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Marketing Environment

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Presentation on theme: "Marketing Environment"— Presentation transcript:

1 Marketing Environment
Presented by Prof. Ashish Bhalla

2 Marketing Environment
The forces that directly and indirectly influence an organization’s capability to undertake its business. The trading 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.

3 Factor Affecting Marketing Environment
Includes: Micro environment - forces close to the company that affect its ability to serve its customers. Macro environment - larger societal forces that affect the whole microenvironment.

4 Microenvironment Internal Forces
Marketing Intermediaries Customers Suppliers Publics For further details about this topic see page80 Company Competitors Company 7

5 Company Marketing must consider other parts of the organization including finance, R&D, purchasing, operations and accounting. Marketing decisions must relate to broader company goals and strategies

6 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.

7 Market Intermediates They are either business houses or individuals .
They help the company in promoting, selling and distributing the goods to customers. They are middlemen, distributing agencies, market service agencies and financial institutions.

8 Customers The target market of the company is usually of five types:
1.Consumer market i.e. individual and householders. 2.Industrial market i.e. organizations buying for producing other Goods and services. 3.Reseller market i.e. organizations buying goods and services with a view to sell them to others. 4.Government and other non profit markets.i.e.those buying goods and services in order to produce public services. 5.International market i.e. individuals and organizations of nations other then home land who buy for either consumption or industrial use.

9 Competitors No company stands alone in serving and satisfying the needs of a customer market. It faces competition. This helps the company in facing a host of competitors with confidence The company in order to come out successfully has to adopt means which may help it to outmaneuver. The competitive environment consists of certain basic things which every marketing manager has to take note of. Philip Kotler ‘the best way for a company to grasp the full range of its competition is to take view point of a buyer.”

10 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. The actions of the company do affect the interest of other groups i.e., those who form general public for the company who must be satisfied along with the consumers of the company. According to Kotler ‘companies must put their primary energy into effectively managing their relationships with their customers.

11 Macro environment (External Forces)
Natural Technological Economic Political For further details about this topic see page80 Demographic Cultural Company 7

12 Demographic Environment
Demographic data helps in preparing geographical marketing plans, household marketing plans, age and sex wise plans. It influences behavior of consumers which in turn will have direct impact on market place. A marketer must communicate with consumers anticipate problems ,respond to complaints and make sure that the firm operates properly.

13 Economic Environment The economic environment consists of factors that affect consumers purchasing and spending power. Under economic environment manager generally studies 1.trends of gross national product 2.patterns of real growth in income 3.variations in geographical income distribution. 4.borrowing pattern ,trends and governmental and legal restrictions. 5.major economic variables

14 Economic Environment Key Economic Concerns for Marketers Economic
This CTR relates to the material on pp Economic Environment Economic Development Changes in Income Key Economic Concerns for Marketers The Economic Environment The Economic Environment consists of factors that affect consumer purchasing power and spending patterns. Key considerations include: Economic Development. Nations vary greatly in their levels of and distribution of income, often as a result of their stage of economic development. Typical distinctions include: Subsistence Economies. These consume most of their own agricultural and industrial output. These countries are poor targets for most products. Industrial Economies. These offer rich markets for many different kinds of goods. Changes in Income. Rising incomes for most consumers have only kept pace with inflation. As a result, consumers are more sensitive to Value Marketing - the careful promotion of a high degree of quality and performance for the price. Income distribution is also of key importance: Upper-class consumers are not affected by current economic events. Middle-class consumers can afford the “good life” most of the time, but are careful about spending. Working-class consumers must budget carefully. Underclass consumers are often unable to participate fully in the marketing system. Changing Consumer Spending Patterns. Knowledge of Engel’s Laws remains important: As income rises, the percentage spent on food declines, the percentage spent on housing remains constant, and the percentage spent on savings and other categories increases. Changes in Consumer Spending Patterns

15 Natural Environment 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. Environmentally sustainable strategies. G.R.E.E.N. movement.

16 Natural Environment More Government Intervention Factors Affecting the
Higher Pollution Levels Shortages of Raw Material Natural Environment There are several areas affecting marketing that stem from the natural environment. Shortages of Raw Materials. Shortages both increase demand and sprout counter-movements aimed at conservation. Discussion Note: Both sides of the "green" movement utilize sophisticated database marketing and lobbying techniques. Energy Costs. The cost of energy makes long-term growth of high energy industries and goods difficult to predict. Increased Pollution. Industrial growth almost always damages the natural environment. The so-called “green movement” seeks to operate businesses in such a way so as not to damage the natural environment. The varying political power of “greens” in different countries is a consideration in global marketing efforts. Government Intervention in Natural Resource Management. Changing philosophies on the role of government in managing natural resources also blends into the legal environment. Marketers must take care in identifying natural environmental trends. Discussion Note: You might further expand this discussion by pointing out that even agencies like the EPA vary greatly in the amount of environmental regulation they perform depending upon funding and the agenda of whoever occupies the White House. Increased Costs of Energy

17 Technological Environment
Most dramatic force now shaping our destiny. Changes rapidly. Creates new markets and opportunities. Challenge is to make practical, affordable products. Safety regulations result in higher research costs and longer time between conceptualization and introduction of product.

18 Issues in the Technological Technological Environment
Rapid Pace of Change High R & D Budgets Technological Environment This CTR relates to the material on pp Issues in the Technological Environment Technological Environment Technological Environment Key forces operating in the technological environment include: Fast Pace of Technological Change. Anyone trying to learn all the features of their current software programs before they are updated and outdated understands this force. Teaching Tip: You might point out to students raised on Star Trek and Star Wars how much of yesterday's sci-fi is already coming true. Cellular phones as Star Trek-type communicators might get class discussion going. High R&D Budgets. The United States spends more on research and development than any other country. Placing marketing personnel on research teams can help focus research efforts on consumer needs and practical applications. Focus on Minor Improvements. Risk factors associated with high costs of development often lead to minor improvements over substantive product changes. Discussion Note: While minor improvements help keep products "fresh" to the market, marketers must anticipate that changing consumer needs will limit the competitiveness of too little innovation. Increased Government Regulation. Faster introduction of increasingly complex products often leads to greater regulation as consumers seek assurances that products are tested and safe. Focus on Minor Improvements Increased Regulation

19 Political and Legal Environment
Includes laws, government agencies and pressure groups that influence or limit various organizations and individuals in a given society. Increasing legislation. Changing government agency enforcement. More emphasis on ethics and socially responsible actions.

20 Political and Legal Environment
Political Environment This CTR relates to the material on pp Political and Legal Environment Increased Legislation Changing Enforcement Key Trends in the Political Environment Political Environment The political macroenvironmental forces consist of laws, government agencies, and interest groups that seek regulation of business activities to forward their own interests. Business in general, more than other groups, uses lobbying efforts to try and obtain legislation favorable to their competitive interests. Key considerations include: Legislation. Laws generally attempt to protect companies from each other to create more competition that in turn creates more value for the consumer. Laws also aim at protecting consumers from unfair and sometimes dangerous business practices. Laws sometimes seek to protect society as a whole from practices that endanger whole communities or other publicly owned resources such as rivers, forests, and parks. Enforcement. The effect of laws depends upon the emphasis given to enforcing them within the regulatory agency responsible for administering the law. Regulation varies in intensity with political agendas of sitting presidents and budget allocations. Public interest groups too affect the degree of legislative activity and administrative enforcement. Increased Emphasis on Ethics. At both the grassroots and corporate level, more US companies are showing a greater concern for more ethical conduct and more socially responsible action. Discussion Note: Ethical companies often enjoy better consumer relations and public image. Bottom line contributions can be defensive. For example, when Johnson & Johnson behaved responsibly after the Tylenol poisonings, they did not suffer expensive lawsuits and were able to recapture all of their original market share when the product was re-introduced. Greater Concern for Ethics

21 Social and Cultural Environment
Social responsibility has crept into the marketing literature as an alternative to the market concept. Socially responsible marketing is that business firms should take the lead in eliminating socially harmful products

22 Social and Cultural Environment
Technological Environment This CTR relates to the material on pp Social and Cultural Environment Of Organizations Nature Oneself Society the Universe Others Views That Express Values Cultural Environment The key elements of the cultural macroenvironment include: Persistence of Cultural Values. Core beliefs and values are relatively enduring and must be considered by marketers positioning products. For example, product innovations that conflict with core values are unlikely to be adopted. Shifts in Secondary Values. These change over time and change more often than core values and may provide positioning opportunities. Cultural values are expressed in people’s views on the following: View of Themselves. People vary in their emphasis on how important serving themselves is compared to serving others. Personal ambition and materialism have increased significantly over time in the US. View of Others. Recently, there has been a trend toward more altruistic behavior, at least among some segments of the population. Discussion Note: You might link ambition and altruism to baby boomers and baby busters, respectively. It wont’ hold up forever, but might generate class participation. View of Organizations. Most people are willing to work for large companies but also believe that the companies are out for themselves. View of Society. Trends like “Buy American” are reflects of this view. View of Nature. This trend has changed over the last few decades from dominate and control to coexist and preserve. View of Universe. Linked in the US to religious observance, this trend has seen an overall decline among most and a simultaneous passionate activism among a small, but powerful group, usually called the “religious right.”

23 Thank You


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