Marketing environment

Dr.S.G.KulkarniDr.S.G.Kulkarni 11

Module 2Module 2

MARKETING ENVIRONMENTMARKETING ENVIRONMENT

Dr.S.G.Kulkarni 2

Marketing Environment

Philip Kotler :

“ A company marketing environment consists of the actors and forces that affect the company’s ability to develop and maintain successful transactions and relationships with its target customers.”


Marketing EnvironmentMarketing Environment

Micro environmentMicro environment Macro environment Macro environment

Controllable Controllable PartiallyPartially UncontrollableUncontrollable

Co OrganizationCo OrganizationSuppliersSuppliers DemographicDemographic

ManagementManagement CustomersCustomers EconomicEconomic

ResourcesResources DealersDealers EcologicalEcological

M MixM Mix CompetitorsCompetitors TechnologicalTechnological

CommunityCommunityPoliticalPolitical

( Social groups)( Social groups)SociologicalSociological



The inputs concerned with The inputs concerned with micro micro environmentenvironment are – are –

Company organizationCompany organization

SuppliersSuppliers

customers customers

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The outputs concerned with The outputs concerned with macro macro environmentenvironment are – are –

► PoliticalPolitical

► EconomicalEconomical

► TechnologicalTechnologicalMacro environment factors may be –Macro environment factors may be –Controllable or partially - controllableControllable or partially - controllable

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Micro environmental factors Micro environmental factors

Company :Company : Company organization consists of Board of Company organization consists of Board of

Directors and functional managers.Directors and functional managers.

Marketing plans are drawn up as per the Marketing plans are drawn up as per the philosophy of Top managementphilosophy of Top management

Marketing decisions like new products, Marketing decisions like new products, expansion, etc depend on the support of expansion, etc depend on the support of top management. It depends upon top management. It depends upon finance, managerial skills, organization’s finance, managerial skills, organization’s strengths and weaknesses. strengths and weaknesses.

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1. Company - continued

Marketing plans should be in harmony with policies of other departments such as production, purchase, finance, personnel, etc

For ex: quality depends upon production policiesAdvertising and sales promotion – on budgets

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2. Suppliers

• Supply raw materials, plant and equipments, human resources, technology

• Their strategies affect ours

• If they increase prices, we have to revise price structure

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2. Suppliers - 2. Suppliers - continuedcontinued

• Decisions like ‘ make or buy’ depend upon suppliers

• Depends upon

– Right supplier– Right place– Right time and lead time– Right price– Right quantity– Right quality

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2. Suppliers -continued2. Suppliers -continued

Good relations are required for Good relations are required for successful marketing successful marketing


3. Intermediaries3. Intermediaries

Wholesalers, retailers, agents, transporters, Wholesalers, retailers, agents, transporters, warehousers, ad agencies, etc.warehousers, ad agencies, etc.

This is a choice of channel of distributionThis is a choice of channel of distribution


4. Customers4. Customers

Purchase requirements vary from Purchase requirements vary from customer to customercustomer to customer

Individual customers are influenced by Individual customers are influenced by cultural, social and psychological cultural, social and psychological factorsfactors

They are large in number, scattered, They are large in number, scattered, poorly informed, buy in small poorly informed, buy in small quantities and frequently and are quantities and frequently and are guided by personal considerationsguided by personal considerations


4. Customers 4. Customers

Industrial producers are limited in number, Industrial producers are limited in number, geographically concentrated, buy in large geographically concentrated, buy in large in bulk, demand is derived, buy on in bulk, demand is derived, buy on reciprocal basis, depend on lease hold.reciprocal basis, depend on lease hold.

Dealers buy for resale.Dealers buy for resale.

Government buys for public welfare, Government buys for public welfare, defence defence

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5. Competitors

Supply similar products or substitute products

Competitors adopt different actions for getting greater share of markets

All firms compete with each other for consumers buying power.

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6. Public

Financial public: financial institutions, investment houses, insurance co,

Government public: Citizen action public: consumer organizations,

environmental groups, minority groups, etc General public: public image Internal public: employees, Board, labour

unions, press and media


Macro environmentMacro environment1. Economic1. Economic

Economic forces influence both Economic forces influence both marketers and the consumersmarketers and the consumers

Economic forces include –Economic forces include – Competition – monopoly, oligopolyCompetition – monopoly, oligopoly Buying powerBuying power Willingness to spendWillingness to spend


Macro environmentMacro environment1. Economic - continued1. Economic - continued

Economic conditions includeEconomic conditions include

Economic developmentEconomic development National incomeNational income Standard of livingStandard of living State of agricultureState of agriculture

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Macro environment1. Economic - continued

Business cycles Interest rate Price levels Fiscal policies

marketers have to take into consideration the changes taking place in agriculture and industry


2. Demography 2. Demography

Demography gives ‘consumer profile’Demography gives ‘consumer profile’ It is the study of population in respect of its It is the study of population in respect of its

size, density, location, age, race, size, density, location, age, race, occupation, marital status, education, sex occupation, marital status, education, sex composition etccomposition etc

All these factors influence marketing All these factors influence marketing decisionsdecisions

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Acronyms used in respect of age

SKIPPIES MOBY’s DINKS PUPPIES WOOFS


2.Demography - continued2.Demography - continued

School Kids with Income and School Kids with Income and Purchasing Power Purchasing Power

Mother Older, Baby YoungerMother Older, Baby YoungerDouble Income, No KidsDouble Income, No KidsPoor Urban PopulationPoor Urban PopulationWell Off Older FolksWell Off Older Folks

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►Mexico is a nation of young populationMexico is a nation of young population

► Japan – ‘old generation’Japan – ‘old generation’►America was a melting bowl. Now it is America was a melting bowl. Now it is

a ‘Salad bowl’ with Chinese, Filipinese, a ‘Salad bowl’ with Chinese, Filipinese, Japanese, Asians, Koreans Japanese, Asians, Koreans

►Ads – show women as decision makers Ads – show women as decision makers due to increase in educationdue to increase in education

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Demography - continuedDemography - continued

EducationEducation► IlliteratesIlliterates►High school drop outsHigh school drop outs►MatriculatesMatriculates►GraduatesGraduates►Professional degreesProfessional degrees►Post graduatesPost graduates

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2.Demography - continued

Buying habits are determined by income, education, age, family composition and other demographic factors

It helps in - Market segmentation, demand forecasting, determination of market potential



India’s population is roughly 108 croresIndia’s population is roughly 108 crores

75% of population lives in villages75% of population lives in villages

Rural marketing offers immense Rural marketing offers immense opportunities and challenges to a creative opportunities and challenges to a creative marketermarketer

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2.Demography - continued

You find that the demand is increasing not only for farm products, but also for non-farm products

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Technology

It has a definite impact on buyers and marketers decisions

It provides mechanical, physical and numerous other processes which help in attaining higher standard of living

It has adverse effects like pollution, unemployment, increase in crime rate, etc

Marketers must be aware of new developments in technology.

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Technology-continued

Technological developments may put some people out of business and at the same time, open up new business opportunities to others

For ex: introduction of synthetic fabrics drove away sheep raisers and cotton growers out of business

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Solar pocket calculators and hand cameras

CDs and Video tapes

Virtual reality applications in Marketing is a new application due to technological progress

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Technological developments have improved the standard of living and given more leisure time

Improvements in communication, transportation

Technology has given wonder drugs like Ampicilliin, by- pass surgery,

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Technology grows out of research made by business, universities

Most of the products that we talk today were not there a few years back. For example, Computers, Photostat, laser technology, scanners.


3. Natural factors and ecological factors - also3. Natural factors and ecological factors - also

These also affect the pattern of These also affect the pattern of industries and marketingindustries and marketing

Industries create pollution of air, water Industries create pollution of air, water and environmentand environment

The package in the form of plastic The package in the form of plastic bags and bottles create a lot of bags and bottles create a lot of problemsproblems

Some governments have banned the Some governments have banned the use of plastic bags.use of plastic bags.


Political factorsPolitical factors

Marketing is affected by monetary, fiscal, Marketing is affected by monetary, fiscal, import and export policiesimport and export policies

Some of the Acts applicableSome of the Acts applicable are as follows: are as follows: Essential Commodities ActEssential Commodities Act Prevention of Food Adulteration ActPrevention of Food Adulteration Act Trade and Merchandise marks ActTrade and Merchandise marks Act Packaged Commodities Act Packaged Commodities Act Companies Act Companies Act


Political factors - continuedPolitical factors - continued

Political and legal factors are inter Political and legal factors are inter connectedconnected

Discontinuation of – CCI, FERA, IDRADiscontinuation of – CCI, FERA, IDRA

Introduction of SEBI, FEMA, VATIntroduction of SEBI, FEMA, VAT

Rules allow private participation in Rules allow private participation in transportation , telecom, airlinestransportation , telecom, airlines

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Social-Cultural environment

Advertisements and culture Some ads are banned on TVs Festivals like Ganesh festival, Diwali, Id-

Milad, Christmas, Dress styles are different School uniforms

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Cultural factors - continuedCultural factors - continued

• Food habitsFood habits• Internet practiceInternet practice• Fast foods – Pizza hut, Ken Fried Fast foods – Pizza hut, Ken Fried

ChickenChicken



• There are several movements like trade union movement, consumer movement, women's lib, deprived classes movement , etc.

• These have their own expectations from the market. If they are against their ideas, they boycott the products


Cultural factors - continuedCultural factors - continued Cause related MarketingCause related Marketing

1980 saw the advent of “ cause related 1980 saw the advent of “ cause related marketing”marketing”

The distinctive feature of case-related The distinctive feature of case-related marketing is the firm’s contribution to a marketing is the firm’s contribution to a designated cause being linked to customers’ designated cause being linked to customers’ engaging in revenue-producing transactions engaging in revenue-producing transactions with the firmwith the firm

Example: Example: CRY, AWWA, WWFCRY, AWWA, WWF cards cards

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• Cultural and ethical forces are of Cultural and ethical forces are of vital importance vital importance


Responding to the marketing environmentResponding to the marketing environment

There are two general approaches to There are two general approaches to respond to marketing environmental respond to marketing environmental forces, viz., Passive approach and forces, viz., Passive approach and Aggressive approachAggressive approach

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1) Passive or reactive approach

Under this approach the marketing strategy is subject to micro environment with macro environment

Environmental objectives of 2010 are set in 2000 and strategies are developed in 1998 and the organizational structure is established in 1995

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1) Passive or reactive approach - 1) Passive or reactive approach - continuedcontinued

• Stable environment is very rare. Stable environment is very rare. Turbulent environment is commonTurbulent environment is common

• Marketing environment should be Marketing environment should be scanned systematically. These guide scanned systematically. These guide marketing opportunitiesmarketing opportunities

• Marketing strategy normally follows Marketing strategy normally follows passive approach that is coordinating passive approach that is coordinating micro environment with macro micro environment with macro environmentenvironment


1) Passive or reactive approach - continued1) Passive or reactive approach - continued

• India has opportunities for handcraft goods, ready made garments, fast food products, software development, call centres and those areas which are labour intensive

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2) Aggressive approach

Marketing manager tries to influence environmental forces so as to create market opportunities.

A firm can be able to influence the shape of legislation through lobbying

A single organization cannot influence – population, economic condition

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Indian Marketing environment

Prosperity in rural area

Overflowing unaccounted money everywhere

Inflationary condition [ inflation is a permanent guest]

Aggressive advertising on TV inspiring children and women. Consumer is a ‘King’

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Indian Marketing environment - continued

Middle class explosion - ‘Consumption community’

Better educated and exposed to the life styles of the rich

Their aspirations have been constantly growing.

They often spend more than what they earn

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Middle class explosion

Their expenditure on non-food items is continuously

Our market is on par with UK, France, West Germany

More disposable income

Spend more on non food items

Invest in stock market

Marketing environment

Business

demography demography

education dr

quality dr

public financial public

defence dr

marketingdecisions dr

government public

demography continued