MARKETING ENVIRONMENT AND ANALYSING CONSUMER MARKETS (Unit 1)

 



☝ MARKETING ENVIRONMENT

It consists of the action and forces outside the marketing that affect marketing management's ability to maintain a successful relationship with customers.

Internal factors (employees, consumers, shareholders, retailers & distributors, etc.) and external factors (political, legal, social, technical, economic) that surround the organization and influence its marketing operations are included in the marketing environment.

Marketing environment offers

  • Opportunities
  • Threats
Successful companies keep a constant watch on the rapidly changing environment.

EXAMPLE :

Supermarket vs e-commerce
Combination of Retailers & Home delivery giants
In India: All big brands using Amazon, Flipkart, BigBasket, Swiggy, Groffers, etc.





☝MICRO ENVIRONMENT

Micro Environment refers to the environment containing all the factors of the immediate environment of an organization that affects the company's efficiency since they have a direct impact on the daily business operations of the company.

The forces close to the company that affect its ability to serve its 

  • - Customers

  • - The company

  • - Suppliers

  • - Channel partners

  • - Customer markets

  • - Competitors

  • - Publics


1.The company - In designing the company's marketing plans marketing management must closely work with "other departments" and the "Top management".

2. Suppliers- Suppliers are an important link: in the company's overall customer value delivery system Supplier problems can impact marketing
  • -Shortages
  • - Delays
  • - Labor strike
  • - Input costs
3.Marketing Intermediaries

  • Firms that help the company promote, sell, and distribute its goods to the final buyers include Resellers: Wholesalers & retailers: have enough power to dictate terms.
  • Can even shut manufacturers from large markets
  • Physical distribution firms: Logistics firms: Co. must determine the best ways to store & ship goods. Find a good balance between Cost delivery, speed & safety
  • Marketing service agencies: MR firms, advertising agencies, media firms. Financial intermediaries: Banks credit companies, & insurance companies, etc.
4. Customers

Types of Customer markets

  • Consumer markets: Personal consumption of goods
  • Business markets: For further processing or use in the production process
  • Reseller markets: Resell for a profit
  • Government markets: For public service.
5. Competitors:

The marketing concept states: To be successful- a company must deliver better customer value & satisfaction than its competitors.

Companies must therefore

    • Gain strategic competitive advantage

    • Ensure superior positioning than competitors 

    • Large firms must use certain strategies that small firms cant deploy.


6. Publics

Any group that has an actual or potential interest in or impact on an organization's ability to achieve its objectives. stockholders etc
  • Financial publics: Banks,
  • Govt public: On issues like product safety,
  • truth in advertising, etc. Govt needs to be consulted.

☝ MACRO ENVIRONMENT

The situation that exists in the economy as a whole, rather than in a specific sector or region, is a macro environment. In general, developments in the gross domestic product (GDP), inflation, wages, expenditure, and monetary and fiscal policy are included in the macro-environment.



The larger societal forces that affect the macroenvironment 


  • Demographic

  • Economic

  • Natural

  • Technological

  • Political

  • Cultural Forces


1.Demographic Factors

Ultimately, demographic forces include human communities patronizing firms and contributing to the economy. There are several statistics, including age, gender, height, occupation, and need, that must be evaluated when it comes to demography.

2. Natural Factors

Natural forces that form a macro environment are ecological influences. It is primarily determined by the ease of access to natural resources used in the manufacture and sale of the products and services of a business.

3. Political Factors

The political environment in which they operate still restricts businesses. Laws and governments constantly influence how an enterprise can work and even have control over the industries that corporations can serve.

4. Economic Factors

Economic factors that influence the macro environment are linked to factors that affect how customers spend and their purchasing power. Several metrics and data are important to understand, including:

  • Gross Domestic Product (GDP) and its current rate of growth
  • The rates of unemployment
  • The Inflation
  • Personal income disposable
  • Existing Trends of Spending

5.Socio-Cultural Factors

In a way, socio-cultural variables contribute to demographics but are more related to communities and how they behave based on preference and values. Different cultures and cultural classes, often based on different core values and desires, are distinguished by different needs.

6. Technological Factors

Technological factors relate to the emergence of emerging technology and the way they form goods, the development of products, and access to new business opportunities. Wireless networking is a prime example of a powerful technical power today.


☝ Some tools for analyzing the marketing environment.

- PESTEL analysis

-SWOT analysis

a. PESTEL analysis

A PESTEL or PESTLE analysis (formerly referred to as PEST analysis) is a system or instrument used to evaluate and track macro-environmental factors that can have a significant effect on the efficiency of an organization. This instrument is particularly useful when beginning a new business or entering a foreign market.



1. Political Factors:

These variables are all about how and to what degree in the economy or a certain sector a government intervenes. Basically, all the influences a government has on your organization can be categorized here. This may include strategy, political stability, or instability of the government.

2. Economic Factors

Economic variables are determinants of the output of a certain economy. Economic growth, exchange rates, inflation rates, interest rates, consumer disposable income, and unemployment rates are variables. These factors may have a long-term direct or indirect effect on a business as it influences customer buying power and may potentially alter demand/supply models in the economy.

3.Social Factors

The demographic characteristics, standards, customs, and values of the community under which the organization works are reflected by this dimension of the social environment. This includes demographic patterns such as population growth rate, age distribution, distribution of income, job attitudes, focus on safety, knowledge of health, attitudes to lifestyle, and cultural barriers.

4.Technological Factors

These factors apply to technological advances that may favorably or unfavorably affect the operations of the industry and the market. This refers to the rewards for technology, the degree of innovation, automation, activity in research and development (R&D), technological change, and the amount of technological knowledge a market has.

5.Environmental Factors

Just relatively recently have environmental factors have come to the forefront. Due to the growing shortage of raw materials, emissions quotas, and government-set carbon footprint targets, have become relevant. These variables include environmental and ecological factors, such as weather, atmosphere, environmental compensation, etc.

6. Legal Factors

While these factors overlap with political factors, they include more specific laws, such as laws on discrimination, antitrust laws, laws on jobs, laws on consumer protection, laws on copyright and patents, and laws on health and safety. To trade effectively and ethically, it is apparent that businesses need to know what is and what is not legal.

b. SWOT analysis


☝ Market demand

The total volume that would be brought:-

- by a defined customer group
- in a defined geographical area
- in a defined time period
- in a defined marketing environment
- under a marketing program


☝ Market Potential

The market potential is the valuation of all the supply networks in a market's sales revenue. The market opportunity is the audience that is interested in the product/service an organization produces or provides. In other words, if it capitalizes on all benefits and everything goes its way, the business opportunity is a company's potential money-making capability.

☝ Sales Potential

Sales potential is a statistic that represents the optimum or cumulative sales of all prospective product buyers. A marketing exercise that determines the highest potential a commodity can have is market potential. Generally, it is a proportion of the overall potential of the market.

☝ Market share

Market share is the percentage of the overall revenue generated by a specific business in an industry. Market share is determined by taking the revenue of the business over the same period and dividing it by the industry's total sales over the same period.



ANALYSING CONSUMER MARKETS

Segmenting Consumer markets

Dividing the market into different 3 groups according to the different benefits that consumers seek from the product/service

(a)BENEFIT SOUGHT-

Example: Travel

With Family-relax

Adventure/Education 

Gambling /fun


(b)User Status

Example: shampoo/Hir conditioners

Nonusers

Ex -users

Potential users

First-time users

Regular users


(c)Usage rate

Light

Medium

Heavy


☝ Segmenting Business markets

Five Major Segmentation variables

1.Demographics


Industry- Which buyer industry to focus on?

Eg-oil:buyers: steel industry: automobile industry, cement industry.

Co size- Which size of co. to focus on?

Small, medium, large

Location- Which Geographical area to focus on?

Religion, states, cities, towns.


2.Operating variables

  • Technology- what customer technologies to focus on?

  • User nonuser status- should we focus on High, Medium, heavy, or nonusers.

  • Customer capabilities


3.Purchasing Approaches

  • Purchasing functions organization-  Focus on companies with centralized or decentralized purchasing function?

  • Power structure- Focus on engineering, financing, or marketing dominated cos?.....


  • Purchase criteria- Focus on cos seeking quality, price, or service?

4.Situational Factors

  • Urgency: Should we focus on cos which needs quick delivery or service?

  • Specific Application: should we focus on a few applications of our product rather than all?...

  • Size of order: Should we focus on large or small orders?

5.Personal Characteristics

Buyer seller, similarity-Should we focus on cos whose people and values are similar to ours?

Attitude towards risks-Should we focus on risk-taking or risk-avoiding customers?..

Loyalty-Should we focus on cos. That show high loyalty to their supplier


☝ Segmenting International markets


Five Segmentation variables


1.Geographic Location: Grouping cos by region-

  • US

  • Europe

  • Asia Pacific

  • Middle East

  • Africa

Nation close to each other may have common traits & behavior.


2.Economic Factors: Grouping developed countries and developing countries separately.


3.Political Legal Factors


  • Types & Stability of governments

  • Receptivity of foreign firms

  • Monetary regulation

  • Amount of bureaucracy


4.Cultural Factors


  • Common language

  • Religion

  • Value & Attitude

  • Customs & Behavioral Patterns


5.Intermarket segmentation


Forming segments of consumer who have similar needs and buying behavior even though they

are located in different countries





1. Need Recognition


The buying decision process starts when a customer knows they have a need. They become conscious they have a dilemma they want to fix or avoid they want to fill. The customer may or may not know what will solve their problem at this stage. They may just be conscious that their reality or circumstance needs to change. Or they may have an idea of what would benefit them, but they are not quite sure which brand, product, service, or solution will provide the best choice.

2. Information Search


When the consumer begins searching for knowledge that can help them solve their dilemma, the next step of the buying decision process starts. In order to remedy their problem, they know they need something, but they are not sure which solution is best for them.

The customer starts looking for details that can help him or her better understand their situation and determine what will address their problems. The consumer also turns to online analysis at this stage and searches to find solutions.

3. Option Evaluation


When the initial search for knowledge is complete, customers begin to focus on what they found or discovered. To determine which is the best solution to their problem, they begin to evaluate their options.

Customers have a lot to consider at this stage in the buying decision process. They need to decide the most trustworthy, accessible, best quality, and highest performing solution. They look for reasons to think that one strategy has more advantages than the other.

4. Purchase Decision


The consumer is able to pull the trigger and make a purchase at this stage in the purchasing decision process. They have made their decision and are ready to purchase which product, service, brand, or solution is best for them. The analysis and appraisal are over, so now the consumer just wants a straightforward path to buy. You need to make it easy to buy in order for a brand to support consumers during this process.

5. Post-Purchase Evaluation


The journey to buying is complete at the last step of the five-stage customer decision-making process. A purchase was made by the client. But that doesn't mean the journey for the customer is complete. Now is the moment where the client thinks about whether they have made the correct decision.


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