various factors affecting marketing function
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Various factors affecting marketing function.The environmental factors that are affecting marketing function can be classified into :
1) Internal environment and2) External environment
Internal Environment of Marketing:This refers to factors existing within a marketing firm. They are also called as controllable
factors, because the company has control over these factors:
a) it can alter or modify factors as its personnel, physical facilities, organization andfunction means, such as marketing mix, to suit the environment.There are many internal factors that influence the marketing function, they are:
Top Management: The organizational structure, Board of Director, professionalization ofmanagement..Etc.Factors like the amount of support the top management enjoys from
different levels of employees, shareholders and Board of Directors has important influenceon the marketing decisions and their implementation.
Finance and Accounting: Accounting refers to measure of revenue and costs to help themarketing and to know how well it is achieving its objectives. Finance refers to funding and
using funds to carry out the marketing plan. Financial factors are financial policies,financial position and capital structure.Research and Development: Research and Development refers to designing the productsafe and attractive. They are technological capabilities, determine a company ability to
innovate and compete.Manufacturing: It is responsible for producing the desired quality and quantity of
products. Factors which influence the competitiveness of a firm are production capacity
technology and efficiency of the productive apparatus, distribution logistics etc.,Purchasing: Purchasing refers to procurement of goods and services from some externalagencies. It is the strategic activity of the business.
Company Image and Brand Equity: The image of the company refers in raising finance,forming joint ventures or other alliances soliciting marketing intermediaries, entering
purchase or sales contract, launching new products etc.
In organization, the marketing resources like organization for marketing, quality of
marketing, brand equity and distribution network have direct bearing on marketingefficiency. They are important for new product introduction and brand extension, etc..
External Environment of Marketing.External factors are beyond the control of a firm; its success depends to a large extent on its
adaptability to the environment.
The external marketing environment consists of:a) Macro environment, andb) Micro environment
a) Micro environment: The environmental factors that are in its proximity. The factorsinfluence the companys non-capacity to produce and serve the market. The factors are:
1) Suppliers: The suppliers to a firm can also alter its competitive position and marketingcapabilities. These are raw material suppliers, energy suppliers, suppliers of labor and
capital. According to Michael Porter, the relationship between suppliers and the firm
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epitomizes a power equation between them. This equation is based on the industrycondition and the extent to which each of them is dependent on the other.
The bargaining power of the supplier gets maximized in the following situations:a) The seller firm is a monopoly or an oligopoly firm.
b) The supplier is not obliged to contend with other substitute products for sale to the buyergroup.
c) The buyer is not an important customer.
d) The suppliers product is an important input to the buyers business and finished product.e) The supplier poses a real threat of forward integration.2) Market Intermediaries: Every producer has to have a number of intermediaries for
promoting, selling and distributing the goods and service to ultimate consumers. Theseintermediaries may be individual or business firms. These intermediaries are middleman
(wholesalers, retailers, agents etc. ), distributing agency market service agencies andfinancial institutions.
3) Customers: The customers may be classified as :1) Ultimate customers: These customers may be individual and householders.
2) Industrial customers: These customers are organization which buy goods and servicesfor producing other goods and services for the purpose of other earning profits or fulfilling
other objectives.3) Resellers: They are the intermediaries who purchase goods with a view to resell them at
a profit. They can be wholesalers, retailers, distributors, etc.4) Government and other non-profit customers: These customers purchase goods and
services to those for whom they are produced, for their consumption in most of the cases.
5) International customers: These customers are individual and organizations of other
countries who buy goods and services either for consumption or for industrial use. Suchbuyers may be consumers, producers, resellers, and governments.
6) Competitors: Competitors are those who sell the goods and services of the same andsimilar description, in the same market. Apart from competition on price, there are like
product differentiation. Therefore, it is necessary to build an efficient system of marketing.
This will bring confidence and better results.
7) Public: It is duty of the company to satisfy the people at large along with its competitorsand the consumers. It is necessary for future growth. The action of the company do
influence the other groups forming the general public for the company. A public is definedas any group that has an actual or potential interest in or impact on a companys ability to
achieve its objective. Public relations are certainly a broad marketing operation which must
be fully taken care of.Macro Environment:Macro environment factors act external to the company and are quite uncontrollable. These
factors do not affect the marketing ability of the concern directly but indirectly the influencemarketing decisions of the company.
These are the macro environmental factors that affect the companys marketing decisions :a) Demographic Forces: Here, the marketer monitor the population because people forms
markets. Marketers are keenly interested in the size and growth rate of population in
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different cities, regions, and nations ; age distribution and ethnic mix ; educational levels;households patterns; and regional characteristics and movements.
b)Economic Factors: The economic environment consists of macro-level factors related tomeans of production and distribution that have an impact on the business of an organization.
c) Physical Forces:Components of physical forces are earths natural renewal and non-renewal resources. Natural renewal forces are forest, food products from agriculture or sea
etc. Non- renewal natural resources are finite such as oil, coal, minerals, etc. Both of these
components quite often change the level and type of resources available to a marketer forhis production.d) Technological Factors: The technological environment consists of factors related to
knowledge applied, and the materials and machines used in the production of goods andservices that have an impact on the business of an organization.
e) Political and Legal Forces: Developments in political and legal field greatly affect themarketing decisions. sound marketing decision cannot be taken without taking into account,
the government agencies, political party in power and in opposition their ideologies,pressure groups, and laws of the land. These variables create tremendous pressures on
marketing management. Laws affect production capacity, capability, product design, pricingand promotion. Government in almost all the country intervenes in marketing process
irrespective of their political ideologies.f) Social and Cultural Forces: This concept has crept into marketing literature as an
alternative to the marketing concept. The social forces attempt to make the marketingsocially responsible. It means that the business firms should take a lead in eliminating
socially harmful products and produce only what is beneficial to the society. These are
numbers of pressure groups in the society who impose restrictions on the marketing
process.
Controllable factor or often called as "Marketing Mix. Now days it remember as "4P's" It
includes: Product, Price, Place and Promotion. 2. Uncontrollable factors are often called as
"Environmental Factors" it includes: Political factors, Economical
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Marketing Plan
A marketing plan may be part of an overall business plan. Solid marketing strategy is the
foundation of a well-written marketing plan. While a marketing plan contains a list of
actions, a marketing plan without a sound strategic foundation is of little use.
In detail, a complete marketing plan typically includes:[4]
1.Title Page2.Executive Summary3.Current Situation - Macro environment
economy legal government technology ecological sociocultural supply chain
4.Current Situation - Market Analysis market definition market size market segmentation competitors' strengths and weaknesses
5.Current Situation - Consumer Analysis nature of the buying decision demographics psychographics buyer motivation and expectations loyalty segments
6.Current Situation - Internal company resources
financial people time skills
http://en.wikipedia.org/wiki/Marketing_plan#cite_note-Baker_08-4http://en.wikipedia.org/wiki/Marketing_plan#cite_note-Baker_08-4http://en.wikipedia.org/wiki/Marketing_plan#cite_note-Baker_08-4http://en.wikipedia.org/wiki/Marketing_plan#cite_note-Baker_08-4 -
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objectives mission statement and vision statement financial objective marketing objectives long term objectives
7.Summary of Situation Analysis external threats external opportunities internal strengths internal weaknesses success factors in the industry
8.Marketing Research information requirements research methodology research results
9.Marketing Strategy - Product product mix product strengths and weaknesses product life cycle management and new product development Brand name, brand image, andbrand equity the augmented product
10.Marketing Strategy - segmented marketing actions and market share objectives by product by customer segment by geographical market by distribution channel
11.Marketing Strategy - Price pricing objectives pricing method (e.g.: cost plus, demand based) pricing strategy (e.g.: skimming, or penetration) discounts and allowances
12.Marketing Strategy - Promotion promotional mix advertising sales promotion publicityandpublic relations electronic promotion (e.g.: web, ortelephone) word of mouth marketing (buzz)
http://en.wikipedia.org/wiki/Marketing_Researchhttp://en.wikipedia.org/wiki/Marketing_Researchhttp://en.wikipedia.org/wiki/Publicityhttp://en.wikipedia.org/wiki/Publicityhttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Publicityhttp://en.wikipedia.org/wiki/Marketing_Research -
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viral marketing13.Marketing Strategy - Distribution
geographical coverage distribution channels physical distribution and logistics electronic distribution
14.Implementation personnel requirements
assign responsibilities give incentives training on selling methods
financial requirements management information systems requirement monitoring results and benchmarks contingencies (what ifs)
15.Financial Summary assumptions breakeven analysis
16.Scenarios prediction of future scenarios plan of action for each scenario
17.Appendix pictures and specifications of the new product results from research already completed
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Concept of Market Potential and market Share:
Market potential is the valuation of the sales revenue from all the supplying channels in a
market.
In other words, it is the potential money making capability of a firm if it capitalizes all
advantages and everything goes its way.
MARKET POTENTIAL ANALYSIS
The concept of market potential is defined as the maximum demand response possible for a given group
of customers within a well defined geographic area for a given product or service over aspecifiedperiod of time under well defined competitive environmental conditions. We will further split
up this definition:1. Market potential is the maximum demand response under certain assumptions(ultimate
demand)
2. Relevant customer for the product and service. It is not merely the presentconsumer but also the potential consumer so that maximum possible demand is achieved
3. The geographic area for which market potential is to be determined should be well-defined.
4. There should be a clear understanding about the product & service for which the marketpotential is to be estimated.
5. The time period for which market potential is estimated should be specific.6.Finally, a clear understanding of environmental & competitive conditions relevant incases ofa particular product or service is also necessary. It is important to remember that the estimatedmarket potential sets an upper boundary on the market size and can be expressed in either
units and/or sales Market potential consists of the upper limit oftotal demand which would theoretically be converged on at (infinite) rise of marketing
expenditures of all relevant providers.
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Market Share
The percentage of an industry or market's total sales that is earned by a particular companyover a specified time period. Market share is calculated by taking the company's sales over
the period and dividing it by the total sales of the industry over the same period. This metric
is used to give a general idea of the size of a company to its market and its competitors.
A percentage of total sales volume in a market captured by a brand, product, or company.The proportion of industry sales of a good or service that is controlled by a company.The percentage of sales of a particular product achieved by a single company in a given
period of time.
Concept of Consumer Market and Organizational Market
Consumer Markets
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Consumer markets are the markets for products and services bought by individuals for theirown or family use. Goods bought in consumer markets can be categorised in several ways:
Fast-moving consumer goods (FMCG's)
These are high volume, low unit value, fast repurchase
Examples include: Ready meals; Baked Beans; Newspapers
Consumer durables
These have low volume but high unit value. Consumer durables are often further dividedinto:
White goods (e.g. fridge-freezers; cookers; dishwashers; microwaves)Brown goods (e.g. DVD players; games consoles; personal computers)
Soft goods
Soft goods are similar to consumer durables, except that they wear out more quickly andtherefore have a shorter replacement cycle
Examples include clothes, shoes
Services (e.g. hairdressing, dentists, childcare)
Industrial Markets/Organizational Market
Industrial markets involve the sale of goods between businesses. These are goods that are
not aimed directly at consumers. Industrial markets include
Selling finished goodsExamples include office furniture, computer systems
Selling raw materials orcomponents
Examples include steel, coal, gas, timber
Selling services to businessesExamples include waste disposal, security, accounting & legal services
Consumer Buying Behavior
Consumer Buying Behavior refers to the buying behavior of final consumers (individuals &households) who buy goods and services for personal consumption.
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Factors Aff ecting Consumer Behavior :
1. Cultur e
Most basic cause of a person's wants and behavior. Values Perceptions
Subculture Groups of people with shared value systems based on common life experiences. Hispanic Consumers African American Consumers Asian American Consumers Mature ConsumersSocial Class People within a social class tend to exhibit similar buying behavior. Occupation Income Education Wealth
2. Social
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3. Personal
4. Psychological
Psychological
Factors
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The Buyer Decision Process
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Step 1. Need Recognition
Step 2. Information Search
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Step 3. Evaluation of Alternatives
Step 4. Purchase Decision
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Step 5. Post purchase Behavior
Bases for Segmentation in Consumer MarketsConsumer markets can be segmented on the following customer characteristics.
Geographic Demographic Psychographic Behavioralistic Geographic Segmentation
The following are some examples of geographic variables often used in segmentation. Region: by continent, country, state, or even neighborhood Size of metropolitan area: segmented according to size of population Population density: often classified as urban, suburban, or rural Climate: according to weather patterns common to certain geographic regions
Demographic SegmentationSome demographic segmentation variables include:
Age Gender Family size Family lifecycle Generation: baby-boomers, Generation X, etc. Income Occupation Education Ethnicity Nationality Religion Social class
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Many of these variables have standard categories for their values. For example,
family lifecycle often is expressed as bachelor, married with no children (DINKS:Double Income, No Kids), full-nest, empty-nest, or solitary survivor. Some of these
categories have several stages, for example, full-nest I, II, or III depending on theage of the children.
Psychographic Segmentation
Psychographic segmentation groups customers according to their lifestyle. Activities,interests, and opinions (AIO) surveys are one tool for measuring lifestyle. Some
psychographic variables include:
Activities Interests Opinions Attitudes Values
Behavioralistic Segmentation
Behavioral segmentation is based on actual customer behavior toward products.
Some behavioralistic variables include:
Benefits sought Usage rate Brand loyalty
Market Segmentation
Market segmentation is the identification of portions of the market that are different
from one another. Segmentation allows the firm to better satisfy the needs of its
potential customers.
The Need for Market Segmentation
The marketing concept calls for understanding customers and satisfying their needs
better than the competition. But different customers have different needs, and it
rarely is possible to satisfy all customers by treating them alike.
Mass marketing refers to treatment of the market as a homogenous group and
offering the same marketing mix to all customers. Mass marketing allows economiesof scale to be realized through mass production, mass distribution, and mass
communication. The drawback of mass marketing is that customer needs and
preferences differ and the same offering is unlikely to be viewed as optimal by all
customers. If firms ignored the differing customer needs, another firm likely would
enter the market with a product that serves a specific group, and the incumbant
firms would lose those customers.
Target marketing on the other hand recognizes the diversity of customers and does
not try to please all of them with the same offering. The first step in target
marketing is to identify different market segments and their needs.
Requirements of Market Segments
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In addition to having different needs, for segments to be practical they should be
evaluated against the following criteria:
Identifiable: the differentiating attributes of the segments must be measurableso that they can be identified.
Accessible: the segments must be reachable through communication anddistribution channels.
Substantial: the segments should be sufficiently large to justify the resourcesrequired to target them.
Unique needs: to justify separate offerings, the segments must responddifferently to the different marketing mixes.
Durable: the segments should be relatively stable to minimize the cost offrequent changes.
A good market segmentation will result in segment members that are internally
homogenous and externally heterogeneous; that is, as similar as possible within the
segment, and as different as possible between segments.
Bases for Segmentation in Consumer Markets
Consumer markets can be segmented on the following customer characteristics.
Geographic
Demographic Psychographic Behavioralistic
Geographic Segmentation
The following are some examples of geographic variables often used in segmentation.
Region: by continent, country, state, or even neighborhood Size of metropolitan area: segmented according to size of population Population density: often classified as urban, suburban, or rural Climate: according to weather patterns common to certain geographic regions
Demographic Segmentation
Some demographic segmentation variables include:
Age Gender Family size Family lifecycle Generation: baby-boomers, Generation X, etc. Income Occupation Education Ethnicity Nationality Religion Social class
Many of these variables have standard categories for their values. For example,
family lifecycle often is expressed as bachelor, married with no children (DINKS:
Double Income, No Kids), full-nest, empty-nest, or solitary survivor. Some of these
categories have several stages, for example, full-nest I, II, or III depending on the
age of the children.
Psychographic Segmentation
Psychographic segmentation groups customers according to their lifestyle. Activities,
interests, and opinions (AIO) surveys are one tool for measuring lifestyle. Some
psychographic variables include:
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Activities Interests Opinions Attitudes Values
Behavioralistic Segmentation
Behavioral segmentation is based on actual customer behavior toward products.
Some behavioralistic variables include:
Benefits sought Usage rate Brand loyalty User status: potential, first-time, regular, etc. Readiness to buy Occasions: holidays and events that stimulate purchases
Behavioral segmentation has the advantage of using variables that are closely related to the product
itself. It is a fairly direct starting point for market segmentation.
Bases for Segmentation in Industrial Markets
In contrast to consumers, industrial customers tend to be fewer in number and purchase larger
quantities. They evaluate offerings in more detail, and the decision process usually involves morethan one person. These characteristics apply to organizations such as manufacturers and service
providers, as well as resellers, governments, and institutions.
Many of the consumer market segmentation variables can be applied to industrial markets.
Industrial markets might be segmented on characteristics such as:
Location Company type Behavioral characteristics
Location
In industrial markets, customer location may be important in some cases. Shipping
costs may be a purchase factor for vendor selection for products having a high bulk
to value ratio, so distance from the vendor may be critical. In some industries firmstend to cluster together geographically and therefore may have similar needs within a
region.
Company Type
Business customers can be classified according to type as follows:
Company size Industry Decision making unit Purchase Criteria
Behavioral Characteristics
In industrial markets, patterns of purchase behavior can be a basis for segmentation.
Such behavioral characteristics may include:
Usage rate Buying status: potential, first-time, regular, etc. Purchase procedure: sealed bids, negotiations, etc.