Marketing Environment

Marketing EnvironmentMarketing Environment

Dr.Sita MishraDr.Sita Mishra

Learning ObjectivesLearning Objectives Describe the environmental forces that affect the Describe the environmental forces that affect the

company’s ability to serve its customers.company’s ability to serve its customers. Explain how changes in the demographic and Explain how changes in the demographic and

economic environments affect marketing economic environments affect marketing decisions.decisions.

Identify the major trends in the firm’s natural and Identify the major trends in the firm’s natural and technological environments.technological environments.

Explain the key changes in the political and Explain the key changes in the political and cultural environments.cultural environments.

Discuss how companies can react to the Discuss how companies can react to the marketing environment.marketing environment.

Marketing EnvironmentMarketing Environment

The marketing environment consists of actors The marketing environment consists of actors and forces outside the organization that affect and forces outside the organization that affect management’s ability to build and maintain management’s ability to build and maintain relationships with target customers.relationships with target customers.

Environment offers both opportunities and Environment offers both opportunities and threats.threats.

Marketing intelligence and research used to Marketing intelligence and research used to collect information about the environment.collect information about the environment.

Marketing EnvironmentMarketing Environment

Includes:Includes: Microenvironment: actors close to the Microenvironment: actors close to the

company that affect its ability to serve its company that affect its ability to serve its customers.customers.

Macro-environment: larger societal forces that Macro-environment: larger societal forces that affect the microenvironment.affect the microenvironment.• Considered to be beyond the control of the Considered to be beyond the control of the

organization.organization.

The Company’s MicroenvironmentThe Company’s Microenvironment

Company’s Internal Environment: Company’s Internal Environment: Areas Areas inside inside a company.a company. Affects the marketing department’s Affects the marketing department’s

planning strategies.planning strategies. All departments must “think consumer” All departments must “think consumer”

and work together to provide superior and work together to provide superior customer value and satisfaction.customer value and satisfaction.

Actors in the MicroenvironmentActors in the Microenvironment

The SuppliersThe Suppliers

Suppliers: Suppliers:

Provide resources needed to Provide resources needed to produce goods and services.produce goods and services.Important link in the “value delivery Important link in the “value delivery system.”system.”Most marketers treat suppliers like Most marketers treat suppliers like partners.partners.

Marketing Intermediaries:Marketing Intermediaries:

Help the company to promote, sell, and Help the company to promote, sell, and distribute its goods to final buyersdistribute its goods to final buyers• ResellersResellers• Physical distribution firmsPhysical distribution firms• Marketing services agenciesMarketing services agencies• Financial intermediariesFinancial intermediaries

CustomersCustomers

Customers:Customers: Five types of markets that purchase a Five types of markets that purchase a

company’s goods and servicescompany’s goods and services Consumer marketConsumer market Business marketBusiness market Reseller marketReseller market Govt. marketGovt. market International marketInternational market

CompetitorsCompetitors

Those who serve a target market with Those who serve a target market with

products and services that are viewed by products and services that are viewed by consumers as being reasonable substitutesconsumers as being reasonable substitutes

Company must gain strategic advantage Company must gain strategic advantage against these organizationsagainst these organizations

PublicsPublicsAny group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives.

The Macro-environmentThe Macro-environment

The company and all of the other actors The company and all of the other actors operate in a larger macro-environment of operate in a larger macro-environment of forces that shape opportunities and pose forces that shape opportunities and pose threats to the company.threats to the company.

“ It is useless to tell a river to stop running; the best thing is to learn how to swim in the direction it is flowing”

The Company’s Macro-The Company’s Macro-environmentenvironment

Demographic EnvironmentDemographic Environment

Worldwide Population GrowthWorldwide Population Growth

Population Age MixPopulation Age Mix

Literacy Level of PopulationLiteracy Level of Population

Household PatternsHousehold Patterns

Geographical Shifts in PopulationGeographical Shifts in Population

Shift from Mass Market to MicromarketShift from Mass Market to Micromarket

Economic EnvironmentEconomic Environment

Income DistributionIncome Distribution

Savings, Debt, & Credit AvailabilitySavings, Debt, & Credit Availability

Natural Environment

Shortages of Raw Materials

Increased Pollution

Increased Government Intervention

Environmentally Sustainable Strategies

Technological EnvironmentTechnological Environment

Accelerating Paceof Change

Accelerating Paceof Change

Unlimited Opportunitiesfor Innovation

Unlimited Opportunitiesfor Innovation

IncreasedRegulation

IncreasedRegulation

Issues in the TechnologicalEnvironment

Issues in the TechnologicalEnvironment

VaryingR & D Budgets

VaryingR & D Budgets

Discussion QuestionsDiscussion Questions

Within the last ten years, which Within the last ten years, which technological force has had the greatest technological force has had the greatest impact on marketing? In what areas of impact on marketing? In what areas of marketing has this impact been seen?marketing has this impact been seen?

What technological force has impacted What technological force has impacted you the most? In what ways has this you the most? In what ways has this occurred?occurred?

Political-Legal EnvironmentPolitical-Legal Environment Increase in business legislationIncrease in business legislation Protecting the welfare of consumersProtecting the welfare of consumersUnder Consumer Protection Act,1986, six rights of Under Consumer Protection Act,1986, six rights of

the consumers are recognised:the consumers are recognised: SafetySafety InformationInformation ChoiceChoice RepresentationRepresentation RedressalRedressal Consumer educationConsumer education

Socio-Cultural EnvironmentSocio-Cultural Environment

The institutions and other forces that affect The institutions and other forces that affect a society’s basic values, perceptions, a society’s basic values, perceptions, preference, and behaviors.preference, and behaviors.

Core beliefs and values are passed on Core beliefs and values are passed on from parents to children and are reinforced from parents to children and are reinforced by schools, churches, business, and by schools, churches, business, and government.government.

Secondary beliefs and values are more Secondary beliefs and values are more open to change.open to change.

•

Colgate-Palmolive’s Total Global Colgate-Palmolive’s Total Global Branding StrategyBranding Strategy

Colgate-Palmolive Colgate-Palmolive has had global has had global success with its success with its Colgate line of tooth-Colgate line of tooth-care products. The care products. The products and their products and their packaging design do packaging design do not vary from not vary from country to country; country to country; the only thing that the only thing that changes is the changes is the language on the language on the packages.packages.

INDIAN MARKETING INDIAN MARKETING ENVIRONMENTENVIRONMENT

Indian PopulationIn the new millennium (in May’2000) India’s population has reached the billion mark – only the second country to do so.There are only four countries in the world that have a population exceeding that of Uttar Pradesh (157 million)India adds roughly 18 million people, the population of Australia, every year.

Indian Population : Age Structure ProjectionIndian Population : Age Structure Projection (Percentage of total population)(Percentage of total population)

Planning Commission ProjectionPlanning Commission ProjectionAge GroupAge Group Year 1997Year 1997 Year 2002Year 2002 Year 2007 Year 2007 Year 2012Year 2012

Under 15 Under 15 YearsYears

37.237.2 33.533.5 30.030.0 28.228.2

15-59 Years15-59 Years 56.156.1 59.359.3 62.362.3 63.263.2

60 Years 60 Years and aboveand above

6.76.7 7.27.2 7.77.7 8.68.6

INDIAN MARKETING INDIAN MARKETING ENVIRONMENTENVIRONMENTFew Examples…………Few Examples…………

How some of the industry leaders lost their How some of the industry leaders lost their competitive advantage because they failed to competitive advantage because they failed to perceive the environmental changes….?perceive the environmental changes….?

The decade of 1980s saw many of the The decade of 1980s saw many of the industry titans losing their competitive industry titans losing their competitive advantage to relatively new entrants……..advantage to relatively new entrants……..

(Contd..)(Contd..)

Few Examples…………Few Examples………… Hindustan Motors and Premier Hindustan Motors and Premier

Automobiles lost their pre-eminent Automobiles lost their pre-eminent position in the Indian market to Maruti position in the Indian market to Maruti Udyog’s Maruti 800.Udyog’s Maruti 800.

Mahindra and Mahindra were shaken Mahindra and Mahindra were shaken up by Maruti Udyog’s Gypsy.up by Maruti Udyog’s Gypsy.

Titan watches heralded a new era of Titan watches heralded a new era of watches and shook the giant HMT.watches and shook the giant HMT.

Hindustan UniLevers Surf was Hindustan UniLevers Surf was cornered by Nirma.cornered by Nirma.

Few Examples…………Few Examples…………

Television giants like NELCO, Crown, Television giants like NELCO, Crown, Weston, Salora, Bush etc. lost out to Weston, Salora, Bush etc. lost out to absolutely new firms and brands like absolutely new firms and brands like LG and Samsung.LG and Samsung.

Videocon launched its washing Videocon launched its washing machine in1998 and suddenly machine in1998 and suddenly thereafter, one saw an explosion in the thereafter, one saw an explosion in the market with about half-a-dozen brands.market with about half-a-dozen brands.

An example of how External Forces Analysis An example of how External Forces Analysis (PEST) can be translated to actionable marketing (PEST) can be translated to actionable marketing

strategies (Asian Airline Industry)strategies (Asian Airline Industry)

(from Marketing: An Introduction (An Asian Perspective) by Armstrong, Kotler and da Silva: Table 3.1)