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MARKETING ENVIRONMENT MBA 1st semester. VTU MBA
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Dr.S.G.KulkarniDr.S.G.Kulkarni 11
Module 2Module 2
MARKETING ENVIRONMENTMARKETING ENVIRONMENT
Dr.S.G.Kulkarni 2
Marketing Environment
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.”
Dr.S.G.KulkarniDr.S.G.Kulkarni 33
Marketing EnvironmentMarketing Environment
Micro environmentMicro environment Macro environment Macro environment
Controllable Controllable PartiallyPartially UncontrollableUncontrollable
Co OrganizationCo OrganizationSuppliersSuppliers DemographicDemographic
ManagementManagement CustomersCustomers EconomicEconomic
ResourcesResources DealersDealers EcologicalEcological
M MixM Mix CompetitorsCompetitors TechnologicalTechnological
CommunityCommunityPoliticalPolitical
( Social groups)( Social groups)SociologicalSociological
Dr.S.G.KulkarniDr.S.G.Kulkarni 44
Marketing EnvironmentMarketing Environment
The inputs concerned with The inputs concerned with micro micro environmentenvironment are – are –
Company organizationCompany organization
SuppliersSuppliers
customers customers
Dr.S.G.Kulkarni 5
Marketing EnvironmentMarketing Environment
The outputs concerned with The outputs concerned with macro macro environmentenvironment are – are –
► PoliticalPolitical
► EconomicalEconomical
► TechnologicalTechnologicalMacro environment factors may be –Macro environment factors may be –Controllable or partially - controllableControllable or partially - controllable
Dr.S.G.Kulkarni 6
Micro environmental factors Micro environmental factors
Company :Company : Company organization consists of Board of Company organization consists of Board of
Directors and functional managers.Directors and functional managers.
Marketing plans are drawn up as per the Marketing plans are drawn up as per the philosophy of Top managementphilosophy of Top management
Marketing decisions like new products, Marketing decisions like new products, expansion, etc depend on the support of expansion, etc depend on the support of top management. It depends upon top management. It depends upon finance, managerial skills, organization’s finance, managerial skills, organization’s strengths and weaknesses. strengths and weaknesses.
Dr.S.G.Kulkarni 7
1. Company - continued
Marketing plans should be in harmony with policies of other departments such as production, purchase, finance, personnel, etc
For ex: quality depends upon production policiesAdvertising and sales promotion – on budgets
Dr.S.G.Kulkarni 8
2. Suppliers
• Supply raw materials, plant and equipments, human resources, technology
• Their strategies affect ours
• If they increase prices, we have to revise price structure
9Dr.S.G.Kulkarni
2. Suppliers - 2. Suppliers - continuedcontinued
• Decisions like ‘ make or buy’ depend upon suppliers
• Depends upon
– Right supplier– Right place– Right time and lead time– Right price– Right quantity– Right quality
1010Dr.S.G.KulkarniDr.S.G.Kulkarni
2. Suppliers -continued2. Suppliers -continued
Good relations are required for Good relations are required for successful marketing successful marketing
1111Dr.S.G.KulkarniDr.S.G.Kulkarni
3. Intermediaries3. Intermediaries
Wholesalers, retailers, agents, transporters, Wholesalers, retailers, agents, transporters, warehousers, ad agencies, etc.warehousers, ad agencies, etc.
This is a choice of channel of distributionThis is a choice of channel of distribution
1212Dr.S.G.KulkarniDr.S.G.Kulkarni
4. Customers4. Customers
Purchase requirements vary from Purchase requirements vary from customer to customercustomer to customer
Individual customers are influenced by Individual customers are influenced by cultural, social and psychological cultural, social and psychological factorsfactors
They are large in number, scattered, They are large in number, scattered, poorly informed, buy in small poorly informed, buy in small quantities and frequently and are quantities and frequently and are guided by personal considerationsguided by personal considerations
1313Dr.S.G.KulkarniDr.S.G.Kulkarni
4. Customers 4. Customers
Industrial producers are limited in number, Industrial producers are limited in number, geographically concentrated, buy in large geographically concentrated, buy in large in bulk, demand is derived, buy on in bulk, demand is derived, buy on reciprocal basis, depend on lease hold.reciprocal basis, depend on lease hold.
Dealers buy for resale.Dealers buy for resale.
Government buys for public welfare, Government buys for public welfare, defence defence
14Dr.S.G.Kulkarni
5. Competitors
Supply similar products or substitute products
Competitors adopt different actions for getting greater share of markets
All firms compete with each other for consumers buying power.
15Dr.S.G.Kulkarni
6. Public
Financial public: financial institutions, investment houses, insurance co,
Government public: Citizen action public: consumer organizations,
environmental groups, minority groups, etc General public: public image Internal public: employees, Board, labour
unions, press and media
1616Dr.S.G.KulkarniDr.S.G.Kulkarni
Macro environmentMacro environment1. Economic1. Economic
Economic forces influence both Economic forces influence both marketers and the consumersmarketers and the consumers
Economic forces include –Economic forces include – Competition – monopoly, oligopolyCompetition – monopoly, oligopoly Buying powerBuying power Willingness to spendWillingness to spend
Dr.S.G.KulkarniDr.S.G.Kulkarni 1717
Macro environmentMacro environment1. Economic - continued1. Economic - continued
Economic conditions includeEconomic conditions include
Economic developmentEconomic development National incomeNational income Standard of livingStandard of living State of agricultureState of agriculture
Dr.S.G.Kulkarni 18
Macro environment1. Economic - continued
Business cycles Interest rate Price levels Fiscal policies
marketers have to take into consideration the changes taking place in agriculture and industry
1919Dr.S.G.KulkarniDr.S.G.Kulkarni
2. Demography 2. Demography
Demography gives ‘consumer profile’Demography gives ‘consumer profile’ It is the study of population in respect of its It is the study of population in respect of its
size, density, location, age, race, size, density, location, age, race, occupation, marital status, education, sex occupation, marital status, education, sex composition etccomposition etc
All these factors influence marketing All these factors influence marketing decisionsdecisions
20Dr.S.G.Kulkarni
Acronyms used in respect of age
SKIPPIES MOBY’s DINKS PUPPIES WOOFS
2121Dr.S.G.KulkarniDr.S.G.Kulkarni
2.Demography - continued2.Demography - continued
School Kids with Income and School Kids with Income and Purchasing Power Purchasing Power
Mother Older, Baby YoungerMother Older, Baby YoungerDouble Income, No KidsDouble Income, No KidsPoor Urban PopulationPoor Urban PopulationWell Off Older FolksWell Off Older Folks
Dr.S.G.Kulkarni 22
2.Demography - continued2.Demography - continued
►Mexico is a nation of young populationMexico is a nation of young population
► Japan – ‘old generation’Japan – ‘old generation’►America was a melting bowl. Now it is America was a melting bowl. Now it is
a ‘Salad bowl’ with Chinese, Filipinese, a ‘Salad bowl’ with Chinese, Filipinese, Japanese, Asians, Koreans Japanese, Asians, Koreans
►Ads – show women as decision makers Ads – show women as decision makers due to increase in educationdue to increase in education
Dr.S.G.Kulkarni 23
Demography - continuedDemography - continued
EducationEducation► IlliteratesIlliterates►High school drop outsHigh school drop outs►MatriculatesMatriculates►GraduatesGraduates►Professional degreesProfessional degrees►Post graduatesPost graduates
Dr.S.G.Kulkarni 24
2.Demography - continued
Buying habits are determined by income, education, age, family composition and other demographic factors
It helps in - Market segmentation, demand forecasting, determination of market potential
2525Dr.S.G.KulkarniDr.S.G.Kulkarni
2.Demography - continued2.Demography - continued
India’s population is roughly 108 croresIndia’s population is roughly 108 crores
75% of population lives in villages75% of population lives in villages
Rural marketing offers immense Rural marketing offers immense opportunities and challenges to a creative opportunities and challenges to a creative marketermarketer
Dr.S.G.Kulkarni 26
2.Demography - continued
You find that the demand is increasing not only for farm products, but also for non-farm products
27Dr.S.G.Kulkarni
Technology
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.
Dr.S.G.Kulkarni 28
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
Dr.S.G.Kulkarni 29
Solar pocket calculators and hand cameras
CDs and Video tapes
Virtual reality applications in Marketing is a new application due to technological progress
Dr.S.G.Kulkarni 30
Technology-continued
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,
31Dr.S.G.Kulkarni
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.
Dr.S.G.KulkarniDr.S.G.Kulkarni 3232
3. Natural factors and ecological factors - also3. Natural factors and ecological factors - also
These also affect the pattern of These also affect the pattern of industries and marketingindustries and marketing
Industries create pollution of air, water Industries create pollution of air, water and environmentand environment
The package in the form of plastic The package in the form of plastic bags and bottles create a lot of bags and bottles create a lot of problemsproblems
Some governments have banned the Some governments have banned the use of plastic bags.use of plastic bags.
Dr.S.G.KulkarniDr.S.G.Kulkarni 3333
Political factorsPolitical factors
Marketing is affected by monetary, fiscal, Marketing is affected by monetary, fiscal, import and export policiesimport and export policies
Some of the Acts applicableSome of the Acts applicable are as follows: are as follows: Essential Commodities ActEssential Commodities Act Prevention of Food Adulteration ActPrevention of Food Adulteration Act Trade and Merchandise marks ActTrade and Merchandise marks Act Packaged Commodities Act Packaged Commodities Act Companies Act Companies Act
Dr.S.G.KulkarniDr.S.G.Kulkarni 3434
Political factors - continuedPolitical factors - continued
Political and legal factors are inter Political and legal factors are inter connectedconnected
Discontinuation of – CCI, FERA, IDRADiscontinuation of – CCI, FERA, IDRA
Introduction of SEBI, FEMA, VATIntroduction of SEBI, FEMA, VAT
Rules allow private participation in Rules allow private participation in transportation , telecom, airlinestransportation , telecom, airlines
35Dr.S.G.Kulkarni
Social-Cultural environment
Advertisements and culture Some ads are banned on TVs Festivals like Ganesh festival, Diwali, Id-
Milad, Christmas, Dress styles are different School uniforms
Dr.S.G.Kulkarni 36
Cultural factors - continuedCultural factors - continued
• Food habitsFood habits• Internet practiceInternet practice• Fast foods – Pizza hut, Ken Fried Fast foods – Pizza hut, Ken Fried
ChickenChicken
Dr.S.G.KulkarniDr.S.G.Kulkarni 3737
Cultural factors - continuedCultural factors - continued
• There are several movements like trade union movement, consumer movement, women's lib, deprived classes movement , etc.
• These have their own expectations from the market. If they are against their ideas, they boycott the products
Dr.S.G.KulkarniDr.S.G.Kulkarni 3838
Cultural factors - continuedCultural factors - continued Cause related MarketingCause related Marketing
1980 saw the advent of “ cause related 1980 saw the advent of “ cause related marketing”marketing”
The distinctive feature of case-related The distinctive feature of case-related marketing is the firm’s contribution to a marketing is the firm’s contribution to a designated cause being linked to customers’ designated cause being linked to customers’ engaging in revenue-producing transactions engaging in revenue-producing transactions with the firmwith the firm
Example: Example: CRY, AWWA, WWFCRY, AWWA, WWF cards cards
39Dr.S.G.Kulkarni
Cultural factors - continuedCultural factors - continued
• Cultural and ethical forces are of Cultural and ethical forces are of vital importance vital importance
4040Dr.S.G.KulkarniDr.S.G.Kulkarni
Responding to the marketing environmentResponding to the marketing environment
There are two general approaches to There are two general approaches to respond to marketing environmental respond to marketing environmental forces, viz., Passive approach and forces, viz., Passive approach and Aggressive approachAggressive approach
41Dr.S.G.Kulkarni
1) Passive or reactive approach
Under this approach the marketing strategy is subject to micro environment with macro environment
Environmental objectives of 2010 are set in 2000 and strategies are developed in 1998 and the organizational structure is established in 1995
Dr.S.G.Kulkarni 42
1) Passive or reactive approach - 1) Passive or reactive approach - continuedcontinued
• Stable environment is very rare. Stable environment is very rare. Turbulent environment is commonTurbulent environment is common
• Marketing environment should be Marketing environment should be scanned systematically. These guide scanned systematically. These guide marketing opportunitiesmarketing opportunities
• Marketing strategy normally follows Marketing strategy normally follows passive approach that is coordinating passive approach that is coordinating micro environment with macro micro environment with macro environmentenvironment
Dr.S.G.KulkarniDr.S.G.Kulkarni 4343
1) Passive or reactive approach - continued1) Passive or reactive approach - continued
• India has opportunities for handcraft goods, ready made garments, fast food products, software development, call centres and those areas which are labour intensive
44Dr.S.G.Kulkarni
2) Aggressive approach
Marketing manager tries to influence environmental forces so as to create market opportunities.
A firm can be able to influence the shape of legislation through lobbying
A single organization cannot influence – population, economic condition
Dr.S.G.Kulkarni 45
46Dr.S.G.Kulkarni
Indian Marketing environment
Prosperity in rural area
Overflowing unaccounted money everywhere
Inflationary condition [ inflation is a permanent guest]
Aggressive advertising on TV inspiring children and women. Consumer is a ‘King’
47Dr.S.G.Kulkarni
Indian Marketing environment - continued
Middle class explosion - ‘Consumption community’
Better educated and exposed to the life styles of the rich
Their aspirations have been constantly growing.
They often spend more than what they earn
48Dr.S.G.Kulkarni
Middle class explosion
Their expenditure on non-food items is continuously
Our market is on par with UK, France, West Germany
More disposable income
Spend more on non food items
Invest in stock market
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