Marketing EnvironmentAnalysing Needs & Trends in the macro-environmentDeciphering & responding to major macro-economic forces, like demography, economy, natural environment, political system, technology & cultural environment

What is a Need?Needs: Needs are the basic human requirements- food, air, water, clothing, shelterPeople also have strong needs for recreation, education & entertainmentA Human need is a state of felt deprivation of some basic satisfaction

What is a Trend?A trend is a direction or sequence of events which have some momentum & durability

Eg, Hush Puppies shoes as mentioned in the book Tipping Point by Malcolm Gladwell-http://www.gladwell.com/tippingpoint/index.html

Hush Puppies- ShoesThe suede shoes

Tipping PointTipping points are "the levels at which the momentum for change becomes unstoppable." Gladwell defines a tipping point as a sociological term: "the moment of critical mass, the threshold, the boiling point.The book seeks to explain the sociological changes that mark everyday life.

Tipping PointAs Gladwell states, "Ideas and products and messages and behaviors spread like viruses do." The examples of such changes in his book include the rise in popularity and sales of Hush Puppies shoes in the mid-1990s

Hush PuppiesHush Puppies is an international brand of contemporary, casual footwear for men, women and children, "the classic American brushed-suede shoes with the lightweight ".

Hush PuppiesA division of Wolverine Worldwide, Hush Puppies is headquartered in Rockford, Michigan. Wolverine markets or licenses the Hush Puppies name for footwear in over 120 countries throughout the world.

Hush PuppiesIn 1994, when sales of Hush Puppies were down to 30,000 pairs a year, and Wolverine was considering phasing out the brand, Hush Puppies suddenly became "hip" in the clubs and bars of downtown Manhattan, where young people were "buying them up" at small shoe stores. In 1995, fashion designers John Bartlett, Anna Sui, and Joel Fitzgerald began featuring them in their collections. Depending on word of mouth, Wolverine sold 430,000 pairs of the shoes, and four times that the following year.

Trend, Fad & CrazeA trend is something that becomes popular within mainstream society over a relatively long period of time (more than a few years). It is the direction of a sequence of events that has some momentum and durability.

Macro-environment

The macro-environmentA firm's marketing macro-environment consists of a variety of external factors that manifest on a large (or macro) scale. These are typically economic, social, political or technological phenomena. A common method of assessing a firm's macro-environment is via a PEST (Political, Economic, Social and Technological) analysis.

PEST analysisWithin a PEST analysis, a firm would analyse national political issues, culture and climate, key macroeconomic conditions, health and indicators (such as economic growth, inflation, unemployment, etc.), social trends/attitudes, and the nature of technology's impact on its society and the business processes within the society

Monitor & AdaptExcellent companies take an outside-inside view of their businessRecognition of new opportunities & threatsIt is important to monitor & adapt to changing environment

Trend TrackersThe marketing department identifies the critical changes in the environmentMust be the trend trackers & opportunity seekersThe marketing department uses its marketing intelligence & market research to track the environment

Analysing Needs & TrendsSuccessful companies respond to unmet needs & trends in the marketUnmet needs include solutions for problems like a cure for cancer, non-fattening tasty food, practical electric cars, voice-controlled computers, affordable housing

Electric CarsCar

Voice controlled computerComputer

Electric Cars

Food for astronautsLow calorie food too

Demand for affordable housesAffordable housing

Unmet demands are metUnmet demands always exist & are met by forward-thinking companies. Eg, Walkman was introduced for the person on the move, ipods, pendrivesCourier companies & E-mail made communication fasterMobile phones even quicker

New Trend-Working WomenOne major trend today is active participation of women in the work force

Working From HomeFlexi-hours from home

Working- Rural womenWorking women- rural

Indian Working WomenBPOs & Office goers

Woman Pilots

Working Women- New TrendOne major trend today is active participation of women in the work force.This has implications on economic growth, family life, business life, political power, preference for specific goods & services

Identify a trendIdentifying a trend, analysing the likely consequences, determining company opportunities are critical skillsThese trends & mega-tends merit close attention of marketersEg., a customised newspaper could be launched- but would it have sufficient readers & advertisers?

Children using mobiles- JapanSmall children use mobiles

Japan

Mobile Phone Culture - JapanMuch of the Japanese population own cellular phones (especially flip phones), most of which are equipped with enhancements such as video and camera capabilities. As of May 2008, 31.3% of elementary school students, and 57.6% of middle school students own a cell phone, with many of them accessing the internet through them. mobile phone culture, or "keitai culture.In India, there is no specific school period called middle school. Grades 1-8 are considered elementary or primary.

Mobile phone culture- JapanJapan

Mobile Phone Culture-JapanMost cellular phones sold in the last three years have integrated cameras; some more up to date models have high quality digital cameras. Many of the cameras are capable of taking both still and video images

Mobile Phone Culture- USAmericans are going wireless Internet big time, report says A few days ago, the Pew Research Center released a report that Americans are looking online to fight the recession. On Tuesday it added that most of us are doing that via wireless Internet.The results of the center's Internet & American Life Project survey show that 56 percent of adult Americans have accessed the Internet via wireless means, such as a Wi-Fi laptop, a mobile device, a game console, or an MP3 player. The most popular way people get online wirelessly is with a laptop computer, numbering 39 percent of some 2,200 survey participants. news.cnet.com/8301-1035_3-10293283-94.html

Mobile Phone Culture- US

Mobile Phone Culture- USUsing mobile phones to access net while on the go.

Mobile Phone Culture- US

Mobile internet usage growing in India, reports Vital Analytics More and more people in India are opting to access the web via their mobile phones, a new study has found. According to figures from Vital Analytics, about 9.3 million people in urban parts of the country used the mobile internet between April and June 2009. More than 2.7 million were said to be viewing mobile websites on a daily basis, while a similar proportion stated that they use their phone to go online at least once a week.

Mobile internet usage-IndiaThe mobile internet was found to be mainly used by those who wanted to check their emails, while many others used the web to look for specific information. However, Vital Analytics noted that a large proportion of consumers in India are still not yet using the mobile web. Has "huge untapped growth potential".

Mobile internet On the move- internet

Accessing the internet from mobileThe major difference which we are going to witness in India is that because of our low PC penetration and high mobile penetration, we are going to get a lot of people who are going to be using only their mobile phone for accessing the internet.

Torn JeansA Trend - Modern

Punk TrendsUnderstand the niche market

Punk Trends

Punk Shoes, Music

Punk Style

Twitter killing Hollywood movies?

Twitter is killing the Hollywood box office, according to film bosses who fear that instant fan reviews on the micro-blogging site can seriously damage a movie's prospects.A slew of summer films have faltered after their opening weekends, including Bruno. Conversely, Transformers: Revenge of the Fallen, while slated by critics, became the season's break-out blockbuster. http://www.telegraph.co.uk/technology/twitter/6069260/Twitter-killing-Hollywood-movies.html

Twitter killing Hollywood movies?-2The rise of Twitter means that film-goers can deliver a withering, one-line verdict on a new release before they have even left the cinema.

Popcorn Reportwww.faithpopcorn.com/

Faith PopcornHeralded as "the Nostradamus of marketing" by Fortune magazine, Faith Popcorn is the premier trend guru; her national bestseller The Popcorn Report identified the business and personal trends that took off in the early 90's, from "cocooning" to "cashing out." Nobody has been more accurate in demonstrating how to profit from tracking the trends, and in Clicking, Popcorn describes how to CLICK into more recently identified trends to future-fit themselves professionally and personally. Clicking is an invaluable road map to the newest lifestyle trends. It's about possibilities, taking chances, and taking charge of the future -- now.

Faith PopcornMs. Popcorn has coined various terms and phrases in her publications. For example "Brailling the culture" is her term for analyzing a range of cultural developments. Ms. Popcorn has identified a number of trends that she argued determine consumer behavior. She also developed a marketing model she calls "InCulture Marketing" which she says turns the culture itself into a medium for brand communications.

Micro-Environment of CompanyThe Company- Marketing Plans, Department, Internal Environment, MissionSuppliers- Provide resources to the company to produce its goods & servicesMarketing Intermediaries- help the company promote, sell, distribute. Include resellers, physical distribution firms, marketing services agencies

Micro-Environment of CompanyCustomers- Types of markets: Consumer, Business, Govt., InternationalCompetitors- A company must provide greater customer value & satisfaction than its competitors doPublics- A public is any group that has an actual or potential interest or impact on an organization's ability to achieve its objectives-

PublicsFinancial publics- Influence the company's ability to obtain funds- banks, inv houses, Media publics- Carry news, features, editorialsGovernment publics-mgt must take govt. developments into accountCitizen-action groups- Companys activities are questioned by consumer organizations, environmental groups, minority groups etc

PublicsLocal publics- include neighborhood residents, & community organizations, General public- The companys image affects its buying Internal publics- include workers, managers, volunteers, board of directors- when employees feel good about the company , this positive attitude spills over to the external publics

Track the environmentMarketers revise & adapt marketing strategies to meet new challenges & opportunities in the environmentVital to concentrate on key methods of tracking & identifying opportunities in the macro-environment and..

Track the environmentand key developments in various forces like demographic, economic, natural, cultural, political and technological

Six Major Forces to monitorDemographicEconomicNaturalCultural ForcesPoliticalTechnological

DemographicsPeople make up marketsMarketers are interested in size & growth rate of the population- in different cities, regions, & nations; age distribution, ethnic mix, educational levels, household patterns, regional characteristics & movements.

World population- to reach 7 billion by 2015.

World wide GrowthThe term world population commonly refers to the total number of living humans on earth at a given time. As of 14 July, 2010, the Earth's population is estimated by the Unites States Census Bureau to be 6.885 billion Explosive growth in world population

World PopulationBecause births outnumber deaths, the world's population is expected to reach about 9 billion by the year 2040.

World PopulationAsia accounts for over 60% of the world population with almost 3.8 billion people. The Peoples Republic of China and India alone comprise 20% and 17% respectively. Africa follows with 840 million people, 12% of the world's population.

World PopulationEurope's 710 million people make up 11% of the world's population. North America is home to 514 million (8%), South America to 371 million (5.3%), and Australia to 21 million (0.3%).

DemographicsClassified on various parameters

Data for demographics

Regional CharacteristicsPeople cross borders easily today

Movement of PopulationTravel

National movementPeople travel & settle across states & countries

Traveling populationMigration labour

DemographicsAge Distribution- Old & Young

Demographics- AgePre-schoolSchool- age childrenTeensYoung adults- 25-40 yearsMiddle-age adults- 40-60 yearsOlder adults- Over 65 years

Education - DemographicsEducation levels affect demographics

DemographicsEducational Levels

Demographics- OccupationEngineerChef

Demographics- OccupationExecutives & Office Staff

Actors

Doctors & Lawyers

LawyerLawyer

Demographics-LabourConstruction workers

DemographicsEthnic Mix

Demographics- Family Size

Household PatternsA traditional family consists of a husband, wife & children, sometimes grandparentsBut today, there are many diverse & non-traditional households- live-alones, single-parent families, childless married couples, empty nestersSSWD group consists of Single, Separated, Widowed, Divorced.

Demographics- FamilyHousehold Patterns

Joint Families- India

American SocietyThe Baby Boom Generation is the generation that was born just after World War II, a time that was marked by an increase in birthrates worldwide.Baby Boomers in their teenage and college years were characteristically part of the counterculture of the 1960s, but later became more ideologically divided, although the generation remained widely committed to keystone values such as gender equality, racial equality, and environmental stewardship.

Beatles of the 60s

American SocietyBaby Boomers and Gen X

American SocietyGeneration X is the generation generally defined as those born after the baby boom ended, extending from the early-to-mid 1960s to late 1970s. They associated with the pop culture of their youth in the 1980s to the early 1990s. Other names used interchangeably with Generation X are Reagan Generation,13th Generation,and Baby Busters.

American SocietyGeneration Y is also known as Generation Next or the Millennials. Generation Y spans from circa 1980 to the late 1990sThe following Generation, referred to as Generation Z, and various other names, was born between the early-1990s and end of the 2000s

DemographicsHousehold Patterns

Macro to Micro-marketsThe effects of these changes is fragmentation of the mass market into many micro-markets differentiated by age, sex, ethnic background, education, geography, lifestyle, etcEach group has strong preferences & is reached through targeted communication media & distribution channels

EconomicMarkets require purchasing power as well as peopleThe purchasing power depends on current income, prices, savings, debt, & credit availabilityMarketers need to keep close watch on income levels & consumer spending patterns

Ability to buy- IncomePurchasing Power

Income < DebtIncome, saving, Debt

EconomicCredit availability

EconomicNations vary greatly in the level & distribution of incomeA major determinant is the nations industrial structure

EconomicFour types of industrial structures can be distinguished:Subsistence EconomiesRaw material exporting economiesIndustrializing economiesIndustrial economies

1-Subsistence EconomiesSubsistence EconomiesIn a Subsistence Economy vast majority of people engage in simple agricultureThey consume their output & barter the rest for goods & servicesThis includes Bangladesh, Cambodia & Pakistan

AgricultureFarming & Agriculture based economy

Agriculture

Agriculture

2-Raw material exporting economiesRaw material exporting economies are rich in one or more natural resource but poor in other areasMaximum revenue comes from exporting these resources, as Brunei does for oilThese could be good markets for extractive equipment, tools, & supplies, trucks, etc

Raw materialsRaw materials

Raw materialRaw mtrl

Revenue comes from oilOil barrels

Raw material exporting economiesDepending on the number of foreign residents & wealthy native rulers & landholders, there is also a market for western style commodities & luxury goods

Wealthy rulersWealthy ruler

Lifestyle products- Cruise/Boats

Lifestyle productsLifestyle products

Lifestyle productsComfortable furniture

Lifestyle productsBeauty Products

Western productsWestern products

Foreign Residents

3-Industrializing EconomiesIndustrializing Economies: In an industrializing economy, manufacturing begins to account for 10 to 20% of the countrys gross domestic product (GDP)Include India & PhilippinesAs manufacturing increases the country relies on imports of raw material , steel, & heavy machinery, & less imports of finished textiles, paper products & processed foods

Manufacturing

ManufacturingManufacturing Industry

ManufacturingManufacturing

Gross Domestic ProductThe gross domestic product (GDP) or gross domestic income (GDI), a basic measure of a country's economic performance, is the market value of all final goods and services made within the borders of a nation in a year.

Industrializing EconomiesThe industrialization creates a new rich class & a growing middle-class, both demanding new products, some of which can only be imported

4-Industrial economiesIndustrial economies: In Asian industrial economies such as Japan, South Korea & Taiwan are major exporters of manufacturing goods & investment productsThey buy manufactured goods from each other & also export them to other type of economies in exchange for raw materials & semi-finished goods.The large & varied manufacturing activities of these industrial nations & their sizable middle-class make them rich markets for many goods.

Industrial economiesIncome distribution is related to a countrys industry structure & is also affected by the political systemThere are five income distribution patterns:

Income Distribution Patterns in EconomiesVery low incomesMostly low incomesVery low, very high incomesLow, medium high incomesMostly medium incomesAn expensive car would not be bought in the first two, but in the third

Natural Environment- 4 Trends

Natural EnvironmentThe air & water pollution in world cities have reached gigantic proportionsThere is great concern about industrial chemicals creating a hole in the ozone layerMarketers need to be aware of the opportunities & threats associated with the natural environment

Natural EnvironmentNatural Environment

Natural Environment- 4 TrendsShortage of raw materialIncreased cost of energyIncreased pollution levelsChanging roles of governments

Natural Environment- Shortage of raw materialsAir & Water seem infinite resources but many see long-run dangersRenewable resources, such as forests & food also have to be used wiselyNon-renewable resources oil, coal, minerals, pose a serious problemFirms that use scarce resources face large costs increases

Shortage of raw materials

Shortage of raw materials

Shortage of raw materials

Increased cost of energy

Due to shortage cost of energy is bound to increase

Natural Environment- 4 TrendsIncreased cost of energy

Solar Power

Increased cost of energy

Increased cost of energy

Increased cost of energy

Wind energy

Natural Environment- 4 TrendsPollutionIncreased pollution levelsIndustry will damage the quality of environmentDisposal of chemical & nuclear waste high mercury levels in the ocean, quantity of chemical pollutants in food supply & soil, littering with non-biodegradable plastic bottles, & packaging

Pollution

Industrial Pollution

Water PollutionIn seas

Natural Environment- 4 TrendsChanging role of governmentsIncreasing govt. intervention in natural resource managementSome developed countries like Germany pursue environment quality, while some poorer nations do little about pollution because of lack of fundsCompanies need to take control

Changing role of governments

International GovernmentsFrance & USA

Changing role of governments

Natural Environment- 4 TrendsToday some companies are part of the Green Movement, developing environmentally sustaining strategies & practicesFor eg, GE is using its ecomagination to create products for a better world- cleaner aircraft engines, cleaner locomotives, cleaner fuel technologies

Culture- Cultural Diversity

Cultural ForcesThe cultural environment a person grows up in shapes his beliefs & values; which tend to persistThus, Indians believe in hard work, getting married, & are piousCore beliefs are passed on from parents to children, reinforced by major social institutions like schools, colleges, religious groups, business & government

Cultural ForcesSecondary beliefs & values are open to changeBelieving in institution of marriage is a core belief; believing that people ought to marry early is a secondary belief.Marketers have some chance of changing secondary values, but little chance of changing core values

Cultural ForcesMarketers can spot cultural shifts that open up new marketing opportunities & threatsEg. Percentage of people who value physical fitness has been steadily rising, particularly in the under-30 group, & upscale segment

Cultural ForcesMarketers of health foods , exercise equipment, & gymnasiums cater to this trend with appropriate products & communicationPeople are also becoming calorie conscious; hence, low calorie snacks can be targeted to this segment

Opening of gymsGymnasiums

CultureUnderstand the culture

PoliticalThe political environment is composed of laws, government agencies, & pressure groups that influence and limit various organisations & individuals in societyGovernment legislation regulates business

PoliticalEg. Alcohol & cigarette advertising is banned since it promotes these stimulantsHome appliances undergo safety checksFood companies need special approval for vegetarian & non-vegetarian itemsBusiness legislation protects companies from each other

PoliticalCompanies establish legal review procedures & promulgate ethical standards to guide their marketing managersPromulgate:1.to make known by open declaration; publish; proclaim formally or put into operation (a law, decree of a court, etc.).2.to set forth or teach publicly (a creed, doctrine, etc.).

TechnologicalAdvancement in Medical technology

TechnologicalThe most dramatic force shaping peoples lives is technologyTechnology has release many wonders like penicillin , & many new health treatmentsAlso, technology has released the bomb, & many guns

TechnologyModern warfare equipment

Warfare TechnologyModern equipment

TechnologicalOther products like the automobile, video games & ready to eat food has also been due to futuristic technologyEach technology has long term consequences that cannot be foreseenCDs hurt Records & cassettes, Internet-postal service, Digital photography-Film business.

TechnologicalTechnological Advancement

TechnologyAircrafts

Technological

Fast TrainsSubways

Fast CarsAutomobiles

Use of mobile phones -IndiaExtensive use by all segments

Use of mobile phones -India

Use of mobile phones -IndiaIn cities

Use of mobile phones -IndiaRural reach of mobile phones

Use of mobile phones -IndiaTechnology reaches all parts of India

Use of mobile phones -India

Video GamesVideo gamesVideo parlours

Growing market of video games

Responding to Macro Environment There are three kinds of companies: those that make things happen, those who watch things happen, & those who wonder what happenedBy taking action, companies can overcome seemingly uncontrollable environments. For example:

Responding to Macro EnvironmentWhereas some companies view the ceaseless online rumours as something on which they have no control, others work proactively to prevent or counter negative word of mouth Some companies only watch; others take action

Responding to Macro EnvironmentIn some cases companies have no control over market forces like migration of labour, changing cultural fashions, economic environment- but smart marketing managers must be proactive, rather than negative.

Being ProactiveProactive planning is the concept of planning AHEAD of the actual event, to be prepared for it (whatever it is). By being proactive you avoid being over-run by the event, and have plans and procedures in place to cope with it (whatever it is). Emergency organizations, like police have plans for future events like riots, floods or earthquakes, you should, too.

Be Prepared- Always!In business and studies, it is always good to be prepared.