MARKETING ENVIRONMENT Marketing environment Marketing environment is defined

MARKETING ENVIRONMENT

Marketing environment • Marketing environment is defined as the totality of forces that are external to the business and that affect and get affected by the marketing activity of a firm • ENVIRONMENTAL SCANNING • Study of marketing environment starts with environment scanning. This is a process of gathering, analyzing and forecasting of external environment information to identify opportunity and threats that a company faces • Need for environment scanning o o o Identify opportunities Identify threats Forecast demand Develop appropriate business plan Adjust the company strategy according as the changes in the competitive environment

Marketing Environment • Marketing environment can be broadly categorized into : o Micro environment o Macro environment

Micro Environment • Micro environment is that external forces which are very close to company and have impact on value creation and customer service. • The major forces of micro environment are: Company Suppliers Intermediaries MICRO ENVIRONMENT Customers Publics Competitors

Micro Environment 1. The Company The company is directed by its marketing plan. The marketing plan can be effective when it is being supported by other functional departments 2. Intermediaries are the firms that distribute and sell the goods of the company to its customers. The intermediaries are retailers, wholesalers, agents, brokers, jobbers and carry and forwarding agents etc. Retailers are the final link between the company and its customers 3. Publics is the group that support the company through financial resources, create an image of the company, examining company’s policy and developing attitude towards the product.

Micro Environment • The publics can be classified into six. They are: o o o Financial Publics Banks, investment houses, stockholders etc Media Publics Media like new papers, television channels, radio etc Regulation Agencies Regulation agencies that control the rules and regulations of business (e. g. TRAI) & Insurance Regulation Agency (IRDA) Citizen Action Groups Formed by consumers or environment groups ( E. g. . Greenpeace) General Publics Common publics that purchase the product Internal Publics Employees of the company who create better image of the company

Micro Environment Competitors • The competitors who compete with the company in the market • In addition to existing competitors, potential competitors should also be anticipated. • Competition may arise from: • Small firms with low overheads producing duplicates • Firms which diversify into certain products by merely being in the particular industry (e. g. . Pepsi entered into snacks business) • Firms which expand in the same vertical. For example, Godrej • Suppliers are the first link in the entire supply chain of the company, so any cost escalation in this stage will have direct effect on company • Many companies adopt Supplier Relation Management System to manage them well • Suppliers are sources of competition now

Micro Environment • Customers are the final target to whom the products or service is created. • Based on customers, the market can be broadly classified into: a. Customer Market b. Business Market c. Reseller Market d. Government Market e. International Market

Macro Environment Political & Legal Environment Social & Cultural Demographic Macro Environment Technological Economic & Natural

Macro Environment • Macro environment is studied with the help of a technique called PEST framework. • P – Political and Legal • E – Economic and Natural • S – Social and Cultural • T – Technology Environment

Macro Environment • Demographic Environment o Demography is the study of population characteristics such as size, density, location, gender composition, age structure, occupation and religion. o Demographic environment is analyzed on the basis of the following factors: § Age structure of population § Marital status of population § Geographic distribution § Educational level § Migration § Occupation

Macro Environment • Political and Legal Environment o Govt. policies, legislations, regulations and stability of government directly affect the marketing and business in a country. o The political and legal forces are groped into the following four categories: § Monetary and fiscal policies § Social legislation and regulations Eg. Environment protection act § Legislations, Policies and Regulations relating to industries: Eg. Labor Act, Factories Act and policies regarding subsidies and change in tariff rate. § Legislation related to manufacturing, trading, marketing etc. (Ref Page No: 50) Eg. Companies Act, Factories Act etc

Macro Environment • Economic, Monetary & Natural Environment o Ref Page No: 51 and 52 o Natural Environment. The major environment factors that should be considered are: § Inadequate raw materials arising out of strict mining regulations § Global warming and pollution levels § Regulatory world

Macro Environment • Social & Cultural Environment • Growing urbanization, increasing participation of women in livelihood activities, advent of global cultural practices, greater exposure to life styles practiced world wide etc. has altered marketing efforts • Rural masses are exposed to urbanized life style due to electronic media • The major changes that has been affecting marketing activities are: 1. Working women and the rise of metro sexual man 2. Jet set people

Macro Environment • Technological Environment o Growth of IT has contributed much to reducing cost, better automation, better communication and the speed in which the service is offered. o Bio-technology has revolutionized the types of various products available in the market o Nano –technology has miniaturized products and combined multi-product features but it has created problems to the marketers to maintain pace with

Difference between micro and macro environment Dimension Macro Micro Size Large Small Control Uncontrollable Controllable Uncertainty Very high Low Complexity High Low Examples Customers, Publics, Competitors, Suppliers, Intermediaries PEST