ANALYZING MARKETING

ENVIRONMENT

Xerox invented photocopying and for decades

flat out dominated the industry it had created.

But Xerox’s harrowing experience provides a

cautionary tale of what can happen when a

company – even a dominant market leader -

fails to adapt its changing marketing

environment.

Xerox has rethought,

redefined, and

reinvented itself. The

company now

―connects closely with

customers in a content

rich digital

marketplace.‖

Two disciplined methods

Marketing Intelligence: The systematic Collection and

analysis of publicly available information about

consumers, competitors and developments in the

marketing environment.

Marketing Research: The systematic Design,

collection, analysis and reporting of data relevant

to a specific marketing situation facing an

organization.

Marketing Environment?

The actors & forces outside marketing that affect

marketing management’s ability to build and

maintain successful relationships with target

customers.

Actors close to the company that affect its ability

to serve its customers.

MICRO ENVIRONMENT

MICRO ENVIRONMENT

The Company

Top Management

Finance

Research & Development

Purchasing

Operations

Accounting

Suppliers

Provide resources needed by the company to

produce its goods & services.

Treated as Partners in creating & Delivering

customers value.

Marketing Intermediaries

Firms that help

company to

promote, sell

and distribute

its goods to

final buyers.

Marketing Intermediaries

Resellers Physical

Distribution Firms

Marketing Service

Agencies

Financial Intermediaries

Competitors

To be successful,

a company must

provide greater

customers value

& satisfaction

that its

competitors do.

Publics

Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives.

Financial Public

Media Public

Government Public

Citizen Action Public

General Public

Internal Public

CUSTOMERS

Consumer Markets

Business Markets

Resellers Markets

Government

Markets

International

Markets

Consists of broader forces that affect the actors

in the microenvironment.

MACRO ENVIRONMENT

MACRO ENVIRONMENT

Demographic Environment

The study of human populations in terms of size,

density, location, age, gender, race, occupation and

other statistics.

Demographic Environment

Increasing Population

―1 Bn population in Asia will move to cities in next 20

years.‖ Haruhiko Kuroda, President Asian Development

Bank.

Rapid growth in urban population in Asia

In India, urban population to rise to 523 million by

2025

Source: Marketing Whitebook 2007-08, Businessworld, p.84

Demographic Environment

Growing Middle class

McKinsey Global Institute (MGI) has divided the Indian

population into 5 economic classes

Division based on real annual disposable income

MGI division of Indian Population

Deprived households

have an annual disposable income of less than Rs

90,000. The poorest economic class

Mostly unskilled or semi‐skilled workers on daily wages

Aspirers

have an annual disposable income in the range of Rs

90,000 to Rs 200,000

Spend most of their income on basic necessities

Small‐time retailers, small farmers, etc.

MGI division of Indian Population

Seekers have an annual disposable income between Rs 200,000

and Rs 500,000.

Mostly white‐collar employees, mid‐level government officials, newly employed postgraduates, medium‐scale traders.

Strivers have an annual income ranging from Rs 500,000 to Rs

1,000,000. Have a stable income source and access to amenities

Mostly professionals such as lawyers, CAs, senior government officials, rich farmers

MGI division of Indian Population

Global Indians

have an annual disposable income in excess of Rs

1,000,000 Creamy layer in society

Globe‐trotters with a high standard of living

Demographic Environment

Growth in the rural population

A changing family system

The changing role of women

Increasing diversity

Economic Environment

Factors that affect consumer buying power and spending patterns.

Global Financial Crisis

Changing Income Distribution and consumer spending patterns.

Ernst Engel—Engel’s Law

As income rises: The percentage spent on food declines

The percentage spent on housing remains constant

The percentage spent on savings increases

Natural Environment

Involves the natural resources that are needed as

inputs by marketers or that are affected by

marketing activities.

Shortages of raw materials

Increased pollution

Increase government intervention

Environmentally sustainable strategies

Technological Environment

Robotic surgery

Miniature

Electronics

Laptops, Computers

and Internet

Credit Cards

Televisions

Automobile

Political Environment

Laws and Government agencies that influence and

limit various organizations and individual in a given

society.

Laws covering issues like

Competition

Fair Trade practices

Environmental Protection

Product Safety

Consumer Privacy etc.

Cultural Environment

Institutions and other forces that affect society’s

basic values, perceptions, preferences and

behaviors.