The document discusses the purpose and process of environmental analysis and market research for businesses. It describes analyzing various external factors including demographic, socio-cultural, economic, political, natural, and technological environments. It also covers analyzing industry-specific micro-environment factors such as the market, consumers, competition, and suppliers. The key goals of environmental analysis are to identify opportunities and threats, assess opportunities, and help businesses adapt their strategies accordingly.

1. Module 2
MBA 09

2. Purpose of Marketing
Environment 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/Business
Legislation
 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 the
Business 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 research
American 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 research
It 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 Techniques
Internal data through financial accounting
records, sales records, reports from
salesman etc
External 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 (“FMCG's”)
– 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 the
industrial 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

52. MARKET
SEGMENTATION

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 Segmentation
Criteria
 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 density
Behavioural 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 rate
Business 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.

65. TARGET MARKETING

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

68. PRODUCT POSITIONING

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 KOTLER
steps 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