2

The Marketing
Environment

Session Objectives
Sensitize the participants to the
components of market environment.

Why a product like radio

declined and now once
again emerging as an
entertainment medium ?

What Were the Drivers of This

Change ?

Technology

Government policy

Other media substitutes

Think of illustrations
where environment
has changed the
entire leadership
positions in industry ?

Why Market Leaders

Suffered ?

HMT vs. Titan

HLL vs. Nirma
Bajaj vs. Honda
Dot.com companies burst
Market leadership today cannot be taken
for granted.New and more efficient
companies are able to upstage leaders in
a much shorter period.
6

What Changed These

Industries?
Telecom
Radio
Detergent
Passenger cars
7

Failure to Read Environment in Eighties Led to .

Maruti 800 displaced prominent positions of PAL and
Hindustan motors in car markets
Titan watches heralded a new era of watches and set
new rules to play in watch industry.
HLL was cornered by Nirma and it took sometime for
HLL to realise the emergence of new segments in
detergent market.
In TV market new entrants like BPL , Onida
Videocon , eclipsed old giants Crown , NELCO, Weston
, Dayonara.
Reliance , IPCL emerged as leaders in synthetic fibers
knocking out Pioneer CAFI (ICI)
8

Marketing Environment
consists of the actors and forces outside
marketing that affect marketing
managements ability to develop and
maintain successful relationships with its
target customers.
Includes:

Microenvironment - forces close to the company

that affect its ability to serve its customers.

Macroenvironment - larger societal forces that

affect the microenvironment.
9

The Companys
Microenvironment
1. Companys Internal Environment
functional areas inside a company
that have an impact on the marketing
departments plans.

10

Companys Internal
Environment

in
g

Marketing

g
Accountin

Top Man
agemen
t

r
tu
ac
uf
an
M

Fi

e
c
n
a
n

Purchasin
D
&
g
R

11

2. Suppliers
provide the resources needed to
produce goods and services
an important link in the value
delivery system.

12

Supplier Sector
Suppliers provide Capital, Labour & Materials.
Effective strategies are concerned with
supplier changes in environment.
Concerned with cost and availability of all
factors of production used in the business.
Cost & availability of RM, Machinery & spares,
money, energy
Employees are affected by power relationships
between the firm and the supplier.

13

3. Marketing Intermediaries
help the company to promote, sell,
and distribute its goods to final
buyers. i.e. resellers.

14

The Companys
Microenvironment
4. Customers
five types of markets that purchase a
companys goods and services.

15

Types of Customer Markets

s
s
e
n
i
s ets
u
B rk
Ma

Reseller
Markets

Go
ve

rnm

ent
Ma
rke
ts
In

Co
ns
Ma um
rke er
ts

l
na
io
at ts
rn ke
te ar
M

Company

16

5. Publics
any group that perceives itself
having an interest in a companys
ability to achieve its objectives.

17

Types of Publics

Financi
al M
Publics P edi
ub a
l ic
s

Lo
Pu ca
bl l
ic
s

Company

l
rna
nte
al I
lics
Pub
er
en lic
G b
Pu

Citizen
Action
t
n
e
Publics
m
n
r cs
e
v bli
o
G Pu

18

Major Forces in the Companys

Macroenvironment

19

External Marketing Environment

External Environment
is not controllable

Social
Social&&cultural
cultural

Ever-Changing
Marketplace

Demographics
Demographics

Product
Product
Distribution
Distribution
Promotion
Promotion
Price
Price

Economic
Economic
Conditions
Conditions

Competition
Competition

Target Market
Political
Political&&
Legal
LegalFactors
Factors
Environmental
Scanning

Natural
Natural

Technology
Technology

20

Target Market

A defined group most

likely to buy a firms
product.

21

Demographics
Demographics

1. Demographic Environment
Population
PopulationGrowth
Growth
Population
PopulationAge
Age Mix
Mix
Ethnic
EthnicMarkets
Markets
Educational
EducationalGroups
Groups
Household
Household Patterns
Patterns
Geographical
GeographicalShifts
Shiftsin
inPopulation
Population
Shift
Shiftfrom
from Mass
MassMarket
Market to
to Micromarkets
Micromarkets
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Individual demographics

40% women do work other than house work compared to

22% in 1991 (Rural 48% and urban 21%)
India is a young country.
Among people aged 12 yrs. & above, 36% are below 25
yrs. of age.
Just 25% of them are over 45 yrs.
Large middle class population of 25%, with dual incomes
Change of traditional purchasing roles

23

Social
Social
Change
Change

2.
2. Social
Social
Factors
Factors

Values
Values

Lifestyle
Lifestyle
Attitudes
Attitudes
24

Social Values
Cultural
Cultural Creativity
Creativity

Todays
MarketingOriented
Values

Traditionalism
Traditionalism

Modernism
Modernism
25

Marketing-Oriented Values
Cultural
Cultural
Creativity
Creativity

Traditionalism
Traditionalism

Modernism
Modernism

Interested in new products

and services.
Heartlanders with
nostalgic views
Place high value on success,
materialism, technology
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Product Characteristics in a
Personalized Economy
Customization
Customization

Immediacy
Immediacy

Value
Value

Products are custom designed

and marketed to small target
markets
Products are delivered at
the consumers convenience
Businesses must price
competitively or create innovative
products
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Multiculturalism - Mumbai
When all major ethnic
groups in an area-such as a city, country, or
census tract--are roughly
represented.

28

Multicultural Marketing
Niche
Niche
Marketing
Marketing
Marketing
Marketing
Strategies
Strategies
for
for
Multicultural
Multicultural
Markets
Markets

Adapting
Adapting
Promotion
Promotion

Stitching
Stitching
Niches
Niches

29

Stitching Niches
A strategy for
multicultural marketing
that combines ethnic,
age, income, and lifestyle
markets, on some
common basis, to form
a large market
e.g ethnic ladies
30
wear

Cultural Environment
institutions and other forces that
affect a societys basic values,
perceptions, preferences, and
behaviors.

31

Economic
Economic
Conditions
Conditions

3. Economic Factors
factors that affect consumer
purchasing power and spending
patterns.

32

Economic Factors
Economic
Economic Areas
Areas
of
of Concern
Concern to
to
Marketers
Marketers
Distribution
Distribution of
of
Consumer
Consumer
Income
Income

Recession
Recession
Inflation
Inflation
33

Economic Factors
Gross national product. (GNP)
Per capita income.
Balance of payments position.
Industry life cycle & current phase through which the
industry is passing. Difft. phases of this life cycle could
be recovery, boom, recession & depression.
Trends in prices of goods & services - specifically,
whether the inflationary or deflationary trends are
visible.
Fiscal policies & prime rate of interest charged by
commercial banks.

34

Economic Factors

Gross National Product

Per capita income
Balance of payments position
Fiscal policies and prime rate of interest
Industry Life cycle
Inflation rate
Trends in prices of of goods and
services

35

Economic Reforms &

Structural Adjustments
Fiscal and Monetary reforms
Banking sector reforms
Capital market reforms
Red carpet to foreign Institutional investors
Insurance sector reforms
Phasing out of subsidies
Dismantling of price controls & intro of
Market driven price environment
Disinvestment in PSUs
Public sector restructure

36

Rising Incomes
25% of Indian households
earn middle-class income
Over10% earn over 3 lakhs , primarily
from dual-income families
More discretionary income for
high-end goods and services
37

Inflation
Prices rise with no wage increase
Purchasing Power decreases
Consumers reaction:
Search for lowest prices
Rely on coupons and sales

38

Recession
Income, production and
employment fall
Reduced demand for
goods and services

39

Recession Marketing
Strategies
Improve existing products
Introduce new products
Maintain customer services
Emphasize top-of-the line products
40

Natural
Natural

4. Natural Environment
natural resources needed as inputs
by marketers or that are affected by
marketing activities.

41

Natural
Natural

Natural Environment
Shortages of
Raw Materials

Environmentally
Sustainable
Strategies

Factors
Affecting
the
Natural
Environment

Governmental
Intervention

Increased
Pollution

42

Natural Environment

Shortage of raw materials

Increased cost of energy - oil is a finite

nonrenewable resource

Increased levels of pollution - industrial

activity will inevitably harm environment

Changing role of govt. in environmental

protection - varies by country

Environmentally sustainable strategies

43

Technology
Technology

5. Technological & Resource

Factors
forces that create new technologies,
creating new product and market
opportunities.

44

Technological & Resource Factors

Technological changes lead to shortening of the
product life cycle and create new sets of
customer expectations as well.
Product outdated rapidly
Unlimited opportunities being
developed in health care, bio-genetic field
Changes is not only technical but also
commercial (make practical, affordable versions
of products.)
Increased regulation concerning product safety,
individual privacy

45

Technological Environment
Faster pace of technological change;
products are outdated at a rapid pace.
Almost unlimited opportunities being
developed daily in health care, space
industry, robotics, and bio-genetic field.
Challenge is not only technical, but also
commercial make practical, affordable
versions of products.
Increased regulation concerning product
safety, individual privacy, and other areas
that affect technological changes.

46

Political
Political&&
Legal
LegalFactors
Factors

6. Political-legal
environment

laws, agencies and pressure groups

that influence and limit organizations
and individuals in a given society.

47

Political Environment

ncludes
ncludes Laws,
Laws, Government
Government Agencies,
Agencies, Etc.
Etc. that
that Influence
Influence
&
& Limit
Limit Organizations/
Organizations/ Individuals
Individuals in
in aa Given
Given Society
Society

Increasing
Increasing
Legislation
Legislation

Changing
Changing
Government
Government
Agency
Agency
Enforcement
Enforcement

Increased
Increased
Emphasis
Emphasis on
on
Ethics
Ethics &
&
Socially
Socially
Responsible
Responsible
Actions
Actions

48

A marketer needs to not only

understand the Government policies
but also the political philosophy and
ideologies of major political groups
and individuals

49

Political and Legal Factors

Laws and Regulations
Protect
Businesses

Consumers

Society

New
Technology
50

Regulatory Agencies
Consumer
Consumer
Courts
Courts
MRTP
MRTP
Commission
Commission
Food
Food &
& Drug
Drug
Administration
Administration

Protects consumer rights

Prevents unfair methods of

competition in commerce

Enforces safety regulations

for food and drug products
51

Competition
Competition

7. Competitive Factors
How many competitors?

Control

How big are competitors?

How interdependent is industry?

52

Competitors
those who serve a target market
with similar products and services
against whom a company must gain
strategic advantage.

53

Competition
Firms not in the industry but likely to overcome
entry barriers, particularly at a low cost.
Firms who derive synergy from being in the
industry.
Firms for whom competing in the industry is an
obvious extension of the corporate strategy.
Customers or suppliers who may integrate
backward or forward.

54

Global Competition
More foreign firms
are entering Indian market
Foreign firms in India
compete on product quality
Global markets are highly competitive
55

Responding to the
Marketing Environment
Environmental Management Perspective
Proactive approach to managing
microenvironment & macroenvironment
by taking aggressive (rather than passive)
actions to affect the publics & forces in the
marketing environment.
How? Hire lobbyists, run advertorials,
press law suits, file complaints, & form
agreements.
56