21-08-2022

MARKETING MANAGEMENT
SESSION 4: MARKETING ENVIRONMENT

I N S T R U C TO R : G A R I M A S A X E N A
E M A I L : g s axe n a @ i mt . e d u

AGENDA – LEARNING OBJECTIVES

• Revision
• Marketing and Customer Value
• Marketing Orientations
• Marketing Process

• Marketing Process
• Understanding the environment and the marketplace
• Holistic Marketing
• Sustainability and Marketing

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MARKETING PROCESS:
EXCHANGES & RELATIONSHPS
Create and deliver value for customers and build
customer relationships

3. Construct an 4. Engage 5. Capture value

1. Understand 2. Design a integrated customers, build from customers
the marketplace customer value- marketing profitable to create profits
and customer driven marketing program that relationships, and and customer
needs and wants strategy delivers superior create customer equity
value delight

Capture Value
from
customers in
return

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UNDERSTANDING MARKETPLACE
MARKETING ENVIRONMENT

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MARKETPLACE: MARKETING
ENVIRONMENT
• Actors and forces outside marketing management’s ability to build and
maintain successful relationships with target customers

•Macro-Environment
◦ Consists of the larger societal forces that affect the microenvironment
◦ Demographic, economic, natural, technological, political, and cultural forces

•Micro-Environment
◦ Consists of actors close to the company that affect its ability to engage and
serve its customers
◦ Company, suppliers, marketing intermediaries, customers, competitors, and
public

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MACRO-ENVIRONMENT

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IDENTIFYING THE MAJOR FORCES

Six major forces in the broad environment

Demographic Natural

Economic Technological

Socio-cultural Political-legal

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THE DEMOGRAPHIC ENVIRONMENT

Worldwide population growth
Population age mix
Diversity of the population
Geographic population shifts
Educational groups
Household income patterns
Changing Family System

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HOUSHOLDS BY Deprived Households

INCOME CATEGORY

Aspirers
(McKinsey Global Institute
Report - 2010)
Seekers

Strivers

Global Indians

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HOUSHOLDS BY INCOME CATEGORY

Source: Report by McKinsey Global Institute;

Figures in Millions
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THE ECONOMIC ENVIRONMENT

Economic factors that affect consumer purchasing power and
spending patterns
◦ Income
◦ Cost of living
◦ Interest Rates
◦ Savings and borrowing patterns

Example: Financial Crisis of 2009 - Increasing importance of Value

Marketing

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THE NATURAL ENVIRONMENT

Involves the physical environment and the natural resources needed
by marketers or that are affected by marketing activities
Corporate environmentalism
◦ Being aware of growing shortages of raw materials
◦ Increased pollution
◦ Increased government intervention
◦ Exploring opportunities to reconcile prosperity with environmental
protection

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THE TECHNOLOGICAL ENVIRONMENT

Accelerating pace of change

Unlimited opportunities
for innovation

Varying R&D budgets

Increased regulation of technological

change

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POLITICAL & SOCIAL ENVIRONMENT

Political Environment: Laws, government agencies, pressure groups that
influence and limit various organizations and individuals in a given society
Business Legislation
◦ Protect companies from each other
◦ Protect consumers
◦ Protect the interests of the society

Codes and Rules of Professional Ethics

◦ Increased emphasis on Ethics and Socially Responsible Actions

Cause-Related Marketing
◦ Warby Parker – For every pair of glasses it sells, it distributes a free pair to
someone in need;
◦ P&G contributes Rupee 1 to child education for every sale they make

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THE SOCIO-CULTURAL ENVIRONMENT

Institutions and other forces that affect society’s basic values,
perceptions, preferences, and behaviors

Core cultural values

◦ Values are passed from parents to children and reinforced by social
institutions

Subcultures
◦ Groups with shared values, beliefs, preferences, and behaviors
emerging from their special life experiences or circumstances

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SECONDARY CULTURAL VALUES

Views of Views of
ourselves society

Views of Views of
others nature

Views of Views of the

organizations universe

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PESTEL ANALYSIS

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COVID 19: MACRO-ENVIRONMENTAL

CHANGES
• Political and Legal
• Capitalism and Globalization increasingly questioned
• Visa restrictions
• Economic
• Worst recession since 1930s – Global Economy shrunk by 3%
• New operating system – Frugal Economy (Aug 6 2020, MIT Sloan Review)
• Social
• Social Distancing
• Rising importance of social inclusion of all classes
• Technological
• Difference between ‘in-real life’ and ‘virtual life’ will diminish
• Environmental
• World Meteorological Organization – Temperatures could potentially rise by 1.5
Degree Celsius in the next five years

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BREAK-OUT • Overarching influence of the tech giants

DEVELOPMENTS • Five big tech companies control the world’s
wealth generation
ON THE • They wield great influence over humanity
ENVIRONMENT • Becoming monopolies in their fields
FRONT • The creeping-to-sweeping deglobalisation
trend
• A backlash against globalisation
• The digital revolution and trends
• ‘Digital’ now permeates all spheres of life
• Danger of ‘Digital Darwinism’
• Millennials
• Spent the longest time on social media
• Likely to be the first to age out of digital

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MICRO-ENVIRONMENT

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THE COMPANY
Groups in a company - Departments
◦ Top management, finance, research and development, purchasing,
operations, human resources, marketing and accounting
◦ Not just marketing, all departments
◦ Share the responsibility for understanding customer needs and creating
customer value

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SUPPLIERS
Important link in the company’s overall customer value delivery
network
Provide resources needed by the company to product its goods and
services
Supply problems can seriously affect marketing
◦ Supply shortages or delays, natural disasters, and other events
Companies treat their suppliers as ‘partners’ in creating and
delivering customer value

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EXAMPLE:
DELL MICROENVIRONMENT
Value Proposition: Mass customization
at economically reasonable price
To keep costs under control:
Inventory Costs are important
◦ Carries only a few days’ inventory
◦ Schedules every production line in every
factory every two hours
◦ Running each one with only a few hours of
parts inventory on hand
◦ Few key suppliers
◦ Top 30 suppliers represent about 75% of
Dell’s total cost; the next 20 account for
another 20%

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EXAMPLE:
DELL MICROENVIRONMENT
Dell partners with suppliers
◦ Suppliers to maintain their leadership in
technology and quality
◦ Performance - closely monitored - supplier
report card
Virtual Integration with suppliers
◦ Real-Time Information Sharing
◦ Suppliers can monitor company’s forecasts
through intranet / web connections
◦ Hence, inventory can be kept to minimum
keeping in mind their costs

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MARKETING
INTERMEDIARIES
Resellers Physical
distribution
Firms that help the firms
company to promote,
sell, and distribute its
goods to final buyers

Marketing Financial
service agencies Intermediaries

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Resellers: Distribution Channel firms that

MARKETING help the company find customers or make
sales to them
INTERMEDIARIES
Physical distribution firms: Help the
company stock and move goods from their
points of origin to their destinations
Firms that help the
company to promote,
sell, and distribute its
Marketing service agencies: Marketing
goods to final buyers research firms, advertising services, media
firms, and marketing consulting firms

Financial Intermediaries: Include

banks, credit companies, insurance
companies

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COMPETITORS
A company must strive provide greater
customer value and satisfaction - than its
competitors do
◦ Adapt to the needs of the target
consumers
◦ Strategic advantage: Position their
offerings strongly against competitor’s
offerings in the minds of the
consumers
Identify the competitors –
◦ Example: Kellogg's Cereal

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PUBLICS Media Publics: Carries news, features, editorial

opinions, and other content

Government Publics: Government regulations

on product safety and quality, truth in advertising

Citizen-action Publics: Consumer organizations,

Any group that has an environmental groups, minority groups, and others
actual or potential
interest in or impact Internal Publics: Includes workers, managers,
on an organization’s volunteers, and the board of directors
ability to achieve its
objectives General Publics: General public’s attitude
towards its products and activities, public image

Local Publics: Community residents and

organizations

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CUSTOMERS
Aim of entire value delivery network: Engage target customers and create
strong relationships with them
Customer Markets
◦ Individuals and households that buy goods and services for personal
consumption
Business Markets
◦ Buy goods and services for further processing or use in their production processes
or for reselling
Government Markets
◦ Government agencies that buy goods and services to produce public services or
transfer the goods and services to others who need them
International Markets
◦ Buyers in other countries, including consumers, producers, resellers, and
governments.

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IKEA & INDIA LAUNCH

THE NEW ENVIRONMENT

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IKEA INDIA: THE NEW

ENVIRONMENT
IKEA will do things differently in India as it opens its first
store in the nation on 9th October
Economic Times, 8th October, 2018

IKEA was needed to drastically tweak its playbook

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IKEA INDIA
POLITICAL & ECONOMIC
Governmental Laws
◦ IKEA's debut in India has been a long time coming
◦ The company hit snags a few years ago
◦ Government rejected its request to relax rules on buying
goods locally.

Higher taxes on imported goods in India

◦ Big challenge to keep prices low
◦ It has to source at least 30 percent of its raw materials locally within
five years of operations in the country as per Indian regulation.

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IKEA INDIA
COMPETITION
Market Characteristics and Competition
◦ Indian furniture market – 70% unorganized retailers and vendors
◦ Competition for IKEA, India
◦ Godrej Interio – 15-20% of organized furniture market
◦ BP Ergo Ltd., Featherlite Furniture, Haworth India Pvt. Ltd. etc.
◦ Rising popularity of online furniture startups such as Pepperfry and
UrbanLadder
◦ Competitors did not consider IKEA, India a threat – Expect overall
market to expand as competition intensified

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IKEA INDIA
CUSTOMERS & SOCIAL
Different customer characteristics and preferences
◦ Buys furniture for lifetime – like gold and silver
◦ Cost-conscious shoppers
◦ Unaccustomed to Do-It-Yourself (DIY) furniture assembly style
◦ IKEA teams visited over 1000 homes in India - Finalized 7500 varieties
of home furnishing items
Social / Cultural
o Indian love for colours
o Importance of sofa – Life revolves around the sofa
o Traditional Indian homes – wooden furniture that was carved, ornated,
dark, heavy-wrought

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IKEA INDIA: VALUE-DRIVEN

MARKETING STRATEGY
Target Market: Brand-conscious and fun loving young
consumers
• Live in small apartments, love modular easy-to-carry furniture
• Newly married couples
• Software engineers
• Students - low cost functional desgins with a resale value
• Middle-class
Value Proposition
“We offer budget-friendly, futuristic, functional, stylish, and
custom-made furniture for young Indian consumers.”

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IKEA INDIA
CUSTOMERS
Attracting Customers
◦ 400,000 square feet (37,160 square metre) store in Hyderabad
◦ Ikea expects its restaurant business to drive higher footfalls in
India - “Call our restaurant or food business the best sofa-seller as
it takes time to buy furniture”
◦ Sharp contrast to other markets
◦ Idli-Sambhar, Samosas and Veg Biryani; Chicken – NOT Beef/Pork
meatballs
◦ - Indians love food: IKEA, India expects that for every customer at
cash counter, one customer would be at the restaurant eating.

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IKEA INDIA
CUSTOMERS
Product Designs for Indian Customers
• Bold colours and patterns
• Inflatable couches / Sofa-Beds
• Product Portfolio – Mix of IKEA classics and Specially made for India

Pricing for Indian Customers

• 1,000 products - cutlery, stuffed toys, hangers and container boxes priced
under 200 Indian rupees ($2.91) - cheaper than in most countries.
• Popular products cheaper than in the US: Company's best-selling Billy
bookcase is cheaper by 1/5th in India than in the US
• Planned to keep prices 30-50% lower than its rival

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IKEA INDIA
CUSTOMERS
Serving Indian Customers unaccustomed to Do-It-Yourself
(DIY)
To satisfy the Indian penchant for ready-made furniture
◦ Assemble-on-premises and Ship the next day option
◦ IKEA has set up a 150 member task force to help customers assemble
furniture
◦ Partnered with UrbanClap for carpenters
◦ UrbanClap charges customers about 250 rupees ($3.64) for a 30-
minute carpentry job. In comparison, TaskRabbit, the services platform
acquired by IKEA in 2017, charges U.S. shoppers a minimum of $36 for
any installation job.

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HOLITSTIC MARKETING
MANAGING HOLISTIC MARKETING ORGANIZATION
IN THE LONG RUN

HOLISTIC MARKETING

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ETHICS & MARKETING

• Raw materials used in production

• Products and advertisements targeting children and

adolescents

• Consumer Data and Privacy

• EU – General Data Protection Regulation (GDPR) in 2018
• California, US – California Consumer Privacy Act

• Debates over rising consumerism

• Luxury and exorbitant prices

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SUSTAINABILITY & BUSINESS

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SUSTAINABILITY & MARKETING

• Not just being sustainable brands but regenerative brands
• Not just reducing carbon footprint, but increasing the positive impact
of their business on society and the environment
• Triple regeneration – People, places, and planet

• Why should business and marketers care?

• Triple regeneration - $26 trillion financial value and create more than 65
million green jobs by 2030
• Potential benefits for the company, the consumer, and the community
• To attract and retain the increasing number of environmentally
conscious consumers

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THANK YOU!

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