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Module 2 <ul><li>Aim </li></ul><ul><li>To understand the behavior of key Marketing Environmental forces that have an impli...
Marketing Environment <ul><li>After going through this module, you will be able to: </li></ul><ul><ul><li>Understand Marke...
Marketing Environment <ul><li>1970s & 1980s linkages of Marketing & Environment arose from the energy shortage </li></ul><...
Marketing Environment   Contd.. <ul><li>Nearly 60,000 auto production workers were unemployed at one point; 16 of the 44 a...
Marketing Environment   Contd.. <ul><li>The slump in big-cars sales became unprecedented rout, with sales running more tha...
Hence, this shows that <ul><li>First & most obvious, it demonstrates the dependence of organization  on uncontrollable env...
Importance of Marketing Environments <ul><li>Marketing Environment  is that which is external to the marketing management ...
Importance    contd.. <ul><li>The rate of environmental change should be remembered that all of the development experience...
Importance    contd.. <ul><li>Until around 1900, the above factors effectively represented the firm’s macro environment.  ...
Characteristics of Marketing Environment  <ul><li>The environment of any thing is large or small, & as simple or complex <...
Characteristics of Marketing Environment   Cond.. <ul><li>The marketing environment includes: </li></ul><ul><ul><li>Non ma...
Characteristics of Marketing Environment   Cond.. <ul><li>Certain environmental forces are partially controllable, but mos...
Characteristics of Marketing Environment   Cond.. <ul><li>The environment comprises surrounding offices & personnel within...
Characteristics of Marketing Environment   Cond.. <ul><li>Marketers look beyond the corporate wall, to work with independe...
Gathering Information / MIS <ul><li>Firms develop Marketing Information systems (MIS) which provides management with rapid...
Gathering Information / MIS <ul><li>Many managers complain about not knowing where critical information is located in the ...
Gathering Information / MIS <ul><li>The company’s marketing information system should represent a cross between </li></ul>...
Environmental Scanning Forecast probability of impact, timing of potential consequences Monitor: Determine nature, directi...
Environmental Scanning / Monitoring <ul><li>High probable changes that are most likely to impact the company </li></ul><ul...
Environmental Scanning / Monitoring Process <ul><li>Environmental Scanning / Monitoring is the process of </li></ul><ul><l...
Environmental Scanning / Monitoring Process  cont.. <ul><li>The word  Environment  is associated with our physical environ...
Levels of External Environmental Forces <ul><li>Macro  Environment influences such as  </li></ul><ul><li>(they affect all ...
External Macro-Environment Forces External Macro-environment of a Company’s Marketing Program Social & Cultural forces Pol...
External Macro-Environment Forces Demographics Social & Cultural forces Political & Legal forces Technology Demographics C...
External Macro-Environment Forces  Demographics <ul><li>Demographics refers to the characteristics of Populations, includi...
Demographic Environment <ul><li>World wide population growth </li></ul><ul><li>Population age mix / age composition </li><...
External Macro-Environment Forces  Economic Conditions Social & Cultural forces Political & Legal forces Technology Demogr...
External Macro-Environment Forces  Economic Conditions <ul><li>People alone do not make a market.  </li></ul><ul><li>They ...
External Macro-Environment Forces  Economic Conditions <ul><li>Inflation  – a rise in prices of goods & services represent...
External Macro-Environment Forces  Economic Conditions <ul><li>Stage of the Business Cycle: (Traditional) </li></ul><ul><u...
External Macro-Environment Forces  Competition Social & Cultural forces Political & Legal forces Technology Demographics C...
External Macro-Environment Forces  Competition <ul><li>Three types of competition </li></ul>Competition Every Company Subs...
External Macro-Environment Forces  Competition <ul><li>Brand Competition  – comes from marketers of directly similar produ...
External Macro-Environment Forces  Technology Social & Cultural forces Political & Legal forces Technology Demographics Co...
External Macro-Environment Forces  Technology <ul><li>Technology has a tremendous impact on consumers lifestyle, their con...
External Macro-Environment Forces  Technology <ul><li>Technological breakthroughs can affect markets in 3 ways: </li></ul>...
External Macro-Environment Forces  Political and Legal Forces Social & Cultural forces Political & Legal forces Technology...
External Macro-Environment Forces  Political and Legal Forces <ul><li>The  Political & Legal Forces  on marketing can be g...
External Macro-Environment Forces  Political and Legal Forces <ul><li>Monetary & fiscal policies:  </li></ul><ul><ul><li>M...
External Macro-Environment Forces  Political and Legal Forces <ul><li>Governmental relationships with Industries:  subsidi...
External Macro-Environment Forces  Social & Cultural Forces Social & Cultural forces Political & Legal forces Technology D...
External Macro-Environment Forces  Social & Cultural Forces <ul><li>Socio-cultural patterns – lifestyles, values, & belief...
External Macro-Environment Forces  Social & Cultural Forces <ul><li>Concern about Natural Environment : </li></ul><ul><li>...
External Macro-Environment Forces  Social & Cultural Forces <ul><li>Changing Gender Roles : </li></ul><ul><li>Changing rol...
External Macro-Environment Forces  Social & Cultural Forces <ul><li>A Premium on Time : </li></ul><ul><li>Since 1990’s Man...
External Macro-Environment Forces  Social & Cultural Forces <ul><li>Physical Fitness and Health </li></ul><ul><li>Most dem...
External Micro-Environment <ul><li>The 3 additional environmental forces which are external to an organization & affect it...
External Micro-Environment <ul><li>The Marketing (general definition) </li></ul><ul><ul><li>How to reach customers & serve...
Organizational Internal Environment Company’s  Marketing Program Research &  Development Location Company Image Human  Res...
The Entire Operating Environment for a Company’s Marketing Program Social & Cultural forces Political & Legal forces Techn...
Marketing Research  Meaning & Scope of MR <ul><li>Definition </li></ul><ul><li>Marketing research is a research on the man...
Marketing Research  Benefits on Marketing Research <ul><li>Three Benefits on Marketing Research </li></ul><ul><li>Research...
Marketing Research  Classification of M R Jobs <ul><li>Routine problem analysis & research on non-routine problems </li></...
Marketing Research  <ul><li>Helps Pick & Choose Customers, & Make Focused Offers </li></ul><ul><li>Helps Know Which Produc...
Marketing Research Procedure or Steps Involved in MR Define the  Problem & Research  objective Develop the Research  plan ...
Marketing Research Procedure or Steps Involved in MR <ul><li>(1) DEFINING THE MARKETING PROBLEM & IDENTIFYING THE MR PROBL...
Marketing Research Procedure or Steps Involved in MR <ul><li>(2) DEVELOP THE RESEARCH DESIGNE & RESEARCH PROCEDURE </li></...
Marketing Research Procedure or Steps Involved in MR <ul><li>Secondary Data </li></ul><ul><ul><li>Sources of internal seco...
Marketing Research Procedure or Steps Involved in MR <ul><li>SAMPLING </li></ul><ul><li>Developing Sampling Design </li></...
Marketing Research Procedure or Steps Involved in MR <ul><li>STEPS INVOLVED IN A MARKET SURVEY </li></ul><ul><li>Planning ...
Marketing Research MR Limitations <ul><li>LIMITATIONS OF MR </li></ul><ul><li>MR does not provide final solution, it only ...
Case Study: Is XM Satellite Radio Playing your Song? <ul><li>As XM Satellite illustrates, any organization must identify &...
Assignment <ul><li>You are the National Head – Marketing for HLL / ITC. The company is planning to launch a new confection...
Bibliography <ul><li>Marketing Management – Carvens, Hills, Woodruff - AITBS </li></ul><ul><li>Introduction -  Marketing M...
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Module 2 Marketing Environment

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Module 2 Marketing Environment

  1. 1. Module 2 <ul><li>Aim </li></ul><ul><li>To understand the behavior of key Marketing Environmental forces that have an implication on marketing decisions </li></ul><ul><li>To understand & grasp of the techniques available for environmental scanning </li></ul><ul><li>To understand Market Research </li></ul><ul><li>Objective </li></ul><ul><li>To Learn how to gather Information & Scanning of the Environment </li></ul><ul><li>To Learn the meaning & concept of Macro / Micro Environment </li></ul><ul><li>To Learn the objectives, scope, limitations & applications of Market Research </li></ul>
  2. 2. Marketing Environment <ul><li>After going through this module, you will be able to: </li></ul><ul><ul><li>Understand Marketing Environment & Market Research </li></ul></ul><ul><ul><li>Information Gathering & Scanning the Environment </li></ul></ul><ul><ul><li>Understand meaning & concept of Macro / Micro Environment </li></ul></ul><ul><ul><li>Understand objective, scope, limitation & applications of Market Research </li></ul></ul>
  3. 3. Marketing Environment <ul><li>1970s & 1980s linkages of Marketing & Environment arose from the energy shortage </li></ul><ul><li>The first major energy crisis, environmental forces severely hit oil companies, automakers, independent oil dealers, & such fuel-dependent industries </li></ul><ul><li>Which was clearly a government environment & overestimates of the availability of US resources </li></ul><ul><li>It was argued that US oil companies underinvested in refining capacity, in part because of the increased capital investment required by environmental legislation </li></ul><ul><li>One thing certain about the crisis was its impact </li></ul>
  4. 4. Marketing Environment Contd.. <ul><li>Nearly 60,000 auto production workers were unemployed at one point; 16 of the 44 auto plants in the nation were either closed or partially shut down; and major plans of the automakers, such as expanding General Motors’ Oldsmobile Division, were scrapped. </li></ul><ul><li>The impact of the crisis was sharply felt by the 25,000 independent dealership for US made autos </li></ul><ul><li>Shortages & higher gasoline prices caused consumers to postpone car purchases & buy smaller, more economical cars </li></ul>
  5. 5. Marketing Environment Contd.. <ul><li>The slump in big-cars sales became unprecedented rout, with sales running more than 50% behind sales for the previous year. Sudden collapse of the big-car market forced many dealers into bankruptcy </li></ul><ul><li>5years latter, in 1980s approaching gas prices again sky-rocketed & gas rationing was actively discussed </li></ul><ul><li>The auto industries debated how to interpret the change </li></ul>
  6. 6. Hence, this shows that <ul><li>First & most obvious, it demonstrates the dependence of organization on uncontrollable environmental change. Forecasters warn that uncontrollable disruptions of various types will probably increase. </li></ul><ul><li>Secondly, it shows that governmental, natural, & economic forces affect customers, competitors, & marketing. </li></ul>
  7. 7. Importance of Marketing Environments <ul><li>Marketing Environment is that which is external to the marketing management function, largely uncontrollable, potentially relevant to marketing decision making, & changing & / or constraining in nature </li></ul><ul><li>The marketing environment is more important to management today than ever before, this is both because the rate of environmental change has increased & because there are more types of important environmental changes </li></ul>
  8. 8. Importance contd.. <ul><li>The rate of environmental change should be remembered that all of the development experienced by humankind has occurred within a mere moment of history </li></ul><ul><li>New types of environmental change have come to the forefront, economic factors go to the core business activity, & historically they have always been important to marketing management. </li></ul>
  9. 9. Importance contd.. <ul><li>Until around 1900, the above factors effectively represented the firm’s macro environment. </li></ul><ul><ul><li>The governmental & legal forces became more significance </li></ul></ul><ul><li>During the1930s, the growth of labour organizations further affected the decision of management. </li></ul><ul><ul><li>Most recently the consumer groups have used the similar tactics to those of labor group. Both highlights a movement towards a pluralistic & interdependence society of interest groups, with business no longer the dominant element </li></ul></ul><ul><li>Some of the more important current environmental changes refers as “mega trends” </li></ul><ul><ul><li>among the most important for marketers is the transition from an industrial society to an information society & form a national economy to a global economy </li></ul></ul><ul><li>Ignoring the opportunities & threats posed by uncontrollable environmental change is nothing short of folly, which reflects on growing recognition by both corporate strategic marketing planners & line marketers </li></ul>
  10. 10. Characteristics of Marketing Environment <ul><li>The environment of any thing is large or small, & as simple or complex </li></ul><ul><li>Changing consumer incomes, technological innovation, changing government agencies, & shifting consumer values are examples of the marketing environmental </li></ul><ul><li>This environment includes those things that are external, largely uncontrollable, changing, constraining, & potentially relevant </li></ul>
  11. 11. Characteristics of Marketing Environment Cond.. <ul><li>The marketing environment includes: </li></ul><ul><ul><li>Non marketing departments within the firm </li></ul></ul><ul><ul><li>As well as markets, </li></ul></ul><ul><ul><li>Competitors, & </li></ul></ul><ul><ul><li>The macroenvironment </li></ul></ul><ul><li>Marketers are primarily adapters: </li></ul><ul><ul><li>They adapt their products </li></ul></ul><ul><ul><li>They adapt prices </li></ul></ul><ul><ul><li>They adapt promotion & </li></ul></ul><ul><ul><li>They adapt distribution to fit the marketplace, </li></ul></ul><ul><ul><li>which was true for the auto industry during the energy crisis </li></ul></ul>
  12. 12. Characteristics of Marketing Environment Cond.. <ul><li>Certain environmental forces are partially controllable, but most are largely uncontrollable </li></ul><ul><ul><li>Some changes in environmental factors, such as shifting population characteristics, represents a key source of uncertainty </li></ul></ul><ul><ul><li>Other changes constrain management to the extent of defining a straight & narrow path for it </li></ul></ul><ul><li>The marketing environment must be potentially relevant to marketing decision making in the organization </li></ul><ul><ul><li>The potentially relevant environment for an electronic calculator firm is very different from that for a soap producer </li></ul></ul>
  13. 13. Characteristics of Marketing Environment Cond.. <ul><li>The environment comprises surrounding offices & personnel within the company, the intra-organizational environment </li></ul><ul><li>The most important aspect of the intra-organizational environment is the internal corporate, or “the collection of beliefs, expectations, & values shared by the corporation members & transmitted from one generation of employees to another” </li></ul><ul><li>Leading companies seem to exhibit a relatively open, creative, & adaptive corporate culture </li></ul>
  14. 14. Characteristics of Marketing Environment Cond.. <ul><li>Marketers look beyond the corporate wall, to work with independent parties that require constant attention; these include </li></ul><ul><ul><li>Marketing intermediaries as distributors, </li></ul></ul><ul><ul><li>Advertising agencies, & </li></ul></ul><ul><ul><li>Marketing research firms </li></ul></ul><ul><li>This task environment includes markets & competitor </li></ul><ul><li>The task environment should be thought of as mediating between the macro environment & management; </li></ul><ul><ul><li>Changes in markets & competitors often result from macro environmental changes, as was illustrated by the effects of the energy crisis on auto industry </li></ul></ul>
  15. 15. Gathering Information / MIS <ul><li>Firms develop Marketing Information systems (MIS) which provides management with rapid & incredible details about: </li></ul><ul><ul><li>Buyer wants </li></ul></ul><ul><ul><li>Preferences & </li></ul></ul><ul><ul><li>Behavior </li></ul></ul><ul><ul><li>Consumption patterns in other countries too </li></ul></ul><ul><ul><li>Example: Swiss consume the most chocolate, Greeks eat the most Cheese, Irish drink the most tea, & the Austrians smoke the most cigarettes </li></ul></ul>
  16. 16. Gathering Information / MIS <ul><li>Many managers complain about not knowing where critical information is located in the company; </li></ul><ul><ul><li>Getting too much information that they cannot use & too little that they really need; </li></ul></ul><ul><ul><li>Getting important information too late; & </li></ul></ul><ul><ul><li>Doubting the information’s accuracy </li></ul></ul><ul><li>In today’s information-based society, companies with superior information enjoy a competitive advantage </li></ul><ul><li>Companies can choose its markets better, develop better offerings, & execute better marketing planning </li></ul>
  17. 17. Gathering Information / MIS <ul><li>The company’s marketing information system should represent a cross between </li></ul><ul><ul><li>what managers think they need, </li></ul></ul><ul><ul><li>What managers really need & </li></ul></ul><ul><ul><li>What is economically feasible </li></ul></ul><ul><li>To discover their information needs, some useful questions are: </li></ul><ul><ul><li>What decisions do you regularly make? </li></ul></ul><ul><ul><li>What information do you need to make these decisions? </li></ul></ul><ul><ul><li>What information do you regularly get? </li></ul></ul><ul><ul><li>What special studies do you periodically request? </li></ul></ul><ul><ul><li>What information do you want that you are not getting now? </li></ul></ul><ul><ul><li>What information would you want daily? Weekly? Monthly? Yearly </li></ul></ul><ul><ul><li>What magazines & trade reports would you like to see on a regular basis? </li></ul></ul><ul><ul><li>What topics would you like to be kept informed of? </li></ul></ul><ul><ul><li>What data analysis programs would you want? </li></ul></ul><ul><ul><li>What are the four most helpful improvements that could be made in the present marketing information system? </li></ul></ul>
  18. 18. Environmental Scanning Forecast probability of impact, timing of potential consequences Monitor: Determine nature, direction, rate of change, magnitude of forces Identify potentially relevant environmental changes Develop & implement strategic responses Environmental Scanning in Action: An Overview
  19. 19. Environmental Scanning / Monitoring <ul><li>High probable changes that are most likely to impact the company </li></ul><ul><li>Low-probability changes that could have major consequences </li></ul><ul><li>Overview of the social, technological, economic, governmental, & natural environments as they relate to marketing </li></ul><ul><li>A step-by-step way to scan the environment include identifying threats & opportunities, monitoring & forecasting these potential forces, & developing strategic responses </li></ul>
  20. 20. Environmental Scanning / Monitoring Process <ul><li>Environmental Scanning / Monitoring is the process of </li></ul><ul><li>(1) Gathering Information regarding a company’s External Environment </li></ul><ul><li>(2) Analyzing it & </li></ul><ul><li>(3) Forecasting the impact of whatever trends the analysis suggests </li></ul>
  21. 21. Environmental Scanning / Monitoring Process cont.. <ul><li>The word Environment is associated with our physical environment – air quality, water pollution, solid-waste disposal, & natural-resource conservation. How ever we use environment in a much broader sense in this module </li></ul><ul><li>An organization operates within an external environment that it generally cannot control. </li></ul><ul><li>At the same time, marketing & non-marketing resources exist within the organization that generally can be controlled by its executives </li></ul>
  22. 22. Levels of External Environmental Forces <ul><li>Macro Environment influences such as </li></ul><ul><li>(they affect all firms) </li></ul><ul><ul><li>Demographics, </li></ul></ul><ul><ul><li>Economic Conditions, </li></ul></ul><ul><ul><li>Culture & </li></ul></ul><ul><ul><li>Laws </li></ul></ul><ul><li>Micro Environment influences consist of </li></ul><ul><li>(they affect a particular firm) </li></ul><ul><ul><li>Suppliers, </li></ul></ul><ul><ul><li>Marketing Intermediaries & </li></ul></ul><ul><ul><li>Customers </li></ul></ul>
  23. 23. External Macro-Environment Forces External Macro-environment of a Company’s Marketing Program Social & Cultural forces Political & Legal forces Technology Demographics Competition Economic Conditions Company’s Marketing Program Six largely uncontrollable external forces influence an organization’s marketing activity
  24. 24. External Macro-Environment Forces Demographics Social & Cultural forces Political & Legal forces Technology Demographics Competition Economic Conditions Company’s Marketing Program
  25. 25. External Macro-Environment Forces Demographics <ul><li>Demographics refers to the characteristics of Populations, including such factors as; Size, Distribution, & Growth </li></ul><ul><li>Changes in the age distribution are the result of many factors, including the quality of health care & nutrition. </li></ul><ul><li>Two key factors are the No. of women who are of child-bearing age & the birthrate. </li></ul><ul><li>The no. of women of child-bearing age is a function of the births that occurred some years before & they are predictable </li></ul><ul><li>Birthrate at any one point in time is influenced by a wide variety of social & economic factors that are much less predictable </li></ul><ul><ul><li>Ex: attitude towards careers & family size certainly affect the birthrate. </li></ul></ul><ul><li>Another notable demographic trend is the rapid growth of minority markets - & their buying power </li></ul>
  26. 26. Demographic Environment <ul><li>World wide population growth </li></ul><ul><li>Population age mix / age composition </li></ul><ul><li>Ethnic & other markets </li></ul><ul><li>Educational groups </li></ul><ul><li>Household patterns </li></ul><ul><li>Geographical shifts in population </li></ul><ul><li>Sex structure of the population & role of women </li></ul>
  27. 27. External Macro-Environment Forces Economic Conditions Social & Cultural forces Political & Legal forces Technology Demographics Competition Economic Conditions Company’s Marketing Program
  28. 28. External Macro-Environment Forces Economic Conditions <ul><li>People alone do not make a market. </li></ul><ul><li>They must have money to spend & be willing to spend it. </li></ul><ul><li>The Economic environment is a significant forces that affects the marketing activities of just about any organization. </li></ul><ul><li>A marketing program is affected especially by economic factors as the current and anticipated stage of the business cycle, as well as inflation and interest rates </li></ul>
  29. 29. External Macro-Environment Forces Economic Conditions <ul><li>Inflation – a rise in prices of goods & services represents inflation. </li></ul><ul><ul><li>When prices rise at a faster rate than personal incomes, consumer buying power declines. </li></ul></ul><ul><ul><li>Inflation rates affect government policies, consumer psychology & also marketing programs </li></ul></ul><ul><li>Interest Rates – when interests rates are high, for instance, consumers tend not to make long-term purchases such as housing. </li></ul><ul><ul><li>Some marketers offer below-market interest rates (a form of price cut) as a promotional device to increase business. </li></ul></ul><ul><ul><li>Ex: Auto manufacturers use this tactic occasionally </li></ul></ul>
  30. 30. External Macro-Environment Forces Economic Conditions <ul><li>Stage of the Business Cycle: (Traditional) </li></ul><ul><ul><li>Prosperity is a period of economic growth, organization tend to expand their marketing programs as they add new products & enter new markets </li></ul></ul><ul><ul><li>Recession is a period of retrenchment for consumers & business – we tighten our economic belts. People can become discouraged, scared, and angry. Example: customers cut on eating out side home & entertainment </li></ul></ul><ul><ul><li>Depression </li></ul></ul><ul><ul><li>Recovery is the period of when economy is moving from recession to prosperity </li></ul></ul>
  31. 31. External Macro-Environment Forces Competition Social & Cultural forces Political & Legal forces Technology Demographics Competition Economic Conditions Company’s Marketing Program
  32. 32. External Macro-Environment Forces Competition <ul><li>Three types of competition </li></ul>Competition Every Company Substitute Products Brand Competition
  33. 33. External Macro-Environment Forces Competition <ul><li>Brand Competition – comes from marketers of directly similar products. Ex: credit cards </li></ul><ul><li>Substitute Products - satisfy the same need Ex: growing no. of homeowners have been choosing wood flooring instead of carpeting , causing carpet sales to stagnate </li></ul><ul><li>More general type of competition, Every Company is a rival for the customer’s limited buying power. </li></ul><ul><li>Hence, Skillful marketer constantly monitors all aspects of competitors’ marketing activities – their products, pricing, distribution systems & promotional programs </li></ul>
  34. 34. External Macro-Environment Forces Technology Social & Cultural forces Political & Legal forces Technology Demographics Competition Economic Conditions Company’s Marketing Program
  35. 35. External Macro-Environment Forces Technology <ul><li>Technology has a tremendous impact on consumers lifestyle, their consumption patterns, & their economic well-being </li></ul><ul><li>Ex: Technological Developments such as airplane, plastics, TV, computers, lasers & etc., at present all these has reached their major market share. </li></ul><ul><li>In future technology could improve Ex: Low-cost methods for making ocean water drinkable, or even commercial travel to moon </li></ul>
  36. 36. External Macro-Environment Forces Technology <ul><li>Technological breakthroughs can affect markets in 3 ways: </li></ul><ul><li>By starting entirely new industries, as computers, lasers have done </li></ul><ul><li>By radically altering, or virtual destroying, existing industries, when TV crippled the radio & movie industries, Computers replaced Typewriters </li></ul><ul><li>By stimulating markets & industries not related to the new technology, new home appliances & microwavable foods give people additional time in which to engage in other activities </li></ul>
  37. 37. External Macro-Environment Forces Political and Legal Forces Social & Cultural forces Political & Legal forces Technology Demographics Competition Economic Conditions Company’s Marketing Program
  38. 38. External Macro-Environment Forces Political and Legal Forces <ul><li>The Political & Legal Forces on marketing can be grouped into the following 4 categories: </li></ul><ul><li>Monetary and fiscal policies </li></ul><ul><li>Social legislation and regulations </li></ul><ul><li>Governmental relationships with industries </li></ul><ul><li>Legislation related specifically to marketing </li></ul>
  39. 39. External Macro-Environment Forces Political and Legal Forces <ul><li>Monetary & fiscal policies: </li></ul><ul><ul><li>Marketing efforts are affected by the level of government spending, the money supply, & tax legislation </li></ul></ul><ul><li>Social legislation & regulation: </li></ul><ul><ul><li>Legislation affecting the environment </li></ul></ul><ul><ul><li>Ex: antipollution laws. </li></ul></ul><ul><ul><li>Regulations set by the Environmental Protection Agency </li></ul></ul>
  40. 40. External Macro-Environment Forces Political and Legal Forces <ul><li>Governmental relationships with Industries: subsidies in agriculture, shipbuilding, passenger rail transportation, & other industries. </li></ul><ul><ul><li>Tariffs & import quotas also affect specific industries. </li></ul></ul><ul><ul><li>Government deregulation continues to have an effect on financial institutions & public utilities (such as electric & natural gas suppliers) as well as on the </li></ul></ul><ul><ul><li>telecommunications & transportation industries </li></ul></ul><ul><li>Legislation related specifically to marketing: </li></ul><ul><ul><li>Marketers need not be a lawyers, but they should know something about laws affecting marketing – </li></ul></ul><ul><ul><li>why they were passed, their main provisions, & </li></ul></ul><ul><ul><li>current ground rules set by the courts & </li></ul></ul><ul><ul><li>regulatory agencies for administering them </li></ul></ul>
  41. 41. External Macro-Environment Forces Social & Cultural Forces Social & Cultural forces Political & Legal forces Technology Demographics Competition Economic Conditions Company’s Marketing Program
  42. 42. External Macro-Environment Forces Social & Cultural Forces <ul><li>Socio-cultural patterns – lifestyles, values, & beliefs – are more complex & are changing much more quickly than they used to. </li></ul><ul><li>Few Social & Cultural forces that have significant marketing implications are: </li></ul><ul><li>Concern about Natural Environment </li></ul><ul><li>Changing Gender Roles </li></ul><ul><li>A premium on time </li></ul><ul><li>Physical Fitness and Health </li></ul>
  43. 43. External Macro-Environment Forces Social & Cultural Forces <ul><li>Concern about Natural Environment : </li></ul><ul><li>Many Consumers emphasize on Quality of life rather than the Quantity of goods consumed. </li></ul><ul><li>The theme is “not more, but better” </li></ul><ul><li>Consumers consider integral to Quality of Life is the natural environment </li></ul><ul><li>Consumers express concerns on air & water pollution, holes in the ozone layer, acid rain, solid waste disposal, & the destruction of rainforests & other natural resources </li></ul><ul><li>These concerns raise the public’s level of environmental consciousness </li></ul><ul><li>Ex: Auto engines using electric motors, veg / natural colures, Reclamere Inc., recycles hazardous materials form old unwanted electronic equipments & disposes them by collecting </li></ul>
  44. 44. External Macro-Environment Forces Social & Cultural Forces <ul><li>Changing Gender Roles : </li></ul><ul><li>Changing roles of women </li></ul><ul><li>Increasing no. of 2 income households, </li></ul><ul><li>Male-female roles related to families, jobs, recreation, & buying behavior are changing dramatically </li></ul><ul><li>Example: more men shop for household necessities, particularly groceries, where as more women purchase such products like cars, mutual funds & etc </li></ul><ul><li>In interesting reversal, women are buying more athletic shoes than men are, </li></ul><ul><li>In contrast, a growing no. of “house husbands” are staying home & assuming primary responsibility for child care & homemaking while their wives work full-time </li></ul><ul><li>Marketers should be aware that these 2 groups of men, “ Change Adapters” & “Change Opposers” buy different items & shop in different ways. </li></ul>
  45. 45. External Macro-Environment Forces Social & Cultural Forces <ul><li>A Premium on Time : </li></ul><ul><li>Since 1990’s Many are working longer hours than their parents did, since 1990’s many large companies downsized, thereby expanding the workload for the remaining employees </li></ul><ul><li>May people also consider it necessary to be involved in activities such as continuing education, personal fitness, & etc., also placed more emphasis on family </li></ul><ul><li>Time-short people seek to gain more time, if possible & maximize the benefit of whatever free time they have </li></ul><ul><li>Example: Many people, especially 2 income households, with more income but less time are more willing to pay for convenience </li></ul><ul><li>Every phase of company’s marketing program is affected by consumers’ desire for convenience </li></ul>
  46. 46. External Macro-Environment Forces Social & Cultural Forces <ul><li>Physical Fitness and Health </li></ul><ul><li>Most demographic & economic segments of our society seem to reflect an increased interest in physical fitness & health </li></ul><ul><li>Participation in fitness activities from yoga to aerobic is on raise. Diets for wait loss; food low in salt, cholesterol & foods high in vitamins, minerals & etc., </li></ul><ul><li>Fitness centers as well as manufacturers of exercise equipment have benefited </li></ul><ul><li>Many consumers changing their dietary habits, they are aware of the relationship between diet, heart disease & cancer. </li></ul><ul><li>Thus companies need to recognize & respond to the public’s growing health interest in health. </li></ul><ul><li>Example: Most supermarkets now stock an assortment of health foods </li></ul>
  47. 47. External Micro-Environment <ul><li>The 3 additional environmental forces which are external to an organization & affect its marketing activities are: </li></ul><ul><li>The firm’s market </li></ul><ul><li>Suppliers </li></ul><ul><li>Marketing intermediaries </li></ul><ul><li>These represent the micro environmental forces for a company </li></ul>Company’s Marketing Program Suppliers Marketing Intermediaries Marketing Intermediaries The Market
  48. 48. External Micro-Environment <ul><li>The Marketing (general definition) </li></ul><ul><ul><li>How to reach customers & serve it profitable & in a socially responsible manner </li></ul></ul><ul><li>3 specific factors need to be considered </li></ul><ul><ul><li>People or organizations with needs, </li></ul></ul><ul><ul><li>Their purchasing power, </li></ul></ul><ul><ul><li>Their buying behavior </li></ul></ul><ul><li>Suppliers </li></ul><ul><ul><li>A business cannot sell a product without being able to make or buy it. </li></ul></ul><ul><ul><li>We consider firms Suppliers a vital part of its marketing environment </li></ul></ul><ul><li>Marketing Intermediaries </li></ul><ul><ul><li>Marketing intermediaries are of 2 types </li></ul></ul><ul><ul><li>Middlemen (wholesalers & retailers) </li></ul></ul><ul><ul><li>Facilitating organizations (transportation, warehousing, & financing that are need to complete exchanges between buyers & sellers </li></ul></ul>
  49. 49. Organizational Internal Environment Company’s Marketing Program Research & Development Location Company Image Human Resource Financial Resources Production Facilities
  50. 50. The Entire Operating Environment for a Company’s Marketing Program Social & Cultural forces Political & Legal forces Technology Demographics Competition Economic Conditions Company’s Marketing Program Suppliers Marketing Intermediaries Marketing Intermediaries The Market Production Facilities Financial Resources Human Resources Company Image Research & Development Location
  51. 51. Marketing Research Meaning & Scope of MR <ul><li>Definition </li></ul><ul><li>Marketing research is a research on the manifold problems on marketing </li></ul><ul><li>Its purpose is to aid decision-making in marketing </li></ul><ul><li>Systematic gathering & analysis of information is what it does in achieving its mission </li></ul><ul><li>The increase complexity of business activities, MR too has been growing in complexity </li></ul><ul><li>It has emerged as a highly specialized function of marketing management </li></ul><ul><li>Today MR needs specialized skills & sophisticated techniques </li></ul>
  52. 52. Marketing Research Benefits on Marketing Research <ul><li>Three Benefits on Marketing Research </li></ul><ul><li>Research on Consumers </li></ul><ul><li>Research on Products </li></ul><ul><li>Research on Distribution </li></ul>
  53. 53. Marketing Research Classification of M R Jobs <ul><li>Routine problem analysis & research on non-routine problems </li></ul><ul><li>Research on short-term problems </li></ul><ul><li>Classification based on the actual subject of the research </li></ul><ul><li>Subject of the Research </li></ul><ul><ul><li>Research on Consumers - Research on Distribution </li></ul></ul><ul><ul><li>Research on Market / Demand - Research on Price </li></ul></ul><ul><ul><li>Research on Product / Brand - Research on Advertising & Promotions </li></ul></ul><ul><ul><li>Research on Competition - Research on Sales Methods </li></ul></ul>
  54. 54. Marketing Research <ul><li>Helps Pick & Choose Customers, & Make Focused Offers </li></ul><ul><li>Helps Know Which Products Move in the Market & Why </li></ul><ul><li>Helps New Entrants Plan Their Channels by Studying Existing Ones </li></ul>
  55. 55. Marketing Research Procedure or Steps Involved in MR Define the Problem & Research objective Develop the Research plan Collect the Information Analyze the information Make the Decision Present the Findings Define the objective Conduct Informal investigation Conduct Situation Analysis Plan & Conduct Formal Investigation Analyze data & Report Result Conduct Follow-up Further Study Needed? Yes End Project & Report Result No Marketing Research Procedure OR
  56. 56. Marketing Research Procedure or Steps Involved in MR <ul><li>(1) DEFINING THE MARKETING PROBLEM & IDENTIFYING THE MR PROBLEM INVOLVED </li></ul><ul><li>Wrong Problem-Definition Misdirects Research </li></ul><ul><li>Specifying the Information Requirement </li></ul>
  57. 57. Marketing Research Procedure or Steps Involved in MR <ul><li>(2) DEVELOP THE RESEARCH DESIGNE & RESEARCH PROCEDURE </li></ul><ul><li>(a) DATA COLLECTION </li></ul><ul><li>Primary Data </li></ul><ul><ul><ul><li>Interview is the most common method, </li></ul></ul></ul><ul><ul><li>Mail interview </li></ul></ul><ul><ul><li>Telephone interview </li></ul></ul><ul><ul><li>Personal interview </li></ul></ul><ul><ul><ul><li>Questionnaire is the most common instrument </li></ul></ul></ul><ul><ul><li>Questionnaire development </li></ul></ul><ul><ul><li>Open-end question </li></ul></ul><ul><ul><li>Closed-end question </li></ul></ul>
  58. 58. Marketing Research Procedure or Steps Involved in MR <ul><li>Secondary Data </li></ul><ul><ul><li>Sources of internal secondary data </li></ul></ul><ul><ul><ul><ul><li>Customer Data Base </li></ul></ul></ul></ul><ul><li>Sources of external secondary data </li></ul><ul><ul><ul><ul><li>News paper </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Magazines </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Technical journals </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Trade publications </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Directories </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Government publication </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Committee reports </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Reference books </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Customer Data Base can also be a External secondary data too </li></ul></ul></ul></ul>
  59. 59. Marketing Research Procedure or Steps Involved in MR <ul><li>SAMPLING </li></ul><ul><li>Developing Sampling Design </li></ul><ul><li>Choosing the sample unit (who are to be Surveyed) </li></ul><ul><li>Choosing the sample size (how many to be surveyed) </li></ul><ul><li>Choosing the sample procedure (how to ensure those who are to be interrogated are included in the sample) </li></ul><ul><li>Choosing the sample media (how to reach the respondents in the sample – through mail interview, personal interview or telephone interview) </li></ul>
  60. 60. Marketing Research Procedure or Steps Involved in MR <ul><li>STEPS INVOLVED IN A MARKET SURVEY </li></ul><ul><li>Planning the survey </li></ul><ul><ul><li>Problem definition </li></ul></ul><ul><ul><li>Selection of the survey method </li></ul></ul><ul><ul><li>Sampling </li></ul></ul><ul><ul><li>Questionnaire development </li></ul></ul><ul><ul><li>Pilot survey </li></ul></ul><ul><li>Field work </li></ul><ul><ul><li>Selection & training of investigation </li></ul></ul><ul><ul><li>Interviewing / collection of data </li></ul></ul><ul><ul><li>Supervision / overseeing the field work </li></ul></ul><ul><li>Processing </li></ul><ul><ul><li>Processing of data </li></ul></ul><ul><ul><li>Tabulating </li></ul></ul><ul><li>Analyzing & Interpretation </li></ul><ul><ul><li>Editing </li></ul></ul><ul><ul><li>Interpreting data </li></ul></ul><ul><ul><li>Statistical analysis & Interpretation </li></ul></ul><ul><li>Report Making </li></ul><ul><ul><li>Summarizing findings & recommendations] </li></ul></ul><ul><ul><li>Report writing </li></ul></ul>
  61. 61. Marketing Research MR Limitations <ul><li>LIMITATIONS OF MR </li></ul><ul><li>MR does not provide final solution, it only provides the indicators </li></ul><ul><li>Errors can creep in the findings of MR (Ex: sampling, choice of research methodology, research design itself, computation, analysis also) </li></ul><ul><li>It could be expensive </li></ul><ul><li>MR has a time limitation </li></ul><ul><li>Research findings are made with reference to a given marketing efforts, known performance of competitors, known policies of government etc., if one or more of these elements change, as they often do, research results may not remain valid. </li></ul>
  62. 62. Case Study: Is XM Satellite Radio Playing your Song? <ul><li>As XM Satellite illustrates, any organization must identify & then respond to numerous Environmental forces ranging form shifting consumer tastes to advancing technology </li></ul><ul><li>Some of these forces are external to the firm, whereas others come from within. </li></ul><ul><li>Management can’t do much about controlling the external forces, but it generally can control the internal ones. </li></ul><ul><li>Many of these forces influence what can & should be done in the area of marketing. </li></ul><ul><li>Ultimately, a firm’s ability to adapt to its operating environment determines, in large part, its level of business success. </li></ul><ul><li>Thus, XM, like any organization, must manage its marketing program within its combined external & internal environment. </li></ul>
  63. 63. Assignment <ul><li>You are the National Head – Marketing for HLL / ITC. The company is planning to launch a new confectionary product. What marketing process will you adopt and how will you analyse the environmental forces affecting to your marketing program, why should customers buy your product? </li></ul>
  64. 64. Bibliography <ul><li>Marketing Management – Carvens, Hills, Woodruff - AITBS </li></ul><ul><li>Introduction - Marketing Management – Saxena 3 rd Edition TMH </li></ul><ul><li>Gathering Information and scanning the environment –Meaning and concept of Macro / Micro Environment – Marketing concepts & cases – Michael, Bruce, William, Stanton & Ajay Pandit – Indian 13 th Edition </li></ul><ul><li>Introduction to Marketing Research – VS Ramaswamy, S Namakmari 3 rd Edition </li></ul>

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