Module 2

MARKETING ENVIRONMENT

Dr.S.G.Kulkarni

Marketing Environment

Philip Kotler : A company marketing environment consists of the actors and forces that affect the companys ability to develop and maintain successful transactions and relationships with its target customers.

Dr.S.G.Kulkarni

Marketing Environment
Micro environment Macro environment

Controllable Co Organization Management Resources M Mix

Partially Suppliers Customers Dealers Competitors Community

( Social groups)

Uncontrollable Demographic Economic Ecological Technological Political Sociological

Dr.S.G.Kulkarni

Marketing Environment
The inputs concerned with micro environment are
Company Suppliers customers

organization

Dr.S.G.Kulkarni

Marketing Environment
The outputs concerned with macro environment are Political
Economical
Technological

Macro environment factors may be Controllable or partially - controllable

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Micro environmental factors

Company :

Company organization consists of Board of Directors and functional managers. Marketing plans are drawn up as per the philosophy of Top management Marketing decisions like new products, expansion, etc depend on the support of top management. It depends upon finance, managerial skills, organizations strengths and weaknesses.
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1. Company - continued

Marketing plans should be in harmony with policies of other departments such as production, purchase, finance, personnel, etc For ex: quality depends upon production policies Advertising and sales promotion on budgets
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2. Suppliers

Supply raw materials, plant and equipments, human resources, technology

Their strategies affect ours

If they increase prices, we have to revise price structure

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2. Suppliers -

continued

Decisions like make or buy depend upon suppliers Depends upon

Right Right Right Right Right Right supplier place time and lead time price quantity quality

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2. Suppliers -continued

Good relations are required for successful marketing

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3. Intermediaries

Wholesalers, retailers, agents, transporters, warehousers, ad agencies, etc. This is a choice of channel of distribution

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4. Customers

Purchase requirements vary from customer to customer Individual customers are influenced by cultural, social and psychological factors They are large in number, scattered, poorly informed, buy in small quantities and frequently and are guided by personal considerations
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4. Customers

Industrial producers are limited in number, geographically concentrated, buy in large in bulk, demand is derived, buy on reciprocal basis, depend on lease hold. Dealers buy for resale. Government buys for public welfare, defence

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5. Competitors

Supply similar products or substitute products Competitors adopt different actions for getting greater share of markets All firms compete with each other for consumers buying power.

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6. Public

Financial public: financial institutions,

investment houses, insurance co,

Government public:

Citizen action public: consumer organizations,

environmental groups, minority groups, etc General public: public image Internal public: employees, Board, labour unions, press and media

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Macro environment 1. Economic

Economic forces influence both marketers and the consumers Economic forces include Competition monopoly, oligopoly Buying power Willingness to spend

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Macro environment 1. Economic - continued Economic conditions include

Economic development National income Standard of living State of agriculture

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Macro environment 1. Economic - continued

Business cycles
Interest rate Price levels

Fiscal policies

marketers have to take into consideration the changes taking place in agriculture and industry

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2. Demography
Demography

gives consumer profile It is the study of population in respect of its size, density, location, age, race, occupation, marital status, education, sex composition etc All these factors influence marketing decisions

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Acronyms used in respect of age

SKIPPIES MOBYs DINKS PUPPIES WOOFS

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2.Demography - continued

School Kids with Income and Purchasing Power Mother Older, Baby Younger Double Income, No Kids Poor Urban Population Well Off Older Folks

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2.Demography - continued
Mexico Japan

is a nation of young population

old generation America was a melting bowl. Now it is a Salad bowl with Chinese, Filipinese, Japanese, Asians, Koreans Ads show women as decision makers due to increase in education
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Demography - continued

Education Illiterates High school drop outs Matriculates Graduates Professional degrees Post graduates
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2.Demography - continued

Buying habits are determined by income, education, age, family composition and other demographic factors It helps in - Market segmentation, demand forecasting, determination of market potential
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2.Demography - continued

Indias population is roughly 108 crores 75% of population lives in villages Rural marketing offers immense
opportunities and challenges to a creative marketer
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2.Demography - continued

You find that the demand is increasing not only for farm products, but also for nonfarm products

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Technology
It has a definite impact on buyers and

marketers decisions It provides mechanical, physical and numerous other processes which help in attaining higher standard of living It has adverse effects like pollution, unemployment, increase in crime rate, etc Marketers must be aware of new developments in technology.

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Technology-continued
Technological developments may put

some people out of business and at the same time, open up new business opportunities to others
For ex: introduction of synthetic fabrics

drove away sheep raisers and cotton growers out of business

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 Solar pocket calculators and hand

cameras
CDs and Video tapes
Virtual reality applications in Marketing is

a new application due to technological progress

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Technology-continued
Technological developments have

improved the standard of living and given more leisure time

Improvements in communication,

transportation
Technology has given wonder drugs like

Ampicilliin, by- pass surgery,

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Technology-continued

Technology grows out of research made by business, universities

Most of the products that we talk today were not there a few years back. For example, Computers, Photostat, laser technology, scanners.
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3. Natural factors and ecological factors - also

These also affect the pattern of industries and marketing Industries create pollution of air, water and environment The package in the form of plastic bags and bottles create a lot of problems Some governments have banned the use of plastic bags.

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Political factors
Marketing is affected by monetary, fiscal, import and export policies Some of the Acts applicable are as follows: Essential Commodities Act Prevention of Food Adulteration Act Trade and Merchandise marks Act Packaged Commodities Act Companies Act

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Political factors - continued

Political and legal factors are inter connected Discontinuation of CCI, FERA, IDRA Introduction of SEBI, FEMA, VAT Rules allow private participation in transportation , telecom, airlines
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Social-Cultural environment

Advertisements and culture Some ads are banned on TVs Festivals like Ganesh festival, Diwali, IdMilad, Christmas, Dress styles are different School uniforms

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Cultural factors - continued

Food habits Internet practice Fast foods Pizza hut, Ken Fried Chicken

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Cultural factors - continued

There are several movements like trade union movement, consumer movement, women's lib, deprived classes movement , etc. These have their own expectations from the market. If they are against their ideas, they boycott the products

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Cultural factors - continued

Cause related Marketing

1980 saw the advent of cause related marketing The distinctive feature of case-related marketing is the firms contribution to a designated cause being linked to customers engaging in revenue-producing transactions with the firm Example: CRY, AWWA, WWF cards
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Cultural factors - continued

Cultural and ethical forces are of vital importance

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Responding to the marketing environment

There are two general approaches to respond to marketing environmental forces, viz., Passive approach and Aggressive approach

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1) Passive or reactive approach

Under this approach the marketing strategy is subject to micro environment with macro environment Environmental objectives of 2010 are set in 2000 and strategies are developed in 1998 and the organizational structure is established in 1995
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1) Passive or reactive approach - continued

Stable environment is very rare. Turbulent environment is common Marketing environment should be scanned systematically. These guide marketing opportunities Marketing strategy normally follows passive approach that is coordinating micro environment with macro environment
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1) Passive or reactive approach - continued

India has opportunities for handcraft goods, ready made garments, fast food products, software development, call centres and those areas which are labour intensive

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2) Aggressive approach
Marketing manager tries to influence

environmental forces so as to create market opportunities. A firm can be able to influence the shape of legislation through lobbying A single organization cannot influence population, economic condition

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Indian Marketing environment

Prosperity in rural area

Overflowing unaccounted money everywhere Inflationary condition [ inflation is a permanent

guest]
Aggressive advertising on TV inspiring children

and women. Consumer is a King

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Indian Marketing environment - continued

Middle class explosion - Consumption

community of the rich

Better educated and exposed to the life styles

Their aspirations have been constantly growing. They often spend more than what they earn

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Middle class explosion

Their expenditure on non-food items is continuously

Our market is on par with UK, France, West Germany More disposable income Spend more on non food items Invest in stock market

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