Marketing Environment

Analysing Needs & Trends in the macroenvironment Deciphering & responding to major macroeconomic forces, like demography, economy, natural environment, political system, technology & cultural environment

What is a Need?
Needs: Needs are the basic human requirements- food, air, water, clothing, shelter People also have strong needs for recreation, education & entertainment A Human need is a state of felt deprivation of some basic satisfaction

What is a Trend?
A trend is a direction or sequence of events which have some momentum & durability

 Eg, Hush Puppies shoes as mentioned in the book Tipping Point by Malcolm Gladwellhttp://www.gladwell.com/tippingpoint/index .html

Hush Puppies- Shoes

The suede shoes

Tipping Point
Tipping points are "the levels at which the momentum for change becomes unstoppable." Gladwell defines a tipping point as a sociological term: "the moment of critical mass, the threshold, the boiling point. The book seeks to explain the sociological changes that mark everyday life.

Tipping Point
As Gladwell states, "Ideas and products and messages and behaviors spread like viruses do." The examples of such changes in his book include the rise in popularity and sales of Hush Puppies shoes in the mid-1990s

Hush Puppies
Hush Puppies is an international brand of contemporary, casual footwear for men, women and children, "the classic American brushed-suede shoes with the lightweight ".

Hush Puppies
A division of Wolverine Worldwide, Hush Puppies is headquartered in Rockford, Michigan. Wolverine markets or licenses the Hush Puppies name for footwear in over 120 countries throughout the world.

Hush Puppies
In 1994, when sales of Hush Puppies were down to 30,000 pairs a year, and Wolverine was considering phasing out the brand, Hush Puppies suddenly became "hip" in the clubs and bars of downtown Manhattan, where young people were "buying them up" at small shoe stores. In 1995, fashion designers John Bartlett, Anna Sui, and Joel Fitzgerald began featuring them in their collections. Depending on word of mouth, Wolverine sold 430,000 pairs of the shoes, and four times that the following year.

Trend, Fad & Craze

A trend is something that becomes popular within mainstream society over a relatively long period of time (more than a few years). It is the direction of a sequence of events that has some momentum and durability.

Macro-environment
The macro-environment A firm's marketing macro-environment consists of a variety of external factors that manifest on a large (or macro) scale. These are typically economic, social, political or technological phenomena. A common method of assessing a firm's macroenvironment is via a PEST (Political, Economic, Social and Technological) analysis.

PEST analysis
Within a PEST analysis, a firm would analyse national political issues, culture and climate, key macroeconomic conditions, health and indicators (such as economic growth, inflation, unemployment, etc.), social trends/attitudes, and the nature of technology's impact on its society and the business processes within the society

Monitor & Adapt

Excellent companies take an outsideinside view of their business Recognition of new opportunities & threats It is important to monitor & adapt to changing environment

Trend Trackers
The marketing department identifies the critical changes in the environment Must be the trend trackers & opportunity seekers The marketing department uses its marketing intelligence & market research to track the environment

Analysing Needs & Trends

Successful companies respond to unmet needs & trends in the market Unmet needs include solutions for problems like a cure for cancer, nonfattening tasty food, practical electric cars, voice-controlled computers, affordable housing

Electric Cars
Car

Voice controlled computer

Computer

Electric Cars

Food for astronauts

Low calorie food too

Demand for affordable houses

Affordable housing

Unmet demands are met

Unmet demands always exist & are met by forward-thinking companies. Eg, Walkman was introduced for the person on the move, ipods, pendrives Courier companies & E-mail made communication faster Mobile phones even quicker

New Trend-Working Women

One major trend today is active participation of women in the work force

Working From Home

Flexi-hours from home

Working- Rural women

Working women- rural

Indian Working Women

BPOs & Office goers

Woman Pilots

Working Women- New Trend

One major trend today is active participation of women in the work force. This has implications on economic growth, family life, business life, political power, preference for specific goods & services

Identify a trend
Identifying a trend, analysing the likely consequences, determining company opportunities are critical skills These trends & mega-tends merit close attention of marketers Eg., a customised newspaper could be launched- but would it have sufficient readers & advertisers?

Children using mobiles- Japan

Small children use mobiles

Japan

Mobile Phone Culture - Japan

Much of the Japanese population own cellular phones (especially flip phones), most of which are equipped with enhancements such as video and camera capabilities. As of May 2008, 31.3% of elementary school students, and 57.6% of middle school students own a cell phone, with many of them accessing the internet through them. mobile phone culture, or "keitai culture. In India, there is no specific school period called middle school. Grades 1-8 are considered elementary or primary.

Mobile phone culture- Japan

Japan

Mobile Phone Culture-Japan

Most cellular phones sold in the last three years have integrated cameras; some more up to date models have high quality digital cameras. Many of the cameras are capable of taking both still and video images

Mobile Phone Culture- US

Americans are going wireless Internet big time, report says A few days ago, the Pew Research Center released a report that Americans are looking online to fight the recession. On Tuesday it added that most of us are doing that via wireless Internet. The results of the center's Internet & American Life Project survey show that 56 percent of adult Americans have accessed the Internet via wireless means, such as a Wi-Fi laptop, a mobile device, a game console, or an MP3 player. The most popular way people get online wirelessly is with a laptop computer, numbering 39 percent of some 2,200 survey participants. news.cnet.com/8301-1035_3-10293283-94.html

Mobile Phone Culture- US

Mobile Phone Culture- US

Using mobile phones to access net while on the go.

Mobile Phone Culture- US

Mobile internet usage growing in India, reports Vital Analytics

More and more people in India are opting to access the web via their mobile phones, a new study has found. According to figures from Vital Analytics, about 9.3 million people in urban parts of the country used the mobile internet between April and June 2009. More than 2.7 million were said to be viewing mobile websites on a daily basis, while a similar proportion stated that they use their phone to go online at least once a week.

Mobile internet usage-India

The mobile internet was found to be mainly used by those who wanted to check their emails, while many others used the web to look for specific information. However, Vital Analytics noted that a large proportion of consumers in India are still not yet using the mobile web. Has "huge untapped growth potential".

Mobile internet
On the move- internet

Accessing the internet from mobile

The major difference which we are going to witness in India is that because of our low PC penetration and high mobile penetration, we are going to get a lot of people who are going to be using only their mobile phone for accessing the internet.

Torn Jeans
A Trend - Modern

Punk Trends
Understand the niche market

Punk Trends

Punk Shoes, Music

Punk Style

Twitter killing Hollywood movies?

Twitter is killing the Hollywood box office, according to film bosses who fear that instant fan reviews on the micro-blogging site can seriously damage a movie's prospects. A slew of summer films have faltered after their opening weekends, including Bruno. Conversely, Transformers: Revenge of the Fallen, while slated by critics, became the season's break-out blockbuster. http://www.telegraph.co.uk/technology/twitter/606926

Twitter killing Hollywood movies?-2

The rise of Twitter means that film-goers can deliver a withering, one-line verdict on a new release before they have even left the cinema.

Popcorn Report www.faithpopcorn.com/

Faith Popcorn
Heralded as "the Nostradamus of marketing" by Fortune magazine, Faith Popcorn is the premier trend guru; her national bestseller The Popcorn Report identified the business and personal trends that took off in the early 90's, from "cocooning" to "cashing out." Nobody has been more accurate in demonstrating how to profit from tracking the trends, and in Clicking, Popcorn describes how to CLICK into more recently identified trends to future-fit themselves professionally and personally. Clicking is an invaluable road map to the newest lifestyle trends. It's about possibilities, taking chances, and taking charge of the future -- now.

Faith Popcorn
Ms. Popcorn has coined various terms and phrases in her publications. For example "Brailling the culture" is her term for analyzing a range of cultural developments. Ms. Popcorn has identified a number of trends that she argued determine consumer behavior. She also developed a marketing model she calls "InCulture Marketing" which she says turns the culture itself into a medium for brand communications.

Micro-Environment of Company
The Company- Marketing Plans, Department, Internal Environment, Mission Suppliers- Provide resources to the company to produce its goods & services Marketing Intermediaries- help the company promote, sell, distribute. Include resellers, physical distribution firms, marketing services agencies

Micro-Environment of Company
Customers- Types of markets: Consumer, Business, Govt., International Competitors- A company must provide greater customer value & satisfaction than its competitors do Publics- A public is any group that has an actual or potential interest or impact on an organization's ability to achieve its objectives-

Publics
Financial publics- Influence the company's ability to obtain funds- banks, inv houses, Media publics- Carry news, features, editorials Government publics-mgt must take govt. developments into account Citizen-action groups- Companys activities are questioned by consumer organizations, environmental groups, minority groups etc

Publics
Local publics- include neighborhood residents, & community organizations, General public- The companys image affects its buying Internal publics- include workers, managers, volunteers, board of directorswhen employees feel good about the company , this positive attitude spills over to the external publics

Track the environment

Marketers revise & adapt marketing strategies to meet new challenges & opportunities in the environment Vital to concentrate on key methods of tracking & identifying opportunities in the macro-environment and..

Track the environment

and key developments in various forces like demographic, economic, natural, cultural, political and technological

Six Major Forces to monitor

Demographic Economic Natural Cultural Forces Political Technological

Demographics
People make up markets Marketers are interested in size & growth rate of the population- in different cities, regions, & nations; age distribution, ethnic mix, educational levels, household patterns, regional characteristics & movements.

World population- to reach 7 billion by 2015.

World wide Growth

The term world population commonly refers to the total number of living humans on earth at a given time. As of 14 July, 2010, the Earth's population is estimated by the Unites States Census Bureau to be 6.885 billion Explosive growth in world population

World Population
Because births outnumber deaths, the world's population is expected to reach about 9 billion by the year 2040.

World Population
Asia accounts for over 60% of the world population with almost 3.8 billion people. The Peoples Republic of China and India alone comprise 20% and 17% respectively. Africa follows with 840 million people, 12% of the world's population.

World Population
Europe's 710 million people make up 11% of the world's population. North America is home to 514 million (8%), South America to 371 million (5.3%), and Australia to 21 million (0.3%).

Demographics
Classified on various parameters

Data for demographics

Regional Characteristics
People cross borders easily today

Movement of Population
Travel

National movement
People travel & settle across states & countries

Traveling population
Migration labour

Demographics
Age Distribution- Old & Young

Demographics- Age
Pre-school School- age children Teens Young adults- 25-40 years Middle-age adults- 40-60 years Older adults- Over 65 years

Education - Demographics
Education levels affect demographics

Demographics
Educational Levels

Demographics- Occupation
Engineer Chef

Demographics- Occupation
Executives & Office Staff

Actors

Doctors & Lawyers

Lawyer
Lawyer

Demographics-Labour
Construction workers

Demographics
Ethnic Mix

Demographics- Family Size

Household Patterns
A traditional family consists of a husband, wife & children, sometimes grandparents But today, there are many diverse & nontraditional households- live-alones, singleparent families, childless married couples, empty nesters SSWD group consists of Single, Separated, Widowed, Divorced.

Demographics- Family
Household Patterns

Joint Families- India

American Society
The Baby Boom Generation is the generation that was born just after World War II, a time that was marked by an increase in birthrates worldwide. Baby Boomers in their teenage and college years were characteristically part of the counterculture of the 1960s, but later became more ideologically divided, although the generation remained widely committed to keystone values such as gender equality, racial equality, and environmental stewardship.

Beatles of the 60s

American Society
Baby Boomers and Gen X

American Society
Generation X is the generation generally defined as those born after the baby boom ended, extending from the early-to-mid 1960s to late 1970s. They associated with the pop culture of their youth in the 1980s to the early 1990s. Other names used interchangeably with Generation X are Reagan Generation,13th Generation,and Baby Busters.

American Society
Generation Y is also known as Generation Next or the Millennials. Generation Y spans from circa 1980 to the late 1990s The following Generation, referred to as Generation Z, and various other names, was born between the early-1990s and end of the 2000s

Demographics
Household Patterns

Macro to Micro-markets
The effects of these changes is fragmentation of the mass market into many micro-markets differentiated by age, sex, ethnic background, education, geography, lifestyle, etc Each group has strong preferences & is reached through targeted communication media & distribution channels

Economic
Markets require purchasing power as well as people The purchasing power depends on current income, prices, savings, debt, & credit availability Marketers need to keep close watch on income levels & consumer spending patterns

Ability to buy- Income

Purchasing Power

Income < Debt

Income, saving, Debt

Economic
Credit availability

Economic
Nations vary greatly in the level & distribution of income A major determinant is the nations industrial structure

Economic
Four types of industrial structures can be distinguished: Subsistence Economies Raw material exporting economies Industrializing economies Industrial economies

1-Subsistence Economies
Subsistence Economies In a Subsistence Economy vast majority of people engage in simple agriculture They consume their output & barter the rest for goods & services This includes Bangladesh, Cambodia & Pakistan

Agriculture
Farming & Agriculture based economy

Agriculture

Agriculture

2-Raw material exporting economies

Raw material exporting economies are rich in one or more natural resource but poor in other areas Maximum revenue comes from exporting these resources, as Brunei does for oil These could be good markets for extractive equipment, tools, & supplies, trucks, etc

Raw materials
Raw materials

Raw material
Raw mtrl

Revenue comes from oil

Oil barrels

Raw material exporting economies

Depending on the number of foreign residents & wealthy native rulers & landholders, there is also a market for western style commodities & luxury goods

Wealthy rulers
Wealthy ruler

Lifestyle products- Cruise/Boats

Lifestyle products
Lifestyle products

Lifestyle products
Comfortable furniture

Lifestyle products
Beauty Products

Western products
Western products

Foreign Residents

3-Industrializing Economies
Industrializing Economies: In an industrializing economy, manufacturing begins to account for 10 to 20% of the countrys gross domestic product (GDP) Include India & Philippines As manufacturing increases the country relies on imports of raw material , steel, & heavy machinery, & less imports of finished textiles, paper products & processed foods

Manufacturing

Manufacturing
Manufacturing Industry

Manufacturing
Manufacturing

Gross Domestic Product

The gross domestic product (GDP) or gross domestic income (GDI), a basic measure of a country's economic performance, is the market value of all final goods and services made within the borders of a nation in a year.

Industrializing Economies
The industrialization creates a new rich class & a growing middle-class, both demanding new products, some of which can only be imported

4-Industrial economies
Industrial economies: In Asian industrial economies such as Japan, South Korea & Taiwan are major exporters of manufacturing goods & investment products They buy manufactured goods from each other & also export them to other type of economies in exchange for raw materials & semi-finished goods. The large & varied manufacturing activities of these industrial nations & their sizable middleclass make them rich markets for many goods.

Industrial economies
Income distribution is related to a countrys industry structure & is also affected by the political system There are five income distribution patterns:

Income Distribution Patterns in Economies

Very low incomes Mostly low incomes Very low, very high incomes Low, medium high incomes Mostly medium incomes An expensive car would not be bought in the first two, but in the third

Natural Environment- 4 Trends

Natural Environment
The air & water pollution in world cities have reached gigantic proportions There is great concern about industrial chemicals creating a hole in the ozone layer Marketers need to be aware of the opportunities & threats associated with the natural environment

Natural Environment
Natural Environment

Natural Environment- 4 Trends

Shortage of raw material Increased cost of energy Increased pollution levels Changing roles of governments

Natural Environment- Shortage of raw materials

Air & Water seem infinite resources but many see long-run dangers Renewable resources, such as forests & food also have to be used wisely Non-renewable resources oil, coal, minerals, pose a serious problem Firms that use scarce resources face large costs increases

Shortage of raw materials

Shortage of raw materials

Shortage of raw materials

Increased cost of energy

Due to shortage cost of energy is bound to increase

Natural Environment- 4 Trends

Increased cost of energy

Solar Power

Increased cost of energy

Increased cost of energy

Increased cost of energy

Wind energy

Natural Environment- 4 Trends Pollution

Increased pollution levels Industry will damage the quality of environment Disposal of chemical & nuclear waste high mercury levels in the ocean, quantity of chemical pollutants in food supply & soil, littering with non-biodegradable plastic bottles, & packaging

Pollution

Industrial Pollution

Water Pollution
In seas

Natural Environment- 4 Trends

Changing role of governments Increasing govt. intervention in natural resource management Some developed countries like Germany pursue environment quality, while some poorer nations do little about pollution because of lack of funds Companies need to take control

Changing role of governments

International Governments
France & USA

Changing role of governments

Natural Environment- 4 Trends

Today some companies are part of the Green Movement, developing environmentally sustaining strategies & practices For eg, GE is using its ecomagination to create products for a better world- cleaner aircraft engines, cleaner locomotives, cleaner fuel technologies

Culture- Cultural Diversity

Cultural Forces
The cultural environment a person grows up in shapes his beliefs & values; which tend to persist Thus, Indians believe in hard work, getting married, & are pious Core beliefs are passed on from parents to children, reinforced by major social institutions like schools, colleges, religious groups, business & government

Cultural Forces
Secondary beliefs & values are open to change Believing in institution of marriage is a core belief; believing that people ought to marry early is a secondary belief. Marketers have some chance of changing secondary values, but little chance of changing core values

Cultural Forces
Marketers can spot cultural shifts that open up new marketing opportunities & threats Eg. Percentage of people who value physical fitness has been steadily rising, particularly in the under-30 group, & upscale segment

Cultural Forces
Marketers of health foods , exercise equipment, & gymnasiums cater to this trend with appropriate products & communication People are also becoming calorie conscious; hence, low calorie snacks can be targeted to this segment

Opening of gyms
Gymnasiums

Culture
Understand the culture

Political
The political environment is composed of laws, government agencies, & pressure groups that influence and limit various organisations & individuals in society Government legislation regulates business

Political
Eg. Alcohol & cigarette advertising is banned since it promotes these stimulants Home appliances undergo safety checks Food companies need special approval for vegetarian & non-vegetarian items Business legislation protects companies from each other

Political
Companies establish legal review procedures & promulgate ethical standards to guide their marketing managers Promulgate:1.to make known by open declaration; publish; proclaim formally or put into operation (a law, decree of a court, etc.).2.to set forth or teach publicly (a creed, doctrine, etc.).

Technological
Advancement in Medical technology

Technological
The most dramatic force shaping peoples lives is technology Technology has release many wonders like penicillin , & many new health treatments Also, technology has released the bomb, & many guns

Technology
Modern warfare equipment

Warfare Technology
Modern equipment

Technological
Other products like the automobile, video games & ready to eat food has also been due to futuristic technology Each technology has long term consequences that cannot be foreseen CDs hurt Records & cassettes, Internetpostal service, Digital photography-Film business.

Technological
Technological Advancement

Technology
Aircrafts

Technological

Fast Trains
Subways

Fast Cars
Automobiles

Use of mobile phones -India

Extensive use by all segments

Use of mobile phones -India

Use of mobile phones -India

In cities

Use of mobile phones -India

Rural reach of mobile phones

Use of mobile phones -India

Technology reaches all parts of India

Use of mobile phones -India

Video Games
Video games Video parlours

Growing market of video games

Responding to Macro Environment

There are three kinds of companies: those that make things happen, those who watch things happen, & those who wonder what happened By taking action, companies can overcome seemingly uncontrollable environments. For example:

Responding to Macro Environment

Whereas some companies view the ceaseless online rumours as something on which they have no control, others work proactively to prevent or counter negative word of mouth Some companies only watch; others take action

Responding to Macro Environment

In some cases companies have no control over market forces like migration of labour, changing cultural fashions, economic environment- but smart marketing managers must be proactive, rather than negative.

Being Proactive
Proactive planning is the concept of planning AHEAD of the actual event, to be prepared for it (whatever it is). By being proactive you avoid being over-run by the event, and have plans and procedures in place to cope with it (whatever it is). Emergency organizations, like police have plans for future events like riots, floods or earthquakes, you should, too.

Be Prepared- Always!

In business and studies, it is always good to be prepared.