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Marketing environment


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Marketing environment - Unitedworld School of Business

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Marketing environment

  2. 2. MARKETING ENVIRONMENT “Marketing Environment can be defined as the internal or external factors that affects the marketing strategies of a particular organization or goods and services.” It basically refers to factors and forces that affect a firm’s ability to build and 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 ability to serve its customers. Meso Environment- the industry in which a company operates and the industry’s market. Macro Environment- larger societal forces that affect the micro environment.
  4. 4. DEMOGRAPHIC ENVIRONMENT  WORLDWIDE POPULATION GROWTH: The world population is growing at an explosive rate. It is expected to exceed 7.9 billion by the year 2025. Moreover, population growth is higher in countries which can least afford it. A growing population does not mean growing markets, unless these markets have sufficient purchasing power. Nonetheless, companies that carefully analyze their markets can find major opportunities.  POPULATION AGE MIX: National population vary in their age mix. Some have a very young population while some have high density of old population. A company will market its products specifically to the greater population in a specific country. For example, marketers will target youth segments where the population is young. Population mix can also be on the basis of literacy.
  5. 5. ECONOMIC ENVIRONMENT INCOME DISTRIBUTION: In an economy, developed or developing, the income of people are unevenly distributed. Some fall in the low level income category, while some in the high level income category. Generally, in a developing nation, the population with a low level income is much higher than the high level. Therefore, marketers carefully analyze under which income criteria does their target segment fall and hence, undertake their marketing strategies. Economic Marketing Environment refers to the purchasing power of potential customers and the ways in which people spend their money.
  6. 6. SOCIAL - CULTURAL ENVIRONMENT Society shapes the beliefs, values, and norms that largely define consumer tastes and preferences. People absorb, almost unconsciously, a world view that defines their relationships to themselves, to others, to organizations, to society, to nature, and to the universe. The diversity in the world is not only restricted to topography but also in the languages, cultures as well as religious beliefs. In this era of globalization, organizations cater to the culture of each country where it functions or operates.
  7. 7. NATURAL ENVIRONMENT The deterioration of the natural environment is a major global problem. There is great concern regarding “green house gases”, depletion of the ozone layer, global warming and shortages of water. It impacts the marketing in a large way as consumers often appear conflicted about product decisions that affect the natural environment. “Corporate Environmentalism” can be defined as the recognition of the importance of environmental issues facing the firm and the integration of those issues into the firm’s strategic plans.
  8. 8. TECHNOLOGICAL ENVIRONMENT One of the most dramatic forces shaping people’s lives is technology. Through the years technology has released such wonders like penicillin, open-heart surgery, submachine gun, etc. It also released mixed blessing such as cell phones and video games. Every new technology is a force for creative destruction. The number of major new technologies discovered affects the economy’s growth rate. Marketers should monitor the regular trends in technology.
  9. 9. POLITICAL ENVIRONMENT The political and legal environment consists of laws, government agencies, and pressure groups that influence and limit various organizations and individuals. Sometimes these laws also create new opportunities for business. Two major trends in the political environment are:  Increase in business legislation  Growth of special interest groups
  11. 11. The Demographic Environment  The World population is showing explosive growth (totaled 6.1 billion 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 South Asia. So, marketers caters more to the youth segment.  Literacy rate is growing at a high rate. Hence the consumers are now more aware with new products and services.
  12. 12. Economic Environment  As per World Bank, GDP of South Asia is estimated at 1.1Trillion (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 is under low level category.  Most of the countries are now turning into free economy by accepting liberalization.
  13. 13. Socio Cultural Environment  Companies engaging in activities in different countries also take care of the cultures, beliefs and values of each country.  Separate Marketing strategies are planned for different cultures.  For example McDonalds change its menu and removed Beef to preserve the Indian culture.
  14. 14. Natural Environment • In western Europe, “green” parties have vigorously pressed for public action to reduce industrial pollution. • In the United States, Sierra club and Friends or the Earth carry these concerns into political and social action. • The Soap Industry increased its products’ biodegradability.
  15. 15. Technological Environment  Accelerating pace of change.  Unlimited opportunities for innovation.  Varying R&D Budgets.  Increased regulation of technological change.
  16. 16. Political-Legal Environment  Increase in Business Legislation.  Less govt. intervention.  Growth of Special interest Groups.  Safety  Information  Choice  Representation  Redressal  Consumer Education
  18. 18. 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 and obligations.
  19. 19. Emerging Trends  Emergence of trade blocked.  Population explosion.  Rapid technological changes.  Social changes.  Literacy levels.  World as a global economic village.
  20. 20. Market Scenario  The entire world is a boundary less global village due to it telecom and transport revolution.  Customers needs, wants, desires, values and ethics are changing day by day.  Customers want more options and alternatives.  There is a shift from sellers market to buyers market.
  21. 21.  Organisations have to look for their competitive edges and develop on their strengths and explore new opportunities.  Organisations have to offer value added focused services to attract customers. CONT…
  22. 22. India's 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.
  23. 23. 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.
  24. 24. 4] PESTEL ANALYSIS
  25. 25. ORGANIZATION Political Economic Legal Social Technological Environmental PESTEL ANALYSIS
  26. 26. What is PESTELAnalysis? PEST stands for the analysis of the external factors which is beneficial when conducting research before beginning a new project or to help conduct market research. It is a tool for analyzing organization’s macro environment . The origin of this framework is difficult to establish however some data is available which refers to the ETPS environment by Francis J. Aguilar. Later it was reorganized as STEP by Arnold Brown(1967). Later in 1980s several authors included variations from taxonomy classifications and thus formed PEST or PESTLE Analysis framework.
  27. 27. POLITICAL FACTORS  Government policies  Government terms and change  Trading policies  Pressure groups  Funding, grants and initiatives  Wars and conflict
  28. 28. 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.
  29. 29. 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
  30. 30. TECHNOLOGICAL FACTORS • Competing technology development. • Technological advancements. • Research and development funding. • Associated/dependent technologies . • Replacement technology /solutions. • Maturity of technology. • Information and communications.
  31. 31. ENVIRONMENTAL FACTORS • Environmental legislation. • Public awareness of environmental issues. • Political agenda on the environment. • Consumer buying patterns. • CSR awareness and expectations.
  32. 32. LEGAL FACTORS  Current Legislation  Future Legislation  European/ International legislation  Regulatory bodies and processes.
  34. 34. RETAIL INDUSTRY Retail consists of the sale of goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small 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 from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as a public utility, like electric power.
  35. 35. PESTELANALYSIS OF RETAIL INDUSTRY Environmental 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 ECONOMICAL Economic growth Interest rates & monetary policies Government spending Unemployment policy Taxation Exchange rates Inflation rates Stage of the business cycle Consumer confidence
  36. 36. Income distribution Demographics, Population growth rates, Age distribution Labor / social mobility Lifestyle changes Work/career and leisure attitudes Entrepreneurial spirit Education Fashion, hypes & Living conditions Health consciousness & welfare, feelings on safety SOCIAL Government research spending Industry focus on technological effort New inventions and development Rate of technology transfer Life cycle and speed of technological obsolescence Energy use and costs Changes in Information Technology Changes in Internet Changes in Mobile Technology TECHNOLOGICAL
  37. 37. Consumer buying behavior. Buying pattern Socio cultural effect on purchasing. ENVIRONMENTAL Retail industry sourcing and overseas Corporate Social Responsibility. Tax issue. M & A expansion and consolidation. LEGAL
  38. 38. INTRODUCTION  Liberalization of economy for a country refers to set it free it from direct or physical controls imposed by the government.  Economic reforms were based on the assumption that market forces could guide the economy in a more effective manner than government control. Examples of one of other undeveloped countries like Korea, Thailand, Singapore, etc. that had achieved rapid economic development as a result of liberalization were kept in consideration.
  39. 39. A Balance of Payments crisis in 1991 which pushed the country to near bankruptcy. The Rupee devalued and economic reforms were enforced upon India. India central bank had refused new credit and foreign exchange reserves had reduced to the point that India could hardly finance three weeks’ worth of imports. CAUSES OF INDIAN LIBERALIZATION
  40. 40.  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
  41. 41.  Gigantic Annual growth in GDP.  A rate of growth that will double average income in a decade.  Rapid Growth in all manufacturing as well as service sectors.  Exports of information technology enabled services predominantly strong. ECONOMIC IMPACT OF LIBERALIZATION
  42. 42.  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
  43. 43.  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
  44. 44.  Indian economy had experienced major policy changes in early 1990s.  The new economic reform, popularly known as, Liberalization, Privatization and Globalization (LPG model) aimed at making the Indian economy as fastest growing economy and globally competitive.  The series of reforms undertaken with respect to industrial sector, trade as well as financial sector aimed at making the economy more efficient. INTRODUCTION
  45. 45.  The rate of growth of the GDP of India has been on the increase from 5.6 % during 1980-90 to 7 % in the 1993- 2001 period.  The cumulative FDI inflows from 1991 to September 2006 were Rs.1, 81,566 crores (US $ 43.29 Bn).  In respect of market capitalization, India is in the fourth position with $ 894 Bn after the US ($ 17,000 Bn)  The foreign exchange reserves of India have enlarged. EFFECTIVE IMPACTS
  46. 46. Campus Overview 907/A Uvarshad, Gandhinagar Highway, Ahmedabad – 382422. Ahmedabad Kolkata Infinity Benchmark, 10th Floor, Plot G1, Block EP & GP, Sector V, Salt-Lake, Kolkata – 700091. Mumbai Goldline Business Centre Linkway Estate, Next to Chincholi Fire Brigade, Malad (West), Mumbai – 400 064.