Module - 2

Marketing Environment Click to edit Master subtitle style

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Topics to be covered

Understanding the market environment Assess the impact of micro and macro environment Importance, distinctive characteristics of services, service mix
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Services

Question
What

is the need of the study of marketing environment?

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Marketing Environment

Includes all forces and institutions external to the organisation which affect the organisations ability to develop and organization has to maintain timely, relevant and appropriate adaptation to these factors so as to be successful in carrying out business operations. It is required to assess the 3/27/12 marketing environment to help

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Question
What

are the major macroenvironmental factors and how does it affect the marketing process?

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Macro Environmental Factors influencing business

Economic Environme nt Social Cultural Environm ent Demographi c Environment Internal Organizatio nal processes natural Environment

Political-Legal Environment Technological Environment

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Demographic Environment
Demography is the study of population and its characteristics. Population is monitored because people make up markets. Marketers are always interested in population related growth indices because eventual market growth rate in the long run depends largely on growth of population.
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Size and Growth rate of population Population is showing explosive growth. Indias population was 310 million in 1947 and 1000 million in 2001, next only to China.Rural population is 74% and urban population is 26% of total population. A growing population does not mean growing markets unless these markets have sufficient purchasing power. Population growth has been a http://www.facebook.co
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Population

Age Mix Population is subdivided into six age groups preschool, school age children, teens, young adults age 25 40, middle aged adults age 40-65, and older adults age 65 and up.The most populous age groups shape the marketing environment.

For eg. Japan has more of old age population above 60 , and thus demand for products that support 3/27/12 digestion, viewing and mobility and http://www.facebook.co

Ethnic Markets- Countries vary in their ethnic and racial makeup. At one extreme is Japan, where almost everyone is Japanese; at the other extreme is the United States, with people from virtually all nations. People call the United States a salad bowl society with ethnic groups maintaining their ethnic differences, neighborhoods and cultures. In Indian market, the consumption, lifestyle and habits of people in different states varies 3/27/12
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Educational Groups Population in any society falls into five educational groups : illiterates, high school dropouts, high school degrees, college degrees and professional degrees. Literacy levels indicate consumption pattern and influencers of consumption decisions. Promotional activities are being designed keeping in mind the literacy level of the consumers.For eg. People 3/27/12 of high literacy level are
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Household Patterns
Size

of the family (Joint family and Nuclear family) Size of the family affects the stock keeping unit size and growth of small size, convenient products on the retail shelf. of the family (TraditionalHusband, Wife and children, Non traditional single live-alones, adult live-togethers of one or both sexes, single parent 3/27/12 http://www.facebook.co families, childless married

Pattern

Natural Environment
Corporate Environmentalism is the recognition of the importance of environmental issues facing the firm and the integration of those issues into the firms strategic plans.Four major trends in the natural environment
Shortage

of raw materials The earths raw materials consist of the infinite, the finite 3/27/12 renewable and the http://www.facebook.co finite

Increased

Pollution Levels Some industrial activity will inevitably damage the natural environment. Littering of environment with nonbiodegradable plastic, bottles etc. Factories are mixing DDT and chemical pollutants in the soil and food supplies. A large market has been created for pollutioncontrol solutions such as scrubbers, recycling centers and landfill systems. 3/27/12
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Economic Environment
It has the highest influence on the marketing decisions as it affects the purchasing power of the consumer.In a declining economy, company which sells price value products has more scope to get customer as compared to a luxury brand
Business

fluctuations Dynamic business fluctuations 3/27/12 that tend to follow a cyclic http://www.facebook.co

Income

Distribution Income distribution of households in India has been changing significantly over time.Households belonging to the lower income segment have been steadily declining over the years and the middle income households have been showing an increase.These are the results of economic growth.

Categories of Indian consumers

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Contd.
Five different income-distribution patterns :
1)

Very low incomes 2) mostly low incomes 3) very low, very high incomes 4) low, medium, high incomes, and 5) mostly medium income

In Mumbai rich have grown richer, the middle class has shrunk, and the poor have remained poor. This is leading to a 2-tier Mumbai3/27/12 market with affluent http://www.facebook.co

Lifestyle

patterns Lifestyle is the way a person decides to live his/her life.Concerns ones family, job, social activities and consumer decisions.Reflection of activities, interests and opinions.Changing lifestyle influences marketing.

. Eg. DINK culture affecting the demand pattern of products targeted for children segment. Retirement3/27/12 are changing very ages http://www.facebook.co

Technological Environment
Wonders such as I-Pod, LCD, LED and 3D TV are released due to technology.Every new technology is a step for creative destruction. Xerography hurt the carbon paper business, autos hurt the rail road, and TV hurt the newspaper. New technology creates major long run consequences that should be observed minutely. Contraceptive 3/27/12 pill for eg led to smaller families, http://www.facebook.co

Unlimited

opportunities for innovation Exciting work is being done in biotechnology, robotics, computers, microelectronics. Researchers are working on AIDS vaccines, nonfattening tasty nutritious foods.

Virtual Reality Companies are already harnessing the power of Virtual Reality, the combination of technologies that allows users to experience3/27/12 dimensional, three
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Increased

regulation of technological change Govt. has expanded its agencies powers to investigate and ban potentially unsafe products . Under the Drug and Cosmetics Act, manufacture, sale and distribution of drugs in India is regulated by the state and the central govt. agencies.
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Label of Agmark forhttp://www.facebook.co food

Political Legal Environment

Consists of laws, govt. agencies and pressure groups that influence and limit various organization and individuals. Sometimes it gives new business opportunities. For eg. Mandatory recycling laws gives recycling industry a major boost and spurred the creation of dozens of new companies making new products from recycled materials.
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Deal with issues as competition , product safety and liability, fair trade and credit practices and packaging & labelling. In India, food companies need special approval to launch brands that duplicate what already exists on the market., such as another cola drink or brand of rice. Govt. has made mandatory that all packaged food products should carry the green dot to denote pure veg and red dot to indicate non veg. 3/27/12
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Growth of special interest groups Consumerist movement an organized movement by the citizens and govt. to strengthen the rights and powers of buyers in relation to sellers. In order to protect the interest of consumers, govt. of India has passed legislation under the Consumer Protection Act 1986. Six rights of consumers are recognized Safety 3/27/12 to be protected Right http://www.facebook.co

1.

Social-Cultural Environment
Society shapes the beliefs, values and norms that largely define consumer tastes and preferences. India is a land of diversity with different languages, cultures and religious beliefs. Regional differences in languages, customs social systems, values, habits, religions and caste system make the social cultural environment complex. 3/27/12
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Core

cultural values and secondary cultural values Core cultural values passes on from parents to children and by institutions like schools , churches, govt. etc. Secondary beliefs are open to change.Believing in the institution of marriage is a core belief and believing that people 3/27/12 ought to get married early is a

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Indian

Women

Traditionalism & Self sacrifice (Lower socioeconomic class ) Westernization & Individualism(Higher socioeconomic class) Based on shopping habits of women1.
3/27/12 Liberated Youngsters (13%) http://www.facebook.co

Question
What

do you understand by fads, trends and megatrends?

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Fads, Trends and Megatrends

A

fad is unpredictable, short lived and without social , economic and political significance. Eg A particular hairstyle, dress. is a direction or sequence of events that has some momentum and durability.eg Percentage of people who value physical fitness has risen steadily. large social,
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Trend

Megatrends are 3/27/12

Question
Which

are the major microenvironmental factors?

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Microenvironment
Elements which affect the company directly constitute the microenvironment.
Internal

Marketing Environment Factors within other functions of their own firm like HR recruiting personnel, Finance setting the price , Production manufacturing the products.
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Suppliers

and Vendors Provide an organization with goods and services which are transformed by the organization into value added products for customers. Companies operating in highly competitive environment where differentiation between products is minimal, obtaining supplies at the lowest possible price may be vital in order to be able to pass on cost savings in the form of 3/27/12
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Question
What

do you understand by services? What are the important characteristics of services?

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Service
A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of any thing. Its production may or may not be tied to a physical product. Depending on the service component, products can be 3/27/12

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Importance of Services
Agriculture, Fishing & Forestry turned to Manufacturing and Construction activities which finally leads to Service Industry(Contributes 52% of GDP). Administrative and Defense Services Insurance, banking &Finance Services 3/27/12 http://www.facebook.co

Reasons Increasing wealth More Leisure Time Higher percentage of women in the labor Greater Life force Expectancy Greater complexity of products Increasing complexity of 3/27/12 Safety and life

Types of Services required Interior Decoration, Laundry, Garden care Recreation and Entertainment, Travel Creches, Baby sitting, household domestic help Nursing homes and Healthcare services Maintenance for AC, PCs, Cars Specialists in IT, legal affairs, marriage counselling http://www.facebook.co Credit card,

Characteristics of Services
Following are the characteristics : Intangibility, Inseparability, Variability, Perishability, Ownership. I ) Intangibility Unlike physical products, services cannot be seen,tasted, felt, heard or smelled before they are bought.A person getting cosmetic surgery cannot see the results before the purchase 3/27/12 and the patient in the psychiatrists http://www.facebook.co

Intangible characteristics
Service Precise There

cannot be touched.

standardization is not possible. is no ownership transfer. be patented.

Cannot No

inventories.

Production

and consumption are 3/27/12 inseparable. http://www.facebook.co

2) Inseparability Whereas physical goods are manufactured, put into inventory, distributed through multiple resellers and consumed later, services are typically produced and consumed simultaneously. A barber cant give a haircut without being present. If a person renders the service, then the provider is part of the service. 3/27/12 Because the client is also often
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3) Variability Because the quality of service depends on who provides them, when and where and to whom , services are highly variable. Some doctors are very proficient surgeons, others are less.Service buyers are aware of this variability and often talk to others before selecting a service provider. Steps to increase service quality http://www.facebook.co
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Standardise

the service performance process throughout the organisation A service blueprint can simultaneously map out the service process, the points of customer contact and the evidence of service from the customers point of view. Eg. In Five star hotels, everything is 3/27/12 standardised, how to greet the
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Strategies for producing a better match between demand and supply Demand Side

Differential Pricing Shift demand from peak to off-peak hours. Eg movie tickets are priced low in weekdays. Non Peak demand can be cultured. 3/27/12 McDonaldhttp://www.facebook.co pushes

Service Mix
Product

As it is intangible, important issue is understanding what benefits and satisfaction the consumer is seeking from the service.Marketing of services is successful only if there is a match between service product from the customers viewpoint and the suppliers viewpoint.
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Price

Different terms used for different services. Tuition fee Colleges, Schools Fare Transport Commission Brokerage Services Fee Legal Service, Consultancy service
3/27/12 Interest Use of money http://www.facebook.co

Promotion

Customer relies more on subjective impressions than convert evidence.Customer is likely to judge the quality of service on the basis of the performer rather than the actual service. Cinemas, Roadways , Airlines Advertisement in newspaper
3/27/12 Doctors, Lawyers- Word of Mouth http://www.facebook.co

Distribution

- Important decision is the issue of location of the service so as to attract the maximum no. of customers. of the location of the service to the consumers.

Importance

- Fast food outlet(Convenient location) - Doctors and Beauty Parlours 3/27/12 (Location not important as decision http://www.facebook.co

People

First line of contact with the customers. Should be well informed and provides the kind of service which wins customer approval.Organizations spend more time in training the visible personnel as waiters in restaurant.
3/27/12 Categories of

service http://www.facebook.co

Process

System by which customers receive delivery of the service.Its a process of adding value to system inputs to create outputs which are useful for the customers. The performance process relates to the way in which service is created and delivered; It is concerned with the functional aspects of service 3/27/12
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Physical

Evidence

In its many forms, will help the potential customer to evaluate the service offering.Their impression of quality will always be subjective and based on their individual perception of the physical evidence and other elements of the service offering. For a fast food Restaurant, physical 3/27/12
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