MARKETING THEORY AND PRACTICE

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DR SURINDER
MARKETING ENVIRONMENT

A company’s marketing environment consists of

the actors and forces outside marketing that
affect marketing management’s ability to build
and maintain successful relationships with target
customers.
MICRO ENVIRONMENT
The company
 In designing marketing plans, marketing management takes other company
groups into account – groups such as top management, finance, research and
development (R&D), purchasing, operations, human resources and
accounting. All of these interrelated groups form the internal
environment.

 Top management sets the company’s mission, objectives, broad strategies and
policies. Marketing managers make decisions within these broader strategies
and plans.

Suppliers
 Suppliers form an important link in the company’s overall customer value
delivery network. They provide the resources needed by the company to
produce its goods and services.
Marketing intermediaries
 Marketing intermediaries help the company promote, sell and distribute its
products to final buyer.
 They include:
 Resellers (are distribution channel firms that help the company find
customers or make sales to them. These include wholesalers and retailers
that buy and resell merchandise)
 Physical distribution firms (help the company stock and move goods from
their points of origin to their destinations).
 Marketing services agencies (are the marketing research firms, advertising
agencies, media firms and marketing consulting firms that help the company
target and promote its products to the right markets) and
 Financial intermediaries (include banks, credit companies, insurance
companies and other businesses that help finance transactions or insure
against the risks associated with the buying and selling of goods).
Competitors
 The marketing concept states that, to be successful, a company must provide
greater customer value and satisfaction than its competitors do.
 Thus, marketers must do more than simply adapt to the needs of target
consumers.
 They also must gain strategic advantage by positioning their offerings strongly
against competitors’ offerings in the minds of consumers.

Publics

 A public is any group that has an actual or potential interest in or impact on

an organisation’s ability to achieve its objectives.
 Financial publics. This group influences the company’s ability to obtain funds.
Banks, investment analysts and stockholders are the major financial publics.
 Media publics. This group carries news, features, editorial opinions and other
content. It includes television stations, newspapers, magazines, and blogs and other
social media.
 Government publics. Management must take government developments into
account. Marketers must often consult the company’s lawyers on issues of product
safety, truth in advertising and other matters.
 Citizen-action publics. A company’s marketing decisions may be questioned by
consumer organisations, environmental groups, minority groups and others. Its
public relations department can help it stay in touch with consumer and citizen
groups.
 Internal publics. This group includes workers, managers, volunteers and the board
of directors. Large companies use newsletters and other means to inform and
motivate their internal publics. When employees feel good about the companies
they work for, this positive attitude spills over to the external publics.
 General public. A company needs to be concerned about the general public’s
attitude toward its products and activities. The public’s image of the company
affects its buying behaviour.
 Local publics. This group includes local community residents and organisations.
Large companies usually work to become responsible members of the local
communities in which they operate
Customers
 Customers are the most important actors in the company’s microenvironment.
The aim of the entire value delivery network is to engage target customers
and create strong relationships with them.
MACROENVIRONMENT
Demographic Environment

 Demographic environment is the scientific study of human population in terms

of elements, such as age, gender, education, occupation, income, and
location.
 Demographic environment is responsible for the variation in the tastes and
preferences and buying patterns of individuals.

Economic Environment

 Economic environment affects the organization’s costs structure and

customers’ purchasing power. The purchasing power of a customer depends on
the current income, prices of the product, savings, and credit availability
 The factors economic environment is as follows:
 a. Inflation: It influences the customers’ demand for different products. For
example, higher petrol prices lead to a fall in demand for cars.
 b. Interest Rates: It determines the borrowing activities of the organization.
For example, increase in interest rates for loan may lead organizations to cut
their important activities.
 c. Unemployment: It leads to a no income state, which affects the
purchasing power of an individual.
 d. Customer Income: It regulates the buying behavior of a customer. The
change in the customer’s income leads to changed spending patterns for the
products, such as food and clothing.
 e. Monetary and Fiscal Policy: It affects all the organizations. The monetary
policy stabilizes the economy by controlling the interest rates and money
supply in an economy; whereas, fiscal policy regulates the government
spending in various areas by collecting the revenue from the citizens by
taxing their income.
Natural Environment

 Natural environment consists of natural resources, which are needed as raw

materials to manufacture products by the organization. The marketing
activities affect these natural resources, such as depletion of ozone layer due
to the use of chemicals. The corrosion of the natural environment is
increasing day-by-day and is becoming a global problem.

 a. Natural Resources: It serves as raw material for manufacturing various

products. Every organization consumes natural resources for the production of
its products. Organizations are realizing the problem of depletion of resources
and trying best to use these resources judiciously. Thus, some organizations
have indulged in de-marketing their products. For example, Indian Oil
Corporation (IOC) tries to reduce the demand for its products by promoting
advertisements, such as Save Oil, Save India.
 b. Weather: It leads to opportunities or threats for the organizations. For
example, in summer, demand for water coolers, air conditioners, cotton
clothes, and water increases while in winter, the demand for woolen clothes
and room heaters rises. The marketing environment is greatly influenced by
the weather conditions of a country.

 c. Pollution: It includes air, water, and noise pollution, which lead to

environmental degradation. Now-a-days, organizations tend to promote
environment friendly products through its marketing activities. For example,
the organizations promote the usage of jute and paper bags instead of plastic
bags.
Socio-Cultural Environment

 Socio-cultural environment comprises forces, such as society’s basic values,

attitudes, perception, and behavior. These forces help in determining that
what type of products customers prefer, what influences the purchase
attitude or decision, which brand they prefer, and at what time they buy the
products.

 For example, the lifestyles of people are changing day-by-day. Now, the
women are perceived as an active earning member of the family. If all the
members of a family are working then the family has less time to spend for
shopping. This has led to the development of shopping malls and super
markets, where individuals could get everything under one roof to save their
time.
Technological Environment

 Pace of Technological Change: It leads to product obsolescence at a rapid

pace. If the pace of technological change is very rapid then organizations
need to modify their products as and when required.
 Automation
 How research and development (R&D) may impact both costs and competitive
advantage
 Technology infrastructure (like 5G, IoT, etc.)
 Cyber security

The speed and scale of technological disruption in the present business

environment are unprecedented, and it has had a devastating impact on many
traditional businesses and sectors – think Uber upending the transportation
industry or the advent of e-commerce revolutionizing retail trade as we know it.
Political and Legal Environment

 Political and legal environment consists of legal bodies and government

agencies that influence and limit the organizations and individuals

 a. Anti-pollution laws, which affect the production or manufacturing of

various products.

 b. Customer legislation, which tries to protect the customer’s interest.