PROGRAM NAME - M.B.A.

COURSE NAME - Basics of Marketing

UNIT NO. – II
UNIT NAME – Marketing Environment

PRESENTED BY- Dr. Yogita Gupta.

Topics to be covered.
• Political Environment
• Economic Environment
• Socio-cultural Environment
• Technical Environment
• Legal Environment
• Demographics Environment.
 Political Environment
Political Environment Elements
There are various factors which affect political environment:
1. Stability
This is one of the most important factors. The stability of political environment is very conducive
to the economy and business in general. If a country is not stable and government keeps
changing frequently, the country can never be economically stable as well. The GDP, stock
exchange index all would go down leading to a vicious circle.
2. Taxation
The taxation regime is very important when it comes to political environment. If a government is
balanced in terms of tax and budge, the companies are motivated to produce more and grow.
3. Foreign Policies
Political Environment should also balance the foreign investments and growth in a particular
country. If there is no foreign investment, growth and technical knowledge can be issues but if
there is too much foreign investment inflow then it can lead to loss of domestic players.
 Economic Environment
Elements of economic environment are as follows –
• Gross Domestic Product (GDP)
Gross Domestic Product is the total value of all products and services produced in a country. Therefore, the growth of GDP signifies that the economy of a country is stable
and improving. It also means that people have more disposable income that, in turn, leads to increased demand for products and services.
• Unemployment
A high level of unemployment in a country means that such an economy is not using its resources to its full potential. At the same time, it would negatively impact
individual disposable income that will result in lower demand. It affects the commercial aspect of an economy significantly. This phenomenon is markedly noticed in the
existing economic environment in India.
• Inflation
When the overall prices of goods and services increase in a given period, it is known as inflation. It happens when even though the prices of goods and services are rising the
general income level of consumers stays the same. Therefore, individuals have less money at their disposal. Small businesses and cottage industries are also affected as
prices of raw goods and labour increase, resulting in smaller profit margins.
• Government Policy
Government policies also play a huge role in influencing the economy of a country. Government policy can have a major influence on the economic environment. This can
include fiscal or monetary policy. An example of monetary policy is a reduction in interest rates on bank loans which encourages consumers’ demand for loans. An example
of fiscal policy would be when the government decides to reduce income tax. Both of these policies attempt to gradually increase individual disposable income and
encourage consumers to spend more, thus boosting commercial activities.
• Reforms in the Banking Sector
The banks are considered to be one of the most crucial aspects of the Indian economy. As a consequence, any reforms in this sector will have a huge impact on the economy.
The banking sector plays a vital role in the betterment of the economy. By boosting the quality of financial services and increasing money accessible, banking sector
openness may directly improve growth.
•Role of the Public and Private Sector
India has a mixed economy where both the private and public sector plays a significant role. While the public sector plays a valuable role in carrying out plans and reforms,
developing infrastructure and building a strong industrial base, the private sector is responsible for generating employment opportunities. About 80% of the population is
working in either organised or unorganised private sectors.

• Balance of Trade and Balance of Payment

Briefly, Balance of Trade (BOT) is the difference between the money value of a country's imports and exports of material goods only whereas Balance of Payment (BOP) is
the difference between a country’s receipts and payments in foreign exchange. When the exports are greater than the imports, it leads to a favourable trade balance. It means
there is a high demand for its goods offshores, and that increases the demand for its currency. On another hand, when the outflow is greater than the inflow, there is a current
account deficit.

• Consumer Confidence
The consumer is confident about his purchasing habits or decisions when they know they have income stability, and income is stable when the overall economy of a country
is. It also affects the markets. For instance, if manufacturers and retail stores detect weak consumer confidence, they have to manage their inventory and cut back on
production. Therefore, the economy will experience a slow down and ultimately, recession. A stable and growing economy usually boosts a consumer’s confidence.

•Role of Economic Policies

The basic purpose of economic policy is to help their country thrive economically through determining tax rates, money supply, government budgets, and interest rates,
among other things. Apart from the components of the economic environment, economic policies introduced by the government can also have an impact on markets. The
components of economic policies are mentioned below.

•Liberalisation
Liberalization is a broad phrase that refers to any process in which a government removes limitations on some individual person activities. It occurs when something which
 Social / Cultural Environment
• Attitude And Beliefs - Beliefs of a person relate from which society he came from. Attitude means how a person behaves.
Beliefs of people matters a lot in order to set up the business. i.e, western clothing is totally different from middle east
outfits.
• Demographic- Demographics is about the characteristics of the population. It includes the income of a family, area, age,
society and etc.
• Religion- Which religion person belong effects the buying behavior. Religion influences food habits, dress, and traveling.
• Language - Language is a medium of communication. what you speak relates to your background. Language effect your
relations.
• Education- Education leads to the person to communicate an idea and thought. An educated person knows the value of
discipline to do what is right.
• Family Structure - The family structure includes the people who are considered part of the family and the quality of the
relationships among them.
• Social Organization - In a Social organization, it made for fun and some small work. it may be in the form of the group in
the office. Circle of friends. The social groups are the most influencing power. Cause we get a habit from our group. That
also influences the Socio-Cultural Environment.
• Class Structure - It can be classified into upper, middle, lower. It reflects income, occupation, education an area of
 Elements of Technical Environment
• Level of Technology.
• The pace of Technological Changes.
• Technological Transfer.
• Research and Development (R & D)
 Elements of Legal Environment
• Contract Laws: This law deals with the mutual contract between more than one
business partner. The government protects the rights of the parties from
malfunctions.
• Consumer protection laws: By implementing the consumer protection laws
government protects the self of a consumer from any explosions.
• Weight and Measures Act (deals with measurement-related issues in an enterprise)
• Trade Description Act (it deals with trade-related issues)
• Consumer Credit Act (deals with consumer credit protection)
• Employee’s protection laws: By implementing this act Government
protects the rights of the employees and secures their jobs in any
corporate house.
• Health and security laws at the workplace In case an employee suffers any
health hazard, he or she can protect himself or herself with the help of this act.
• Security against termination By this act, the service of an employee, is secured
in any Government or Private sector. Any company cannot terminate an employee
Elements of Demographics Environment
Assessment
1. The advantage of marketing is to: 4. Money spent on marketing is:
(a) Consumers (a) Wastage
(b) Businessmen (b) Unnecessary expenditure
(c) Manufactures (c) Burden on the customers
(d) To all (d) Investment
2. The basic objective of marketing function is to 5. Which is not the function of marketing:
link: (a) Sales
(a) Producers & consumer (b) Purchases
(b) Wholeseller & retailer (c) Education
(c) Producer & retailer (d) Transportation
(d) Producer & advertiser 6. Marketing concept is:
3. For business, marketing is: (a) Production-oriented
(a) Compulsory (b) Sales-oriented
(b) Necessary (c) Customer-oriented
(c) Unnecessary (d) All above
(d) Luxury
7. Importance of marketing concept is for: 10. Which is not the merchandising function of marketing?
(a) Society (a) Product Planning and Development
(b) Consumers (b) Standardization and Grading
(c) Producers (c) Storing of raw material
(d) All above (d) Buying and assembling
8. Marketing starts from: 11. The emphasis in marketing is on the identification and
(a) Consumer satisfaction of ………:
(b) Production (a) Customer needs
(c) Sales (b) Market needs
(d) None of these (c) Both of the above
9. Modern Concept of marketing does not (d) None of these
accept: 12. “Marketing is the delivery of standard of living of the society.”
(a) High quality services What meaning derives this statement?
(b) Satisfaction of customers (a) Delivery of better quality goods and services
(c) Research and Development (b) Charging reasonable prices
(d) Dissatisfaction of customers (c) Giving after-sales-services
(d) All of these
Answers
1. To all
2. Producers & consumers
3. Compulsory
4. Investment
5. Education
6. All Above
7. All Above
8. Consumer
9. Dissatisfaction of customers
10. Storing of raw material.
11. Customer needs
12. All of these
THANK YOU