MKT Environment.pptx

7/27/2019 MKT Environment.pptx

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UNIT-2

UNDERSTANDING MARKETINGENVIRONMENT

Concept of Marketing Environment

Marketing is a subsystem of business system. The

business system itself is a subsystem of social

system. So, external forces affect all the activities of

marketing. It becomes inadequate only to considerinternal components while making decisions,

strategies, programs etc in marketing.


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A business should also consider the externalfactors while taking decisions, making policies and

plans relating to marketing activities. The businessfirms which cannot properly consider or payattention towards external environment factors orforces become unable to get success and survive.

According to Kotler and Armstrong, The

marketing environment comprises all actors andforces influencing the companys ability to transact

business effectively with the target market.


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According to Prof. Kotler, A companys marketing

environment consists of the factors and forces that

affect the companys ability to develop andmaintain successful transactions and relationships

with its target customers.

The definition makes it clear that marketing

environment consists of the external forces or

factors affecting marketing activities, and they are

beyond the control of marketer. So, business

activities should be changed according to theenvironmental situation.


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The business firms that become able to face theenvironmental challenges can use different

opportunities. A marketing manager shouldcorrectly analyze the changed needs of market andcarefully observe the new as well as mega trends totake benefits from environmental dynamism.

Thus, in short we can say that marketing isenvironment specific. It operates in a dynamicenvironment. Marketing environment refers to allactors and forces which influences exchange

relationship of marketing with target customers.They affect the performance and outcomes ofmarketing.


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Features of Marketing Environment

1. Dynamic: Marketing environment is always

dynamic in nature. The environment all over theworld is undergoing radical changes. Thesechanges are significant because of their impacton business organization.

2. Complex: Marketing environment is complexbecause of its composition. It includes allinteracting events, conditions, forces, andinfluences that surround and affect business

firms. There are different level of events andelements of the marketing environment.


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3. Uncertain: Marketing environment is notalways certain, rather it is uncertain. The

constantly changing economic, social, cultural,political, legal and technological factors createenvironmental uncertainty. The changes inenvironmental forces can hardly be predicted by

entrepreneurs and managers. Unpredictabilityfurther leads to uncertainty to marketingenvironment.

4. Multi-dimensional: Marketing environment is

multi-dimensional. It means environmentalchanges may effect on different business firmsdifferently. Ctd.


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A particular change in the environment can

provide an opportunity for one business firm,but threat to others.

5. Long-term impact: Marketing environmentcreates long term impact on business firms. It

greatly affects their ability to achieve goals andobjectives.


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Classification of Marketing Environment

1. Micro Environment

2. Macro EnvironmentMicro Environment: In the course of earning aprofit by satisfying the needs of the targetmarket, a business firm needs to have or contact

with different factors or forces. Among themcustomers, suppliers, intermediaries, public etcare notable. These forces also affect the firmsmarketing activities. So they are discussed in brief

as follows:- ctd..


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i. Customers: A business firm works for satisfyingthe needs of customers. They can efficiently supply

necessary goods or services to the target marketwith the help of suppliers and middlemen. Suchtarget markets may be consumer market, industrialmarket, resale market, government, profit making

and non-profit making market. Customer marketincludes individual or members of families who buygoods or services for personal use. Materials arepurchased in business markets to use in producing

goods or reprocessing them. Similarly, in thereselling markets goods are purchased for resellingthem to earn profit and so on.


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ii. Company: A marketing manager shouldconsider the top level management, finance,

research and development, purchase, production,account etc. departments while makingmarketing plan. These all are interrelated aspectsof internal environment. Mission, objective, goaland strategy of a company are determined by top

level management. Marketing manager takesmarketing decisions remaining under the planmade by the top level management. In this way,the top level management and marketing

management have relationship and eachundertaking of the high level management alwaysaffect marketing.


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iii. Suppliers: The organization or person who

provides necessary materials and resources to acompany for production of goods or services iscalled supplier. As the supplier greatly affects themarketing, it is taken as an important elements of

marketing environment. Supplier shouldrenowned and able to supply quality materialsand resources in necessary quantity regularly.Besides their, terms and conditions of sale also

should be simple. If the supply cost increase, thecost and goods of services also increase. As aresult, sale gets adversely affected.


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iv. Competitor: Competitor is the other elementof micro environment of marketing. A company

should give maximum satisfaction to theconsumers by providing quality goods or servicescompared to the competitors. Besides, thecompany should be able to remain in the heart of

customers by maintaining more effective productpositioning than the competitors. Samemarketing strategy cannot be fit for allcompanies. So, each company should adopt

suitable strategy according to or considering thesize, nature, scope of activity, life cycle etc.


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v. Marketing intermediaries: The marketingintermediaries help in carrying companys products tothe consumers and market promotion. This includes

sellers, physical distribution firms, marketing serviceagencies and financial intermediaries. The distributionchannel which carries the services or goods produced bya firm to the consumers is called Seller. Dealers,wholesalers and retailers are in the group of seller. The

body which helps in delivering companys productservices to consumer is called physical distribution firm.This includes transportation and warehousing. Marketingservice agencies include research firms, advertisementagencies, media firms, marketing consultancies etc. They

help in promoting and delivering products or services toright markets. Financial intermediaries include banks,credit companies, insurance companies etc. They helpbusiness firms by bearing risk and providing necessaryfinancial support.


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Macro Environment: Macro environment ofmarketing is also called external environment.

External environment affects a business firmdirectly and indirectly form outside. This includesdemographic, economic, natural, technological,political-legal, social and cultural elements or

forces. These macro environmental elements donot remain under control of any firm. The macroenvironmental elements may appear both as thethreats & opportunities for the business firms. So

a marketing manager should make plans andprograms only after scanning the macroenvironmental elements or forces.


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i. Demographic environment: Demographicenvironment includes total population size, growth

rate of population, age mix, migration, urbanizationprocess etc. Future plans and programs should bemade only after carefully studying and analyzingthese elements.

ii. Economic environment: A marketing managershould make future plans, programs and strategiesby studying and analyzing this element carefully.Consumers purchasing power, economic health,

inflation rate, exchange rate, regional group,consumers income availability of credit & otherelements are included in economic environment.


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iii. Natural environment: Natural environment is one ofthe main elements of macro environment. A marketingmanager should wisely and carefully make marketing

plan, programs and strategies. Natural resources,topography, climate etc are elements of naturalenvironment. Since the natural environment does notremain under control of business organization.

iv. Political-legal environment: This environment directlyaffects the marketing activities. So, a marketingmanager should study and analyze it carefully whilemaking marketing strategies, plans and programs. Law,government policies, government agencies, pressure

groups etc are included in political-legal environment.Since these elements do not remain under control ofany organization, marketing mix should be made inagreement with them.


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v. Technological environment: This includes level of

technology, technology changes, research and study,

development budget etc. These elements directly affect

marketing plans, programs & strategies. So, a marketing

manager should study and analyze these things carefully

for marketing mix.

vi. Socio-cultural environment: This is other importantelement of macro environment. This environment

includes tradition, social customs, belief, religion, human

value and norms, language, attitude, lifestyle, art,

culture. These elements become different according tocountry, society, community. So, a marketing manager

should carefully study & analyze these things while

making marketing plans, programs & strategies.


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Marketing Environment in NepalNepals marketing environment can also be analyzed interms of the macro environmental variable. The macro

environmental variables relevant in marketing in Nepal aredemographic, economic, socio-cultural, political-legal,technological & natural.

1. Demography: The population of Nepal is estimated at 30millions. The population has been growing at the rate of 2.8

percent per annum. The rapidly increasing population isexpanding the size of the Nepalese market. Improvement inmedical care has reduced the crude death rate and lifeexpectancy at birth. However, the economy is more or less,stagnant due to a negative growth in agriculture production

and lack luster performance in the industrial sector. About30.8% (2060/61) of the total population live under thepoverty line. This has made the Nepalese market lessattractive for international market.


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2. Economy: Nepals economy is mainly agrarian in

character. About 40% of National GDP originates in

the agricultural sector. Only about 20% of the landis arable and only about 30% of arable land is

irrigated. Agriculture productivity has been

declining over the years. Increase in population

and declining agricultural production has made

Nepal a net importer of food grain. In Nepalese

context, people invest their money, assets in land,

gold, buildings, houses rather than investing inbusiness. So, it also creates problem in economic

environment of Nepal.


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3. Socio-culture: The Nepalese society is composed ofdifferent cultural groups based on geography, ethnicity,castes & religions. These sub-cultural groups exhibit

significant differences in tradition, values, and attitudesthat are reflected in their product choice. Development inthe fields of transportation, communication & educationhas dramatically change the socio-cultural beliefs, attitude& behavior of the Nepalese people. In Nepalese context,

the urban population is increasingly adopting the westerncultural values and outlooks and gradually distancingthemselves from established beliefs, religions andtraditions. Changes in dressing, housing, food, education& entertainment are clearly visible. People have adopted a

more materialistic way of life and have become morestatus conscious. All this dynamism has brought newmarketing opportunities in Nepal.


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4. Politics and Law: The frequent change of

government has been adversely affecting the

marketing activities in Nepal. Foreign Investmentsare also distracted when governments and their

policies are not stable. The country has been

suffering from a chronic problem of political

instability. Thus, political environment in Nepal

has not contributed positively for the

development of marketing. Moreover, the cost of

corruption has been increasing rapidly in thecountry.


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5. Technology: In the context of the Nepalesemarket the major technological aspects to be

considered are level of technology and pace oftechnological change. A large part of theeconomy is rural and depends on the ruraltechnology which is highly labor-intensive. Mostof the manufacturing industries are sick mainly

because the technology adopted is obsolete.Although, the use of computer based technologyis getting popular, shortage of manpower tohandle advanced technology has been creating

several problems. The country has no manpowerplanning & there has been lopsided developmentof manpower in the country.


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6. Natural forces: Nepals high potential for

generating hydro-electricity provides ample hope

for economic development in future. Abundanceof water is highly essential for industrial as well as

agricultural production. So, natural resources are

the keystone for production and hence for

marketing activities. Nepal has a variety of

climates due to the wide variation in the

topography. This gives Nepal the opportunity to

produce a variety of fruits & vegetables. Thevariety of fauna & flora in Nepal attracts tourists

from all over the world.

MKT Environment.pptx

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