1. ABC Company is a solution provider for the market entrants.

Your client XYZ wants

to introduce his product in the market. As a Service provider analyse the various forces
of Micro Environment so that it could help his client to identify all possible threats and
opportunities in the market.

Answer: Micro environment

Micro environment is the immediate environment in which marketers have totake decisions.
The players of this environment are called actors as theyhave a direct bearing on the
marketing decisions.This environment identifies the way a company does business and
againstwhom it stands in the market. For example, Nirma, a detergent companyhas defined its
competitive environment by identifying key players inbusiness namely, the suppliers,
competitors, intermediaries, and thecustomers.

Micro environment forces

Competitors
Success or failure of an offer largely depends on how competitors react tothe company’s
offer. Godrej was a successful refrigerator manufacturer.Once competition intensified, the
company started losing market share.Today, though there is a growth in refrigerator industry,
Godrej as a brand isnot growing as fast as its competitors.

Through the years, marketing systems have become increasinglycompetitive. Traditional

economic analysis views competition as a battlebetween companies in the same industry or
between substitutable products.Marketers, however, tend to accept the argument that all firms
arecompeting for a limited discretionary buying power. Though we can say thatMaruti as a
car manufacturing company is facing competition from other carmanufacturers, ultimately it
is the consumer’s disposable income for whichshampoos, soaps, and scooters are also
competing with Maruti. A customeris expected to allocate his disposable income optimally
and in the process acategory also competes with another category to be in the
activeconsideration set of customers for such an allocation.

Industry has found numerous new uses for existing products, with the wholearena of
competition being expanded. While this forces business toreassess long-established
marketing practices, it also opens new avenuesof business opportunity. Emergence of
computers with multimedia as a toolof infotainment and knowledge sharing device has
challenged traditional
products in the entertainment market.

Public
Positive and favourable public opinion is crucial to marketing success sincethe public is the
authority that permits the existence and operation ofcompetitive marketing systems.This
environmental factor includes the general public, its support, thegovernment, and the set of
public who have a direct bearing on business.These public can be classified as welcome
public, sought public, andunsought public. For example,
 Investors and financial institutions are under the category of welcomepublic,
 Government and media are counted as sought public. Without their help,it is difficult
to have a positive impact on consumers and society.
 Pressure groups like consumer activists and environmental activists areunsought
public because they would create problems for the firmthrough their righteous
activities.
Intermediaries
Intermediaries are independent business units and they carry the company’sproducts and
services to the customers. Prominent intermediaries includewholesalers, retailers, merchants,
selling agents, brokers, etc. Theirobjective of being in business is different than being in a
firm, so theintermediaries will be interested in maximising their profits. Any tradepromotion
scheme will motivate them to push competitors’ product deeperand faster.

Any type of intermediary the company must take into active consideration, the following
aspects:
(i) The company has also to constantly review the performance of both middlemen and others
helping its efforts periodically. If necessary, it may take recourse to replacement of those who
no longer perform at the expected level.
(ii) Middlemen come into being to help overcome the discrepancies in quantities place, time,
assortment and possession that would otherwise exist in a given condition.
(iii) It is advantageous and also efficient to work through the established Marketing channels
instead of creating one and thus going for experiments.
(iv) The manufacturer has to decide the most cost-effective method of intermediaries to reach
the product to consumer that will help to increase the profit.

Suppliers
Increase in the price of raw materials will have a bang on effect on themarketing mix strategy
of an organisation. As a result, the prices may beforced up. This is the impact that the
suppliers can have. Closer relationshipwith suppliers is one way of ensuring competitive and
quality products for anorganisation.

Customers
Organisations exist because of customers. No customer means, nobusiness. Organisations’
survival depends on how they meet the needs andwants of the customers and provide them
with maximum benefits. Failure todo so will result in a failed business strategy.Now a days, a
business firm to be successful, must find customers for its products. This is the reason the
customers thus constitute the most important element in the micro environment of business.
Products sales depend mainly on the degree of consumer satisfaction.

In fact, this is a reason that gives more importance to customer satisfaction surveys. Now
every business firm set-up systems to regularly watch customer attitude and customer
satisfaction, because today it is universally accepted that the satisfaction of customers is the
base for company’s success. Normally the customers are not in a same group, they are
individuals, business enterprises, institutions and government.From the company’s point of
view it is always better to have customer from various groups and legions for that easily
sustains demand for the company’s product.

The company
Some company factors that affect the marketing decisions are:
 Culture and value system – Organisational culture can be viewed asthe system of
shared values and beliefs that shape a company’sbehavioural norms. A value is an
enduring preference as a mode ofconduct or an end state. The value system of the
founders of theorganisation has a lasting impact on it. The value system not
onlyinfluences the working of the company and the attitude of its people butalso the
choice of its business.
  Mission and objectives – The mission and objectives of the companyguide the
priorities, direction of development, business philosophy, andbusiness policy.
 Management structure and nature – Structure is the manner in whichthe tasks and
sub-tasks of the organisation are related. Structure isconcerned with the hierarchical
relationship and the relationshipbetween the management of different functional areas
like the structureof the top management and the pattern of shareholding.
 Human resource – This concerns factors like manpower planning,recruitment and
selection, compensation, communication, and appraisal.

2. The five forces Model by Porter is a vital tool for analysing the industry in which it
operates. You are required to analyse how it has aimed to examine the five key forces of
competition in case of Apple Inc., American multinational Technology giant.

Answer: Porter’s Five forces Model

Bargaining power of customers: Customers are the ones who buyproducts from the sellers.
However, they are not always the final users ofthe product. For example, for Procter and
Gamble, the direct buyers ofits detergents are wholesalers and retailers. Bulk buyers such
assupermarkets often have greater bargaining power, i.e., they can ask thesupplier company
for prices lower than single customers or small retailers.If buyers are in a weak bargaining
position than the supplier, the supplyingcompany can hike prices and make profits on that
basis. Thus, thebargaining power of buyers is one of the factors in industry-level
strategicanalysis.

Bargaining power of suppliers: The suppliers’ power to bargaininfluences the profits earned
by the company. This occurs when thesuppliers determine the price that the customers or
buyers must pay forthe product. Suppliers are powerful under the following circumstances:
• When the product that they sell has few substitutes and is importantto the purchasing
company or buyer
• When no single industry is a major customer for the suppliers
• When products in the industry are differentiated to such an extentthat they are not easily
substitutable and it is costly for a buyer toswitch from one supplier to another
• To raise prices, the supplier can use the threat of vertically integratingforward into the
industry and competing directly with the buyingcompany

One example of a powerful supplier is Microsoft, the world’s largest providerof operating
software. Manufacturers of computers, laptops, etc., arealmost totally dependent on Microsoft
to run their PCs as it is the mostpopular and reliable software used universally all over the
world.

Threat posed by substitute products: Companies in the coffee industryare restricted. If

coffee prices are hiked, customers have the option ofswitching over to tea or soft drinks,
which are its substitutes.A close substitute is a potential threat to the company’s product.
Theexistence of a substitute limits the price which can be charged for a productand therefore
the profitability of the company.

Threat posed by new entrants: Generally, new entrants into any industrytend to capture the
market share with their new capacity. As a result,there are more players and more
competition. The situation can lead toprice wars, which can result in falling returns. This
decline in profitabilitybecomes a problem for the new entrants too. That is why new entrants
toan industry often take the ‘acquisitions’ route. There are certain barriersthat determine a
firm’s ability to enter an industry.

Competition among existing firms: Intense competition is referred toas rivalry. It occurs in
an industry when one business or many businessestry to increase their market share.

Apple- Porter five forces analysis

Bargaining power of customers: The bargaining power of buyers is strong in affecting
Apple’s business. This component of Porter’s Five Forces analysis model determines how
buyers impact businesses. In Apple’s case, buyers’ strong power is based on the following
external factors:
 Low switching cost (strong force)
 Small size of individual buyers (weak force)
It is easy for customers to change brands, thereby making them powerful in compelling
companies like Apple to ensure customer satisfaction. On the other hand, each buyer’s
purchase is small compared to Apple’s total revenues. This condition makes customers weak
at the individual level.

Bargaining power of suppliers: Apple experiences the weak force of the bargaining power
of suppliers. This component of Porter’s Five Forces analysis model indicates the influence
of suppliers in imposing their demands. In Apple’s case, suppliers have a weak bargaining
power based on the following external factors:
 High number of suppliers (weak force)
 High overall supply (weak force)
Even though Apple has less than 200 suppliers of components for its products, the company
has more options because there are many suppliers around the world. This condition makes
individual suppliers weak in imposing their demands on firms like Apple. In relation, there is
a high level of supply for most components of Apple products.

Threat posed by substitute products: The threat of substitution is weak in affecting Apple’s
business. This component of Porter’s Five Forces analysis model determines the strength of
substitute products in attracting customers.Substitutes to Apple products are readily available
in the market. For example, people can easily use digital cameras instead of the iPhone to
take pictures. They can also use landline telephones to make calls. However, these substitutes
have low performance because they have limited features. Many customers would rather use
Apple products because of their advanced features. Thus, substitution has a weak force in
impacting Apple’s business.

Threat posed by new entrants: Apple experiences the moderate force of the threat of new
entrants. This component of Porter’s Five Forces analysis model indicates the effect and
possibility of new competitors entering the market.Establishing a business to compete against
firms like Apple requires high capitalization. Also, it is considerable costly to develop a
strong brand to compete against large firms like Apple. These factors make new entrants
weak. However, there are large firms with the financial capacity to enter the market and
impact Apple. Google has already done so through products like Nexus smartphones.
Samsung also used to be a new entrant.

Competition among existing firms: Apple faces the strong force of competitive rivalry or
competition. This component of Porter’s Five Forces analysis model determines the intensity
of influence competitors have on each other.Companies like BlackBerry, Samsung, LG, and
others aggressively compete with Apple. Such aggressiveness is observable in rapid
innovation, aggressive advertising, and imitation. On the other hand, switching cost is low,
which means that it is easy for customers to switch from Apple to other brands, thereby
making competition even tougher.

3. A) You are working in a reputed market Research Company. You are asked by your
senior to prepare a short presentation for your clients explaining them the importance
of Market research in today’s Era and also how the company will help the Client to
have a better Business Opportunity.
3. B)Enumerate the various steps/Process to effective Market Research that can be
carried out for an Organisation.

Answer: a) Marketing research is viewed as a systematic and objective process ofidentifying

and formulating the marketing problems, setting researchobjectives and methods for
collecting, editing, coding, tabulating, evaluating,analysing, interpreting and presenting data
in order to seek solutions for theproblems.Thus, the role of research is to provide assistance
to management fordecision-making. In other words, the research helps provide management
tounderstand process and evaluate the required information in time so as tofacilitate effective
and efficient decision-making through the application ofthe fundamental concepts of
research.

Marketing research embraces all research activities that involve identifyingmarket potential
for the new and existing products, forecasting the marketand sales trends and marketing mix-
related research, wherein the past andfuture trends for one's own company as well as of
competitors are analysedand interpreted.As businesses expand further and further in
international markets, the roleof timely and accurate marketing research to guide decision-
makingbecomes increasingly critical. Research to support international marketingdecisions
has evolved over the past four decades and must change evenmore to support firms in the
21st century.

With the change from a seller’s market to a buyer’s market, it was deemednecessary to
acquire information on the needs, preferences, and evaluationof the consumer. The most
relevant requirement was to ensure that the rightproduct reaches the right person at the right
place at the right price.Besides, it was also necessary to get feedback from the customers as
towhether they are getting optimum satisfaction and thus continue to makechanges in the
marketing mix so that consumers remain loyal to the product.Consequently, the whole task
requires entrepreneurial flair and skill, whichultimately calls for marketing research. Thus,
marketing research is a veryuseful tool in enhancing the decision-making ability of the
marketer in thedynamic environment of today.

Market research companies work hard for their clients and gather all the relevant information
before launching any new product or while getting other critical information about any
product.

Advantages of Marketing Research:

i. Marketing research helps the management of a firm in planning by providing accurate and
up- to-date information about the demands, their changing tastes, attitudes, preferences,
buying
ii. It helps the manufacturer to adjust his production according to the conditions of demand.
iii. It helps to establish correlative relationship between the product brand and consumers’
needs and preferences.
iv. It helps the manufacturer to secure economies in the distribution о his products.
v. It makes the marketing of goods efficient and economical by eliminating all type of
wastage.
vi. It helps the manufacturer and dealers to find out the best way of approaching the potential
vii. It helps the manufacturer to find out the defects in the existing product and take the
required corrective steps to improve the product.
viii. It helps the manufacturer in finding out the effectiveness of the existing channels of
distribution and in finding out the best way of distributing the goods to the ultimate
consumers.
ix. It guides the manufacturer in planning his advertising and sales promotion efforts.
x. It is helpful in assessing the effectiveness of advertising programmes.

b) Market research process

1. Identifying the marketing problem
The first step in marketing research is identifying and understanding themarketing problem.
What is the problem? What type of information isrequired to solve it? What segments of the
related information are alreadyavailable? Marketing researchers also make use of the
available literaturefor an in-depth background study of the problem, which will help them
todefine the research objectives clearly.Once the problem is defined, a series of research
objectives can be laiddown for further work. Marketing researchers often conduct
preliminaryresearch to find out the problem and clarify the nature of the problem.

2. Developing marketing research plan

When the marketing problem is clearly identified and formulated, marketingresearchers
should develop a plan to collect the relevant information. Whiledeveloping the research plan,
they should also familiarise themselves withthe existing research findings. They can also take
the help of librarysources, as well as experienced consultants, persons with
practicalknowledge, etc.

3. Designing marketing research strategy

Marketing researchers should design the research strategy in accordancewith the
requirements of the problem. They should make certainhypotheses, the testing of which
would be considered helpful in solving theproblem.A research strategy also covers issues like
the cost structure for theresearch, the time and scheduling for the research, and the nature of
thecontact method,like personal contact, email, telephone, etc.Marketing researchers should
also set up a research strategy chart forsmooth conduct of the proposed research.

4. Collection of data
Marketing researchers would either select primary methods or secondarymethods or both for
data collection. Their decision depends on the nature ofstudy and objective, availability of
financial resources and time, and thedesired degree of accuracy.

5. Analysis of collected data

Data collected from various sources are processed. They are edited for thepurpose of
improving accuracy level. Editing is a process of weeding outirrelevant information from the
data. It is done to find out the consistency,accuracy, completeness, and legibility of the
responses and its usability forthe desired research. Responses found unsuitable are removed
from thesample list. Editing can be done sequentially when the responses are beingcollected
or at the central table after all the responses have been collected.

The researcher has two sets of data, namely

 Qualitative data analysis – It can be done by drawing inferences fromthe responses or
by conducting content analysis.
 Quantitative data analysis – It is classified by evaluating how manyvariables are to be
measured.

6. Report preparation
Keeping the objectives of the study in mind, the researcher should preparethe study report.
The findings should be written in a concise, simple, andobjective-oriented language.Graphs
and examples in the main reportshould be limited to those needed to convey essential facts to
support theresearch statement.