketing environment
the process of assessing and interpreting the information
gathered through environmental scanning
Environmental scanning should be a constant process. An
environmental analysis should be conducted periodically,
typically once per year, with an assessment of external
threats and opportunities,
for inclusion in an annual marketing plan.
edited 5 JUN 05