MARKET ENVIRONMENT

Marketing Environment of a company consists of

the actors and forces outside marketing that affect marketing managements ability to build and maintain successful relationships with target customers.
All these gains & losses of these companies

point to one important fact THE SENSITIVITY to the external environment is extremely critical for a company to succeed.

 The analysis of external environment implies the

identification of threats and opportunities and involves the understanding of the various forces that effect the environment : Socio-economic

Competition Technology Govt. policies Suppliers

Andrew Grove, CEO Intel Corp added 6th one

Complementors

(Whose products are bought by the customers as complimentary to the main products.) Eg. Computer needs hardware and software Car Insurance, Driving License, Spare parts etc.
MARKETING ENVIRONMENT

MICRO MACRO

 MICRO (the actors close to the company):

Company Suppliers Marketing Intermediaries Customers Competitors and Publics

MACRO (Large societal forces that affect the micro

environment):
Demograhic Economic Natural

 Technological
Political Cultural

the company: Marketing manager has to make

decisions according the strategies & plans made by the top management. All depts. should work in harmony to provide for superior customer-value & satisfaction Suppliers : Supply problems can seriously affect marketing.

 Marketing Intermediaries :

help the company to promote, sell and distribute its products to final buyers. They include resellers, physical distributing firms, marketing services agencies and financial intermediaries. Customers : The marketer needs to study 4 types of customers markets : Consumer markets Business markets Govt. markets International Markets

 Competitors :

Marketers must try to gain strategic advantage by positioning their offerings strongly against competitors offerings. Publics : Company environment also includes various publics Any group that has an actual or potential interest in or impact on an organisations ability to achieve its objectives. 7 types of publics are:
Financial publics (Banks, financial institutions)

(ability to obtain funds). Media Publics (Ability to create/hamper Image). Govt. Publics (Govt. Policies, Eco policies) (Impact on working). Citizen Action Public (Communist, environmentalists) (Accountability)

 Local Publics (neighborhood public or organizations)

(Image) General Publics (Image) Internal Publics (workers, wages, employees) (Morale of employee)

Analysing the Macro environment :

FADS
fad

TRENDS

MEGATRENDS

Change in fashion that is unpredictable, short-lived and without social, economic and political significance

 Trend

Direction of changes that has some momentum & durability. Are more predictable & durable than fads.
Megatrend

Large social , eco., political & technological changes that are slow to form & one in place, they influence for at least seven to ten years or even longer.

DEMOGRAPHIC ENVIRONMENT :
It is the study of human population in terms of size, density, location, age, gender, race, occupation & others statistics. Age composition :
Marketer needs to understand the age composition of a country. To day about 72% of Indian market is young market consisting of people in the age group of 5-44 years. 36% is below 25 years of age. 25% is above 45 years of age. (requirements accordingly).

How young is Indian market ? (Year 2003)

Age-Group

12-14 15-19 20-24 25-34 34-44

9.8 13.6 12.9 22.2 16.4

44-54 55+

11.6 13.6

THE NEW URBAN FAMILY ( Indian traits) :

The New Urban Women;
Diff. from woman of 1970s & 1980s.
Now major role in decision making. More informed, independent & enterprising. Previously knew more about FMCG products.

Now aware & user of all products & services.

The New Urban Man :

Role of man also redefined. Perceived to more caring, concerned & sensitive. Plays a major role in purchase of all products & services but as

the value increases, his wife & children because the co-decider. Has a very high self esteem. Highly ambitious for children but not necessarily for his wife to whom he gives space to decide.

 THE NEW URBAN CHILD :

More

responsible, disciplined, career minded conscious of family values. Role in purchase of all products & services. More assertive. Wants to seek professional qualification. Environmental consciousness.

&

Occupation & literacy profile :

Literacy also affects the demand for quality products. As of 2001 about 65.4 % of Indians were literate. 75% were

males as opposed to 54% of women. The Indian market is on an ascent so far as literacy is concerned. The occupational profile also affects choice & product demand.

 Shift in Income levels :

Income in Indian house holds have been growing. The NCAER research over a period of time has indicated

that the growth rate in middle & higher income groups is far more than at the top level group.

Categorisation based on income-level Destitutes : below Rs. 16,000 (Poor) Aspirants : b/w Rs. 16,000 22,000 (Lower income
class)

Climbers
Class)

between Rs. 22,000 45,000 (Middle between Rs. 45,001 2,15,000

Consuming Class :
(Rich)

Very Rich

: Over Rs. 2,15,000 (Very Rich).

 Growth in Affluency : There has been a growth in Affluency of

Indian Consumers. Esp. the super-affluent Indian Consumers.

According to Engels Law:

Consumers at different income level have different spending patterns. This was studied by Ernst Engel, a century ago. He found that as family income rises, the percentage spent on food declines or housing remains constant and on most other categories & savings increase.

 ECONOMIC ENVIRONMENT
The economic environment consists of factors that affect

the demand structure of any product or service, may be due to economic policies, or due to consumption patterns of consumers or due to purchasing power of consumers. The marketer needs to examine the following :
GNP Per capita income Balance of Payment position Industry life cycle (different phases being recovery, boom,

recession and depression) Trends in prices of goods (Inflationary or deflationary) Fiscal policies.

 NATURAL ENVIRONMENT :
The Natural resources that are needed as inputs by

marketers or that are affected by the marketing activities.

Increased Govt. Intervention :
Laws passed by Govt. for protection of environment

(Copenhagen Meet)

 TECHNOLOGICAL :
Forces that create new technologies, create new product

and market opportunities. It is most dramatic force now shaping our destiny. Knowledge through research is a must to sustain to technological changes e.g. pharmaceutical industry. Hence, the marketer should watch the technological environment closely. Can be done through R & D. U.S. leads the world in R & D.

 POLITICAL / LEGAL :
Laws, Govt. agencies and pressure

groups that influence and limit various organisations and individuals in a given society. Almost every marketing activity is subject to a wide range of laws and regulations. Business legislations are enacted for a number of reasons :

Govt. policies : Govt. intervention is also an important aspect to be taken into account. In U.S. it is relatively low, in India it is higher. India has a history of controlled Economy with government deciding the rules of the game like a ban on advertisement distribution of kerosene & food products (PDS-Public distribution system).

 SOCIO CULTURAL ENVIRONMENT :

Institutional and other forces that affect societys basic values,

perceptions, preferences & behaviours. People grow in a particular society that shapes their values and beliefs. Core beliefs (more specific attitudes behaviours) passed on from parents to children. Secondary beliefs (more open to change).

 Peoples view of themselves

Peoples views of others

Peoples view of Organisations

Peoples view of Society
Peoples views of Nature
Peoples views about universe

Marketers should tap these opportunities.