SERVICE MARKETING ENVIRONMENT AND OTHER FACTORS AFFECTING MARKETING ENVIRONMENT

SERVICE MARKETING ENVIRONMENT AND OTHER FACTORS AFFECTING MARKETING ENVIRONMENT

CHAPTER-1INTRODUCTION1.1 INTRODUCTION TO SERVICE MARKETING ENVIRONMENTThe world economy nowadays is increasingly characterized as a service economy. This is primarily due to the increasing importance and share of the service sector in the economies of most developed and developing countries. In fact, the growth of the service sector has long been considered as indicative of a countrys economic progress.Economic history tells us that all developing nations have invariably experienced a shift from agriculture to industry and then to the service sector as the main stay of the economy.This shift has also brought about a change in the definition of goods and services themselves. No longer are goods considered separate from services. Rather, services now increasingly represent an integral part of the product and this interconnectedness of goods and services is represented on a goods-services continuum.

The American Marketing Association defines services as - Activities, benefits and satisfactions which are offered for sale or are provided in connection with the sale of goods.Services marketingis a sub field of marketing, which can be split into the two main areas of goods marketing (which includes the marketing of fast moving consumer goods (FMCG) and durables) and services marketing. Services marketing typically refers to both business to consumer (B2C) and business to business (B2B) services, and includes marketing of services like telecommunications services, financial services, all types of hospitality services, car rental services, air travel, health care services and professional services. The range of approaches and expressions of a marketing idea developed with the hope that it be effective in conveying the ideas to the diverse population of people who receive it.Services Marketing refers to the marketing of services as against tangible products.As already discussed, services are inherently intangible, are consumed simultaneously at the time of their production, cannot be stored, saved or resold once they have been used and service offerings are unique and cannot be exactly repeated even by the same service provider.Marketing of services is a relatively new phenomenon in the domain of marketing, having gained in importance as a discipline only towards the end of the 20th century.Services marketing first came to the fore in the 1980s when the debate started on whether marketing of services was significantly different from that of products so as to be classified as a separate discipline. Prior to this, services were considered just an aid to the production and marketing of goods and hence were not deemed as having separate relevance of their own.The 1980s however saw a shift in this thinking. As the service sector started to grow in importance and emerged as a significant employer and contributor to the GDP, academics and marketing practitioners began to look at the marketing of services in a new light. Empirical research was conducted which brought to light the specific distinguishing characteristics of services.By the mid 1990s, Services Marketing was firmly entrenched as a significant sub discipline of marketing with its own empirical research and data and growing significance in the increasingly service sector dominated economies of the new millennium. New areas of study opened up in the field and were the subject of extensive empirical research giving rise to concepts such as - the product-service spectrum, relationship marketing, franchising of services, customer retention etc.MEANING OF SERVICEAserviceis the action of doing something for someone or something. It is largely intangible (i.e. not material). You cannot touch it. You cannot see it. You cannot taste it. You cannot hear it. You cannot feel it. So a service context creates its own series of challenges for the marketing manager since he or she must communicate the benefits of a service by drawing parallels with imagery and ideas that are more tangible.Search quality is the perception in the mind of the consumer of the quality of the product prior to purchase through making a series of searches. So this is simple in relation to a tangible product because you might look at size or colour for example. Therefore search quality relates more to products and services.

1.2 DEFINITION AND CHARACTERISTICS Of SERVICE MARKETING The American Marketing Association defines services as - Activities, benefits and satisfactions which are offered for sale or are provided in connection with the sale of goods.The defining characteristics of a service are:Intangibility:Services are intangible and do not have a physical existence. Hence services cannot be touched, held, tasted or smelt. This is most defining feature of a service and that which primarily differentiates it from a product. Also, it poses a unique challenge to those engaged in marketing a service as they need to attach tangible attributes to an otherwise intangible offering.1. Heterogeneity/Variability:Given the very nature of services, each service offering is unique and cannot be exactly repeated even by the same service provider. While products can be mass produced and be homogenous the same is not true of services. eg: All burgers of a particular flavor at McDonalds are almost identical. However, the same is not true of the service rendered by the same counter staff consecutively to two customers.2. Perishability:Services cannot be stored, saved, returned or resold once they have been used. Once rendered to a customer the service is completely consumed and cannot be delivered to another customer. eg: A customer dissatisfied with the services of a barber cannot return the service of the haircut that was rendered to him. At the most he may decide not to visit that particular barber in the future3. Inseparability/Simultaneity of production and consumption:This refers to the fact that services are generated and consumed within the same time frame. Eg: a haircut is delivered to and consumed by a customer simultaneously unlike, say, a takeaway burger which the customer may consume even after a few hours of purchase. Moreover, it is very difficult to separate a service from the service provider. Eg: the barber is necessarily a part of the service of a haircut that he is delivering to his customer.4. Customers do not obtain ownership of services5. Service products are ephemeral and cannot be inventoried6. Intangible elements dominate value creation7. Greater involvement of customers in production process8. Other people may form part of product experience9. Greater variability in operational inputs and outputs10. Many services are difficult for customers to evaluate11. Time factor is more important--speed may be key12. Delivery systems include electronic and physical channels1.3 MEANING OF SERVICE MARKETING & SERVICE MARKETING ENVIRONMENTSERVICE MARKETING Thepromotionofeconomic activitiesoffered by abusinessto itsclients. Service marketing might include theprocessofsellingtelecommunications,healthtreatment,financial, hospitality, car rental, airtravel, andprofessional servicesSERVICE MARKETING ENVIRONMENTThe environment in which the services is delivered and where the firm and customer interactCLASSIFICATION OF SERVICE MARKETING 1)By Market Segmentation2)By Degree Of Tangibility3)By Skills Of The Service Provider4)By Goals Of The Provider5)By Degree Of Regulation6)By Degree Of Labour Intensiveness1.4 SIGNIFICANCE OF SERVICE MARKETING ENVIRONMENTProper marketing of services contributes substantially to the process of development. If innovative marketing principles are followed in services marketing, the socio-economic transformation will take place at a much faster rate. In future, the service sector would operate in a conducive environment offering great potential. If the opportunities are properly utilised by the service sector, it will lead to an all round development of the economy. The significance of the service economy may be discussed under the following headings: 1. Generation of employment opportunities 2. Optimum utilisation of resources 3. Capital formation 4. Increased standard of living 5. Use of environment-friendly technology.Given the intangibility of services, marketing them becomes a particularly challenging and yet extremely important task.A key differentiator:Due to the increasing homogeneity in product offerings, the attendant services provided are emerging as a key differentiator in the mind of the consumers. Eg: In case of two fast food chains serving a similar product (Pizza Hut and Dominos), more than the product it is the service quality that distinguishes the two brands from each other. Hence, marketers can leverage on the service offering to differentiate themselves from the competition and attract consumers.Importance of relationships:Relationships are a key factor when it comes to the marketing of services. Since the product is intangible, a large part of the customers buying decision will depend on the degree to which he trusts the seller. Hence, the need to listen to the needs of the customer and fulfill them through the appropriate service offering and build a long lasting relationship which would lead to repeat sales and positive word of mouth.Customer Retention:Given todays highly competitive scenario where multiple providers are vying for a limited pool of customers, retaining customers is even more important than attracting new ones. Since services are usually generated and consumed at the same time, they actually involve the customer in service delivery process by taking into consideration his requirements and feedback. Thus they offer greater scope for customization according to customer requirements thus offering increased satisfaction leading to higher customer retention.Generation of employment OpportunitiesThe components of the service sector are wide and varied. For example, the service sector includes personal care services, education services, medicare services, communication services, tourism services, hospitality services, banking services, insurance services, transportation services, consultancy services, etc The organised and systematic development of the service sector would create enormous employment opportunities. Application of marketing principles in the I service sector is instrumental to the development of the economy. However, it is appropriate to mention that India has not been successful in utilising the potential of the service sector. As seen in Table 1.1, in USA about 80 per cent of job opportunities are offered by the service sector compared to India's 60%. So, the significance of the service sector lies in its capacity to create job opportunities. If the service sector is properly developed, it will solve the problem of unemployment in India to a great extent. After liberalisation policy, the service sector in India has been emerging as a dominant component in the economy. .Optimum Utilisation of Resources India is bestowed with rich resources. Particularly, the human resources available in India favour the growth of the service sector. While the labour content in most manufacturing activities is dropping steadily with use of technology, the labour content in the service sector is comparitively high. As India is rich in human resources, service sector can grow steadily. Moreover, service sector offers excellent export opportunities too. In fact, the important agenda of the World Trade Organisation (WTO) is opening up of market for services. So, by exploiting these factors, India can maximise its services export. Though its performance in the export of computer software is quite commendable already, it should concentrate on other areas as well. Service firms such as personal care services, the entertainment services, tourism services, hotel service contribute to the growth of the economy without consuming any natural resources. In a sense, the growth of service firms of this kind conserve natural resources. Thus, services marketing help conserve the valuable resources for future generations. Capital Formation There are indications that Services will grow more rapidly in the near future. Economic, social and political factors signal an expansion of the service sector. Investments and job generations are far greater in the service sector compared to manufacturing. It is estimated that telecom alone will account for an investment of Rs. 150,000 crores in the coming years. Investment encourages capital formation. For the development of a - 2 - nation, the flow of capital should be directed towards the most productive uses. If investments are made in the service sector, it will contribute to the nation-building process. With increased developmental activities, the per capita income increases which, in turn, facilitates capital formation. Performance of profitable services can absorb higher investments, thereby accelerating the rate of capital formation Increasing the Standard of LivingThe standard of living of the people in any country would be decided on the basis of quality and standard of products consumed or services availed in the day-to-day living. Any development is transparent only when the living conditions of the masses improve. When compared with developed countries, the standard of living in India is far from satisfactory. Standard of living cannot be improved by offering more opportunities for earnings. On the other hand, the standard of living is determined by the availability of goods and services for citizens and a wise spending on them. The development of services industry is sure to promote the standard of living of the people.Use of Environment-friendly Technology: Now-a-days, almost all services are found technology-driven. Developed countries are making full use of latest technology while rendering services. Technologies used by service generating organisations such banks, insurance companies, tourism, hotel services, , mmunicatiW1 services. and. education services are not detrimental in any way to the environment. On the contrary, technologies used in manufacturing organisations may have harmful effects on the environment. So, services industry do not pollute the environment which is indeed laudable.

CHAPTER -2SERVICE MARKETING ENVIRONMENT2.1 SERVICE MARKETING ENVIRONMENTAll organizations operate within the marketing environment. The marketing environment is made up of two parts Micro environment Macro environment

Micro Environment The micro environment is the internal environment of the organization .The factors to be analyzed in the internal environment will include the following 1Company management structure 2Customers3 Suppliers4 Channel members5 Competitors 6 Other publics which may include 7 Government and political bodies8 Pressure groups 9 Financial institutions10 Shareholders In effect any person or organization which can influence the companys marketing activities and marketing success in way should be included here. The list is not absolutely comprehensive as individual organizations may need to consider special influences..The political legal , economic , social and technological forces exert the same type of services as they do on products ; however certain environment features have a greater impact on service

Macro Environment The macro environment represents all the outside influences which have impact on an organizations marketing or business activity. It includes economic and political factors and socio-cultural trends, for example the external environment influences will effect all organizations within a sector to a greater or lesser degree. The internal environment relates to a particular organization and its publics.

The environmental factors are :1. Political legal environment2.Economic environment 3.Socio-cultural environment 4.Technological environment

1. Political Legal Environment There is considerable influence of the political legal environment on service marketing . Service industries are often more closely regulated than most other forms of private enterprise. Many service firms are being subject to government regulations in addition to the usual taxes and legislation. Service providers must understand and recognize the impact of such regulation on their competitive strategies.Regulation generally influences service business in four ways. Regulation generally influences the range and type of competition. Regulation reduces the marketers array of options and introduces certain rigidities into the marketing process. Decision of the regulatory agencies being the binding part of the marketing decision making process must be focused at understanding and predicting those agencies actionPressure groups may be established to lobby and effect change or modify , the directions being taken by the regulatory bodies.2.Economic Environment In economic environment changing life style , changing world ,changing economies and changing technological advances and changing consumer needs have contributed to increase spending on consumer services. Technological innovations have also helped to create a higher standard of living for a common man, who presently spends a larger portion of his or her increased disposable income of services.But the.role of technology has also aided in circumventing barriers to trade , especially in its role in designing and delivering services. The urbanization has widened the demand for personal and public services . The demographic shift towards an older population in some countries has resulted in new service demands such as better healthcare , convenience products etc. In the global environment , due to cross country cultural issues , trade barrier ( both tariff and non-tariff) tend to become more restrictive in marketing of services.3.Socio-Cultural EnvironmentSocio- cultural forces are set factors including life style , social values and beliefs that affect the marketing activities of an organization. These factors have significant impact on the marketing of services . The marketers have found the intensive use of consultants and counselors in their personal family and working lives. Health, Beauty, travel, culture, and higher education have partly replaced durable goods as status.symbols in the mind of many consumers . There had been an increasing trend in the services like security , insurance, legal, medical and investment. Globally , the cultural dimensions affect services in a more pronounced manner than do goods. Due to inseparability characteristic of services the firms may need to adapt their offerings to suit local taste and preferences . KFC and McDonalds had to adapt its products in India to suit local polates. Business negotiations are very much subject to local norms and local systems. Language is a major cultural influence

4.Technological Environment Technology has influenced our life styles, consumption pattern and our economic well being tremendously. Just think of internet , worldwide web (www) , E-commerce , video conferencing. World has become too small and boundary less. The service economies will be technologically driven soon. Instead of expecting service providers to improve results ; management must see what kind of organizational structure , incentives , technology and skills can improve overall productivity

ENVIRONMENT FOR SERVICE MARKETINGENVIRONMENT FOR SERVICE MARKETINGINTERNAL MARKETING ENVIRONMENTInternal marketing describes the programmes that instil and maintain a strong service mentality in the mindset of employees. Most of the employees in an organisation serve the external customer. The efforts of all of them should be coordinated to serve the customers well. Customer-service heavily depends upon the service employees. Internal marketing addresses those employees who act as an internal market within an organisation. Employees are given the status of 'customers' with the same level of importance attached to the external customers. So, customer satisfaction can be guaranteed only by satisfying the employees (internal customers). In addition to their external marketing plans and strategies, service organisations pay a lot of attention to their internal marketing programmes. The importance of internal marketing is evident from the statement of Jan Car/zon. "If you don't serve customers you better serve somebody else in the organisation"DEFINITION OF INTERNAL MARKETING The following are some important definitions offered for the term internal marketing. I. "The means of applying the philosophy and marketing to people who serve the external customers so that; (a) the best possible people can be employed and retained; and (b) they do the best possible work". - Berry 2. "The term internal marketing has been coined to characterise the set of activities a firm must undertake to woo and win over the hearts and minds of its employees to achieve service excellence".

Objectives Of Internal Marketing According to Gronroos, there are three objectives of internal marketing. (Figure 12.1)

Objectives of internal marketing

Overall objectives Tactical level objectives Strategic level objectives

The overall objectives of internal marketing is to create customer conscious and care-oriented personnel. Internal marketing has strategic objectives to create an internal environment that supports the customer conscious personnel. Internal marketing works through supportive management methods, personnel policy internal trading policy and planning and control procedures. The tactical level objectives related to sale of services, supporting services, campaigns and single marketing efforts to the employees are based on the following principles:(i) The personnel in a service organisation constitute its primary market(ii) The employees are expected to understand their role in creating customer satisfaction and actively supporting a given service. (iii) The employees should follow the policies and procedures laid down by the company in order to support the services needed for custom contact. (iv) The service organisation should launch all service schemes only aft, getting the full acceptance of customers. (v) Internal marketing calls for an internal information channel i. e., personal selling is required internally. EXTERNAL MARKETING ENVIRONMENT External marketing is directed at those individuals and groups that buy goods and services from an organisation. External marketing involves traditional marketing efforts such as market research, personal selling, advertising, direct mail, sales promotion, pricing and public relations. The organisation makes promises which correspond with the personal needs and wishes of the target group of customers. External marketing helps to build the customer's understanding of the quality of service an organisation can deliver. The service provider should understand the needs of the customer. This necessitates segmentation of the market on a suitable basis - demographic, psychographic or usage pattern. Having identified the service market, the organisation finds suitable ways to compete in that segment. This is achieved by designing an appropriate marketing mix. The concept of external marketing differs from the concept of internal marketingDIFFERENCE BETWEEN INTERNAL AND EXTERNAL MARKETING ENVIRONMENTExternal marketing EnvironmentInternal marketing Environment

There is interaction between the organisation and customers.There is interaction between the organisation and its employees

Customers influence the operations of the organizationManagement plays a crucial role in finalising tasks and directing employees

Organisation makes promises to its customersInternal marketing enables the employees to fulfill the promises made during external marketing

Customers derive benefits from the service offeringEmployees derive benefits from compensation plan adopted by the company.

External marketing aims at achieving customer satisfactionInternal marketing increases job satisfaction among employees.

Demand from customers fluctuates as there are frequent changes in the needs of customers.Feedback is obtained from employees. Training and appraisal of employees are suitably adopted.

Market research is conducted on customer trends, competitors' strategy etc., in the market.Needs of employees are not at al1 fluctuating. The genuine requirements of the employees

In external marketing, promotion mix consists of advertising, sales promotion, publicity, etcPromotional aspects consist of salary increases, awards, recognition given to the employees

External marketing focuses on quality, cultural and social factors, standards of living and the needs and wants ofInternal marketing pays attention to values, attitudes, beliefs and personalities of service employees. customers

It requires feedback and control.It requires vision and planning.

External marketing pays attention to good public relations.Counselling is given to employees to tone up HR skills

Relationship" is the focal point"Partnership" is the focal point.

Operations in external markets are constrained by trends, fashions and money power.Relationship with employees is constrained by available resources and other institutional factors.

5 External marketing focuses on operational levels.Strategic and tactical levels are in focus.

Retention of customers is criticalRetention of employees is critical.

Target groups are individual and Institutional customers.Target groups are employees.

Customers are offered incentives in the form of discounts, premiums, gifts and contests, etcIncentives may be financial and nonfinancial; bonus, commission, free housing facilities, free medical facilities, etc

2.2SERVICE MARKETING TRIANGLEServices marketing is about promises. Promises are made and promises are kept to customers. Service triangle is the strategic framework which "reinforces the importance of people in the ability of firms to keep their promises and succeed in building customer relationships" - (MJ. Bitner) A services triangle is made up of three types of marketing, namely I. External marketing 2. Interactive marketing and 3. Internal marketing.

Figure 12.2 - Services Triangle The triangle shows three interlinked groups that work together to develop, promote and deliver services. The key players are company, customers and the providers. Providers can be employees of the firm, subcontractors or outsourced entities who actually deliver the company's services. External marketing sets up customers' expectations and makes promises to customers. In interactive marketing or real-time marketing, promises are kept by the firms' employees, subcontractors or agents (service providers). If promises are not kept, customers become dissatisfied and may switch firms. Internal marketing consists of the activities that management engages itself in order to aid the providers to deliver on the service promise - recruiting, training motivating and rewarding. All the three sides of the triangle should be properly aligned. They work together to ensure what is promised through the external marketing is delivered. To achieve this, the enabling activities should be aligned with the role of service providers.2.3SERVICE MARKETING MIXThe 7 Ps of Services MarketingThe first four elements in the services marketing mix are the same as those in the traditional marketing mix. However, given the unique nature of services, the implications of these are slightly different in case of services.1. Product:In case of services, the product is intangible, heterogeneous and perishable. Moreover, its production and consumption are inseparable. Hence, there is scope for customizing the offering as per customer requirements and the actual customer encounter therefore assumes particular significance. However, too much customization would compromise the standard delivery of the service and adversely affect its quality. Hence particular care has to be taken in designing the service offering.2. Pricing:Pricing of services is tougher than pricing of goods. While the latter can be priced easily by taking into account the raw material costs, in case of services attendant costs - such as labor and overhead costs - also need to be factored in. Thus a restaurant not only has to charge for the cost of the food served but also has to calculate a price for the ambience provided. The final price for the service is then arrived at by including a mark up for an adequate profit margin.3. Place:Since service delivery is concurrent with its production and cannot be stored or transported, the location of the service product assumes importance. Service providers have to give special thought to where the service would be provided. Thus, a fine dine restaurant is better located in a busy, upscale market as against on the outskirts of a city. Similarly, a holiday resort is better situated in the countryside away from the rush and noise of a city.4. Promotion:Since a service offering can be easily replicated promotion becomes crucial in differentiating a service offering in the mind of the consumer. Thus, service providers offering identical services such as airlines or banks and insurance companies invest heavily in advertising their services. This is crucial in attracting customers in a segment where the services providers have nearly identical offerings.We now look at the 3 new elements of the services marketing mix - people, process and physical evidence - which are unique to the marketing of services.5. People:People are a defining factor in a service delivery process, since a service is inseparable from the person providing it. Thus, a restaurant is known as much for its food as for the service provided by its staff. The same is true of banks and department stores. Consequently, customer service training for staff has become a top priority for many organizations today.6. Process:The process of service delivery is crucial since it ensures that the same standard of service is repeatedly delivered to the customers. Therefore, most companies have a service blue print which provides the details of the service delivery process, often going down to even defining the service script and the greeting phrases to be used by the service staff.7. Physical Evidence:Since services are intangible in nature most service providers strive to incorporate certain tangible elements into their offering to enhance customer experience. Thus, there are hair salons that have well designed waiting areas often with magazines and plush sofas for patrons to read and relax while they await their turn. Similarly, restaurants invest heavily in their interior design and decorations to offer a tangible and unique experience to their guests

CHAPTER-3FACTORS AFFECTING MARKETING ENVIRONMENTIntroduction:A variety of environmental forces influence a companys marketing system. Some of them are controllable while some others are uncontrollable. It is the responsibility of the marketing manager to change the companys policies along with the changing environment.According to Philip Kotler, A companys marketing environment consists of the internal factors & forces, which affect the companys ability to develop & maintain successful transactions & relationships with the companys target customers.The Environmental Factors may be classified as:1. Internal Factor

2. External Factor

External Factors may be further classified into:External Micro Factors & External Macro FactorsCompanys Internal Environmental Factors:A Companys marketing system is influenced by its capabilities regarding production, financial & other factors. Hence, the marketing management/manager must take into consideration these departments before finalizing marketing decisions. The Research & Development Department, the Personnel Department, the Accounting Department also have an impact on the Marketing Department. It is the responsibility of a manager to company-ordinate all department by setting up unified objectives.

External Micro Factors:1. Suppliers: They are the people who provide necessary resources needed to produce goods & services. Policies of the suppliers have a significant influence over the marketing managers decisions because, it is laborers, etc. A company must build cordial & long-term relationship with suppliers.2. Marketing Intermediaries: They are the people who assist the flow of products from the producers to the consumers; they include wholesalers, retailers, agents, etc. These people create place & time utility. A company must select an effective chain of middlemen, so as to make the goods reach the market in time. The middlemen give necessary information to the manufacturers about the market. If a company does not satisfy the middlemen, they neglect its products & may push the competitors product.3. Consumers: The main aim of production is to meet the demands of the consumers. Hence, the consumers are the center point of all marketing activities. If they are not taken into consideration, before taking the decisions, the company is bound to fail in achieving its objectives. A companys marketing strategy is influenced by its target consumer. Eg: If a manufacturer wants to sell to the wholesaler, he may directly sell to them, if he wants to sell to another manufacturer, he may sell through his agent or if he wants to sell to ultimate consumer he may sell through wholesalers or retailers. Hence each type of consumer has a unique feature, which influences a companys marketing decision.4. Competitors: A prudent marketing manager has to be in constant touch regarding the information relating to the competitors strategies. He has to identify his competitors strategies, build his plans to overtake them in the market to attract competitors consumers towards his products.

Any company faces three types of competition:a) Brand Competition: It is a competition between various companies producing similar products. Eg: The competition between BPL & Videcon companies.

b) The Product Form Competition: It is a competition between companies manufacturing products, which are substitutes to each other Eg: Competition between coffee & Tea.

c) The Desire Competition: It is the competition with all other companies to attract consumers towards the company. Eg: The competition between the manufacturers of TV sets & all other companies manufacturing various products like automobiles, washing machines, etc.Hence, to understand the competitive situation, a company must understand the nature of market & the nature of customers. Nature of the market may be as follows:I. Perfect MarketII. OligopolyIII. MonopolyIV. Monopolistic MarketV. Duopoly

5. Public: A Companys obligation is not only to meet the requirements of its customers, but also to satisfy the various groups. A public is defined as any group that has an actual or potential ability to achieve its objectives. The significance of the influence of the public on the company can be understood by the fact that almost all companies maintain a public relation department. A positive interaction with the public increase its goodwill irrespective of the nature of the public. A company has to maintain cordial relation with all groups, public may or may not be interested in the company, but the company must be interested in the views of the public.Public may be various types. They are:a. Press: This is one of the most important group, which may make or break a company. It includes journalists, radio, television, etc. Press people are often referred to as unwelcome public. A marketing manager must always strive to get a positive coverage from the press people.b. Financial Public: These are the institutions, which supply money to the company. Eg: Banks, insurance companies, stock exchange, etc. A company cannot work without the assistance of these institutions. It has to give necessary information to these public whenever demanded to ensure that timely finance is supplied.c. Government: Politicians often interfere in the business for the welfare of the society & for other reasons. A prudent manager has to maintain good relation with all politicians irrespective of their party affiliations. If any law is to be passed, which is against the interest of the company, he may get their support to stop that law from being passed in the parliament or legislature.d. General Public: This includes organisations such as consumer councils, environmentalists, etc. as the present day concept of marketing deals with social welfare, a company must satisfy these groups to be successful.

External Macro Environment:

These are the factors/forces on which the company has no control. Hence, it has to frame its policies within the limits set by these forces:

1. Demography Factor:It is defined as the statistical study of the human population & its distribution. This is one of the most influencing factors because it deals with the people who form the market. A company should study the population, its distribution, age composition, etc before deciding the marketing strategies. Each group of population behaves differently depending upon various factors such as age, status, etc. if these factors are considered, a company can produce only those products which suits the requirement of the consumers. In this regard, it is said that to understand the market you must understand its demography.

2. Economic Factors : A company can successfully sell its products only when people have enough money to spend. The economic environment affects a consumers purchasing behavior either by increasing his disposable income or by reducing it. Eg: During the time of inflation, the value of money comes down. Hence, it is difficult for them to purchase more products. Income of the consumer must also be taken into account. Eg: In a market where both husband & wife work, their purchasing power will be more. Hence, companies may sell their products quite easily.

3. Physical Environment or Natural Forces: A company has to adopt its policies within the limits set by nature. A man can improve the nature but cannot find an alternative for it.Nature offers resources, but in a limited manner. A product manager utilizes it efficiently. Companies must find the best combination of production for the sake of efficient utilization of the available resources. Otherwise, they may face acute shortage of resources. Eg: Petroleum products, power, water, etc.

4. Technological Factors: From customers point of view, improvement in technology means improvement in the standard of living. In this regard, it is said that Technologies shape a Persons Life.Every new invention builds a new market & a new group of customers. A new technology improves our lifestyle & at the same time creates many problems. Eg: Invention of various consumer comforts like washing machines, mixers, etc have resulted in improving our lifestyle but it has created severe problems like power shortage.Eg: Introduction to automobiles has improved transportation but it has resulted in the problems like air & noise pollution, increased accidents, etc. In simple words, following are the impacts of technological factors on the market:a) They create new wantsb) They create new industriesc) They may destroy old industriesd) They may increase the cost of Research & Development.

5. Social & Cultural Factors : Most of us purchase because of the influence of social & cultural factors. The lifestyle, values, believes, etc are determined among other things by the society in which we live. Each society has its own culture. Culture is a combination of various factors which are transferred from older generations & which are acquired. Our behaviour is guided by our culture, family, educational institutions, languages, etc.The society is a combination of various groups with different cultures & subcultures. Each society has its own behavior. A marketing manager must study the society in which he operates.Consumers attitude is also affected by their society within a society, there will be various small groups, each having its own culture.Eg: In India, we have different cultural groups such as Assamese, Punjabis, Kashmiris, etc. The marketing manager should take note of these differences before finalizing the marketing strategies.Culture changes over a period of time. He must try to anticipate the changes new marketing opportunities

SOME OTHER FACTORS AFFECTING MARKET ENVIRONMENTCustomersAs all businesses need customers, they should beCentred (Orientated)around customers. The firm's marketing plan should aim to attract and retain customers through products that meets their "wants and needs" and excellent customer service.EmployeesEmploying staff with relevant skills and experience is essential. This process begins at recruitment stage and continues throughout an employee's employment via ongoing training and promotion opportunities. Training and development play a critical role in achieving a competitive edge; especially inService Sector Marketing. If a business employs staff without motivation, skills or experience it will affect customer service and ultimately sales.SuppliersSuppliers provide businesses with the materials they need to carry out their business activities. A supplier's behaviour will directly impact the business it supplies. For example if a supplier provides a poor service this could increase timescales or product quality. An increase in raw material prices will affect an organisation'sMarketing Mixstrategy and may even force price increases. Close supplier relationships are an effective way to remain competitive and secure quality products.ShareholdersAs organisations require investment to grow, they may decide to raise money by floating on the stock market i.e. move from private to public ownership. The introduction of public shareholders brings new pressures as public shareholders want a return from the money they have invested in the company. Shareholder pressure to increase profits will affect organisational strategy. Relationships with shareholders need to be managed carefully as rapid short term increases in profit could detrimentally affect the long term success of the business. MediaPositive media attention can make an organisation (or its products) and negative media attention can break an organisation. Organisations need to mange the media so that the media help promote the positive things about the organisation and reduce the impact of a negative event on their reputation. Some organisations will even employ public relations (PR) consultants to help them manage a particular event or incident.Consumer television programmes with a wide and more direct audience can also have a very powerful impact on the success of an organisation. Some businesses recognise this and will change their reaction when consumers mention that they are going to contact a consumer television programme or the newspapers about the business.

CompetitorsThe name of the game in marketing is differentiation. Can the organisation offer benefits that are better than those offered by competitors? Does the business have a unique selling point (USP)? Competitor analysis and monitoring is crucial if an organisation is to maintain or improve its position within the market.If a business is unaware of its competitor's activities they will find it very difficult to beat their competitors. The market can move very quickly for example through a change in trading conditions, consumer behaviour or technological developments. As a business it is important to examine competitors' responses to these changes so that you can maximise the impact of your response.

CHAPTER-4SUGGESTIONS &RECOMMENDATIONSservices marketing researchers will need to focus on customer's needs, attitudes. values and behaviours. Customer research will help in understanding and anticipating customer needs that can be met through product development or through differentiation. There is tremendous scope for further research anlong bank customers and staff in Kerala, the state with highest literacyacy and banking habits. It will enable monitoring of customer satisfaction with personal service and with automated service-delivery methods in order to pinpoint areas where service quality can be enhanced. Internal marketing will also be challenged to use technology to more precisely identify and segment markets and prospects that can be targeted with a special offer.

CHAPTER-5CONCLUSIONThe analysis above highlights the importance of understanding various environmental factors. It is clear that macro and micro environmental factors have a direct impact on how an organisation conducts business. From a recommendations point of view it is important to highlight that firms must understand the macro environmental factors such as politics, social behaviour, legal requirements and the economic state of a country as these are directly linked to a businesss performance. Furthermore organisations need to understand the importance of micro environmental factors which determine the competition level in the industry, the firms ability to operate in the market and the consumer perception of the organisation in question. By developing a marketing strategy that keeps in context all of the environmental factors an organisation can enhance in position in the market and hence develop products most suited for its core audience. This enables the firm to not only strengthen its position in the market but also enhances its long term sustainability in the industry

One factor can be part of a firm's micro environment and macro environment. The media can be used to illustrate this:- A one off media story about the firm may affect daily operations and will therefore be part of the firm's micro environment;- Whilst a general desire to avoid a negative media story may influence a firm's long term business operations and therefore make up the firm's macro environment.Firms should not concern themselves too much about which of the three categories a factor fits into. Instead firms should ensure that they have correctly identified all of the factors which make up their marketing environment and plan how to manage them for the firm's benefit

CHAPTER-6BIBLIOGRAPHYWEBSITESwww.investopedia.comwww.economictimes.comwww.google.comARTICLES &JOURNALSLevitt, T., (1981), Marketing Intangible Products and Product Intangibles, Harvard Business Review, MayJune, pp. 94-102. Lovelock, C.H., (1983), Classifying Services to Gain Strategic Marketing Insights, Journal of Marketing, Vol. 47, Summer, pp. 9-20. Shostack, L.G., (1977), Breaking Free from Product Marketing, Journal of Marketing, Vol. 41, April, pp. 73- 80. Zeithaml, V.A., Parasuraman, A. and Berry, L., (1985), Problems and Strategies in Services Marketing, Journal of Marketing, Vol. 49, Spring, pp. 33-46.Kotler, Armstrong, Philip, Gary.Principles of Marketing. pearson education.Jump up^Kotler, Phillip andGary Armstrong(2006), Principles of Marketing (Version 12/E).Pearson EducationInc. New Jersey

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