UNDERSTANDING THE MARKET ENVIRONMENT

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Marketing Environment

A company’s marketing environment consists of the actors & forces outside marketing that affects marketing management’s ability to build & maintain successful relationships with the target customers.

Philip Kotler

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Marketing Environment

Micro Environment Macro Environment

Mkg Environment provides both opportunities and threats

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Micro Environment

The actors close to the company that affects its ability to serve customers.

Company

Suppliers

Marketing Intermediates

Customers

Competitors

Public

Micro Environment

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1. COMPANY

While formulating plans, Mkg managers must take into account the other groups such as top mgt, finance, R & D, purchasing, manufacturing, & accounting.

All these groups constitute a company’s microenvironment for the planners.

They should think about the consumer & work in harmony to provide customer value & satisfaction.

2. SUPPLIERS

Developments in the supplier environment can have a substantial effect on the company’s mkg operations.

Price change, supply shortages, and other events can interfere with the fulfillment of delivery promises to customers & lose sales in the short run & damage customer relationship in the long run6

3. Mkg Intermediaries

Mkg Intermediaries are firms that aid the company in promoting, selling

& distributing its goods to the final buyers.

• Physical Distribution firms – assist the company in stocking & moving

goods from factory to their destinations.

• Warehousing firms – Stores and protects goods

• Transportation firms – move goods

• Mkg Servicing Agencies – assists the company in targeting &

providing its products to the right markets.

• Financial intermediaries – include banks, credit companies, insurance

companies, etc. that help with the buying & selling of goods, & also

insure against risk involved.

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4. CUSTOMERS

Customers belong to consumer markets, industrial markets,

reseller markets & international markets.

The taste and preferences of customers keeps on

fluctuating.

Only by studying the market demand & customer-

related factors on a regular basis can marketers carry out

their business activities successfully.

Marketers have to keep track of what customers

want, and grab emerging market opportunities.

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5. COMPETITORS

The competitors have to be identified, monitored to gain and

maintain customer loyalty.

Development of mkg plans and strategy is based on

knowledge about competitor’s activities.

Competitive advantage building also depends on

understanding the status, strength & weakness of

competitors in the market.

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The company must also acknowledge a large group of publics that take

an interest. Whether welcome or not, in its method of doing business.

Most organizations establish public relations (PR) departments to plan

constructive relations with various publics. Every company is surrounded

by seven types of publics

• Financial – banks, stock brokers, financial institutions

• Media – newspaper, magazines, radio, TV

• Government – Government departments

• Citizen –action – consumer organizations, environment groups

• Local – neighborhood residents, community groups

• General – general public – public opinion

• Internal – workers, officers, board of directors.

6. PUBLIC

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Macro EnvironmentThe largest societal factors that affects the micro environment. These are uncontrollable factors.

It includes factors such as,

Demographic

Economic

Natural

Technological

Political

Legal

Cultural

Macro Environment

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1.Demographic

It is the study of human population in terms of :Age

Gender

Family Size

Income

Occupation

Education

Religion

Nationality

Ex – Teenagers market have created marketing opportunities in India

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2.Economic Factors

Distribution of Consumer Income

Distribution of Consumer Income

InflationInflation

RecessionRecession

Economic Areas of Concern to Marketers

Economic Areas of Concern to Marketers

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Distribution Of Income

Income distribution affects purchasing power of peopleConsumption pattern is affected by income generation

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• Prices rise with no wage increasePurchasing Power decreases

• Increase profit margins by increasing efficiency

• Consumers reaction:– Search for lowest prices– Rely on coupons and sales

Inflation

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• Income, production and employment fall

• Reduced demand for goods and services

Recession

These also affect the pattern of industries and marketing

Industries create pollution of air, water and environment

The package in the form of plastic bags and bottles create a lot of problems

Some governments have banned the use of plastic bags.

3.Natural Factor3.Natural Factor

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4.Technological Environment4.Technological Environment

Technological discoveries and developments create opportunities and threats in the market. The marketers should watch the trends in technology.

5.Political Factors5.Political Factors

The political environment consists of laws, government

agencies that influence or limit various organizations and

individuals in a given society.

Substantial number of laws have been enacted to

regulate business and marketing – to protect companies

from each other, to protect consumers from unfair trade

practices.

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6.Legal Factors6.Legal Factors

Marketers have to function within the legal framework

prevailing in the country. There have been many

legislations passed in India to control or guide businesses

and industry. There are legal regulations on products,

prices, distribution and promotion.

For example : Liquor and cigarette ads have been banned.

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7. Cultural Factors7. Cultural Factors

Affect a society’s basic values, perceptions, preferences, and behaviors.Culture is the unified result of factors like religion, language, education and upbringing. The following cultural characteristics can affect marketing decision-making-• Persistence of core cultural values – These are deep rooted and do not change easily.• Ex: ethnocentrism, i.e., affinity to local made products and aversion to foreign goods.• Shifts in secondary cultural values – These can be changed and can be moulded and manipulated easily.• Ex: The influence of film stars, models and celebrities on our young people’s trend in hair styles, fashion of dresses and even lifestyles.

Marketers have a keen interest in anticipating cultural shifts in order to spot new mkg opportunities or threats.