Marketing

Environment

Why some of the products, brands and organizations which once dominated their
respective industries are out of markets?
36% of registered companies closed down- 2019 India
Blackberry-Samsung-Apple, Kodak-Canon, DVD rental-Netflix, Walkman-iPod, tea,
soap brands, Yahoo-Google, T-series
Nursing homes, path labs, medical equipment companies, coaching industry have been
changing in the ways of doing their business to keep them relevant to changes in
technology, consumer behaviour etc.
Siemens, Hindustan Unilever, Coca-Cola, Hewlett-Packard, 3M, GE, Car companies
Kodak suffered setback in its film-based camera business due to digital camera
whereas Canon adapted to digital technology in time
Hindustan Motors was dented by new car companies like Maruti Suzuki- fuel prices
Hindustan Unilever, Siemens - continue to grow as they have been adapting according
to the changes in the environment.

● There is Continuous interface between Organizations and environment

● How well a business adapts to its ever-evolving environment determines its
success
● Need for continuous scanning of environment to know and act for:
● Opportunities to seize
● Meet challenges of threats

Sensing the changes and responding/adapting well in time

There is 2-Way effect of environment

• Affect firm
• Affect Customers
The environmental shifts can be upsetting strategic fit. Businesses may get out of syn
because of not sensing the changes, which can affect them and not adapting
accordingly.
Competitors may start doing it better.
It is worth investing in collecting information about trends-Information systems and
Interpreting trends as opportunity and threats.
Marketers try to forecast the changes in the marketing environmental forces
Marketer adapt/modify marketing strategies to dynamic forces. It is important to be
ahead in judging the changes so that adaption can be done well in time.
Different industries may have different forces influencing them.

Why marketers must consider their environment when they make marketing decisions.
Marketing environment consists of forces outside the firm that affects mgt’s abiliy to
build and maintain relationships with target customers.
Various sources like Marketing research, reports etc. are used to collect information
about the environment.
Types of Marketing Environment
It can be classified as:
• Internal environment –within the firm. Internal small forces with in the company
that affects its ability to serve its customers.

• External environment-outside the firm. It is of two types:

• Micro environment It is the forces of the industry in which a company operates

and the market (customers) of the industry. Firms have some control over them.

• Macro environment
• Macro environmental forces influence the society in a larger and more profound
way organization. Firms do not have much control over them.
• Macro-larger forces that affect micro environment.

Macro Environment Forces

Social, Cultural and Demographic is about the people who would buy the product or
why they won’t, includes demographic changes, social and cultural changes and their
effects on consumer purchase preferences.
Competitive is about which other companies are out there
Economic isn’t just about what happens to discretionary income in recessionary times,
but what is happening with the economy where your organization is located.
Technology what new technologies are coming to market
Legal/Regulatory what governments are requiring of a business-laws, regulations or any
practices of other companies, which are not considered fair for competition.

Demographic environment/forces
Demographics are the study of trends and patterns related to human population.
• Changing Trends in the factors such as age, gender, economic status, education.
• It is used to identify consumer markets and how they are changing
• These trends– create or expand or shrink the markets.

DEMOGRAPHIC TRENDS
 • Population-entry of foreign companies
• Age groups-Youth-education, beauty, wellness, education, entertainment,
housing, durables, clothing, travel, wedding related services etc.
• Education: It influence purchase behavior for some of the products. Thus,
marketers can be interested to keep track of changes in education levels of
population (age groups) and their purchase preferences. Coaching industry
• Income trends--gadgets, cars, bikes, life-style products professional education,
branded clothes, cafes
• Fewer children-more spending on them-more products for children
• Working women-home care services, packaged food items, child care services
• Migration to urban area-higher sale per sq foot in urban areas
As a result, Demand for more- private consultations, more facilities, better ambience
at the hospitals have been increasing with increase in population and income levels
of certain groups.
Socio-Cultural Environment
• Social and Cultural forces: The beliefs, values, customs are important aspects of
society norms.
• Culture and sub-culture-national and regional culture. It keeps changing with time
• Generational Cohorts: How does a generation differ from previous generations
as consumers in their different roles-as parents, as children, as youth, as elderly?
• Power distribution in the family
• Influence spending behavior and purchase patterns
• Various social trends appear to be shaping consumer values in India and around
the world. Example: Fast food chains, western clothes, Weddings, cosmetics,
beauty salons, eating out, fast-food, ready to eat, packaged snacks, organic
food, use of mobile apps, gyms, nuclear families, old-age homes, Cafes
• The way people relate with products, services and brands- even for health
services-Hospital and Doctors as brands

ECONOMIC FORCES
Marketers monitor the general economic situation, both in their home country and
abroad, because it affects the way consumers buy merchandise and spend money.
Economic factors- Affect running of a business and household.
Various economic factors affect each of these areas:
• State of economy, GDP growth rate
 • Income level,
• Distribution of income-different income classes
• Per capita income,
• Employment levels,
• Interest rate,
• Price levels-inflationary or recessionary trends,
• Foreign exchange-oil, gold, international tourism
Trends of: Gross income, Disposable income, Discretionary income
Consumer Income-- consumer’s ability to buy is related to income, which consists of
three components.
Gross income. Gross income is the total amount of money made in one year by a
person, household or family unit.
2. Disposable income. Disposable income is the money a consumer has left after
paying taxes to use for such necessities as food, shelter, clothing and transportation.
People have decreased their allocation for personal savings and are spending much of
the money on new categories of necessities such as vitamins, body washes, lotions,
and etc.
3. Discretionary income. Discretionary income, the money that remains after paying for
spending, investing, or saving after paying taxes and paying for personal necessities,
such as food, shelter, and clothing. Discretionary income is used for comforts, luxuries.
Studies suggest that two-thirds of all North American households have some
discretionary income.

• Confidence indexes-customers’ confidence in the present and future state of

economy, relates directly to spending affects the way consumers spend money and
their purchases
• Consumption basket-% spend across food, education, home care items, vacation
planning, home buying, consumer durables, automobiles

Technological Environment
• Changes is technology can be a threat for established players and provide
opportunity to technology initiators.
• There is-Rapid development and Application of Technology in:
• Automobiles, medical devices, electronics, entertainment, communication,
software, social media industries
• Technology Influences- businesses practices and consumers behavior
 • Technology impacts every aspect of marketing:
• New products and services.
• New forms of communication.
• New retail channels.
• Growing importance of mobile marketing, social media
• Computing data, big data storage, RFID, analytical techniques Smart phones,
dependence on internet, M-Wallets Artificial Intelligence, Robotics, Internet of
Things (IoT)
• Gadgets for Fall detection, monitoring patients, electronic medical records

Effect of Macro Environment Forces-can be seen as changes happening in:

Nursing, attendant services,
medical equipment for home care
Online platform, telemedicine for health services
Groups, forums of patients for sharing information
Medical tourism

Political and Legal Environment

the governments enact laws that promote both fair trade and competition by prohibiting
the formation of monopolies or alliances that would damage a competitive marketplace,
which fosters fair pricing practices for all suppliers and consumers.

• The political/regulatory environment comprises government organizations, and

legislation and laws.
• Changes in legal framework or political condition can be a source of an
opportunity or threat.
• Laws that have direct or indirect bearing on business functioning must be
properly understood, may influence marketing strategies
• Demonetization, GST, environment protection laws
• Paytm, mobile wallet Car emissions, plastic bags, FDI

• Competition-MRTP Act, CCI fosters fair pricing practices for all suppliers and
consumers.
• Flipkart predatory pricing, regulated pricing of stents, medicines
• Consumer protection- Consumer rights, food labeling, Trade marks for wool,
energy efficient appliances, food, gold, silk, selling of pharma products
Natural Environment
 • Business organization depends upon natural resources, chemicals,
manufacturing processes, which disturbs ecological balance.
• Use of energy, water, plastic, manufacturing emissions
• Global movement, Govt. regulations, eco-conscious customers
These are sources of both opportunity and threat
• Coca-Cola, Loreal, Pharma Co. have been making changes to become more
environmentally friendly, Hospital waste disposal
• Visit the website of Loreal or any big company to know about various initiatives
being taken

Micro Environment: Direct Influence

• The micro environment consists of factors which act in close proximity of the firm
• Firms can have some control over them.
• Their direct influence on firm and firm’s direct influence on them makes them very
important
• Micro environment is made of suppliers, consumers, competitors, intermediaries
and publics like stockholders, customers

Micro-Environment
• For example, automobile manufacturers collaborate with suppliers of sheet
metal, tire manufacturers, component part makers, employee unions, transport
companies, and dealerships to produce and market their automobiles
successfully.
• Hospitals- various suppliers-trust quality, timely delivery, immediate orders

Microenvironment also includes company’s internal environment

Top management, Marketing, Finance, R&D, Manufacturing etc.-All deptts should
adapt and work in harmony to provide superior customer value.

Maruti’s Micro Environment

 Successful firms need to keep monitoring
Strengths and weaknesses of the firm,
Marketplace trends,
Capitalizing on opportunities,
Managing threats,
Exploit their core competencies
with focus on identifying and satisfying customer needs
Amazon, Maruti, Apple, Canon-- have been successfully adapting to changes and
leveraging core competencies and while some of their competitors have not done it well.

STRATEGIC MARKETING PROCESS.

The Planning Phase--Situation (SWOT) Analysis
The situation analysis involves taking stock of where the firm or product has been
recently, where it is now, and where it is headed- in light of the organization’s plans and
the external factors and trends affecting it.
Situational analysis is -Organization's appraisal of its internal strengths and weaknesses
and its external opportunities and threats.
Most importantly, remember that the Strengths and Weaknesses are internal to the
organization.
This describes what they are doing now, right or wrong – and what they can control.

Opportunities and Threats are out of the organization’s control

• Opportunity: an opportunity is a chance arising out of environmental shift to do

business by satisfying emergent consumer needs and wants. It presents a
window for an organization to earn revenue and surpluses like opportunity for
electric vehicles, online coaching
• Threat: is a development which can damage an organization’s market fit by
adversely affecting its business. Threats arise out of unfavorable trend –hair oil,
physical class room coaching or development like the rise of health-conscious
consumers is a threat to unhealthy fast-food marketers

A SWOT analysis provides the foundation for a marketing program by:

identifying industry trends;
analyzing competition;
assessing its own firm;
researching customers

Having completed its swot analysis, an organization considers four alternative

market-product strategies:
Build on a strength,
Correct a weakness,
Exploit an opportunity,
Avoid a threat.

Given below is the example of some of the points covered in SWOT analysis:
Internal (strengths and weaknesses)
• Finance – Is the organization profitable?
• Business processes- Are these effective/efficient?
• IT- Is IT integrated into all business processes (MIS)?
 • Communication- Are there effective lines of communication?
• Management and Leadership- What are the management and
leadership styles?
• Cost- What unique or lowest cost resources do you have access to?
• Competitive Advantage- What do you do better than anyone else?
What advantages do you or your company have?
• Resources- What unique or lowest cost resources do you have
access to?
• Sales- What are the factors that have led to an increase or decrease
in sales?

External (opportunities and threats)

• Competitors- What does their SWOT look like? Are competitors
doing or changing anything?
• Markets- Are there any new markets for our products or services? Is
there any new products or services for our market?
• Political/Environmental Climate- Is there any government legislation?
• Demographics – Are there any age or socio-economic factors?
• Technology- Are there any new technological breakthroughs? Is
changing technology giving competitors the edge?
• Barriers- What barriers exist in the marketplace?
• Trends- Are there any trends or patterns in the market? Are the
industry, technology, sociocultural trends changing?