MARKETING MANAGEMENT

CHAPTER 4:
MARKETING ENVIRONMENT
MARKETING ENVIRONMENT
Environment refers to surrounding of the
organisation.
Marketing environment refers to factors or
forces outside an organisation which could affect
marketing activity planned by organisation. It
divided into two categories:-
- Micro-environment
- Macro-environment
MARKETING ENVIRONMENT

Michael E. Porter has developed a framework, the five forces model that analyses
market structures as means to determine market attractiveness.
MARKETING ENVIRONMENT
The micro-environment includes those forces that impact
on the companys ability to serve its customers. Those
factors included in the micro-environment are:-

1. The companys own internal environment

2. The marketing channel firms
3. The relevant customer markets
4. Competitors
5. The organisations publics
MARKETING ENVIRONMENT
The macro environment related to the large forces that
have an impact on society as a whole and not just on
one or a few organisations.
1. Demographic trends
2. Economic trends
3. Natural trends
4. Technological trends
5. Political and legal trends
6. Cultural trends
MARKETING ENVIRONMENT
COMPETITIVE ENVIRONMENT
A modern economy has many different types of
industries.
However, an economic analysis of the different firms or
industries within an economy is simplified by first
segregating them into different models based on the amount
of competition within the industry.
There are 4 basic market models: pure competition,
monopolistic competition, oligopoly, and pure monopoly.
COMPETITIVE ENVIRONMENT

THE COMPETITION AMONG THE LAST 3 CATEGORIES

IS LIMITED, THESE MARKET MODELS ARE OFTEN
REFERRED TO AS IMPERFECT COMPETITION.
PURE COMPETITION
There are large numbers of firms producing
a standardized product.
Market prices are determined by consumer
demand; no supplier has any influence over
the market price, and thus, the suppliers are
often referred to as price takers.
PURE COMPETITION
The primary reason why there are many firms is
because there is a low barrier of entry into the
business.
The best examples of a purely competitive
market are agricultural products, such as corn,
wheat, and soybeans.
MONOPOLISTIC COMPETITION
Monopolistic competition is much like pure
competition in that there are many suppliers and the
barriers to entry are rather low.

However, the suppliers try to achieve some price

advantages by differentiating their products from other
similar products. Most consumer goods, such as health
and beauty aids, fall into this category.
 MONOPOLISTIC COMPETITION
Suppliers try to differentiate their product as being
better so that they can justify higher prices or to have a
larger market share than the competition.

Monopolistic competition is only possible, however,

when the differentiation is significant or if the suppliers
are able to convince consumers that they are significant
by using advertising or other methods that would
convince consumers of a product's superiority.
OLIGOPOLY
Oligopoly is a market dominated by a few
suppliers. A high barrier to entry limits the
number of suppliers that can compete in the
market, so the oligopolistic firms have
considerable influence over the market price of
their product.
OLIGOPOLY
However, they must always consider the actions of the
other firms in the market when changing prices, because
they are certain to respond in a way to neutralize any
changes so that they can maintain their market share.
Auto manufacturers are a good example of an
oligopoly, because the fixed costs of automobile
manufacturing are very high, thus limiting the number
of firms that can enter into the market.
PURE MONOPOLY
Pure monopoly has pricing power within the
market.
There is only one supplier who has significant
market power and determines the price of its
product.
PURE MONOPOLY
A pure monopoly faces little competition
because of high barriers to entry, such as high
initial costs, or because the company has
acquired significant market influence through
network effects, for instance.
Example TNB,SYABAS.