MARKETING ENVIRONMENT MBA 1st semester. VTU MBA

1. Module 2
MARKETING ENVIRONMENT
Dr.S.G.Kulkarni 1

2. Marketing Environment
Philip Kotler :
“ A company marketing environment
consists of the actors and forces that
affect the company’s ability to develop
and maintain successful transactions
and relationships with its target
customers.”
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3. Marketing Environment
Micro environment Macro environment
Controllable Partially Uncontrollable
Co Organization Suppliers Demographic
Management Customers Economic
Resources Dealers Ecological
M Mix Competitors Technological
Community Political
( Social groups) Sociological
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4. Marketing Environment
The inputs concerned with micro
environment are –
 Company organization
 Suppliers
 customers
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5. 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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6. 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, organization’s strengths and
weaknesses.
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7. 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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8. 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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9. 2. Suppliers - continued
• Decisions like ‘ make or buy’ depend upon
suppliers
• Depends upon
– Right supplier
– Right place
– Right time and lead time
– Right price
– Right quantity
– Right quality
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10. 2. Suppliers -continued
 Good relations are required for
successful marketing
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11. 3. Intermediaries
 Wholesalers, retailers, agents, transporters,
warehousers, ad agencies, etc.
 This is a choice of channel of distribution
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12. 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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13. 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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14. 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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15. 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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16. 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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17. Macro environment
1. Economic - continued
Economic conditions include
 Economic development
 National income
 Standard of living
 State of agriculture
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18. 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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19. 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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20. Acronyms used in respect of age
 SKIPPIES
 MOBY’s
 DINKS
 PUPPIES
 WOOFS
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21. 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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22. 2.Demography - continued
► Mexico is a nation of young population
► Japan – ‘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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23. Demography - continued
Education
► Illiterates
► High school drop outs
► Matriculates
► Graduates
► Professional degrees
► Post graduates
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24. 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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25. 2.Demography - continued
 India’s 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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26. 2.Demography - continued
 You find that the demand is increasing not
only for farm products, but also for non-
farm products
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27. 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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28. 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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29.  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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30. 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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31. 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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32. 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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33. 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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34. 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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35. Social-Cultural environment
 Advertisements and culture
 Some ads are banned on TVs
 Festivals like Ganesh festival, Diwali, Id-
Milad, Christmas,
 Dress styles are different
 School uniforms
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36. Cultural factors - continued
• Food habits
• Internet practice
• Fast foods – Pizza hut, Ken Fried Chicken
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37. 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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38. Cultural factors - continued
Cause related Marketing
 1980 saw the advent of “ cause related
marketing”
 The distinctive feature of case-related
marketing is the firm’s 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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39. Cultural factors - continued
• Cultural and ethical forces are of vital
importance
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40. 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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41. 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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42. 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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43. 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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44. 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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45. Dr.S.G.Kulkarni 45

46. 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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47. Indian Marketing environment - continued
 Middle class explosion - ‘Consumption
community’
 Better educated and exposed to the life styles
of the rich
 Their aspirations have been constantly growing.
 They often spend more than what they earn
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48. 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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