Major and Minor Factors that Affect the Marketing Environment

1. MARKETING
ENVIRONMENT
Prof Prashant Kumar Gupta
Jain College Of MBA and
MCA

2. Why To Study??
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An understanding of macro and micro marketing
environment forces is essential for planning.
Helps a business to compete more effectively
against its rivals.
Assists in the identification of opportunities and
threats.
Enables an organization to take advantage of
emerging strategic opportunities.

3. Environment
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Environment literally means the surroundings,
external objects, influences or circumstances
under which someone or something exists.
The environment of an organization is the
aggregate of all conditions, events and
influences that surrounds and affects it.

4. Marketing Environment


The external forces that directly and indirectly
influence an organization’s capability to
undertake its business.
The forces operating in a market place over
which a business has no direct control ,but
which shape the manner in which the business
function and is able to satisfy its customers.

5. Types Of Environment
Internal environment :
Forces and actions inside the firm that
affect the marketing operation composed of
internal stake holders and the other functional
areas within the business organization.
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External environment
 Macro environment
 Micro environment

7. Micro Environment
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
The forces close to the company that affects
its ability to serve.
It comprises all those organisations and
individuals who directly affect the activities
of a company.

8. Factors in the Micro
Environment

9. The Company
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Top management
Finance
R&D
Purchasing
Operations
Accounting

10. Suppliers
Suppliers are either individuals or business houses.

They provide resources needed by the company.

The developments in the suppliers environment
have a substantial impact on the marketing
operations of the company.

Companies can lower their supply costs and
increase product quality to gain competitive
advantage in the market.

Supply shortages have to be fully monitored and
plans should be made to avoid it.


11. Marketing Intermediaries
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
Help the company to promote, sell and
distribute its products to final buyers
Intermediaries take many forms.
Resellers
Physical
Distribution
Firms
Marketing
Services
Agencies
Financial
Intermediaries

12. Competitors

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Competitors are those who sell the goods and
services of similar description in the same
market.
The company in order to come out successfully
has to adopt means which may help it to
outmaneuver them.

13. Public

Public is defined as any group that has an
actual or potential interest in or impact on a
company’s ability to achieve it’s objective.
 Financial
public
 Media public
 Government public
 Local public
 General public
 Internal public

14. Customers
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1.
2.
3.
4.
5.
The target market of the company is usually of
five types:
Ultimate customers
Industrial customers
Resellers
Government and other non- profit customers
International customers

15. Macro Environment
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Macro environment refers to those factors
which are external to company’s activities and
do not concern the immediate environment.
These are uncontrollable factors which
indirectly affect the concern’s ability to operate
in the market effectively.

16. Factors in the Macro
Environment

17. The Demographic Environment
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Study of human populations in terms of size,
density,
location,
age,
gender,
race,
occupation, and other statistics.
Important because it involves people, and
people make up markets.
Demographic trends include age, family
structure, geographic population shifts,
educational characteristics, and population
diversity.

18. Demography:
Population Growth
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Currently 7 billion and expected to reach 8.1
billion by 2025
It means bigger market specially countries like
India, China, Africa, etc
But at the same time it can be harnessed only
when there is economic growth resulting into
higher purchasing power

19. Demography:
Population Age Mix
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India is a young country which will have a
median age of 30 in 2025.
Marketers need to identify the ‘Youth
Segment’

20. Demography:
Literacy Levels
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About 74% Indians are literate. (Government’s
definition of being a literate is worth noticing).
But 82% of ‘Young India’ is literate.
Results are a big segment as consumers and
influencers

21. The Economic Environment
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Economic environment consists of factors that
affect consumer purchasing power and
spending patterns.
Under economic environment manager
generally studies:Trends of gross national product
Patterns of real growth in income
Variations in geographical income distribution.
Borrowing pattern ,trends and governmental
and legal restrictions.

22. Economy:
Income Distribution
Destitute: Annual household income of 16,000
Are not active participants for exchange of goods for
wide range of goods

Aspirants: Annual household income of 16,000 –
22,000
New entrants in the consumption market as real income
has increased

Climbers: Annual household income of 22,000 –
45,000
Have desire and willingness to by but limited cash

Consuming Class: Annual household income of
45,000 – 2,10,000
Majority of consumers, have money and willing to spend


23. 
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Ernst Engel—Engel’s Law
As income rises:
 Percentage spent on food declines
 Percentage spent on housing remains
constant
 Percentage spent on savings increases
 Percentage spent on luxury increases

24. Socio-Cultural Environment
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Consists of institutions and other forces that
affect a society’s basic values, perceptions, and
behaviors like religion.
Core beliefs and values are persistent and
are passed on from parents to children and are
reinforced by schools, religion, businesses, and
government
Secondary beliefs and values are more
open to change and include people’s views of
themselves, others, organizations, society,
nature, and the universe

25. Socio-Cultural Environment:
Importance
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Socially responsible marketing is eliminating
socially harmful products.
Understanding the diversity is key to marketing
success.
Product and Brand preferences have regional
biasness.
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Diversity affects the marketing communication.
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Defines customers’ taste and preferences.

26. Natural Environment
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1.
2.
3.
Involves the natural resources
that are needed as inputs by marketers or that
are affected by marketing activities
Natural Environment trends:Shortage of raw materials.
 Limited quantities of non-renewable
resources.
Increased pollution.
 Waste disposal, air/water pollutants.
Increased government intervention.
 Kyoto and other initiatives.

27. Natural Environment:
Importance
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1.
2.
3.
80% people considered ‘The effect on
environment’ before buying a product in US.
More than 50% people asserted on purchase of
recycled goods.
Responsible for breaking customer loyalty.
Many marketers used THE GREEN PITCH but
failed. Why?
Lack of credibility
No willingness to pay extra for environment
Poor design and inappropriately placed

28. Technological Environment
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One of the most dramatic forces in changing
peoples life.

Creates new products and opportunities

Safety concerns increases costs
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Challenge is to make practical, affordable
products.
Big time gap between conceptualisation and
intialisation

29. Political-Legal Environment
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Consists of laws, government agencies, and
pressure groups that influence or limit various
organizations and individuals in a given society.
Key trends include:
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Increased legislation to protect
businesses as well as consumers.
Changes in governmental agency
enforcement.
Increased emphasis on ethical
behavior and social responsibility.

30. 
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Marketers must have good working knowledge
about laws related to competitors, consumers
and society.
Understand the Consumer Protection Act,
1986

31. Ways To Respond To The
Environment
Uncontrollable
Proactive
Reactive
• React and
adapt to
forces in the
environment
• Aggressive
actions to
affect forces
in the
environment
• Watching
and reacting
to forces in
the
environment

32. Thank You…!
That’s it For Today 