2 marketing environment

MARKETING ENVIRONMENT


Marketing environment: The actors (suppliers, intermediaries, customers, competitors, publics and

others) andForces (demographic, economic, natural, technological, political, and cultural)That affect (actors- that may work with or against the company

& forces – shape marketing opportunities, pose threats)Marketing management’s abilityto build and maintain successful relationshipsWith target customers.

Marketing research and mktg intelligence = collect information about mktg environment.


Made up of 1. Micro environment2. Macro environment

1.Micro environment:The actors close to the company that affect its ability to serve its customers –

the company, suppliers, marketing intermediaries, customer markets, competitors, and publics.

These actors can be controlled by the company by its own actions, and hence called controllable factors.


2. Macro environment:The larger societal forces that affect the microenvironment – demographic,

economic , natural, technological, political, and cultural forces.

The forces which can not be controlled by the company with its own actions, at least in the short run, also called uncontrollable factors.


The company’s Microenvironment:

Fig (Actors in company’s Microenvironment)

1. The Company:In designing mktg plans, Coordinate with other co groups- top management, finance, R&D etc.

2. Suppliers:Important in the co’s overall customer value delivery system.


3. Marketing Intermediaries: Help the co to promote, sell, and distribute its products to final buyers.Include: Resellers, physical distribution firms, marketing services agencies, and financial intermediaries.a) Resellers: Distribution channel firms that help the co find customers or make sales.b) Physical Distribution firms:Help the co to stock and move goods from their points of origin to their

destinations.C) Marketing Services agencies:Marketing Research firms, advtg agencies, media firms, and mktg consulting

firms.


d) Financial Intermediaries:Banks, credit cos, insurance cos, and other businesses that help financial

transactions.

4. Competitors:The co must provide greater customer value and satisfaction than its

competitors do.Gain strategic advantage by positioning.

5. Publics:Any group that has an actual or potential interest in Or impact on an organization's ability to achieve its objectives.


a) Financial Publics:Banks, investment houses, and stockholders.The group which influences the co’s ability to obtain funds.b) Media Publics:News papers, magazines, radio and television stations.This group carries news, features, and editorial opinion.c) Government Publics:Mgmt must take govt developments into account.On issues of product safety, etc.d) Citizen-action Publics:A co’s mktg decision may be questioned by consumer orgns, environmental

groups, and others.


e) Local Publics:Neighborhood residents and community orgns.f) General Publics:A co concern about the general public’s attitude towards its products and

activities.g) Internal Publics:Includes workers, managers, and board of directors.Large cos use newsletters and other means to inform and motivate their

internal publics.


6. Customers:Five types of customer markets.1. Consumer Markets: consist of individuals and households2. Business Markets: for further processing or for use in their production

process3. Reseller Markets: buy goods and services to resell at a profit.4. Government Markets: Made up of government agencies to produce

public services or transfer them to others who need them.5. International Markets: Consist of these buyers in other countries,

including consumer markets, producers, resellers, and governments.


The company’s Macro environment:Six major forces:Fig (Forces of company’s Macro environment)


1. Demographic Environment:The study of human populations in terms of size, density, location, age,

gender, occupation, and other statistics.It involves people, and people make up markets.• Increasing Population• A growing middle class

Indian population into five economic classes on the basis of their real annual disposable income.Deprived households: An annual disposable income of less than Rs.90,000/-.Poorest economic class in the economy. Mostly unskilled and semiskilledworkers.


Aspirers: Annual disposable income between Rs.90,000/- to Rs.2,00,000/-Spent almost half of their incomes on basic necessities.Small time retailers, small farmers, and low-skilled industrial workers.Seekers: Annual disposable income between Rs.2,00,000/- to Rs.5,00,000/-.White-collar employees, mid-level government officials, newly-employed post graduates etcStrivers: Having an income range from Rs.5,00,000/- to 10,00,000/- per annum. Established professionals like lawyers, doctors, rich farmers, medium-scale industrialists.


McKinsey Global Institute (MGI) report Defines the middle class as combination of seekers and strivers.

• Growth in Rural Population E.g., Project Shakti launched by HUL• A Changing Family System

Double Income No kids (DINK)Double Income Single Kid (DISK)

• The Changing role of women• A Better-educated, More White-collared, More Professional Population• Increasing Diversity


2. Economic Environment:It consists of factors that affect consumer purchasing power and spending

patterns.E.g., Cars

• The Global Financial Crisis• Changing Income Distribution and Consumer Spending Patterns

Engel’s Law: Differences noted over a century ago by Ernst Engel in how people shift their spending across food, housing, transportation, health care, and other goods and services categories as family income rises.


Findings of Engel’s Law:

Food, housing, and transportation use up the maximum household income.As family income rises, the percentage spent on food declines, The percentage spend on housing remains about constant (except for utilities

such as gas, electricity, and public services), and savings increase

Changes in major economic variables such as income, cost of living, interest rates, and saving and borrowing patterns

Have a large impact on the market place.


3. Natural Environment:Involves the natural resources that are needed as inputs by marketers or that

affected by marketing activities.• Shortage of raw materials• Increased pollution• Increased government intervention

Green movement – concern for the natural environmentCos are developing strategies and practices that support environmental sustainability .


4. Technological Environment:Forces that create new technologies, creating new product and market

opportunities.

5. Political and Social Environment:Political Environment:Consists of laws, government agencies, and pressure groups that influence

and limit various organizations and individuals in a given society.

Legislation Regulating BusinessRegulation can encourage competition and ensure fair markets for goods and

services.


Increased Emphasis on Ethics and Socially Responsible Actions:

Socially Responsible Behavior: “Do the right thing”.Protecting the long-run interests of their consumers and environment.Cause-Related Marketing:To build more positive image.E.g., P&G, ITC Classmate notebooks etc“Do well by doing good”.


6. Cultural Environment:It is made up of institutions and other forces that affect A society’s basic values, perceptions, preferences, and behaviors.

Beliefs and values are shaped by a particular society in which people are grown up.

Core beliefs and values are passed on from parents to children and are reinforced by schools, religious institutions, business, and government.

Secondary beliefs and values are more open to change.Believing in marriage is a core belief; believing that people should get married

in early life is secondary belief.


Shifts in Secondary Cultural Values:Although core values are fairly persistent, cultural shifts do take place, but much more slowly.

Marketers track such values on a regular basis to explore opportunities.

The major cultural values of a society are expressed in people’s views of themselves and others, as well as in their view of organizations, society, nature and universe.


People’s View of themselves:Some people seek personal pleasure, wanting fun, change and escape.Other seek self-realization through religion, recreation, or pursuit of careers

or other life goals.

People use products, brands, and services as a means of self-expression.Two examples:Do-It-Yourself- Recent Movers: DIY attitude – Gen X – enjoy playing board and

card games with family and children.Adventurers: Rarely follow a single path.E.g., Master Cards – experience of lifetime – “There are some things in life

that money can’t buy. For everything else, there’s MasterCard”.


People’s views of others:“Cocooning” – people are going out less with others and stay at home to

enjoy - networked home office, home theatres etc.People’s view of Organizations:To earn money to enjoy their non work hours.People’s View of Society:Patriotism-Independence day-to sell products and services.People’s view of nature:Organic foodPeople’s Views of the Universe:Materialism to spirituality.E.g., Aastha Channel – religious discourses, yoga, and spirituality.


Responding to the Marketing Environment:

Proactive than Reactive.

2 marketing environment

Business

marketing intermediaries

mktg environment

marketing research firms

macro environment

micro environment

financial publics

c marketing services

b media publics