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  • 1. Module 2 MBA 09
  • 2. Purpose of MarketingEnvironment Analysis To know where the environment is heading To find out the opportunities and threats To assess the scope of opportunities and short list those that can favorably impact the business. To project how the environment will be at a future point of time To help secure the right fit between the
  • 3. Marketing Environment Analysis Is the process of gathering, filtering and analysing information relating to the marketing environment.
  • 4. Factors to be covered under Environmental Analysis Macro  Micro environment Environment  The Market/Demand Demographic  The Consumer Environment  The Industry Socio-Cultural Environment  The Competition  Government Policies Economic Environment  Supplier – Related Political Environment Factors Natural Environment Technological Environment Legal Environment Government Policies
  • 5. Mega/Macro Environment Demographic Environment Socio-Cultural Environment Economic Environment Political Environment Natural Environment Technological Environment Legal Environment Government Policies
  • 6. Demographic Environment Factors relating to Population  Size  Growth Rate  Age Distribution  Religious Composition  Literacy Levels  House hold pattern  Regional characteristics
  • 7. Socio-Cultural Environment Culture (religion, language, education etc) Social Class (income, occupation, lifestyle, behavior) Changing position of women
  • 8. Economic Environment General Economic Conditions Rate of Growth of Economy Credit Availability and Interest Rates Inflation Rate Behaviour of Capital Markets Foreign Exchange Reserves Exchange Rates Tax Rates Prices of Essential Commodities Energy ( cost, availability etc) Labour ( cost, skill, availability etc)
  • 9. Political Environment Form of Government Political Stability Social and Religious Organisations Media and Pressure Group
  • 10. Natural Environment Natural Resources Ecology Climate Recent Trends in Natural Environment Shortage of Raw Materials Increased Energy Costs Anti- Pollution Pressures Changing Role of Government
  • 11. Technological Environment Options Available in Technology Governments Approach in respect of Technology Technology Selection
  • 12. Legal Environment/BusinessLegislation Corporate Affairs Consumer Protection Employee Protection Sectoral Protection Corporate Protection Protection of society as a whole against unbridled business behaviour Regulations on products, prices and distribution
  • 13. Environmental Factors Specific to theBusiness Concerned (micro) The Market/Demand The Consumer The Industry The Competition Government Policies Supplier – Related Factors
  • 14. The Market/Demand Nature of the demand Size of the demand, present and potential Changes taking place in consumption pattern and buying habits Invasion of substitute products Changes taking place in consumption pattern/buying habits
  • 15. The Consumer Preferences/Priorities Location and Number Purchasing Power Buying Behaviour Personality Traits Lifestyles and Needs Brand Loyalty Reactions to Competing Products
  • 16. The Industry Knowledge About Industry Competitive Advantage Building
  • 17. Government Policies Subsidising selected firms and Industries Ban fresh entry in selected Industries Government can be producers, thus acting as competitors
  • 18. Supplier – Related Factors Bargaining Power in the Industry Trade-off between integrated and outsourcing Suppliers becoming Competitors
  • 19.  Environmentalscanning has to be a Continuous Affair
  • 20. Marketing researchAmerican marketing association defines marketing research as “ the systematic gathering, recording and analyzing of data about the problems relating to marketing of goods and services”Market researchIt is the process of collecting and analyzing data relating to demand for a good or service in a specific market
  • 21.  Marketing Research provides information about customers and markets, and their reactions to various products, prices, distribution and promotion strategies
  • 22. Scope of marketing research  Consumer research  Product research including product planning and development  Study of the market  Sales research- methods, performance, establishing territories and quotas  Pricing- expectations, actions and reactions, policies and strategies  Distribution research- channels,intermediaries,inventory level, handling and transportation
  • 23.  Motivation research- why people buy or do not buy a product Advertising research- ad messages, selection of the right media, evaluation Policy research-finance, production and HR activities
  • 24. Marketing Research Process Formulating/ identification of the problem Planning the research technique Collection of data Analyzing the data Interpreting the data Preparing and presenting the report Follow up study
  • 25. Research Plan Research design is broadly classified into Exploratory research, Descriptive research and Casual research Research instruments used are a) Questionaires b) Mechanical instruments such as galvanometer (for response assessment such as emotions, interest in an advertisement), tachistoscope (message is flashed one hundredth of a second several times and subject behaviour is observed) c) Sampling
  • 26. Data Collection TechniquesInternal data through financial accounting records, sales records, reports from salesman etcExternal sources are of 2 types a) Primary data collection – Mail interviews, Telephonic interviews, Personal interviews, Observation b) Secondary data collection
  • 27. Barriers to the use of Marketing Research  All problems cannot be researched.  A narrow conception of the research  Uneven caliber of researchers (view it as a clerical job)  Poor framing of the problem  Late and occasionally erroneous findings  Only a tool to improve the decision making process  Personality and Presentational differences  Cannot predict the future
  • 28.  Executives hesitant to use MR practices Based on sampling and hence lacks accuracy Time consuming Lack of professionals
  • 29.  Marketing information system is a process which helps marketers manage their marketing efforts, effectively and efficiently. It helps in planning, analyzing and presenting the information necessary for marketing decisions Importance of marketing information system Anticipation of consumer demand (changing styles) Economic indicators Dynamic competitive environment Development of science and technology Growing complexity of marketing Consumerism and increasing grievances
  • 30. Components of MkIS Internal marketing information ( Data available within the firm) Marketing intelligence system( data available in the external environment) Marketing research system(special studies relating to a particular problem)
  • 31. Types Of Markets Consumer Markets Consumer markets are the markets for products and services bought by individuals for their own or family use. Goods bought in consumer markets can be categorized in several ways:Convenience goods- -Fast-moving consumer goods (“FMCGs”) – These are high volume, low unit value, fast repurchase – Examples include: Ready meals; Baked Beans, biscuits, Newspapers
  • 32.  Specialty goods  Special / unique features  Buyers make special efforts to buy them  Buy from specialist retailers  Reluctant to buy substitutes  E.g., ray ban sunglasses, Rolex watch, Tata sumo Nikon camera etc
  • 33.  Shopping goods  Buy after comparing the suitability, quality, price etc of different brands  E.g., clothing, furniture, shoes, utensils etc Emergency Goods-  To fulfill an urgent need  May be a convenience good or a shopping good
  • 34. It can also be classified as: Consumer durables – These have low volume but high unit value. Consumer durables are often further divided into: – White goods (e.g. fridge-freezers; cookers; dishwashers; microwaves) – Brown goods (e.g. DVD players; games consoles; personal computers) - orange goods( goods which change at a moderate rate- clothing) - red goods-( American expression of fast moving consumer goods like food) - yellow goods( American expression of consumer goods that are purchased infrequently, yellow =brown + white, e.g. oven, refrigerator, TV, CD player)
  • 35. Soft goods – Soft goods are similar to consumer durables, except that they wear out more quickly and therefore have a shorter replacement cycle – Examples include clothes, shoes Services (e.g. hairdressing, dentists, childcare_)
  • 36.  Industrial goods  meant for use in production / business/ institutional purposes  Not directly used by the consumers  Classified as  Production facilities and equipments, production materials, production supplies and management materials
  • 37.  • Selling finished goods – Examples include office furniture, computer systems • Selling raw materials or components – Examples include steel, coal, gas, timber • Selling services to businesses – Examples include waste disposal, security, accounting & legal services
  • 38. Consumer behaviour “Consumer behaviour is a process whereby individuals decide what, when, how and from whom to purchase goods and services” - Walters and Paul CB decides how consumers make purchase decisions and how they use the products they buy Important for framing production policies, price policies, distribution policies and also in designing the sales promotion programmes.
  • 39. Need and importance of CB enables marketer to design appropriate strategies for marketing plan and develop products framing pricing policies to know buying motive deciding on appropriate channels buying decision and consumption
  • 40. BUYING MOTIVE is a strong feeling , instinct, desire or an emotion that make the buyer to buy the product Are influences or considerations which provide the impulse to buy, induce action or determine choice in the purchase of goods and services
  • 41. Types of buying motives Product motive( hunger thirst ,sleep etc) Patronage motive( price, location, quality, variety, service, personality of the owner or the salesman) Emotional motive (status, personal comfort, pride) Rational motive (logical thinking- price, durability, efficiency, convenience, monetary gain etc) Inherent motive (for satisfaction he makes best efforts) Learned motive ( acquired or learned from environment and education- religious belief, fear , security )
  • 42. Consumer buying process Recognition of a need Identification of alternatives Evaluation of alternatives Purchase decision Post purchase behaviour
  • 43. Organizational Buying Process  Problem recognition  Determine product dimensions and quantity  Precise description of product characteristics  Search and qualification of potential sources  Acquisition and analysis of proposals  Evaluation of proposals and supplier selection  Selection of an order routine  Performance feedback and evaluation
  • 44. Specific marketing considerations in theindustrial facilities business : Long decision taking process High risk Complex buying center The specific competitive situation
  • 45. Demand Forecasting Market demand may mean different things to different marketers, but the marketer needs to have a clear idea what it means to his company and estimate it accordingly
  • 46. Concept of Market Demand for Marketing Market demand for a product under a specified marketing activity is the sales volume of the product in the target market for a specified time period in a particular region Steps Market potential Companies Demand Sales quota and Sales Budget Current Demand estimation
  • 47. Future Demand Estimation a) Composite sales force opinion (company asks its sales force to estimate sales patterns in the near future depending upon their experience) b) Survey of buyer intentions c) Expert opinion
  • 48.  Market Demand – The total volume that would be bought by a defined customer group in a defined geographical area in a defined marketing environment under a defined marketing program. Company Demand – Company’s estimated share of market demand at alternative levels of company marketing effort in a given time period. Sales Quota – Sales goal set for a product line, company division, or sales representative. Sales Budget – a conservative estimate of the expected volume of sales and is used primarily for making current purchasing, production and cash flow decisions.
  • 49. Estimating Current Demand Total Market Potential = Potential number of buyers x Average quantity purchased by a buyer x The Price Area Market Potential – There are primarily two methods a) Market – Build up method – requires identifying all the potential buyers in each market and estimating their potential purchases b) Multiple factor Index method – Estimating market potential either by using existing market indices or by developing their own market indices Eg: Potential of a “Book publishing company” depends on Population, number of teachers in the market etc.
  • 50.  Industry Sales and Market shares Estimating Future Demand Survey of Buyers intentions Composite of Sales force opinions Expert opinion Past sales analysis Market- Test method
  • 51. Heart of Modern Strategic Marketing Segmenting Targeting Positioning
  • 53.  A Market segment consists of a group of customers who share a similar set of needs and wants Basic Market Preference Patterns Homogeneous Diffused Clustered
  • 54.  “Market segmentation is the subdividing of market into homogeneous Sub section of customers , where any sub section can conceivably be selected as a target market to be reached with a distinct marketing mix” – Philip Kotler
  • 55. Purpose of segmentation Helps company to exploit its market better by selecting niches (suitable segments). Helps in focussing strategies more sharply on target groups. Allocation of marketing budget. Builds customer loyalty.
  • 56. Effective SegmentationCriteria Measurable Substantial (large enough to serve) Accessible Differentiable Responsiveness (effective programs for attracting and serving the segments)
  • 57. Patterns of segmentation Undifferentiated marketing ( soft drink) Differentiated marketing( FMCG) Concentrated marketing (trying to monopolise himself- railways) Customized marketing( interior designing,)
  • 58. Bases for segmentation Demographic segmentation Geographic segmentation Behavioral segmentation Psychographic segmentation
  • 59. Demographic Age and Life-cycle stage (Johnson baby soap for infants and children) Gender Income Occupation Religion Purchasing power
  • 60. Geographic segmentation Area Climate Population densityBehavioural Segmentation Decision Roles- People are different and they all pursue different roles like initiator, influencer, Decider, Buyer and User (useful for designing communication strategy) Behavioural Variables- Occasions, Benefits, User status, Usage rate, Buyer- readiness stage, Loyalty Status (Hard core loyals, Split loyals, Shifting loyals, Attitude)
  • 61. Psychographic Lifestyles Social class personality
  • 62. Bases for Segmenting Business Markets Geography Benefits sought Usage rateBusiness Buyers have to orient their tastes as below - First time prospects - Novice - Sophisticates
  • 63. Costs involved Management cost Production cost Product cost Inventory cost Promotion cost
  • 64.  Niche Marketing – Niche is a more narrowly defined customer group seeking a distinctive mix of benefits. Local Marketing – It is a growing trend called as Grass roots Marketing. Marketing activities are pursued for getting on close and personally relevant to individual customers as possible Customerisation- It combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice.
  • 66. Target marketing strategies Undifferentiated targeting strategy Differentiated targeting strategy Concentrated targeting strategy Customized targeting strategy
  • 67. Factors affecting targeting Objectives of the company Resources Profitability competition
  • 69.  “positioning is the act of designing the company’s offer and image so that it occupies a distinct and a valued place in the target consumers minds “ – PHILIP KOTLERsteps in product positioning Identifying potential competitive advantages Choosing the appropriate advantages Communicating those advantages
  • 70. Techniques of positioning Positioning by corporate identity (tata, Sony, godrej) Positioning by brand endorsement (lux, surf , titan, dettol) By product attributes or benefits (pepsodent germ killer and gum protection By use, occasion and time (Vicks for cold, burnol for burns, dettol antiseptic)
  • 71.  By price and quality (Nirma detergent powder) By product category( dove – creamy moisturiser, 7up- alternative to cola) By product user( particularly for class of customers- horlicks junior, malt, nutrition drink) By competitor(well established image of the competitor – Avis-’ we serve better because we r no.2’)
  • 72. Thank you