Marketing environment - Unitedworld School of Business
1] MARKETING ENVIRONMENT
MARKETING ENVIRONMENT“Marketing Environment can be defined as the internal or externalfactors that affects the marketing strategies of a particular organization orgoods and services.”It basically refers to factors and forces that affect a firm’s ability to buildand maintain successful relationships with customers.There are three levels of Marketing Environment, which are as follows :Micro Environment- small forces within a company that affect its abilityto serve its customers.Meso Environment- the industry in which a company operates and theindustry’s market.Macro Environment- larger societal forces that affect the microenvironment.
DEMOGRAPHIC ENVIRONMENT WORLDWIDE POPULATION GROWTH:The world population is growing at an explosiverate. It is expected to exceed 7.9 billion by the year2025. Moreover, population growth is higher incountries which can least afford it. A growingpopulation does not mean growing markets, unlessthese markets have sufficient purchasing power.Nonetheless, companies that carefully analyze theirmarkets can find major opportunities. POPULATION AGE MIX:National population vary in their age mix. Somehave a very young population while some have highdensity of old population. A company will market itsproducts specifically to the greater population in aspecific country. For example, marketers will targetyouth segments where the population is young.Population mix can also be on the basis of literacy.
ECONOMIC ENVIRONMENTINCOME DISTRIBUTION:In an economy, developed or developing, theincome of people are unevenly distributed. Some fallin the low level income category, while some in thehigh level income category. Generally, in adeveloping nation, the population with a low levelincome is much higher than the high level. Therefore,marketers carefully analyze under which incomecriteria does their target segment fall and hence,undertake their marketing strategies. EconomicMarketing Environment refers to the purchasingpower of potential customers and the ways in whichpeople spend their money.
SOCIAL - CULTURAL ENVIRONMENTSociety shapes the beliefs, values, andnorms that largely define consumer tastesand preferences. People absorb, almostunconsciously, a world view that definestheir relationships to themselves, to others,to organizations, to society, to nature, andto the universe. The diversity in the worldis not only restricted to topography but alsoin the languages, cultures as well asreligious beliefs. In this era ofglobalization, organizations cater to theculture of each country where it functionsor operates.
NATURAL ENVIRONMENTThe deterioration of the naturalenvironment is a major global problem.There is great concern regarding “greenhouse gases”, depletion of the ozone layer,global warming and shortages of water. Itimpacts the marketing in a large way asconsumers often appear conflicted aboutproduct decisions that affect the naturalenvironment.“Corporate Environmentalism” can bedefined as the recognition of theimportance of environmental issues facingthe firm and the integration of those issuesinto the firm’s strategic plans.
TECHNOLOGICAL ENVIRONMENTOne of the most dramatic forces shapingpeople’s lives is technology. Through theyears technology has released suchwonders like penicillin, open-heart surgery,submachine gun, etc. It also releasedmixed blessing such as cell phones andvideo games.Every new technology is a force forcreative destruction. The number of majornew technologies discovered affects theeconomy’s growth rate. Marketers shouldmonitor the regular trends in technology.
POLITICAL ENVIRONMENTThe political and legal environment consistsof laws, government agencies, and pressuregroups that influence and limit variousorganizations and individuals. Sometimesthese laws also create new opportunities forbusiness.Two major trends in the political environmentare: Increase in business legislation Growth of special interest groups
The Demographic Environment The World population is showing explosive growth (totaled 6.1billion in2001 and will exceed 7.9 billion by the year 2025). Growth rate : Developed Nations - 0.6%Developing Nations - 2% Young population is more in Developing Nations and in SouthAsia. So, marketers caters more to the youth segment. Literacy rate is growing at a high rate. Hence the consumers arenow more aware with new products and services.
Economic Environment As per World Bank, GDP of South Asia is estimated at1.1Trillion (2.3%of world’s GDP) Growing at 8.6%per annum. But Per Capita GDP is low. Income level is rising but still large number of population isunder low level category. Most of the countries are now turning into free economy byaccepting liberalization.
Socio Cultural Environment Companies engaging in activities in differentcountries also take care of the cultures, beliefs andvalues of each country. Separate Marketing strategies are planned fordifferent cultures. For example McDonalds change its menu andremoved Beef to preserve the Indian culture.
Natural Environment• In western Europe, “green” parties have vigorouslypressed for public action to reduce industrialpollution.• In the United States, Sierra club and Friends or theEarth carry these concerns into political and socialaction.• The Soap Industry increased its products’biodegradability.
Technological Environment Accelerating pace of change. Unlimited opportunities for innovation. Varying R&D Budgets. Increased regulation of technological change.
Political-Legal Environment Increase in Business Legislation. Less govt. intervention. Growth of Special interest Groups. Safety Information Choice Representation Redressal Consumer Education
Characteristics of 21st Century knowledge and information based society Global networking. High mobility of population from rural to urban areas. Increasing productivity. Reliance on innovation and creativity Conscious society-customer aware of his rights andobligations.
Emerging Trends Emergence of trade blocked. Population explosion. Rapid technological changes. Social changes. Literacy levels. World as a global economic village.
Market Scenario The entire world is a boundary less global villagedue to it telecom and transport revolution. Customers needs, wants, desires, values and ethicsare changing day by day. Customers want more options and alternatives. There is a shift from sellers market to buyersmarket.
Organisations have to look for their competitiveedges and develop on their strengths and explorenew opportunities. Organisations have to offer value added focusedservices to attract customers.CONT…
Indias Strengths-marketing Prospective• Huge resources both human and natural.• Inflation under check.• Stability of government irrespective of ideology.• Capable of providing food to many nations.• Matured democracy.• Global it hub.
Weaknesses Population growth unchecked. Fiscal deficit. Inadequate infrastructure Slow judiciary. Complicated procedures and systems. Unexpected high level of unethical practices. R&D base is very low. 27% population below poverty line.
What is PESTELAnalysis?PEST stands for the analysis of the external factors which isbeneficial when conducting research before beginning a newproject or to help conduct market research. It is a tool foranalyzing organization’s macro environment .The origin of this framework is difficult to establish howeversome data is available which refers to the ETPS environment byFrancis J. Aguilar. Later it was reorganized as STEP by ArnoldBrown(1967).Later in 1980s several authors included variations fromtaxonomy classifications and thus formed PEST or PESTLEAnalysis framework.
POLITICAL FACTORS Government policies Government terms and change Trading policies Pressure groups Funding, grants and initiatives Wars and conflict
ECONOMIC FACTORS• Home economy situation and trends.• Overseas economies and trends.• General taxation.• Taxation specific to product/services.• Seasonal/weather issues.• Market and trade cycles.• Industry-specific factors .• Market routes and trends.• Customer/end-user drivers.
SOCIAL FACTORS Life trends. Demographics. Consumer attitudes and opinions. Media views. Law changes affecting social factors. Brand, company, technology image. Consumer buying patterns . Fashion and role models . Ethnic/religious factors
TECHNOLOGICAL FACTORS• Competing technology development.• Technological advancements.• Research and development funding.• Associated/dependent technologies .• Replacement technology /solutions.• Maturity of technology.• Information and communications.
ENVIRONMENTAL FACTORS• Environmental legislation.• Public awareness of environmental issues.• Political agenda on the environment.• Consumer buying patterns.• CSR awareness and expectations.
LEGAL FACTORS Current Legislation Future Legislation European/ International legislation Regulatory bodies and processes.
RETAIL INDUSTRYRetail consists of the sale of goods or merchandise from a fixedlocation, such as a department store, boutique or kiosk, or by mail, insmall or individual lots for direct consumption by the purchaser.Retailing may include subordinated services, such as delivery.Purchasers may be individuals or businesses. In commerce, a"retailer" buys goods or products in large quantities frommanufacturers or importers, either directly or through a wholesaler,and then sells smaller quantities to the end-user. Retail establishmentsare often called shops or stores. Retailers are at the end of the supplychain. Manufacturing marketers see the process of retailing as anecessary part of their overall distribution strategy. The term "retailer"is also applied where a service provider services the needs of a largenumber of individuals, such as a public utility, like electric power.
PESTELANALYSIS OF RETAIL INDUSTRYEnvironmental regulations and protection.Tax policies.Interest rates & monetary policies.Contract enforcement law.Consumer protection.Employment laws.Government organization / attitude.Competition regulation.Political Stability.Safety regulations.POLITICAL ECONOMICALEconomic growthInterest rates & monetary policiesGovernment spendingUnemployment policyTaxationExchange ratesInflation ratesStage of the business cycleConsumer confidence
Income distributionDemographics, Population growthrates, Age distributionLabor / social mobilityLifestyle changesWork/career and leisure attitudesEntrepreneurial spiritEducationFashion, hypes & Living conditionsHealth consciousness & welfare,feelings on safetySOCIALGovernment research spendingIndustry focus on technological effortNew inventions and developmentRate of technology transferLife cycle and speed of technologicalobsolescenceEnergy use and costsChanges in Information TechnologyChanges in InternetChanges in Mobile TechnologyTECHNOLOGICAL
Consumer buying behavior.Buying patternSocio cultural effect on purchasing.ENVIRONMENTALRetail industry sourcing and overseasCorporate Social Responsibility.Tax issue.M & A expansion and consolidation.LEGAL
INTRODUCTION Liberalization of economy for a country refers to set itfree it from direct or physical controls imposed by thegovernment. Economic reforms were based on the assumption thatmarket forces could guide the economy in a more effectivemanner than government control.Examples of one of other undeveloped countries likeKorea, Thailand, Singapore, etc. that had achieved rapideconomic development as a result of liberalization were keptin consideration.
A Balance of Payments crisis in 1991 which pushed thecountry to near bankruptcy.The Rupee devalued and economic reforms were enforcedupon India.India central bank had refused new credit and foreignexchange reserves had reduced to the point that Indiacould hardly finance three weeks’ worth of imports.CAUSES OF INDIAN LIBERALIZATION
Elimination of industrial licensing and registration. Liberalizing the MRTP act. Freedom for expansion and production. Increase in the investment limit of the small industries. Freedom to import capital goods. Freedom to import technology. Free determination of interest rates.ACTIONS TAKEN DURING LIBERALIZATION
Gigantic Annual growth in GDP. A rate of growth that will double average income in adecade. Rapid Growth in all manufacturing as well as servicesectors. Exports of information technology enabled servicespredominantly strong.ECONOMIC IMPACT OF LIBERALIZATION
Increase in rate of economic growth. Increase in competitiveness of industrial sector. Reduction in poverty and inequality. Fall in fiscal deficit. Control on prices. Decline in deficit of BOP. Increase in Efficiency.POSITIVE IMPACT OF LIBERALIZATION
Less importance to agriculture. Pressure by IMF and World Bank. More depending on Foreign Debt. Dependence on Foreign technology. Undue importance to Privatization. Problem of Unemployment.NEGATIVE IMPACT OF LIBERALIZATION
Indian economy had experienced major policy changesin early 1990s. The new economic reform, popularly known as,Liberalization, Privatization and Globalization (LPGmodel) aimed at making the Indian economy as fastestgrowing economy and globally competitive. The series of reforms undertaken with respect toindustrial sector, trade as well as financial sector aimedat making the economy more efficient.INTRODUCTION
The rate of growth of the GDP of India has been on theincrease from 5.6 % during 1980-90 to 7 % in the 1993-2001 period. The cumulative FDI inflows from 1991 to September2006 were Rs.1, 81,566 crores (US $ 43.29 Bn). In respect of market capitalization, India is in the fourthposition with $ 894 Bn after the US ($ 17,000 Bn) The foreign exchange reserves of India have enlarged.EFFECTIVE IMPACTS