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 scanningo Identify opportunitieso Identify threatso Forecast demando Develop appropriate business plano Adjust the company strategy according as the changes in the

competitive environment

Marketing Environment

• Marketing environment can be broadly categorized into :o Micro environmento 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:

MICRO ENVIRONMENT

Company

Intermediaries

Publics

Suppliers

Customers

Competitors

Micro Environment1. The CompanyThe company is directed by its marketing plan. The marketing plan can be effective when it is being supported by other functional departments2. IntermediariesIntermediaries 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 customers3. PublicsPublics 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 Financial Publics Banks, investment houses, stockholders etco Media Publics Media like new papers, television channels, radio etco Regulation Agencies Regulation agencies that control the rules and regulations of business (e.g.TRAI) & Insurance

Regulation Agency (IRDA)o Citizen Action Groups Formed by consumers or environment groups ( E.g..

Greenpeace)o General Publics Common publics that purchase the producto 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• 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• 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 Marketb. Business Marketc. Reseller Marketd. Government Markete. International Market

Macro Environment

Political & Legal

Environment

Macro Environment

Social & Cultural

Economic & NaturalTechnological

Demographic

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 52o 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 man2. Jet set people

Macro Environment

• Technological Environmento 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 PEST Customers, Publics, Competitors, Suppliers, Intermediaries