Environmental Forces

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Environmental Forces

• Marketing for Engineers
• ELE 41EMT ELE 31MEL

Lecture 3 7 March, 2005
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Topics

• The difference between the Domestic and the
  Foreign environments.
• The difference between Macro and
  Micro-Environment.
• Examine the components of Macro-environment.

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Domestic Foreign Environments
Domestic Environment
Foreign Environments
Marketing Mix

• Product
• Place
• Price
• Promotion

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Definitions

• Domestic Environment
• The environment in an organisations home
  country.
• Foreign Environment
• The environment outside an organisations home
  country.
• Imports
• Foreign products purchased domestically.
• Exports
• Domestically produced products sold in foreign
  markets.

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Environment Types
Environment (Domestic, Foreign, World)
Macro- environment
Micro- environment
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Macroenvironment

• The broad social forces that shape every business
  and non-profit marketer.
• Components of the Macroenvironment
• Physical environment,
• Sociocultural forces,
• Demographic forces,
• Economic forces,
• Scientific knowledge and technology, and
• political and legal forces.

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Microenvironment

• Consists of the environmental forces that
  directly influence a company, such as its
  customers and the institutions that shape its
  marketing practice.

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Macroenvironmental Influence
Physical Environment
Sociocultural Forces
Demographic Forces
Marketing Mix
Economic Competitive Forces
Science Technology
Political Legal Forces
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Physical Environment

• The environment, domestic or foreign or both,
  consisting of natural resources and other aspects
  of the natural world.
• The availability of natural resources may have a
  direct and far-reaching impact on marketing
  activities in a geographical region.
• Climate influence on marketing
• Food and drinks
• Clothes
• Housing

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Sociocultural Forces

• Social Values,
• Belief,
• Religion,
• Language,
• Cultural Symbols, and
• Ethnocentrism
• The tendency to consider our own culture and way
  of life as the natural and normal ones.

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Demographics

• Demography is defined as the study of the size,
  composition, and distribution of human population
  in relation to social factors such as geographic
  boundaries.
• The size, composition, and distribution of the
  population in any geographic market clearly
  influence marketing.

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Economic Competitive Forces

• Economic Systems
• Capitalism
• Socialism
• Communism
• Pure Competition
• Monopolistic Competition
• Oligopoly
• Monopoly

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Pure Competition

• A market structure that is characterised by
• No barriers,
• Free entry to the market,
• Steady demand and supply,
• Homogeneous (identical) product, and
• Many sellers and buyers, none of whom can control
  the price.
• Example is basic food commodities, such as rice,
  sugar, mushrooms, etc.

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Monopolistic Competition

• A market structure that is characterised by
• A large number of sellers offering slightly
  differentiated products, and
• exerting some control over their own price.
• The fast-food industry is a good example.

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Oligopoly

• A market structure that is characterised by
• a small number of sellers,
• who control the market.
• Competition may not be based on prices.
• Examples include some airline, telecommunication
  carriers, petrol companies etc.

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Monopoly

• A market structure that is characterised by
• a single seller in a market in which there are no
  suitable substitute products.
• Example Telecom Australia was seen as such
  before Optus and deregulation of the market.

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The Business Cycle

• Reflects recurrent fluctuation in general
  economic activity.
• Influences unemployment, inflation, and consumer
  spending and saving pattern.
• The phases of business cycle
• Prosperity
• Recession
• depression
• Recovery

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GDP GNP

• Gross Domestic Product
• The total value of all the goods and services
  produced by capital and workers in a country.
• Gross National Product
• The total value of all the goods and services
  produced by a nations residents or corporations,
  regardless of location.

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Science Technology

• Science
• The accumulation of knowledge about humans and
  the environment.
• Technology
• The application of science to practical purposes.

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Politics Law

• Political Environment - The practices and
  policies of governments.
• Legal Environment - Laws and regulations and
  their interpretation.
• Federal Level
• State Level
• Local Level
• International Laws

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Reference Book
Zikmund, W. G. dAmico M. Marketing (1996, 5th
Edition), West Publishing Company.
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Thank you for your attention