3.

Marketing
Environment
MARKETING MANAGEMENT
?
Definition of Marketing
Environment
“The actors and forces outside the marketing that affect marketing
managements' ability to build and maintain successful relationships with
target customers”

- “Principles of Marketing, 13th Ed”

KAAH
Learning Objectives
1. Understanding the importance of environment scanning

2. Discussing the elements of external & Internal environment of

marketing
Why to study marketing
environment?
1. Spotting opportunities & threats
Q. Where is the environment heading?

Q. What trends are emerging therein?

Q. What are the opportunities & threats embedded in the trends?

Why to study marketing
environment?
2. Strategic response to the environment
Q. What should be the firms response to these trends?
Marketing Environment
INTERNAL ENVIRONMENT
01 Company Policies, Skills, Assets etc.

MICRO ENVIRONMENT
02 Actors Close to Company-Competitors, Suppliers,
Intermediaries, Consumers etc.

EXTERNAL ENVIRONMENT
03 Larger Forces-PEST
An organizations marketing
environment
Definitions
◦ Macro environment are the larger societal forces that affect the
microenvironment

◦ Microenvironment are the actors close to the company that affect its
ability to serve its customers

◦ Internal environment are the structures and the policies of an

organization affect the manner in which it responds to environmental
change
Marketing Environment
Analysis
1. Gather all the relevant information
2. Analysis of both macro & micro environment
 Firm should study and examine the following:
i. Customers
ii. Emerging trends
iii. Nature of competition
iv. Structure of the industry
v. Alternative technologies
vi. Scope of substitute product
 Macro Environment
Technological
Environmental/
Natural Demographic

Socio-Cultural Economic

Political-Legal
 Example: Baby Care
Product in India Growing Rural
-Population 0-6 Yrs.-15.87 Cr Market
-Market is Expected to grow at -Rural FMCG Market
12% 29 Billion $
-Middle class Population spends -Total FMCG Market
about 25% on baby care products 49 Billion $
-American & European Companies (Year 2016-17)
will target India -Micro Finance
-Project Shakti-HUL

1.Demographic Education
Key Facts
Environment --Growing Middle class -Literacy Rate in
A Study of Population -60 Cr Population (Census India-74.04%
- Age 2011)
- Density -2010-2030, India will
- Location add 241 Million people in
- Gender working-age population
- Education
- Life Cycle Stage
2. Socio Cultural Environment
Global socio – cultural
Changing Role of Women
scene
-Techno Intoxication

-Pace of Life -11.7 Million Working

Mc. Donald, Multiplex Women
-Will add 700 Billion $ to
Indian Economy by 2015
Eg. Taking a bath daily-Racold -Bank, Insurance Products
Vegetarian Buyers-McD
Family Size
Average Family
Socio-Cultural Size-4
Environment Nuclear Family
-Culture

-Social Class
-Values
 INDICATORS
3.Economic Environment 5.Interest Rate-
borrowing money 
cost of

6. Balance of Trade-Export &

Import
INDICATORS .

1 GDP-the total amount of all

goods and services produced in ECONOMIC
the country.
ENVIRONMENT
2.Per Capita Income

3.Inflation-reflects the
increased cost of living

4.Currency Strength-a country’s

purchasing and selling power
DIFFERENTIATORS
with other nations 1. Government Economic
Policies
Eg. 2. Five Year Plan
1.Ruppe Depreciation and IT 3. Sector wise Performance
companies stock position eg. Agriculture
2.Increase in Per capita income- 4. Current Employment statistics
Scope for Baby care products
 4.Technology
Importance
1. Reduce the business cost
2. Automation brings ease in

1 Business Functions
3. Technology brings precision

2
3 Potential

4 1.To reach new markets

2.To bring new products and services

Eg.
1.Social Media Considerations
Negative Effects
2.Data Usage 1.Outsourcing
3.Inventory Management 1.Confusion
2.Crime 2. Service support
4.Roboics
5.ERP
5. Political Environment -
Government

Business Governmen
t
• Taxes • Law & Order
• Inspection &
• Voluntary
Licenses
Programs • Money & Credit
• Government • Competition
Service • Tariffs & Quotas
• Political Activity • Infrastructure
• Technology
Natural Environment
Land-Soil
Water-Rainfall
Temperature
Microenvironment
Competitors

Intermediaries Publics

Customer
Suppliers Micro s
Porters Five Forces Model
 Macro Environment-Porters Five Forces Model
Threat of New NEW ENTRANTS
DIRECT COMPETITORS Entrants 1.Yara International-A Norvey
based firm
1.RCF 2. Cargill- world largest firm in
2.IFFCO food & Agri business
3.Coromandel Etc. .

57 large production plants.

Rivalry Among Bargaining Power
Bargaining Power of Competitors of Buyer
Supplier
SUPPLIERS Buyer power
1.Australian Potash Ltd. 2. 1. Farmer Cooperatives 2.
Agrimin Ltd. 3.Borax Ltd. Farmer Producer Companies 3.
. New Breed of modern farmers

SUBSTITUTE
Threat of substitutes 1. Zero Budget Farming and
Organic farming
2. Water Soluble Fertilizers
 Fertilizer Industry-Marketing
Environment
Sr. No. Item
1 Customers
2 Emerging trends
3 Nature of competition
4 Industry Structure
5 Alternative Technology
6 Scope of substitute product
Description
Customers are farmers, influence of
large farmers and sellers, low
availability of credit.
Fertigation
Oligopoly
Difficult to enter and exit, govt.
control,Public units
A part from own production import is
also covers major part of the sales
Limitation on use of organic fertilizers
due to availability and use efficiency
 Fertilizer Industry-Marketing
Environment-Macro Factors
Sr. No. Item
1 Demographic
2 Technological
3 Natural
4 Political & Legal
5 Economic
6 Global Environment
Description
85% small & Marginal farmers, slow adoption of
technology ,un/less educated, most of the time
unaware of tech, availability of credit is the biggest
hurdle
Fertigation through drip is becoming regular practice,
Use of data becoming a trend, spraying through
drones, automization in irrigation, harvesting etc ,Use
of high pressure vessel, distributed
High dependency on rainfall, climate change and
related variability
Govt. has reduced subsidy due to which here is triple
fold increase in customer prices, govt. control, license
to sale,
Repo rate, Agri as a priority sector for banks
Cartel formation by fertilizer exporters from global
market for Potash
 Fertilizer Industry-Marketing
Environment-Micro Factors
Sr. No. Item Description
1 Competitors RCF,IFFCO,KRIBHCO,IPL,PPL,Coromandel,Nagarjuna,GSF
C,GNVFC,DFCL,NFL

2 Suppliers Global market, import of Potash and cartel formation

3 Intermediaries Dealer-Retailer-Farmer, well established channel,

presence of cooperative societies, push market
4 Substitute Use of farm manure, Zero Budget farming, Organic
farming-Awareness about harmful effects of Chemical
on soil
5 New Entrants Yara International,Cargill

6 Buyers Farmer cooperatives, Farmer Producer Companies

7 Public Sensitive issue due dealt with farmers, govt. public is

having interference in operations
 Fertilizer Industry-Market
Analysis
Sr. No. Item
1 Market Size
2 Market Growth rate
4 Opportunities
5 Threats
6 Firms Response
Description
413.24 Lakh Metric Tones (2017)
2%
Exploring new areas of technology-fertigation, highly
soluble fertilizers, Precision farming, Customized
fertilizers
Intense competition, rising costs of inputs and
1. Entry in water soluble fertilizers
2. Introduction of organic fertilizer grades
3. Development of customized fertilizers
ETOP
Environment Threat & Opportunity Profile
◦ This technique is suggested by GLUECK

◦ ETOP involves dividing the environment into different sectors & then
analyzing the impact of each sector on the organization

◦ A comprehensive ETOP requires subdividing each environmental sector into

sub factors & then study the impact of each sub factor on the organizations
ETOP for MOM & POP
Stores
Environmental Sector Nature of Impact of Each Sector
Impact

Rising disposable income, Living

Economic standard & Change in shopping
Pattern
Market 95% unorganized sector

International Foreign Players Walmart and

Amazon are entering with big plan
Political Strong resistance for foreign players
entry from some political parties
As per FDI more investment in Back-
Suppliers end infrastructure i.e. Cold storage.
Direct purchase from farmers & small
manufacturers
Microenvironment -
Suppliers
Availability & cost

Supply shortage, delays, labor strikes

Suppliers are treated as partners

http://www.toyotasupplier.com/

TATA Motors - Terms Conditions.pdf

 Strengthening relationships
and fostering mutual growth
At Future Group, we make every effort to ensure our products meet the
unique needs of the diverse communities we serve. It is our constant
Endeavour that consumers have ready access to our products in every
corner of urban and rural India. We partner with over 30,000 suppliers
across merchandise categories ranging from one-person shops to
multinational corporations, maintaining a distinct mix that is key to
our success.

At Future Group, we believe our relationship with supply partners is

one of our core competitive assets. We are committed to creating
successful business partnerships built on mutual trust, transparency,
fair business practices and respect across our entire value chain. We
strive to create a win-win situation for our customers and partners by
combining our strengths and capabilities and developing micro-
enterprise models.
Strengthening relationships
and fostering mutual growth
From sourcing to distribution, we engage with varied
business partners, jointly sharing insights, promoting
brands, creating new products, expanding our
capacity and developing new markets. Our businesses
create economic benefits for all our partners, including
our suppliers and distributors.

Our Sambandh program aims to foster an

environment combining our strengths to create
immense value for our partner suppliers and, in turn,
nurture mutual growth. Our strategic objective is to
grow responsibly while enhancing the livelihoods of
our partners.
Microenvironment -
Intermediaries
Definition: “Firms that help the company to promote, sell & distribute its
goods to final buyers”
Resellers – Wholesalers, Retailers & etc
Strong reseller can dictate terms & conditions
◦ E.g. Big Bazaar, Shoppers Stop & etc
Microenvironment -
Intermediaries
Physical Distribution Firms help the company to stock & move goods
from their points of origin to their destinations
E.g. Cold Storage, Transport & etc.
Microenvironment -
Intermediaries
Marketing Services Agencies help the company to target & promote its
product to the right markets
◦ Marketing research firms
◦ Media firms
◦ Advertising agencies
◦ Marketing consulting firms
Microenvironment -
Intermediaries
Financial Intermediaries
◦ Banks
◦ Credit companies
◦ Insurance companies
◦ Business firms that help finance transactions
◦ Insure against the risks associated with the buying & selling of goods
Industrial Insurance
Fire Policy
Burglary Policy
Machinery Breakdown Policy
Electronics Equipment Policy
Consequential Loss Policy
Contractors All Risk Policy
Marine cum Erection / Storage cum Erection Policy
Advanced Loss of Profit / Delay in Startup Policy
Contractor Plant and Machinery Policy
Mega Package Policies
 Commercial Insurance
Jewellers Block Policy
Bankers Indemnity Policy
Shopkeeper's Policy
Marine Cargo Policy
Plate Glass Insurance
Special Contingency Policy
Neon Sign Insurance
Multi Peril Policy for L.P.G. Dealers
Fidelity Guarantee Insurance Policy
Marine Hull Policy
Aviation Insurance
Source: http://newindia.co.in/Content.aspx?pageid=70
 Microenvironment -
Competitors
Apple wins patent case against Samsung
US firm awarded $1.05 bn in damages; verdict could lead to a ban on the sales
of key Samsung products
Challenge for competitors
◦ Apple’s victory could present immediate issues for companies that sell Android-
based smart phones and tablets, including Google’s own Motorola subsidiary, which
it acquired last year for $12.5 billion, and HTC of Taiwan.
◦ South Korean court found that both companies shared blame for patent
infringement, ordering Samsung to stop selling 10 products including its Galaxy S II
phone and banning Apple from selling four different products, including its iPhone 4.
Competitors Factor Analysis
New
Entrants

Industry
Strategic Competitor
Substitutes
Changes s

Exit
Behaviour
Analysis & Diagnosis of the
Industry Environment
Markets & Customers
• Size
• Growth & cyclicality
• Customer Segments & utilities
• Suppliers
• Availability of needed inputs
• Costs of Inputs
• Exits & Entry of suppliers
• Power of suppliers
Competitors
• Concentration ratio
• Capacity utilization
• Exits & entry barriers,
especially foreign threats of
entry
• Competitive Behavior
• Strategic groups & mobility
across strategic groups
• Availability & costs of
substitutes from other
industries
Strategic Importance of an
Industry’s Key Economic Character
Market Size
Market Growth Rate
Capacity Surpluses or Shortage
Industry Profitability
Entry Exit Barriers
Product is a big-ticket item for buyers
Standardized Product
Strategic Importance of an
Industry’s Key Economic Character
Rapid Technological Change – IT sector
Capital Requirement -
Vertical Integration
◦ The Indian petrochemical giant Reliance Industries has integrated back into
polyester fibers from textiles and further into petrochemicals, beginning with
Dhirubhai Ambani. Reliance has entered the oil and natural gas sector, along with
retail sector. Reliance now has a complete vertical product portfolio from oil and
gas production, refining, petrochemicals, synthetic garments and retail outlets
◦ Apple retail stores sell its own hardware, software and services directly to
consumers.

Economies of Scale – Big Bazaar

Rapid Product Innovation – Apple
 Microenvironment - Publics
A Publics is any group that has an actual or potential interest in or impact on an
organizations ability to achieve its objectives

Financial Publics – Banks, Investment houses, Shareholders

Media Publics – Newspapers, Magazines, & Radio & Television stations

Local Publics – Neighborhood residence, community organizations

General Publics – Their attitude about company’s products & actions

Internal Publics – Workers, Managers & BOD

Microenvironment - Publics
Citizen-action Publics – Consumer organizations, minority groups,
environmental groups
Central Pollution Control Board (CPCB) aims to promote cleanliness of
streams and wells in different areas of the States by prevention, control
and abatement of water pollution, and to improve the quality of air and
to prevent, control or abate air pollution in the country.
Gujarat Pollution Control Board – Gujarat State
 Microenvironment - Publics
• Ministry of Environment and Forests The ministry is responsible for planning,
promoting, coordinating, and overseeing the implementation of
environmental and forestry programmes in the country. The main activities
undertaken by the ministry include conservation and survey of the flora of
India and fauna of India, forests and other wilderness areas; prevention and
control of pollution; afforestation, and land degradation mitigation. It is
responsible for the administration of the national parks of India.
Microenvironment - Publics
Microenvironment -
Customers
Five types of customer markets
◦ Consumer markets

◦ Business markets

◦ Resellers markets

◦ Government markets

◦ International markets
Concept of Market Share
"Market share is the percentage of a market (defined in terms of either
units or revenue) accounted for by a specific entity.“
"Marketers need to be able to translate sales targets into market share
because this will demonstrate whether forecasts are to be attained by
growing with the market or by capturing share from competitors.
Concept of Market Share
The main advantage of using market share as a measure of business
performance is that it is less dependent upon macro-environmental
variables such as the state of the economy or changes in tax policy.
Market Share - Purpose
Market share is a key indicator of market competitiveness
"This metric, supplemented by changes in sales revenue, helps
managers evaluate both primary and selective demand in their market
Firms with market shares below a certain level may not be viable
Market Potential
Analysing Market Potential.pdf
Estimating Market Potential.pdf
Types of Market Share
"Market share: The percentage of a market accounted for by a specific
entity."
"Unit market share: The units sold by a particular company as a
percentage of total market sales, measured in the same units.“
"Revenue market share: Revenue market share differs from unit market
share in that it reflects the prices at which goods are sold.
 Market share analysis
A market share analysis needs to take into account the following:
◦ Total Market Size refers to the annual business volume in currency or in number of
transactions;
◦ Market Growth Rate refers to the Compounded Annualized Growth Rate ( CAGR )
taken over a period of 3 to 5 years;
◦ Market Share is the breakup of market size in percentage terms, to help identify
the top players, the middle and the "minnows" of the marketplace, based on the
volume of business conducted;
 Market share analysis
◦ Market Segmentation Some of the factors that determine the market are price,
quality, speed of service, ease of maintenance, and points of distribution. By
mapping on quality and price parameters, it is possible to identify graphically the
spaces which are crowded by service providers and which are the relatively empty
spots;
◦ Key Players i.e.the top players in each segment of the market. The extent to which
they provide premium quality, or premium service or price advantage, can help
identify future target segments;
 Market share analysis
◦ SWOT Analysis. The strengths of players as well as weaknesses/areas of
improvement are needed to combat the onslaught in a marketing warfare. Strength
and weakness include brand equity, geographic presence, strong
management/leadership, technological edge, and patent/copyrights.
◦ Emerging Opportunities should be identified which could make the market grow
faster/larger or acquire business more easily. Similarly, are there threat factors that
could reduce the total market size. These could be due to regulatory guidelines,
changes in fashion trends, consumer preference, macro economic events like
currency crisis, import/export, war, natural calamity, or demographic shift;
 Market share analysis
◦ Business Continuity Plan: While planning for market share analysis, the worse must
be planned for to ensure continuity of the concern in the event of a calamity.
Companies which have a continuity plan usually sustain shocks better and ensure
achievement of targeted market share.
◦ Target Market Share: Based on the above analysis, it is possible to arrive at the
overall market size for the assessment period, and thereby decide on the volume of
business the firm targets to achieve during the period. This helps determine the
firm's targeted market share. This also helps budget for activities like budgeting for
R&D, sales promotion, marketing, and training.
Responding to Marketing
Environment
Companies should take PROACTIVE stance:
◦ Hire lobbyists to influence legislation
◦ Stage media events – Favorable press coverage
◦ Run advertorials – Shape public opinion
◦ Press lawsuits & file complaints – Competitors in line
◦ Contractual agreement – Better control on distribution channels
 Why to study marketing
environment?
Example – Indian luxury car market
◦ Indian auto segment is growing by 25%

◦ Luxury car segment is growing by 20%

Luxury car maker BMW AUDI MERCEDES

Rank 1 2 3
Operation started in India 2007 2007 1997
Units sold during 2369 2269 2130
(Jan – March 2012)
Why to study marketing
environment?
BMW & Audi’s Proactive Plan
◦ Understood changing demographics & targeted young buyer profile
◦ Under stood the taste of young business magnates & new produced
products with contemporary styling
◦ Understood the importance of multidimensional segmentation & done
multiple sub – segment within luxury
Why to study marketing
environment?
Mercedes Reactive Plan:
1.Launching 2 new models every year

2.Fresh investment of Rs. 1000 crore

3.Change in positioning – fresh & youthful brand

 Luxury Car Market Units Sold in
2017 Vs. 2016

Mercedes
40% Market
15330 +15.86 Share
%
13231

BMW
9800 +24%

7861

Audi
+2%
7876 Total Cars Sold in 2017:40000

10 fold increase in sales 2007-2017

7742
Market Growth: 16%

Source: Co. data