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1. Module IIModule II
Dr. Bhumija ChouhanDr. Bhumija Chouhan

2. Marketing EnvironmentMarketing Environment

The forces that directly and indirectly influence an The forces that directly and indirectly influence an
organization’s capability to undertake its business.organization’s capability to undertake its business.

The trading forces operating in a market place over The trading forces operating in a market place over
which a business has no direct control ,but which which a business has no direct control ,but which
shape the manner in which the business function and shape the manner in which the business function and
is able to satisfy its customers.is able to satisfy its customers.

Environment offers both opportunities and threats.Environment offers both opportunities and threats.

3. Marketing EnvironmentMarketing Environment

According to Philip Kotler : “ A company According to Philip Kotler : “ A company
marketing environment consists of the marketing environment consists of the
actors and forces that affect the actors and forces that affect the
company’s ability to develop and company’s ability to develop and
maintain successful transactions and maintain successful transactions and
relationships with its target customers.” relationships with its target customers.”

4. COMPONENTS OF MARKETING COMPONENTS OF MARKETING
ENVIRONMENTENVIRONMENT

Internal environmentInternal environment : Forces and actions : Forces and actions
inside the firm that affect the marketing inside the firm that affect the marketing
operation composed of internal stake holders operation composed of internal stake holders
and the other functional areas within the and the other functional areas within the
business organization.business organization.

External environmentExternal environment
•
Macro environmentMacro environment
•
Micro environmentMicro environment

5. WHY IS IT IMPORTANTWHY IS IT IMPORTANT
•An understanding of macro and micro marketing An understanding of macro and micro marketing
environment forces is essential for planning.environment forces is essential for planning.
•Helps a business to compete more effectively against Helps a business to compete more effectively against
its rivals.its rivals.
•Assists in the identification of opportunities and Assists in the identification of opportunities and
threats.threats.
•Enables an organization to take advantage of Enables an organization to take advantage of
emerging strategic opportunities.emerging strategic opportunities.

6. THE INTERNAL ENVIRONMENTTHE INTERNAL ENVIRONMENT
All factors that are internal to the All factors that are internal to the
organization are known as the 'internal organization are known as the 'internal
environment'. They are generally audited by environment'. They are generally audited by
applying the 'Five Ms' which are applying the 'Five Ms' which are MMen, en, MMoney, oney,
MMachinery, achinery, MMaterials and aterials and MMarkets. The arkets. The
internal environment is as important for internal environment is as important for
managing change as the external. As managing change as the external. As
marketers we call the process of managing marketers we call the process of managing
internal change 'internal marketing.‘internal change 'internal marketing.‘

7. INTERNAL PROCESSES AND INTERNAL PROCESSES AND
PROCEDURESPROCEDURES

Allocation of responsibilities within the Allocation of responsibilities within the
organization.organization.

Resources availability .Resources availability .

The extent to which the major functional The extent to which the major functional
areas work together supporting the areas work together supporting the
marketing function to be customer oriented .marketing function to be customer oriented .

The culture of organization. The culture of organization.

The attitude of internal stakeholders.The attitude of internal stakeholders.

9. Micro EnvironmentMicro Environment

The forces close to the company that affects its ability to The forces close to the company that affects its ability to
serve.serve.
•It comprises all those organizations and individuals who It comprises all those organizations and individuals who
directly affect the activities of a company.directly affect the activities of a company.
•All factors which impact directly on a firm and its activities in All factors which impact directly on a firm and its activities in
relation to a particular market.relation to a particular market.
1.1.CompanyCompany
2.2.SuppliersSuppliers
3.3.The market intermediaries The market intermediaries
4.4.Customers. Customers.
5.5.Competitors Competitors
6.6.PublicPublic

10. Actors in the Actors in the
MicroenvironmentMicroenvironment

11. Company Company

Company /organization consists of Board of Directors and Company /organization consists of Board of Directors and
functional managers.functional managers.

Marketing plans are drawn up as per the philosophy of Top Marketing plans are drawn up as per the philosophy of Top
managementmanagement

Marketing decisions like new products, expansion, etc depend Marketing decisions like new products, expansion, etc depend
on the support of top management. It depends upon finance, on the support of top management. It depends upon finance,
managerial skills, organization’s strengths and weaknesses.managerial skills, organization’s strengths and weaknesses.

Marketing plans should be in harmony with policies of other Marketing plans should be in harmony with policies of other
departments such as production, purchase, finance, personnel, departments such as production, purchase, finance, personnel,
etc For ex: quality depends upon production policies etc For ex: quality depends upon production policies
Advertising and sales promotion – on budgetsAdvertising and sales promotion – on budgets

12. SuppliersSuppliers

Suppliers are either individuals or business houses.Suppliers are either individuals or business houses.

They provide resources needed by the company .They provide resources needed by the company .

The developments in the suppliers environment have The developments in the suppliers environment have
a substantial impact on the marketing operations of a substantial impact on the marketing operations of
the company .the company .

Companies can lower their supply costs and increase Companies can lower their supply costs and increase
product quality to gain competitive advantage in the product quality to gain competitive advantage in the
market.market.

Decisions like ‘ make or buy’ depend upon– Right Decisions like ‘ make or buy’ depend upon– Right
supplier – Right place – Right time and lead time – supplier – Right place – Right time and lead time –
Right price – Right quantity – Right qualityRight price – Right quantity – Right quality

Good relations are required for successful marketingGood relations are required for successful marketing

13. Market IntermediariesMarket Intermediaries

They are either business houses or They are either business houses or
individuals .individuals .

They help the company in promoting, They help the company in promoting,
selling and distributing the goods to selling and distributing the goods to
customers.customers.

They are middlemen, distributing They are middlemen, distributing
agencies, market service agencies and agencies, market service agencies and
financial institutions.financial institutions.

14. CustomersCustomers

The target market of the company is usually of five types:The target market of the company is usually of five types:
1.Consumer market i.e. individual and householders1.Consumer market i.e. individual and householders
2.Industrial market i.e. organizations buying for producing other 2.Industrial market i.e. organizations buying for producing other
and services.and services.
3.Reseller market i.e. organizations buying goods and services 3.Reseller market i.e. organizations buying goods and services
with a view to sell them to others.with a view to sell them to others.
4.Government and other non profit markets .i.e. those buying 4.Government and other non profit markets .i.e. those buying
goods and services in order to produce public services.goods and services in order to produce public services.
5.International market i.e. individuals and organizations of 5.International market i.e. individuals and organizations of
nations other then home land who buy for either consumption nations other then home land who buy for either consumption
or industrial use.or industrial use.

15. Competitors Competitors

No company stands alone in serving and satisfying the No company stands alone in serving and satisfying the
needs of a customer market. It faces competition.needs of a customer market. It faces competition.

This helps the company in facing a host of competitors This helps the company in facing a host of competitors
with confidence .with confidence .

The company in order to come out successfully has to The company in order to come out successfully has to
adopt means which may help it to outmaneuver.adopt means which may help it to outmaneuver.

The competitive environment consists of certain basic The competitive environment consists of certain basic
things which every marketing manager has to take things which every marketing manager has to take
note of.note of.

Philip Kotler ‘the best way for a company to grasp the Philip Kotler ‘the best way for a company to grasp the
full range of its competition is to take view point of a full range of its competition is to take view point of a
buyer.”buyer.”

16. PublicPublic

Public is defined as ‘any group that has an Public is defined as ‘any group that has an
actual or potential interest in or impact on a actual or potential interest in or impact on a
company’s ability to achieve it’s objective.company’s ability to achieve it’s objective.

The actions of the company do affect the The actions of the company do affect the
interest of other groups i.e., those who form interest of other groups i.e., those who form
general public for the company who must be general public for the company who must be
satisfied along with the consumers of the satisfied along with the consumers of the
company.company.

According to Kotler ‘companies must put their According to Kotler ‘companies must put their
primary energy into effectively managing their primary energy into effectively managing their
relationships with their customersrelationships with their customers

17. The Macro
Marketing
Environment

18. Macro environmentMacro environment
Macro environment refers to those Macro environment refers to those
factors which are external to factors which are external to
company’s activities and do not company’s activities and do not
concern the immediate environmentconcern the immediate environment..
It comprises general forces that affect all It comprises general forces that affect all
business activities in marketbusiness activities in market

19. Factors affecting Macro Factors affecting Macro
environmentenvironment
1.1.POLITICAL FORCESPOLITICAL FORCES
2.2.ECONOMIC FORCESECONOMIC FORCES
3.3.SOCIAL AND CULTURAL FORCESSOCIAL AND CULTURAL FORCES
4.4.NATURAL FORCESNATURAL FORCES
5.5.TECHNOLOGICAL FORCESTECHNOLOGICAL FORCES
6.6.DEMOGRAPHIC FORCESDEMOGRAPHIC FORCES

20. Political FactorPolitical Factor

Marketing is affected by monetary, fiscal, Marketing is affected by monetary, fiscal,
import and export policiesimport and export policies

Some of the Acts applicable are as follows:Some of the Acts applicable are as follows:
1.1.Essential Commodities ActEssential Commodities Act
2.2.Prevention of Food Adulteration ActPrevention of Food Adulteration Act
3.3.Trade and Merchandise marks ActTrade and Merchandise marks Act
4.4.Packaged Commodities ActPackaged Commodities Act
5.5.Companies Act Companies Act

21. 
Political and legal factors are inter Political and legal factors are inter
connectedconnected

Discontinuation of – CCI, FERA, IDRADiscontinuation of – CCI, FERA, IDRA

Introduction of SEBI, FEMA, VATIntroduction of SEBI, FEMA, VAT

Rules allow private participation in Rules allow private participation in
transportation , telecom, airlinestransportation , telecom, airlines

22. Economic FactorsEconomic Factors

Economic forces influence both marketers Economic forces influence both marketers
and the consumersand the consumers

Economic forces include –Economic forces include –
1.1.Competition – monopoly, oligopolyCompetition – monopoly, oligopoly
2.2.Buying powerBuying power
3.3.Willingness to spendWillingness to spend
4.4.Economic developmentEconomic development
5.5.National incomeNational income
6.6.Standard of livingStandard of living

23. 7.7.State of agriculture State of agriculture
8.8.Business cyclesBusiness cycles
9.9.Interest rateInterest rate
10.10.Price levelsPrice levels
11.11.Fiscal policies marketers have to take Fiscal policies marketers have to take
into consideration the changes taking into consideration the changes taking
place in agriculture and industry place in agriculture and industry

24. Social and Cultural FactorsSocial and Cultural Factors

Culture, social class, tradition, beliefs, Culture, social class, tradition, beliefs,
values and lifestyles of the people in a values and lifestyles of the people in a
given society constitute the socio-cultural.given society constitute the socio-cultural.

Socio-cultural environment has two main Socio-cultural environment has two main
parts:parts:

1. Culture1. Culture

2. Social Class2. Social Class

25. Natural FactorsNatural Factors

Involves the natural resources that Involves the natural resources that
are needed as inputs by marketers are needed as inputs by marketers
or that are affected by marketing or that are affected by marketing
activities.activities.

26. Factors Impacting the Natural Factors Impacting the Natural
EnvironmentEnvironment
Shortages of Raw Materials
Increased Pollution
Increased Government Intervention
Environmentally Sustainable Strategies

27. Technological FactorsTechnological Factors

Changes rapidly.Changes rapidly.

Creates new markets and opportunities.Creates new markets and opportunities.

Challenge is to make practical, Challenge is to make practical,
affordable products.affordable products.

Safety regulations result in higher Safety regulations result in higher
research costs and longer time between research costs and longer time between
conceptualization and introduction of conceptualization and introduction of
product.product.

28. 
It has a definite impact on buyers and It has a definite impact on buyers and
marketers decisionsmarketers decisions

It provides mechanical, physical and It provides mechanical, physical and
numerous other processes which help in numerous other processes which help in
attaining higher standard of livingattaining higher standard of living

It has adverse effects like pollution, It has adverse effects like pollution,
unemployment, increase in crime rate, etcunemployment, increase in crime rate, etc

Marketers must be aware of new Marketers must be aware of new
developments in technologydevelopments in technology

29. 
Technological developments may put some Technological developments may put some
people out of business and at the same time, people out of business and at the same time,
open up new business opportunities to othersopen up new business opportunities to others

For ex: introduction of synthetic fabrics drove For ex: introduction of synthetic fabrics drove
away sheep raisers and cotton growers out of away sheep raisers and cotton growers out of
business business

Solar pocket calculators and hand cameras, Solar pocket calculators and hand cameras,
CDs and Video tapes, Virtual reality CDs and Video tapes, Virtual reality
applications in Marketing is a new application applications in Marketing is a new application
due to technological progressdue to technological progress

30. Demographic FactorsDemographic Factors

Demography gives ‘consumer profile’Demography gives ‘consumer profile’

It is the study of population in respect of its It is the study of population in respect of its
size, density, location, age, race, occupation, size, density, location, age, race, occupation,
marital status, education, sex composition etcmarital status, education, sex composition etc

Buying habits are determined by income, Buying habits are determined by income,
education, age, family composition and other education, age, family composition and other
demographic factorsdemographic factors

It helps in - Market segmentation, demand It helps in - Market segmentation, demand
forecasting, determination of market potentialforecasting, determination of market potential

31. Responding to the marketing Responding to the marketing
environmentenvironment

There are two general approaches to respond There are two general approaches to respond
to marketing environmental forces, viz., (1) to marketing environmental forces, viz., (1)
Passive approach and (2)Aggressive approachPassive approach and (2)Aggressive approach

Passive or reactive approach:Passive or reactive approach:

Under this approach the marketing strategy is Under this approach the marketing strategy is
subject to micro environment with macro subject to micro environment with macro
environment.environment.

Environmental objectives of 2010 are set in Environmental objectives of 2010 are set in
2000 and strategies are developed in 1998 2000 and strategies are developed in 1998
and the organizational structure is and the organizational structure is
established in 1995.established in 1995.

32. 
Stable environment is very rare. Turbulent Stable environment is very rare. Turbulent
environment is common. Marketing environment is common. Marketing
environment should be scanned environment should be scanned
systematically. These guide marketing systematically. These guide marketing
opportunities. Marketing strategy normally opportunities. Marketing strategy normally
follows passive approach that is coordinating follows passive approach that is coordinating
micro environment with macro environmentmicro environment with macro environment

India has opportunities for handcraft goods, India has opportunities for handcraft goods,
ready made garments, fast food products, ready made garments, fast food products,
software development, call centres and those software development, call centres and those
areas which are labour intensiveareas which are labour intensive

33. 
2) 2) Aggressive approachAggressive approach

Marketing manager tries to influence Marketing manager tries to influence
environmental forces so as to create environmental forces so as to create
market opportunities.market opportunities.

A firm can be able to influence the A firm can be able to influence the
shape of legislation through lobbyingshape of legislation through lobbying

A single organization cannot influence – A single organization cannot influence –
population, economic conditionpopulation, economic condition

34. 
A system that analyzes and assesses A system that analyzes and assesses
marketing information, gathered marketing information, gathered
continuously from sources inside and continuously from sources inside and
outside an organization. Timely outside an organization. Timely
marketing information provides basis marketing information provides basis
for decisions such as product for decisions such as product
development or improvement, pricing, development or improvement, pricing,
packaging, distribution, media packaging, distribution, media
selection, and promotion. selection, and promotion.

35. Marketing-MixMarketing-Mix
A unique blend of product, distribution, A unique blend of product, distribution,
promotion, and pricing strategies promotion, and pricing strategies
designed to produce mutually satisfying designed to produce mutually satisfying
exchanges with a target market.exchanges with a target market.

36. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

37. 
Simply, to meet consumersSimply, to meet consumers ’’ needs, needs,
businesses must produce the right businesses must produce the right
product, at the right price, make it product, at the right price, make it
available at the right place, and let available at the right place, and let
consumers know about it through right consumers know about it through right
promotion. promotion.

38. The 4 Ps & The 4 Ps & 4Cs4Cs
Marketing
Mix
Product
Price Promotion
Place
Customer
Solution
Customer
Cost
Communication
Convenience

39. Product StrategiesProduct Strategies
Product

The starting point of The starting point of
the “4 Ps”the “4 Ps”

Includes physical unit, Includes physical unit,
package, warranty, package, warranty,
service, brand, image, service, brand, image,
and valueand value

40. Distribution (Place) StrategiesDistribution (Place) Strategies
Place

Product availability Product availability
where and when where and when
customers want them.customers want them.

Involves all activities Involves all activities
from raw materials to from raw materials to
finished productsfinished products

41. Promotion StrategiesPromotion Strategies
Promotion

Role is to bring about Role is to bring about
exchanges with target exchanges with target
marketsmarkets

Includes integration of Includes integration of
personal selling, personal selling,
advertising, sales advertising, sales
promotion, and public promotion, and public
relationsrelations

42. Pricing StrategiesPricing Strategies
Price

The most flexible of The most flexible of
the “4 Ps”the “4 Ps”

Price X Units Sold = Price X Units Sold =
Total RevenueTotal Revenue

43. Extended Marketing-MixExtended Marketing-Mix

Traditional 4Ps extended to encompass Traditional 4Ps extended to encompass
growth of service industrygrowth of service industry

7Ps – Price, Product, Promotion, Place, 7Ps – Price, Product, Promotion, Place,
People, Process, Physical EnvironmentPeople, Process, Physical Environment

53. The Marketing MixThe Marketing Mix

Blend of the mix depends upon:Blend of the mix depends upon:
1.1.Marketing objectivesMarketing objectives
2.2.Type of productType of product
3.3.Target marketTarget market
4.4.Market structureMarket structure
5.5.Rivals’ behaviourRivals’ behaviour
6.6.Global issues – culture/religion, etc.Global issues – culture/religion, etc.
7.7.Marketing positionMarketing position
8.8.Product portfolioProduct portfolio

Product lifecycleProduct lifecycle

Boston MatrixBoston Matrix

54. Modern Marketing RealitiesModern Marketing Realities
P
Product
Place
Promotio
n
Price
People
Processes
Programs
Performance
s

55. 
People People reflects in part internal reflects in part internal
marketing and the fact that employees marketing and the fact that employees
are critical to marketing success. It also are critical to marketing success. It also
reflects the fact that marketers must reflects the fact that marketers must
view consumers as people to view consumers as people to
understand their lives more broadly understand their lives more broadly
and not just as they shop for and and not just as they shop for and
consume products and services.consume products and services.

56. 
ProcessesProcesses reflect all the creativity, reflect all the creativity,
discipline and structure brought to MMdiscipline and structure brought to MM

By instituting the right set of processes By instituting the right set of processes
to guide activities and programs can a to guide activities and programs can a
firm engage in mutually beneficial long firm engage in mutually beneficial long
term relationshipterm relationship

57. 
Programs reflects all the firms Programs reflects all the firms
consumer directed activities.consumer directed activities.

It encompasses the old four Ps as well It encompasses the old four Ps as well
as a range of other marketing activities as a range of other marketing activities
that might not fit as neatly into the old that might not fit as neatly into the old
view of marketingview of marketing

58. 
Performance Performance is being defined as is being defined as
holistic marketing to capture the range holistic marketing to capture the range
of possible outcome measures that of possible outcome measures that
have financial and non financial have financial and non financial
implications implications

59. Marketing MyopiaMarketing Myopia

Marketing MyopiaMarketing Myopia is narrow minded is narrow minded
approach to a marketing situation where only approach to a marketing situation where only
short-range goals are considered or Where short-range goals are considered or Where
the marketing focuses on only one aspect out the marketing focuses on only one aspect out
of many possible marketing attributes of many possible marketing attributes

Is management’s failure to recognize the Is management’s failure to recognize the
scope of its business.scope of its business.

To avoid marketing myopia, companies must To avoid marketing myopia, companies must
broadly define organizational goals toward broadly define organizational goals toward
consumer needs.consumer needs.

60. 
Refer to the short sightednessRefer to the short sightedness

The marketer wants to sell the product The marketer wants to sell the product
and services, without much focusing on and services, without much focusing on
the customer demands/needs. the customer demands/needs.

61. CausesCauses

Company thinks, its growth is guaranteed by Company thinks, its growth is guaranteed by
expanding population expanding population

Believe there is no competitive substitutesBelieve there is no competitive substitutes

Mass Production- Not concentrating on the Mass Production- Not concentrating on the
needs of the customer needs of the customer

Focusing on product rather than the Focusing on product rather than the
customer (Lacking innovation) customer (Lacking innovation)

Not considering the changing consumer Not considering the changing consumer
lifestyle in digital age lifestyle in digital age

62. Examples from Indian MarketExamples from Indian Market

Harrison LocksHarrison Locks

Market leader – locksMarket leader – locks

Case of marketing Case of marketing
myopia.myopia.

Poor Advertisement Poor Advertisement

Enters new domains.Enters new domains.

India’s - security India’s - security
solutions myopia solutions myopia
provider. provider.

LML VESPALML VESPA

India - collaboration India - collaboration
- Bajaj Auto.- Bajaj Auto.

Failed - LML entered Failed - LML entered
motorcycles.motorcycles.

Failed - sweeping Failed - sweeping
changes in two changes in two
wheeler marketwheeler market

63. Contd.Contd.

CaronaCarona: :

Was Heritage brand & second largest Was Heritage brand & second largest
footwear company.footwear company.

Couldn’t withstand competition after 1991Couldn’t withstand competition after 1991

Was stiff competitor to BATAWas stiff competitor to BATA

Failed when introduced PUMAFailed when introduced PUMA

Went out due to mismanagementWent out due to mismanagement

64. Contd.Contd.

Tata SierraTata Sierra

First Passenger car –First Passenger car –
Telco (TATA Motors).Telco (TATA Motors).

Brand came too earlyBrand came too early

Classic case- marketing Classic case- marketing
myopiamyopia

Failed - steep price & Failed - steep price &
quality issue. quality issue.

Didn’t appeal - value Didn’t appeal - value
proposition of consumerproposition of consumer

KelvinatorKelvinator

Parent Company – Parent Company –
ElectroluxElectrolux

Killed - sheer negligence-Killed - sheer negligence-
marketing myopiamarketing myopia

Disaster –Whirlpool Disaster –Whirlpool
acquired in 1996. acquired in 1996.

Came back - Electrolux Came back - Electrolux
1997.1997.

Brand killed - 2005 Brand killed - 2005