Module-2 Marketing Environment (Micro & Macro)

Macro Environment: It consists of demographics and economic conditions, sociocultural factors, political and legal systems, technological developments, etc.

Demographic Environment  Demographic environment refers to the environment concerned and with the nature and characteristics of the population, under which, the business operates.  It consists of factors relating to population, such as, size, growth rate, age distribution, religious composition and literacy levels and aspects like composition of workforce, household patterns, regional characteristics, population shifts etc.  The points to be considered here are: What demographic trends will affect the market size of the industry? What demographic trends represent opportunities or threats?

Economic Environment  Economic environment determines the strength and size of the market. It refers to the impact of monetary and fiscal policies and other economic factors.  It includes national and per capita income, current income, prices, savings, and circulation of money, debt and credit availability, consumption patterns, general economic conditions, types of economic system etc.  The important point to consider is to find out the effect of economic prospects and inflation on the operations of the firms.

Technological Environment  The application of science in order to facilitate and make life easier and more convenient is called as technology. Changes in technology can affect the marketing of a business as products become obsolete and new products has to be changing requirements of order to meet the changing requirements of the customer.  Technology has literally transformed the way people think, work and relax.  Technology has changed the way people communicate with the advent of Internet and telecommunication system, and, with the revolution in communication has come new ways of doing business.  The following factors are to be considered for the technological environment: The pull of technological change, Opportunities arising out of technological innovation, Risk and uncertainty of technological development, Role of R&D in a country and the government’s R&D budget.

Political and Legal Environment  A set of rules and principles which govern the functioning of any society and which is enforceable by the higher authority is termed as law.  The political environment of a country also affects the marketing of a firm since the political ideology shapes the policies of a country.  Political changes and changes in the style of functioning of the government affect the firms performance.  Firms prefer to operate in a country where there is a sound legal system.  Marketers must have a good working knowledge of the major laws protecting consumers, competitions and organizations. Laws like MRTP, Consumer Protection Act, Intellectual Property Right, FEMA, Labour Laws etc., can considerably affect business operations.. All these acts affect the production and distribution of goods and services of a firm

Social and Cultural Environment  The beliefs, values and norms of a society determine how individuals and organizations relate to each other. The core beliefs of a particular society tend to be persistent.  It is difficult for marketers to change these core values, which have a major bearing on marketing operations in as much as they set the stage for marketing activity and consumer response.  Culture may be defined as the set of beliefs, values and attitudes shared by contemporaries and passed on from generation to generation. It includes the following: Culture – Indian; Sub culture-Rajasthani, Maharashtra, etc.  Social environment refers to the interaction of various members of the firm with the society.  It involves all those faces that are present in the society which will affect the marketing of the business in some way or the other. They include Family, Peer groups, Reference groups, Social class, Role and status in society and Religion.

Microenvironment: It consists of suppliers, consumers, marketing intermediaries, etc. These are specific to the said business or firm and it affects its working on a short term basis. Controllable Environment It includes two variables: Business Mix : This refers to all the components and elements of business which can be combined in order to make an enterprise run. It includes the 5 M’s – Man, Machine, Method, Material and Money. Marketing Mix: Marketing mix may be defined as a set of those key inputs or variables which are necessary for the marketing of the firm. They include the 4 P’s, namely, Product, Price, Place, and Promotion. In the service industry, there are 3 additional P’s, namely, a) Physical Evidence b) Process c) People.

McCarthy’s Classification (4Ps) Lauterborn’s Classification (4Cs) 1.Product--Customer Benefit 2. Promotion--Communication. 3. Place (distribution)—Customer Convenience. 4. Price--Customer Cost.

Semi controllable marketing environment: It refers to that environment which is partially within the control of the organization. It includes: Suppliers: They are providers of raw material or finished goods for manufacturing or trading of business. They have a direct impact on the marketing of business products. For example, SURAJ diamond in Surat. Marketing intermediaries: They are those individuals and agencies who help in the promotion distribution and marketing of goods and services to customers. Intermediaries exert a considerable influence on the marketing environment. They can also be considered as the major determining force in business. In many cases the consumers are not aware of the manufacturer and buy the product from renowned intermediaries. They are divided into: a) Physical distribution intermediaries b) Channel intermediaries c) Financial intermediaries d) Marketing service intermediaries.

Customer According to Peter Drucker, the aim of business is to create and retain the customer. Hence, the consumer occupies the central position in the marketing environment. The marketer has to closely monitor and analyze changes in consumer tastes and preferences and cater to (if not try and anticipate) their buying habits. What constitutes the consumer value system? What benefits is the consumer looking for? Who are the consumers? What are their buying patterns? Competitors Competition shapes business. A study of the competitive scenario is essential for the marketer, particularly, threats from competition. Who are the competitors? What are their present strategies and business objectives? Who are the most aggressive and powerful competitors? Those competitors who are the immediate vicinity of business can be controlled to a limited extent and, therefore, quality as semi controllable environment. Public Public may be defined as all those individuals and group of individuals who are directly or indirectly interested and impacted by the market operation of a firm. Public constitute a major force in the micro environment and marketers have to very carefully study their opinion, values, beliefs and attitudes in order to design a proper marketing strategy for goods carefully tailored to meet the needs of the target consumer segment. They include Financial public, Media public, Citizen Action public, Government public, Local public, General public, etc.