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Marketing Environment
Marketing activities are influenced by several factors inside and outside a business firm. These factors or forces influencing marketing decisions are collectively called marketing environment. It comprises all those forces which have an impact on market and marketing efforts of the enterprise.
According to 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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The Marketing Environment
Company
Macro-Environment
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Types Of Marketing Environment
–Microenvironment (internal forces) - forces close to the company that affect its ability to serve its customers.–Macro environment (external forces)-
larger societal forces that affect the whole microenvironment.
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Microenvironment
• The forces close to the company that affect its ability to serve its customers –
• They include : company Suppliers Intermediaries Customers Competitors Publics
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The Microenvironment
Company
Customers
Publics Suppliers
Competitors Intermediaries
Forces Affecting a Company’s Ability to
ServeCustomers
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The Company’s Macro environment
• The larger societal forces that affect the whole microenvironment - demographic, economic, natural, technological, political and socio-cultural forces.
They include: DemographicEconomicNaturalTechnologicalPoliticalSocio-Cultural
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Micro-Environment
Company
Socio-Cultural Demographic
Technological Economical
Natural Political
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Demographics
Demography is the study of population characteristics that are used to describe consumers. Demographics tell marketers who are the current and potential customers, where are they, how many are likely to buy and what the market is selling. Demography is the study of human populations in terms of size, density, location, age, sex, race, occupation and other statistics.
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• For this we need to understand the demographic variables which are traditionally used by marketers, to segment the markets.
• Income:• Income determines purchasing power and status. Higher the income, higher is
the purchasing power. Though education and occupation shapes one’s tastes and preferences, income provides the means to acquire that.
• Life-style:• It is the pattern of living expressed through their activities, interests and opinion.
Life-style is affected by other factors of demography as well. Life-style affects a lot on the purchase decision and brand preferences.
• Sex:• Gender has always remained a very important factor for distinction. There are
many companies which produce products and services separately for male and female.
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• Education:• Education implies the status. Education also determines
the income and occupation. With increase in education, the information is wider with the customers and hence their purchase decision process is also different. So the marketers group people on the basis of education.
• Social Class:• It is defined as the hierarchical division of the society into
relatively distinct and homogeneous groups whose members have similar attitudes, values and lifestyle.
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• Occupation:• This is very strongly associated with income and education. The
type of work one does and the tastes of individuals influence one’s values, life-style etc. Media preferences, hobbies and shopping patterns are also influenced by occupational class.
• Age:• Demographic variables help in distinguishing buyers, that is, people
having homogenous needs according to their specific wants, preferences and usages. For instance, teenagers usually have similar needs. Therefore, marketers develop products to target specific age groups.
• The youth are being targeted through advertisements and promotional campaigns, stores are being designed with ‘youthful’ features, youth events are being sponsored, and even new technology is developed with their tastes in mind.
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Economic Environment
People alone do not make a market. They must have money to spend & be willing to spend it. Economic environment is the most significant component of the marketing environment. It affects the success of a business organisation as well as its survival. The economic policy of the Government, needless to say, has a very great impact on business. Some categories of business are favourably affected by the Government policy, some adversely affected while some others remain unaffected. The economic system is a very important determinant of the scope of private business and is therefore a very important external constraint on business.
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General Economic Conditions• Business cycle: fluctuations in the economy that follow the
general pattern of prosperity, recession, depression and recovery.
• Prosperity: A period during which unemployment is low and total income is relatively high.
• Recession: A period during which unemployment rises and total buying power declines.
• Depression: A period during which unemployment is extremely high, wages are very low, total disposable income is at a minimum and consumers lack confidence in the economy.
• Recovery: The stage of the business cycle in which the economy moves from depression or recession to prosperity.
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Economic Environment
Key Economic concerns for
marketers
Change in consumer
spending pattern
Economic DevelopmentChanges in income
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Natural EnvironmentNatural resources that are needed as inputs by marketers or that are affected by marketing activities.IssuesShortage of raw materialsIncreased cost of energyIncreased pollutionGovernment intervention in natural resource management
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Natural Environment
Factors Affecting
the Natural
Environment
More GovernmentIntervention
Shortages of Raw Material
Increased Costsof Energy
Higher PollutionLevels
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Technological Environment
• The technological environment is the most dramatic force now facing our destiny. Technological discoveries and developments create opportunities and threats in the market. The marketer should watch the trends in technology. The biggest impact that the society has been undergoing in the last few years is the technological advancement, product changes and its effects on consumers.
• Technology has brought innumerable changes in human lives, be it in the field of science, medicine, entertainment, communication, and travel or office equipment. Name any field, and one can see changes in product or efficiency and faster services.
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Technological Environment
• 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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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• Solar pocket calculators and hand cameras• CDs and Video tapes• Virtual reality applications in Marketing is a new application due to
technological progress• 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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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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Technological Environment
Rapid Pace of Change
High R & D Budgets
Focus on MinorImprovements
IncreasedRegulation
Issues in the TechnologicalEnvironment
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Political Environment
The political environment consists of factors related to the management of public affairs and their impact on the business of an organisation. Political environment has a close relationship with the economic system and the economic policy. Some Governments specify certain standards for the products including packaging. Some other Governments prohibit the marketing of certain products.
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Political environment
Key trends in political
Environment
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Socio-Cultural EnvironmentSocio-cultural forces refer to the attitudes, beliefs, norms, values, lifestyles of individuals in a society. These forces can change the market dynamics and marketers can face both opportunities and threats from them. Some of the important factors and influences operating in the social environment are the buying and consumption habits of people, their languages, beliefs and values, customs and traditions, tastes and preferences, education and all factors that affect the business.
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Socio-Cultural Environment
• Understanding consumer needs is central to any marketing activity and those needs will often be heavily influenced by social and cultural factors. These cover a range of values, beliefs, attitudes and customs which characterize societies or social groups. Changes in lifestyle of people affect the marketing environment.
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Socio-Cultural Environment
OfOrganizations
OfNature
OfOneself
OfSociety
Ofthe Universe
OfOthersViews
That ExpressValues