MARKETING ENVIRONMENT

Prof Prashant Kumar Gupta

Jain College Of MBA and MCA

Why To Study??

An understanding of macro and micro marketing environment forces is essential for planning.

Helps a business to compete more effectively against its rivals.

Assists in the identification of opportunities and threats.

Enables an organization to take advantage of emerging strategic opportunities.

Environment

Environment literally means the surroundings, external objects, influences or circumstances under which someone or something exists.

The environment of an organization is the aggregate of all conditions, events and influences that surrounds and affects it.

Marketing Environment

The external forces that directly and indirectly influence an organization’s capability to undertake its business.

The forces operating in a market place over which a business has no direct control ,but which shape the manner in which the business function and is able to satisfy its customers.

Types Of Environment

Internal environment : Forces and actions inside the firm that

affect the marketing operation composed of internal stake holders and the other functional areas within the business organization.

External environment Macro environment Micro environment

Micro Environment

The forces close to the company that affects its ability to serve.

It comprises all those organisations and individuals who directly affect the activities of a company.

Factors in the Micro Environment

The Company

Top management Finance R&D Purchasing Operations Accounting

Suppliers

Suppliers are either individuals or business houses.

They provide resources needed by the company.

The developments in the suppliers environment have a substantial impact on the marketing operations of the company.

Companies can lower their supply costs and increase product quality to gain competitive advantage in the market.

Supply shortages have to be fully monitored and plans should be made to avoid it.

Marketing Intermediaries

Help the company to promote, sell and distribute its products to final buyers

Intermediaries take many forms.

ResellersPhysical

Distribution Firms

Marketing Services Agencies

Financial Intermedia

ries

Competitors

Competitors are those who sell the goods and services of similar description in the same market.

The company in order to come out successfully has to adopt means which may help it to outmaneuver them.

Public

Public is defined as any group that has an actual or potential interest in or impact on a company’s ability to achieve it’s objective.

Financial public Media public Government public Local public General public Internal public

Customers

The target market of the company is usually of five types:

1. Ultimate customers2. Industrial customers3. Resellers4. Government and other non- profit

customers5. International customers

Macro Environment

Macro environment refers to those factors which are external to company’s activities and do not concern the immediate environment.

These are uncontrollable factors which indirectly affect the concern’s ability to operate in the market effectively.

Factors in the Macro Environment

The Demographic Environment

Study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics.

Important because it involves people, and people make up markets.

Demographic trends include age, family structure, geographic population shifts, educational characteristics, and population diversity.

Demography:Population Growth

Currently 7 billion and expected to reach 8.1 billion by 2025

It means bigger market specially countries like India, China, Africa, etc

But at the same time it can be harnessed only when there is economic growth resulting into higher purchasing power

Demography:Population Age Mix

India is a young country which will have a median age of 30 in 2025.

Marketers need to identify the ‘Youth Segment’

Demography:Literacy Levels

About 74% Indians are literate. (Government’s definition of being a literate is worth noticing).

But 82% of ‘Young India’ is literate.

Results are a big segment as consumers and influencers

The Economic Environment

Economic environment consists of factors that affect consumer purchasing power and spending patterns.

Under economic environment manager generally studies:-

Trends of gross national product Patterns of real growth in income Variations in geographical income

distribution. Borrowing pattern ,trends and

governmental and legal restrictions.

Economy:Income Distribution

Destitute: Annual household income of 16,000Are not active participants for exchange of goods for wide range of goods

Aspirants: Annual household income of 16,000 – 22,000

New entrants in the consumption market as real income has increased

Climbers: Annual household income of 22,000 – 45,000Have desire and willingness to by but limited cash

Consuming Class: Annual household income of 45,000 – 2,10,000

Majority of consumers, have money and willing to spend

Rich

Ernst Engel—Engel’s Law

As income rises: Percentage spent on food declines Percentage spent on housing remains

constant Percentage spent on savings

increases Percentage spent on luxury increases

Socio-Cultural Environment

Consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors like religion.

Core beliefs and values are persistent and are passed on from parents to children and are reinforced by schools, religion, businesses, and government

Secondary beliefs and values are more open to change and include people’s views of themselves, others, organizations, society, nature, and the universe

Socio-Cultural Environment:Importance

Socially responsible marketing is eliminating socially harmful products.

Understanding the diversity is key to marketing success.

Product and Brand preferences have regional biasness.

Diversity affects the marketing communication.

Defines customers’ taste and preferences.

Natural Environment

Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities Natural Environment trends:-1. Shortage of raw materials.

Limited quantities of non-renewable resources.

2. Increased pollution. Waste disposal, air/water pollutants.

3. Increased government intervention. Kyoto and other initiatives.

Natural Environment:Importance

80% people considered ‘The effect on environment’ before buying a product in US.

More than 50% people asserted on purchase of recycled goods.

Responsible for breaking customer loyalty.

Many marketers used THE GREEN PITCH but failed. Why?

1. Lack of credibility2. No willingness to pay extra for environment3. Poor design and inappropriately placed

Technological Environment

One of the most dramatic forces in changing peoples life.

Creates new products and opportunities

Safety concerns increases costs

Challenge is to make practical, affordable products.

Big time gap between conceptualisation and intialisation

Political-Legal Environment

Consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society.

Key trends include: Increased legislation to protect

businesses as well as consumers. Changes in governmental agency

enforcement. Increased emphasis on ethical

behavior and social responsibility.

Marketers must have good working knowledge about laws related to competitors, consumers and society.

Understand the Consumer Protection Act, 1986

Ways To Respond To The Environment

Uncontrollable

• React and adapt to forces in the environment

Proactive

• Aggressive actions to affect forces in the environment

Reactive

• Watching and reacting to forces in the environment

Thank You…!

That’s it For Today