The document discusses the evolving marketing environment, highlighting factors such as technological advancements, changing consumer preferences, and economic conditions that influence market dynamics. It emphasizes the importance of understanding macro and micro environments, including demographic trends and the impacts of cultural shifts on consumer behavior. Moreover, it addresses the challenges faced by market leaders and the necessity for organizations to adapt to maintain competitiveness.

1. Basics of Marketing – MBA I
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2. 2
Why a product like radio declined
and now once again emerging as an
entertainment medium?
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3. 3
What Were the Drivers of This Change ?
 Technology ?
 Government policy ?
 Other media substitutes ?
 Change in Consumers’ Preferences ?
 Change in Economic Conditions ?
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4. 4
Why Market Leaders Suffered?
 Market leadership
today cannot be
taken for granted.
New and more
efficient companies
are able to upstage
leaders in a much
shorter period.
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5. Marketing Environment
 The marketing environment consists of
actors and forces outside the organization
that affect management’s ability to build and
maintain relationships with target customers.
 Environment offers both opportunities and
threats.
 Marketing intelligence and research used
to collect information about the environment.
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6. Marketing Environment
 Includes:
 Microenvironment: actors close to the
company that affect its ability to serve its
customers.
 Macro environment: larger societal forces
that affect the microenvironment.
○ Considered to be beyond the control of the
organization.
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7. Analyzing the
Macroenvironment

8. Needs and Trends
Fad
Megatrend
Trend

9. Marketing Environment
 Analyzing the Macroenvironment
 Needs and Trends
○ Fads – “unpredictable, short-lived, and
without social, economic and political
significance”
○ Trend – “direction or sequence of events that
has some momentum & durability”
○ Megatrends – “ large social, economic,
political and technological changes that are
slow to form and once in place, they
influence us for some time between 7-10
years or longer”
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10. Marketing Environment
 Analyzing the Macroenvironment
 Identifying Major Forces
○ Suppliers, intermediaries, customers,
competitors, and public – Is their behaviour
controllable?
○ A steep decline of stock market affects
savings, investment, retirement funds etc,
increasing unemployment, corporate
scandals, rise of terrorism.
○ Six major forces – Demographic, economic,
social-cultural, natural, technological, political
& legal.
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11. Then GOOGOL now
GOOGLE
 Founded in 1998 by two Stanford
university PhD students.
 Corporate mission – To organize
the world’s information and make it
universally accessible and useful.
 Larry Page & Sergey Brin
 AdWords, Analytics, Maps,
Finance, Local, Gmail, Google+,
Youtube, Androids, Duo etc.
 Abc.xyz (Alphabate)
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12. The Marketing Environment
Company
Demographic
Economic
Natural
Technological
Political
Cultural
Company
Customers
Intermediaries
Suppliers
Competitors
Publics
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13. Major Environmental
Forces
Economic
Sociocultural
Natural
Technological
Political-Legal
Demographics

14. Demographic Environment
Worldwide population growth
Population age mix
Ethnic and other markets
Educational Groups
Household patterns

15. The World as a Village
If the world were a village of 100 people:
61 – Asian (20 Chinese, 17 Indian)
18 – Unable to read (33 have cell phones)
18 – Under 10 years of age (11 over 60
years old)
18 – Cars in the village
63 – Inadequate sanitation
67 – Non-Christian
30 – Unemployed or underemployed
53 – Live on less than $2 a day
26 – Smoke
14 – Obese
01 – Have AIDS
Source: David J. Smith and Shelagh Armstrong, If the World Were a
Village: A Book About the World’s People, 2nd ed. (Tonawanda, NY: Kids
Can Press, 2002)

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Rank Continent Population
1 Asia 4,140,000,000
2 Africa 1,033,000,000
3 Europe 739,000,000
4 North America 529,000,000
5 South America 386,000,000
6 Oceania (Australia) 36,000,000
7 Antarctica 4,000
Age
group
Total Rural Urban
0-14 29.5 30.9 25.5
15-59 62.5 61 66.6
60+ 8 8.1 7.9

17. The Demographic
Environment Demography
 The study of human population in terms of size,
density, location, age, gender, race, occupation, and
other statistics.
 The World’s large & highly diverse population pose
both opportunities & threats.
 E.g. China’s policy to control population growth.
 Keeping track of changing age, family structures,
geographic population shifts, educational
characteristics, & population density.
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18. The Demographic
Environment Population Growth
 World wide population estimation 8.82 billion by 2040.
(9 billion by 2045)
 Developing regions account for 84% of population (1-
2% growth).
 More developed countries growing at 0.3%
 Death rate is falling (life expectancy in India – 69.1 yrs)
 India 17.7% of world population.
 Population size & growth rate. (Approx 3000 births/hr &
1000 deaths/hr)
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19. The Demographic
Environment Population Age Mix
 Mexico – young population & rapid
population growth.
 Japan – world’s oldest population.
 So milk, diapers, school supplies &
toys will be more imp in Mexico than
in Japan
 Median age India – 23.8, Pakistan –
22.2, Sri lanka – 29.5 etc.
 Literacy Levels of Population
 71.02% in India (2017 estimate)
 Youth Literacy Rate is 90.2% (2015)
0-
14
yrs
15
–
24
25-
54
55-
64
<
65
yrs
27.
3%
17.
9%
41.
1%
7.5
%
6.3
%
Male Female
81.3% 60.6%
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20. The Demographic
Environment Increasing Population
 More population in urban areas (34% 2020) (49% by 2050).
 Growth Rate – 1.1% (2018)
 A growing middle class
 Deprived households –
○ Annual household income less than Rs. 90000, poorest economic class,
unskilled or semi-skilled daily wage earners.
 Aspirers
○ Rs. 90000 to Rs. 200000., small farmers, small retailers, low skilled
industrial workers.
 Seekers
○ Rs. 200000 to Rs. 500000, white collar employees, mid level govt.
officials, newly employed young postgraduates, and medium scale
traders & businesspeople.
 Strivers
○ Rs. 500000 to Rs. 1000000, established professionals like lawyers,
doctors, CAs, MBAs, senior govt. officials, medium scale
industrialists, rich farmers.
 Global Indians
○ In excess of Rs. 1000000, Senior corporate executives, large business
owners, topmost professionals, politicians, film actors, big farmers,
graduates from leading institutes.
Middle
class
Seekers &
strivers
7 million
households
87 million
by 2025
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21. Demographic
Environment
 Increasing Population
 A Growing Middle class
 Population in Rural India
 Generational Marketing
 The changing family system
 The changing role of women
 A Better-Educated, More White-Collar, More
Professional Population
 Increasing Diversity
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22. The Demographic
Environment Growth in rural population
 By 2050 rural population will be 50% of total population.
 Some problems like, purchasing power, lack of proper infrastructure, reliable
supply of electricity etc.
 A Changing Family System
 Joint family system – able bodied men will be bread earners, women looks after
kitchen, elderly look for cultural norms & preach value to kids.
 Dual income single kid (DISK)
 The changing role of women
 Education, more ambitious, earning more, more active member of family.
 A better educated, more white-collared, more professional population
 789 universities and 37,234 colleges
 More educated people will demand more quality product, books, magazines,
travel, personal computers, & internet services.
 Increasing Diversity
 Inner state diversities are increasing
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23. Economic Environment
Consumer
Psychology
Income
Distribution

24. Economic Environment
 Factors that affect consumer purchasing power & spending
patterns.
 Industrial economy, Developing economy, Subsistence economy,
 The Global Financial Crisis
 Subprime housing loans issued in US (2007-09), most stock markets in world
crashed, severe lending crunch, inflation, less exports, less FDI, less GDP
growth.
 In India demand for housing, construction, consumer durables & IT sector were
affected most.
 Changing Income distribution & Consumer spending pattern
 Rich have grown richer.
 Growing urban middle class.
 Purchase of consumer items increasing.
 Mercedez – Benz targets affluent; Tata Motors – modest means, Maruti-Suzuki
 Current income, prices, savings, debt & credit availability.
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25. Economic Environment
 India GDP per capita – $ 1997 and growing at 7.74% $FY
2017-18
 Healthy foreign exchange reserves (US$ 387 billion approx),
Inflation (CPI / WPI); (inflation 3.69%); (3.3%YTD) in Aug 18
 Income Distribution –
 Lower income households declining continuously.
 Destitute – annual income of Rs. 16000
 Aspirants – 16000 – 22000
 Climbers – 22000 – 45000
 Consuming class – 45000 – 215000
 Rich – more than 1000000 lakhs annual income
 Demand is likely to increase, additional opportunities for new
products & services, Business expansion etc.
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26. Walt Disney markets two distinct Pooh bears to match its two-tiered
market.
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27. Ourselves
Others
Universe
Organizations
Society
Nature
Sociocultural
Environment

28. Social-Cultural
Environment Society shapes the beliefs, values, & norms that largely define
consumer tastes & preferences.
 Ethnic Diversity – one fifth of the world
 Major religions – Hinduism, Islam, Sikhism, Christianity, Buddhism & Jainism
 Different languages & thousands of dialects.
 Customs, social systems, Values, habits, Religions & Caste
Systems.
 E.g. Dress codes, food habits, local advertising, regional biases for brand
preferences,
 Progression from traditionalism & self sacrifice to westernization &
individualism.
 Increased Emphasis on Ethics & Socially Responsible Actions
 Socially responsible behaviour – business scandals, environment issues, online
privacy issues, transfer of digital data etc.
 Cause-related marketing – linking to a worthwhile cause, selling strategy than
giving strategy. But may give company good image.
 E.g. CRY greeting cards.
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29. Cultural Environment
 Made up of institutions & other forces that affect
society’s basic values, perceptions, preferences, &
behaviors.
 Persistence of Cultural Values
 Most Asians believe in working, getting married & giving
to charity and have strong faith in religion.
 Core beliefs & values passed on from parents to
children & are reinforced by schools, religious institutions,
business, & government.
 Secondary beliefs are more open to change.
 E.g. Getting married is core belief but getting married
early in life is secondary belief.
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30. Cultural Environment
 Shifts in Secondary Cultural Values
 Impact of Music groups, movie personalities, & other
celebrities on a variety of areas like clothing & hairstyles.
 People’s views of themselves
○ Some seek personal pleasure, wanting fun, change etc.
○ Others seek self realization through religion, recreation, or
pursuit of career or other life goals.
○ Selects products those match their views of themselves.
 People’s views of others
○ Digital Age and Communication
○ People like to stay at home to enjoy the comforts of home &
connect with others through advanced technology.
○ Less demand for theater going & more demand for home
improvement, home office, & home entertainment products.
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31. Cultural Environment
 Shifts in Secondary Cultural Values
 People’s views of Organizations
○ Changing Attitudes towards corporations, government agencies,
trade unions, universities & other organizations.
 People’s views of Society
○ Patriotism theme used for promoting ideas & products on
Independence day.
 People’s views of Nature
○ Nature is finite & fragile that can be destroyed or spoiled by human
activities.
○ Organic food products
 People’s views of Universe
○ Moving away from religious to spiritual.
○ Heightened sensitivity presents unique marketing opportunity.
○ E.g. Aastha TV channel, Ayurvedic treatment.
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32. Technological Environment
Accelerated pace of change
Unlimited opportunities
R&D Spending

33. Technological
Environment Best – antibiotics, robotic surgery, smartphones, internet
 Dangerous – Nuclear missiles, nerve gas, machine guns
 Mixed blessings – automobiles, television, credit cards, Cell
phones, & video games.
 Creative destruction
 New technology affects the economy’s growth, creates new markets
& opportunities & replace old technology.
 Transistors hurt vacuum-tube industry, CDs hurt cassettes, digital
photography hurt film business etc.
 Tracking through RFID, GPS, Bluetooth etc.
 Four trends
 Accelerating pace of change
 Unlimited Opportunities for innovation
 Varying R & D budgets
 Increased regulation of technological change.
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34. Political-Legal Environment
Special Interest Groups
Government Agencies
Laws

35. Political-Legal
Environment Laws, government agencies, & pressure groups.
 Increase in Business Legislation (Public Policy)
 To protect companies & consumers from unfair
competition, to protect interest of society from unfair
activities, to charge business with social costs.
 Laws to cover competition, fair-trade practices,
environment protection, product safety, truth in
advertising, consumer privacy, packaging and labeling,
pricing etc.
 At National, State & local level.
 Legal review procedures & guide business according to
ethical standards
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36. Political Environment
 The growth of special interest groups
 Consumerist movement
 Consumer protection act – Safety, Information, Choice,
Representation, Redressal & consumer education.
 Increased Emphasis on Ethics & Socially
Responsible Actions
 Socially Responsible Behaviour
 Cause Related Marketing
 Includes Laws, Government Agencies, and
Pressure Groups that Influence or Limit Various
Organizations and Individuals In a Given Society.
 Changes in tariff & quota regimes may have direct
impact on the profitability, survival of business.
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37. Natural Environment
Environmental
Regulations

38. Natural Environment
 Involves the Physical environment & natural resources
that are needed inputs by marketers or that are affected by
marketing activities.
 Floods in Kerala
 Auto Dealers, restaurants, airlines, tourist destinations
 Packaged drinking water, mosquito repellent, auto repair centers
 FedEx & UPS – employs meteorologists
 Greenhouse gases, Global warming, Shortage of drinking
water, Garbage issue in Urban India
 Deterioration of natural environment – shortage of raw
materials.
 Increased pollution – disposal of chemical & nuclear waste,
dangerous mercury levels in sea, quantity of chemicals in soil
& food, plastic & other packaging materials.
 Conserving natural resources
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39. Natural Environment
 Increased Govt. Interventions - New
regulations, environment protection agency,
NGOs etc.
 CPCB, Ministry of Environment, Forest & Climate
Change
 Environment Sustainability – an effort to create
a world economy that planet can support
indefinitely.
 Companies are developing recyclable & biodegradable
packaging, recycled materials & components, better
pollution controls, & more energy efficient operations.
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41. MBA-I MIBM 44

42. Actors in the Microenvironment
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43. The Company’s Microenvironment
 Company’s Internal Environment:
 Areas inside a company.
 Affects the marketing department’s
planning strategies.
 All departments must “think consumer” and
work together to provide superior customer
value and satisfaction.
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44.  The Company – top management, finance, R & D, purchasing,
operations, & accounting.
 Suppliers –
 Provide resources needed to produce goods and services.
 Important link in the “value delivery system.”
 Most marketers treat suppliers like partners
 Marketing Intermediaries
 Help the company to promote, sell, and distribute its goods to final buyers
○ Resellers – wholesalers, retailers
○ Physical distribution firms – to stock & move goods from their point of origin to
destination
○ Marketing services agencies – marketing research firms, advertising agencies,
media firms, & marketing consultancy firms.
○ Financial intermediaries – banks, credit companies, insurance companies.
○ E.g. Coca cola signs on as exclusive beverage provider for fast food chains.
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45.  Competitors
 Those who serve a target market with products and services that are viewed by
consumers as being reasonable substitutes
 Company must gain strategic advantage against these organizations
 Publics
 Group that has an interest in or impact on an organization's ability to achieve its
objectives
 Customers
 Five types of consumers – consumer markets, business markets, reseller markets,
government markets, international markets
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46. Responding to the Marketing
Environment
 Environmental Management Perspective
○ 3 type –
 Those who make things happen,
- Develop strategies to change environment
- Apple’s iPod & iPhone, Google’s search engine,
Patanjali’s Ayurveda products, Amazon’s online market
place
- Taking a proactive approach to managing the environment
by taking aggressive (rather than reactive) actions to affect
the publics and forces in the marketing environment.
- Hiring lobbyists
- Running “advertorials” (ads expressing editorial point of
views)
- Pressing lawsuits
- Filing complaints
- Forming agreements to control channels
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47. Responding to the Marketing
Environment
 Environmental Management Perspective
○ This can be done by:
 Those who watch things happen,
- Passively accept marketing environment & don not try
to change it
- Must react and adapt
 Those who wonder what’s happened
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48. Marketing & Other business
Functions
 Finance & Marketing
 Financial Dimensions – Cost & Profit history of
business, financial statements, budgets, ROI,
ROE, ROS etc.,
 Marketing decisions as investment decisions.
 Financial tools & criteria to evaluate investment.
 Capital allocation based on expected returns.
 Evaluation of M&A – both marketing & financial
view
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49. Accounting & Marketing
 Firms' cost allocation procedure
 Use fully allocated costs rather than
variable costs depicts distorted picture
of product profitability.
 Responsibility accounting.
 Evaluation of marketing performance –
selling or advertising costs as a % of
sales.
 Forecast data.
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50. Production & Marketing
 Production capabilities determine no &
types of products which can be
marketed.
 Marketing – accurate sales forecast.
 Change in production capacities.
 Size of new plants depends on market
research based estimation of demand.
 Conflicts.
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51. Customer Service &
Marketing
 Customer complaints – solved or not.
 No of complaints
 Type of complaints
 Regular line of communication between
customer service & marketing
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52. Procurement & Marketing
 Many firms modifying products to
substitute scarce raw material with more
available, cheaper or legally available
ones.
 Shortage of coffee – increase in price of
coffee beans – changes in the brand’s
strategies.
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53. R & D - Marketing
 R & D – New product Development
 Product design – market research
 Marketing research may provide
important insights into customer’s
unsolved problem & needs.
 Realistic Expectations.
 R&D may decide the future of new
products.
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54. HRM & Marketing
 HRM – hiring, training & management
 Develop job description, screen
candidates, design training programs &
incentives.
 Value of human capital
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55. Legal & Marketing
 Government interventions
 Advertising claims
 Legal function of firm, brand name
requires legal clearance, new product
approvals, pricing policies etc.
 Legal dept – risk avoidance
 Marketing – Risk taking
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56. Top Management & Marketing
 Provide guidance, inspiration,
encouragement & control of firms
marketing & non marketing efforts.
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57. Market Potential
 Consists of the set of consumers who profess a
sufficient level of interest in a market offer.
 Total amount of possible sales in the market.
 Total Market potential – The maximum
amount of sales that might be available to all
the firms in an industry during given period,
under a given level of industry marketing effort
& environmental conditions.
 Total Market potential = potential no of
buyers * Average quantity purchased by
buyer * The price.
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58. Market Potential
 Well defined geographic area
 Entry / Exit decisions
 Resource Allocation decisions.
 Forecast
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59. Estimation of market
potential
 Estimation by analogy
 Comparing data from similar countries
 Problems: geography, culture, tradition and Historical reasons
 Income elasticity of demand
 Market’s level of development
 Regression Analysis
 Demand for any product = f(income, price, competition, etc.)
 Input-output tables
 provides a summary of the structure of an economy by showing
the impact of changes in the demand for one industry’s product
on other industries product
 Relationship between economic sectors
 Published by UNCTAD/GATT/WTO
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60. Market Share
 JD Power Asia Pacific estimates automobile
market size to about 9.3 million units by 2020
 Watch industry size to touch Rs. 15000 crore by
2020
 Baby care products Rs. 9000 Cr by 2020

61.  Rs 6300 crore
 Maaza – 48% share
 Frooti – 25.6%
 Slice – 23.4%
 Other – 3%
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62. Market share
 Market share is the portion or percentage
of sales of a particular product or service in
a given region that are controlled by a
company.
 example, there are 100 products sold in a
country and company A sells 43 of them, then
company A has a 43% market share

63. Market Share
 Or – you sold a product for a total cost
of Rs. 1000 and the people in the
country spend a total of Rs. 2,000 on the
same widgets, then the market share is
1000/2,000 or 50%
 The two different methods of calculating
market share won't always provide the same
answer,

64. Market Share
 Market share is used by businesses to
determine their competitive strength in
a sector as compared to other
companies in the same sector
 Methods
 No of buyers
 Percentage of sales

65. Method 1 – Number of Buyers
 Estimate the total number of buyers in
your market and determine how
successful your competition is
 Per month, estimate the number of
people that will buy your product or
service
 This is your percentage

66. Method 1 – Number of Buyers
 Ex/ Organic Coffee House
 Number of Coffee shops – 3040
 Market Share = 76% of Coffee and Baked
Goods
 A Coffee shop sells 3 million cups a day
 3,000,000/ 3,040 = 987 cups sold per day per
store
 987* 30 days = 29,605 per month
 29,605 / .76 = 38,954 cups a month for a store
to have 100% market share in their area

67. Method 1 – Number of Buyers
 Our Organic Coffee House should get
2% of the market, based off of the
following data… (trends that support
your business) 2% of total market share
or 779 cups sold a day
 38,954 * 0.02 = 779 cups sold a day

68. Method 2 – Percent of Sales
 Total Market Share of top 5 competitors and
average last five years of sales
 Ex/ Organic Coffee House
 Top Five Competitors
 Tim Horton’s – 76% - Sales $14 billion
 Starbucks – 7% - Sales $1.3 billion
 Timothy’s Coffees World Inc – 4% - Sales $736
million
 Second Cup – 2% - Sales $386 million
 William's – 1.5% - Sales $276 million

69. Home Assignment
 Find out the market potential for
Wooden toys in India.
 Demonstrate the market share for
Internet Service providers in India.
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70. 74MBA-I MIBM