Marketing Environment


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Major and Minor Factors that Affect the Marketing Environment

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Marketing Environment

  1. 1. MARKETING ENVIRONMENT Prof Prashant Kumar Gupta Jain College Of MBA and MCA
  2. 2. Why To Study??     An understanding of macro and micro marketing environment forces is essential for planning. Helps a business to compete more effectively against its rivals. Assists in the identification of opportunities and threats. Enables an organization to take advantage of emerging strategic opportunities.
  3. 3. Environment   Environment literally means the surroundings, external objects, influences or circumstances under which someone or something exists. The environment of an organization is the aggregate of all conditions, events and influences that surrounds and affects it.
  4. 4. Marketing Environment   The external forces that directly and indirectly influence an organization’s capability to undertake its business. The forces operating in a market place over which a business has no direct control ,but which shape the manner in which the business function and is able to satisfy its customers.
  5. 5. Types Of Environment Internal environment : Forces and actions inside the firm that affect the marketing operation composed of internal stake holders and the other functional areas within the business organization.   External environment  Macro environment  Micro environment
  6. 6. Micro Environment   The forces close to the company that affects its ability to serve. It comprises all those organisations and individuals who directly affect the activities of a company.
  7. 7. Factors in the Micro Environment
  8. 8. The Company       Top management Finance R&D Purchasing Operations Accounting
  9. 9. Suppliers Suppliers are either individuals or business houses.  They provide resources needed by the company.  The developments in the suppliers environment have a substantial impact on the marketing operations of the company.  Companies can lower their supply costs and increase product quality to gain competitive advantage in the market.  Supply shortages have to be fully monitored and plans should be made to avoid it. 
  10. 10. Marketing Intermediaries   Help the company to promote, sell and distribute its products to final buyers Intermediaries take many forms. Resellers Physical Distribution Firms Marketing Services Agencies Financial Intermediaries
  11. 11. Competitors   Competitors are those who sell the goods and services of similar description in the same market. The company in order to come out successfully has to adopt means which may help it to outmaneuver them.
  12. 12. Public  Public is defined as any group that has an actual or potential interest in or impact on a company’s ability to achieve it’s objective.  Financial public  Media public  Government public  Local public  General public  Internal public
  13. 13. Customers  1. 2. 3. 4. 5. The target market of the company is usually of five types: Ultimate customers Industrial customers Resellers Government and other non- profit customers International customers
  14. 14. Macro Environment   Macro environment refers to those factors which are external to company’s activities and do not concern the immediate environment. These are uncontrollable factors which indirectly affect the concern’s ability to operate in the market effectively.
  15. 15. Factors in the Macro Environment
  16. 16. The Demographic Environment    Study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. Important because it involves people, and people make up markets. Demographic trends include age, family structure, geographic population shifts, educational characteristics, and population diversity.
  17. 17. Demography: Population Growth    Currently 7 billion and expected to reach 8.1 billion by 2025 It means bigger market specially countries like India, China, Africa, etc But at the same time it can be harnessed only when there is economic growth resulting into higher purchasing power
  18. 18. Demography: Population Age Mix   India is a young country which will have a median age of 30 in 2025. Marketers need to identify the ‘Youth Segment’
  19. 19. Demography: Literacy Levels    About 74% Indians are literate. (Government’s definition of being a literate is worth noticing). But 82% of ‘Young India’ is literate. Results are a big segment as consumers and influencers
  20. 20. The Economic Environment       Economic environment consists of factors that affect consumer purchasing power and spending patterns. Under economic environment manager generally studies:Trends of gross national product Patterns of real growth in income Variations in geographical income distribution. Borrowing pattern ,trends and governmental and legal restrictions.
  21. 21. Economy: Income Distribution Destitute: Annual household income of 16,000 Are not active participants for exchange of goods for wide range of goods  Aspirants: Annual household income of 16,000 – 22,000 New entrants in the consumption market as real income has increased  Climbers: Annual household income of 22,000 – 45,000 Have desire and willingness to by but limited cash  Consuming Class: Annual household income of 45,000 – 2,10,000 Majority of consumers, have money and willing to spend 
  22. 22.   Ernst Engel—Engel’s Law As income rises:  Percentage spent on food declines  Percentage spent on housing remains constant  Percentage spent on savings increases  Percentage spent on luxury increases
  23. 23. Socio-Cultural Environment    Consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors like religion. Core beliefs and values are persistent and are passed on from parents to children and are reinforced by schools, religion, businesses, and government Secondary beliefs and values are more open to change and include people’s views of themselves, others, organizations, society, nature, and the universe
  24. 24. Socio-Cultural Environment: Importance    Socially responsible marketing is eliminating socially harmful products. Understanding the diversity is key to marketing success. Product and Brand preferences have regional biasness.  Diversity affects the marketing communication.  Defines customers’ taste and preferences.
  25. 25. Natural Environment   1. 2. 3. Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities Natural Environment trends:Shortage of raw materials.  Limited quantities of non-renewable resources. Increased pollution.  Waste disposal, air/water pollutants. Increased government intervention.  Kyoto and other initiatives.
  26. 26. Natural Environment: Importance     1. 2. 3. 80% people considered ‘The effect on environment’ before buying a product in US. More than 50% people asserted on purchase of recycled goods. Responsible for breaking customer loyalty. Many marketers used THE GREEN PITCH but failed. Why? Lack of credibility No willingness to pay extra for environment Poor design and inappropriately placed
  27. 27. Technological Environment  One of the most dramatic forces in changing peoples life.  Creates new products and opportunities  Safety concerns increases costs   Challenge is to make practical, affordable products. Big time gap between conceptualisation and intialisation
  28. 28. Political-Legal Environment   Consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society. Key trends include:    Increased legislation to protect businesses as well as consumers. Changes in governmental agency enforcement. Increased emphasis on ethical behavior and social responsibility.
  29. 29.   Marketers must have good working knowledge about laws related to competitors, consumers and society. Understand the Consumer Protection Act, 1986
  30. 30. Ways To Respond To The Environment Uncontrollable Proactive Reactive • React and adapt to forces in the environment • Aggressive actions to affect forces in the environment • Watching and reacting to forces in the environment
  31. 31. Thank You…! That’s it For Today 