Marketing Environment PDF

Marketing Environment By Dr. Ganga Susheel Warriar  Marketing Environment It refers to the external factors and forces that affect a company's ability to develop and maintain successful relationships with its target customers. It can be broadly divided into two categories: ...

Marketing Environment By Dr. Ganga Susheel Warriar  Marketing Environment It refers to the external factors and forces that affect a company's ability to develop and maintain successful relationships with its target customers. It can be broadly divided into two categories:  Microenvironment Components of the Microenvironment: The Company: Internal departments (e.g., marketing, finance, R&D) influence the marketing strategy. Ex: A company’s marketing team collaborates with R&D to develop a new product based on consumer preferences. Suppliers: Provide the materials and resources needed to produce goods and services. Ex: A smartphone manufacturer relies on suppliers for components like chips and batteries. Marketing Intermediaries: Help the company promote, sell, and distribute its products. Ex: Retailers like Walmart or e-commerce platforms like Amazon act as intermediaries for consumer products. Competitors: Companies that offer similar products or services. Ex: Coca-Cola and Pepsi are direct competitors in the soft drink market. Customers: The target audience for the company's products or services. Ex: Nike targets athletes and fitness enthusiasts with its sports apparel. Publics: Various groups that can impact or are impacted by the company’s marketing efforts. Ex: A local community may be considered a public if they are affected by a company’s operations, such as when a new factory opens.  Macro-environment Demographic Environment: Characteristics of the population such as age, gender, education, and income levels. Ex: A company may develop products specifically for the growing senior population, such as hearing aids. Economic Environment: Factors like inflation, unemployment rates, and economic growth that affect consumer purchasing power. Ex: During a recession, consumers may cut back on luxury spending, which affects high-end retailers. Natural Environment: Environmental factors like climate change, resource availability, and environmental regulations. Ex: Companies moving towards sustainable packaging due to environmental concerns (e.g., McDonald’s using paper straws). Technological Environment: Changes in technology that affect how companies produce and deliver products. Ex: The rise of artificial intelligence and automation is transforming industries such as customer service with chatbots. Political and Legal Environment: Government regulations, policies, and legal factors that can impact marketing strategies. Ex: Tobacco companies face stringent advertising restrictions in many countries. Socio - Cultural Environment: Societal values, beliefs, and norms that shape consumer preferences.  Socio - Cultural Environment Cultural Values and Beliefs: The shared principles and moral standards that guide behaviors in a society. In some cultures, collective decision-making (family-oriented) is valued over individualism, influencing how products like family vacations are marketed. Social Norms and Customs: The accepted rules of behavior that influence how people interact and behave in specific settings. In Japan, gifting is a strong tradition, and companies often design products with attractive packaging during festivals and holidays to align with this custom. Lifestyles: The way people live their lives, which includes their interests, activities, and spending patterns. As more people adopt healthier lifestyles, the demand for fitness products, organic food, and wellness services increases. Socio - Cultural Environment Language and Communication Styles: Language differences, dialects, and communication preferences affect marketing strategies, including packaging, advertising, and product names. Companies localize their advertising campaigns to resonate with different linguistic and cultural groups. Pepsi's slogan "Pepsi Brings You Back to Life" when translated into Chinese it came out as "Pepsi brings your ancestors back from the grave," which caused confusion. Education: In societies with high literacy rates, customers may prefer more detailed information in product marketing, leading companies to emphasize technical product details. Religious Beliefs: Ex- In predominantly Muslim countries, companies ensure products are halal-certified, while food brands avoid using pork or alcohol in their products. Attitudes Toward Change and Innovation: Societies differ in their openness to new ideas, technologies, and innovations. In South Korea, consumers are quick to adopt the latest gadgets, leading companies to release products there first.  Marketing Research Marketing research is the systematic process of gathering, analyzing, and interpreting information about a market, product, or service. It helps businesses understand customer needs, preferences, behaviors, and market trends, allowing them to make informed decisions about their marketing strategies. Marketing research goes beyond understanding customers; it also examines competitors, the overall business environment, and marketing channels.  Types of Marketing Research Exploratory Research: Used when the problem is not clearly defined, this research helps identify potential issues or opportunities through open-ended approaches like interviews or focus groups. Descriptive Research: Focuses on providing detailed information about a specific marketing problem or situation, like customer demographics or product usage patterns. Causal Research: Looks at cause-and-effect relationships, such as how changes in price might impact sales or how a new ad campaign influences brand awareness.  Exploratory Research A company has noticed a decline in customer engagement but isn't sure why. conduct exploratory research by holding focus groups and conducting interviews with customers. This research helps uncover potential reasons, such as changing preferences or dissatisfaction with product features. Tools Used: Focus groups, in-depth interviews, open-ended surveys. Descriptive Research Purpose: To describe characteristics of a phenomenon or market in detail. Example: A fashion retailer wants to understand the demographics of its customer base, such as age, gender, income level, and shopping habits. They conduct a descriptive survey targeting existing customers to gather information on their purchasing patterns, preferences, and frequency of purchases. Tools Used: Surveys, questionnaires, observational methods.  Causal Research Purpose: To identify cause-and-effect relationships between variables. Example: A beverage company wants to determine if a price reduction would increase sales. They conduct an experiment by lowering the price in one geographic region and keeping it constant in another. After analyzing sales data, they conclude whether the price reduction led to increased demand. Tools Used: regression analysis. The marketing research process Defining the problem Make Develop the decision research plan Analyse the Collect the information information  Develop the research plan Plan to gather the needed information and to determine what will be the cost of the information. The cost should be inline with its estimated benefits Research plan deals with decisions with respect to data sources, research approaches, research instruments, sampling plan and contact methods  Data sources Primary data – data Secondary data – freshly gathered for a already collected data specific purpose or for another purpose project and exist somewhere  Research approaches Observational research – observing consumers shop or consume products – Ethnographic research – uses tools to provide understanding of deep cultural aspects of how people live and work Focus group research Survey research Behavioural research - Behavioural research Understanding Consumer Behavior and Attitudes Customer Needs and Preferences: Understanding what motivates customers to purchase a product or service, including their preferences, attitudes, and emotional triggers. Buyer Decision Process: Researching how consumers make decisions, including the stages of awareness, consideration, evaluation, and purchase. Customer Satisfaction and Loyalty: Gathering feedback on customer satisfaction to improve products and services, and understanding loyalty drivers to increase retention.  Research Instruments Questionnaire – open and close ended Qualitative measures – word association, visualization (create collage or drawing) Brand personification – compare a brand with person/animal/object Laddering Ex: Why buy an iphone- they look well built (attribute), why it is imp that the ph is well built? – bcse its reliable(functional benefit), why reliability is important? – bcse my colleagues/family can be sure to reach me(an emotional benefit), why u must be available at all times? – I can help them if they are in trouble(a core value)  Skin sensors, rain wave scanners, full Measuring body scanners, eye tracking, etc Neuromarketing describes brain research on devices the effect of marketing stimuli.  Collecting the information Sampling plan Sampling unit – whom should we survey? Sample size- how many people should we survey? Samples with less than 1% of a population also provide good reliability Sampling procedure – how should we choose respondents? Through data mining marketing statisticians can extract from the mass of data useful information about individuals, trends, segments.  Analysing the information and making the decision TABULATING THE DATA DEVELOPING SUMMARY MEASURES  Market Demand Market demand refers to the total quantity of a product or service that all consumers in a specific market are willing and able to buy at a given price over a certain period. It reflects the overall desire for a product in the market. Example: – In the smartphone industry, market demand refers to the total number of smartphones that all consumers in a country, would purchase in a year at different price points.  Company Demand Company demand is the portion of the market demand that a specific company can capture based on its market share, pricing, marketing efforts, and competitive position. Example: – Suppose the total market demand for sneakers in a country is 10 million pairs per year. A specific brand, like Nike, may have 40% market share. In this case, the company demand for Nike would be 4 million pairs per year (40% of 10 million).  Company Sales Forecast A company’s sales forecast is the estimated sales volume (units or revenue) that the company expects to achieve during a specific period, often based on factors like historical data, market trends, marketing strategies, and economic conditions. Example: – If a car manufacturer projects that it will sell 200,000 units next year based on past performance, new product launches, and marketing campaigns, that is its company sales forecast. If a new competitor enters the market, the forecast may need to be adjusted.  Market Potential Market potential is the maximum possible sales volume or revenue that the entire market could achieve if every potential customer was fully engaged and willing to purchase the product. It is often considered the "ceiling" for market demand. Example: – In the electric vehicle (EV) market, the market potential represents the total number of EVs that could be sold if all potential buyers who are interested in environmentally friendly transportation purchased an electric vehicle.  Company Sales Potential Company sales potential refers to the maximum possible sales a company can achieve within the market potential. It considers the company’s ability to capture market share, brand strength, distribution, and other factors. Example: – If Tesla operates in a market with a total EV market potential of 5 million vehicles per year, and it realistically believes it can capture a 20% market share, its company sales potential would be 1 million vehicles annually. However, achieving this potential depends on Tesla’s marketing, product quality, and competitive positioning.  Relationships Between the Concepts Market Demand reflects the total demand in the market for a product or service. Company Demand is the portion of the market demand that a particular company can expect to capture, influenced by its market share. Company Sales Forecast is a realistic estimate of future sales based on market demand, company demand, and external factors like competition or economic conditions. Market Potential is the theoretical maximum number of products or services that could be sold in a market if all potential customers made purchases. Company Sales Potential represents the upper limit of sales a company could achieve within the market potential, factoring in competition and the company's capabilities.  Forecasting market demand Industry sales and market sales Survey of buyers intentions Composite of sales force opinions Expert opinion Past sales analysis Market test method