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Marketing EnvironmentMarketing Environment

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Learning ObjectivesLearning Objectives

Describe the environmental forces that affect theDescribe the environmental forces that affect thecompanys ability to serve its customers.companys ability to serve its customers.

Explain how changes in the demographic andExplain how changes in the demographic and

economic environments affect marketingeconomic environments affect marketingdecisions.decisions.

Identify the major trends in the firms natural andIdentify the major trends in the firms natural andtechnological environments.technological environments.

Explain the key changes in the political andExplain the key changes in the political and

cultural environments.cultural environments. Discuss how companies can react to theDiscuss how companies can react to the

marketing environment.marketing environment.

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The marketing environment consists of actorsThe marketing environment consists of actors

and forces outside the organization that affectand forces outside the organization that affect

managements ability to build and maintainmanagements ability to build and maintain

relationships with target customers.relationships with target customers.

Environment offers both opportunities andEnvironment offers both opportunities and

threats.threats.

Marketing intelligence and research used toMarketing intelligence and research used to

collect information about the environment.collect information about the environment.

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The Marketing EnvironmentThe Marketing Environment

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Includes:Includes:

Microenvironment: actors close to theMicroenvironment: actors close to the

company that affect its ability to serve itscompany that affect its ability to serve its

customers.customers.

MacroMacro--environment: larger societal forces thatenvironment: larger societal forces that

affect the microenvironment.affect the microenvironment.

Considered to be beyond the control of theConsidered to be beyond the control of theorganization.organization.

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The Companys MicroenvironmentThe Companys Microenvironment

Companys Internal Environment:Companys Internal Environment:

AreasAreas insideinside a company.a company.

Affects the marketing departmentsAffects the marketing departmentsplanning strategies.planning strategies.

All departments must think consumerAll departments must think consumer

and work together to provide superiorand work together to provide superiorcustomer value and satisfaction.customer value and satisfaction.

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Actors in the MicroenvironmentActors in the Microenvironment

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The SuppliersThe Suppliers

Suppliers:Suppliers:

Provide resources needed toProvide resources needed to

produce goods and services.produce goods and services.Important link in the value deliveryImportant link in the value delivery

system.system.

Most marketers treat suppliers likeMost marketers treat suppliers like

partners.partners.

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Marketing Intermediaries:Marketing Intermediaries:

Help the company to promote, sell, andHelp 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

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CustomersCustomers

Customers:Customers:

Five types of markets that purchase aFive types of markets that purchase a

companys goods and servicescompanys goods and servicesConsumer marketConsumer market

Business marketBusiness market

Reseller marketReseller market

Govt. marketGovt. market

International marketInternational market

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CompetitorsCompetitors

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

products and services that are viewed byproducts and services that are viewed by

consumers as being reasonable substitutesconsumers as being reasonable substitutes

Company must gain strategic advantageCompany must gain strategic advantage

against these organizationsagainst these organizations

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PublicsPublics

Any group that has an actual or potential interest in orimpact on an organizations ability to achieve its

objectives.

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The MacroThe Macro--environmentenvironment

The company and all of the other actorsThe company and all of the other actors

operate in a larger macrooperate in a larger macro--environment ofenvironment of

forces that shape opportunities and poseforces that shape opportunities and posethreats 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

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The Companys MacroThe Companys Macro--

environmentenvironment

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Demographic EnvironmentDemographic Environment

Worldwide Population GrowthWorldwide Population Growth

Population Age MixPopulation Age Mix

Ethnic MarketsEthnic Markets

Household PatternsHousehold Patterns

Educational GroupsEducational Groups

Geographical Shifts in PopulationGeographical Shifts in Population

Shift from Mass Market to MicromarketsShift from Mass Market to Micromarkets

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Economic EnvironmentEconomic Environment

Income DistributionIncome Distribution

Subsistence economies(few opportunities for marketers)

Subsistence economies(few opportunities for marketers)

Raw-material-exporting economiesRaw-material-exporting economies

Industrializing economiesIndustrializing economies

Industrial economiesIndustrial economies

Savings, Debt, &Credit Availability

Savings, Debt, &Credit Availability

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Natural Environment

Shortages of Raw Materials

Increased Pollution

Increased Government Intervention

Environmentally Sustainable Strategies

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Technological EnvironmentTechnological Environment

Accelerating Pace

of Change

Unlimited Opportunities

for Innovation

Increased

Regulation

Issues in the Technological

Environment

Varying

R & D Budgets

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Discussion QuestionsDiscussion Questions

Within the last ten years, whichWithin the last ten years, which

technological force has had the greatesttechnological force has had the greatest

impact on marketing? In what areas ofimpact on marketing? In what areas of

marketing has this impact been seen?marketing has this impact been seen?

What technological force has impactedWhat technological force has impacted

you the most? In what ways has thisyou the most? In what ways has this

occurred?occurred?

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PoliticalPolitical--Legal EnvironmentLegal Environment

Increase in business legislationIncrease in business legislation

Protecting the welfare of consumersProtecting the welfare of consumers

Under Consumer Protection Act,1986, six rights ofUnder Consumer Protection Act,1986, six rights of

the consumers are recognised:the consumers are recognised: SafetySafety

InformationInformation

ChoiceChoice

RepresentationRepresentation RedressalRedressal

Consumer educationConsumer education

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Cultural EnvironmentCultural Environment

The institutions and other forces that affectThe institutions and other forces that affecta societys basic values, perceptions,a societys basic values, perceptions,preference, and behaviors.preference, and behaviors.

Core beliefs and values are passed onCore beliefs and values are passed onfrom parents to children and are reinforcedfrom parents to children and are reinforcedby schools, churches, business, andby schools, churches, business, andgovernment.government.

Secondary beliefs and values are moreSecondary beliefs and values are moreopen to change.open to change.

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External macro environmentExternal macro environment

1)1) Economic conditionsEconomic conditions

2)2) Social and cultural forcesSocial and cultural forces3)3) Political and legal forcesPolitical and legal forces

4)4) TechnologyTechnology

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1)Demographics1)Demographics

By demographics we mean characteristics ofBy demographics we mean characteristics ofpopulation i.e. size, distribution, growthpopulation i.e. size, distribution, growth

SizeSize

what is the total number of populationwhat is the total number of population

DistributionDistribution

how the population is distributed in ahow the population is distributed in acountry, how much percentage is living in citiescountry, how much percentage is living in citiesand how much percentage of population is livingand how much percentage of population is living

in villagesin villages

Growth.Growth.

the total population is growing at whichthe total population is growing at whichpercentagepercentage

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Social classSocial class

that how many social classes arethat how many social classes are

there in a country.there in a country.Age groupsAge groups

that how much percentage of athat how much percentage of a

population are children, how much are youngpopulation are children, how much are youngpeople, how much are married couples andpeople, how much are married couples and

how much are aged people.how much are aged people.

GenderGender

that how much percentage is male andthat how much percentage is male and

how much is femalehow much is female

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2. Economic conditions2. Economic conditions

By economic conditions we mean theBy economic conditions we mean theincome level of people.income level of people.

Inflation rateInflation rate

inflation means the rise in theinflation means the rise in theprices of goods and services in comparisonprices of goods and services in comparison

with the income of the peoplewith the income of the people

Interest rate.Interest rate.

whether the interest rate is high orwhether the interest rate is high or

low in a countrylow in a country

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3.Competition3.Competition

if the competition is tough in a countryif the competition is tough in a countryit will also influence every companyit will also influence every company

Types of competitionTypes of competition1.1. Brand competitionBrand competition

2.2. Substitute productsSubstitute products

3.3. Rivalry for limited buying powerRivalry for limited buying power

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Types of competitionTypes of competition

i) Brand competitioni) Brand competitionwhen any two or morewhen any two or more

companies are producing similar productscompanies are producing similar products

and targeting same need of market it isand targeting same need of market it is

called brand competitioncalled brand competition

For example Honda and Toyota.For example Honda and Toyota.

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ii) substitute productsii) substitute products

By substituteBy substituteproducts we mean those products that areproducts we mean those products that are

different in nature from each other butdifferent in nature from each other but

satisfy the same need of the marketsatisfy the same need of the market

For example carpets and tilesFor example carpets and tiles

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iii). Rivalry for limited buying poweriii). Rivalry for limited buying power

In a way every typeIn a way every typeof business is competitor for otherof business is competitor for other

business because everyone is trying tobusiness because everyone is trying to

attract the customers and is trying thatattract the customers and is trying that

consumer may spend maximum portion ofconsumer may spend maximum portion of

his income for the products of thathis income for the products of that

companycompany

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4.Social4.Social andand culturalcultural forcesforces

If the culture of a country changes it will also affectIf the culture of a country changes it will also affectevery businessevery business

Some of the changes areSome of the changes are

i)i) Changing gender rolesChanging gender roles

with the passage of timewith the passage of timefemales are also entering in the every field of life.females are also entering in the every field of life.Therefore companies should target their increasingTherefore companies should target their increasingneedsneeds

ii)ii) A premium on timeA premium on timebecause of shortage of timebecause of shortage of timepeople are liking those products that are timepeople are liking those products that are timesaving, so all the companies should produce timesaving, so all the companies should produce timesaving productssaving products

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5.Political5.Political andand legallegal forcesforces

Change in the political and legal forces can alsoChange in the political and legal forces can alsoaffect every business. i.e.affect every business. i.e.

Attitude of the government is positive or negativeAttitude of the government is positive or negative

towards trade and industry.towards trade and industry.

Type of legislation made about air pollution,Type of legislation made about air pollution,

water pollution.water pollution.

Nature of taxation imposed on businesses.Nature of taxation imposed on businesses.

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6.Technology6.Technology

If the trend of technology increases in aIf the trend of technology increases in a

country it also can affect all thecountry it also can affect all the

businesses. i.e.businesses. i.e.

In these days the use of computer graphics,In these days the use of computer graphics,

robots and latest methods ofrobots and latest methods of

communication are becoming part ofcommunication are becoming part ofbusiness world.business world.

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External micro environmentExternal micro environment

By external micro environmentBy external micro environment

we mean those environmental factors thatwe mean those environmental factors thatif any change occurs in them, it will affectif any change occurs in them, it will affect

only a particular business/company and itonly a particular business/company and it

will not affect all the businesses of awill not affect all the businesses of a

countrycountry

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External micro environmentalExternal micro environmental

forcesforces1)1) The marketThe market

2)2) SuppliersSuppliers

3)3) Marketing intermediariesMarketing intermediaries

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1)The market1)The market

Market is that population to whom aMarket is that population to whom a

company offers its products.company offers its products.

If the market is attracted towards theIf the market is attracted towards the

products of one company it will affect theproducts of one company it will affect the

business of the competitor of thatbusiness of the competitor of that

company in the similar industry.company in the similar industry.

For example increased sale of Areeba willFor example increased sale of Areeba will

affect the sale of Etisalaat.affect the sale of Etisalaat.

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2.Suppliers2.Suppliers

Suppliers are those people or firms thatSuppliers are those people or firms thatprovide raw materials to the productionprovide raw materials to the production

companies.companies.

For different business there are differentFor different business there are different

types of raw materials required.types of raw materials required.

If the suppliers are in favor of one companyIf the suppliers are in favor of one company

they will affect the business of anotherthey will affect the business of another

company in the similar industrycompany in the similar industry

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3.The market intermediaries3.The market intermediaries

The market intermediaries are thoseThe market intermediaries are thosefirms/people who play the role of a bridgefirms/people who play the role of a bridgebetween a producer and marketbetween a producer and market

Wholesalers and retailers are marketWholesalers and retailers are marketintermediariesintermediaries

If they are in favor of one company, it willIf they are in favor of one company, it willaffect the business of another company in theaffect the business of another company in thesimilar industry.similar industry.

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ColgateColgate--Palmolives Total GlobalPalmolives Total Global

Branding StrategyBranding Strategy

ColgateColgate--PalmolivePalmolive

has had globalhas had global

success with itssuccess with its

Colgate line ofColgate line of

toothtooth--care products.care products.

The products andThe products and

their packagingtheir packaging

design do not varydesign do not vary

from country tofrom country tocountry; the onlycountry; the only

thing that changesthing that changes

is the language onis the language on

the packages.the packages.

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INDIAN MARKETINGINDIAN MARKETING

EN

VIRON

MEN

TEN

VIRON

MEN

T

Indian Population

In the new millennium (in May2000) Indias

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 ofAustralia, everyyear.

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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 2002Year2002 Year2007Year2007 Year2012Year2012

Under 15Under 15

YearsYears

37.237.2 33.533.5 30.030.0 28.228.2

1515--59 Years59 Years 56.156.1 59.359.3 62.362.3 63.263.2

60 Years60 Yearsand aboveand above

6.76.7 7.27.2 7.77.7 8.68.6

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INDIAN MARKETINGINDIAN MARKETING

EN

VIRON

MEN

TEN

VIRON

MEN

TFew ExamplesFew Examples

How some of the industry leaders lost theirHow some of the industry leaders lost their

competitive advantage because they failed tocompetitive advantage because they failed to

perceive the environmental changes.?perceive the environmental changes.?

The decade of 1980s saw many of theThe decade of 1980s saw many of the

industry titans losing their competitiveindustry titans losing their competitive

advantage to relatively new entrants..advantage to relatively new entrants..

(Contd..)(Contd..)

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Few ExamplesFew Examples

Hindustan Motors and PremierHindustan Motors and PremierAutomobiles lost their preAutomobiles lost their pre--eminenteminentposition in the Indian market to Marutiposition in the Indian market to MarutiUdyogs Maruti 800.Udyogs Maruti 800.

Mahindra and Mahindra were shakenMahindra and Mahindra were shakenup by Maruti Udyogs Gypsy.up by Maruti Udyogs Gypsy.

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

Hindustan Levers Surf was cornered byHindustan Levers Surf was cornered byNirma.Nirma.

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Few ExamplesFew Examples

Television giants like NELCO, Crown,Television giants like NELCO, Crown,

Weston, Salora, Bush etc. lost out toWeston, Salora, Bush etc. lost out to

absolutelynew firms and brands likeabsolutelynew firms and brands like

Onida and Videocon.Onida and Videocon.

Videocon launched its washingVideocon launched its washing

machine in1998 and suddenlymachine in1998 and suddenly

thereafter, one saw an explosion in thethereafter, one saw an explosion in themarket with about halfmarket with about half--aa--dozen brands.dozen brands.

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