Understanding the Marketing Environment

Session 2

Why environment scan?

• “If the rate of change inside a company is less than the rate of change outside a company, then the end is in sight”

Jack Welch, ex CEO, GE

Elements of the environment scan

• Environment monitoring or scanning is defined as the process of gathering information regarding a firms external environment, analyzing it and forecasting its impact on the company’s business.

• External environment…..uncontrollable element• Internal environment……controllable element

External environment

• Macro elements…those which affect all firms in the industry

• Demographics

• Economic conditions– Global– Domestic

• Cultural issues

• Political

• Micro elements…those which relate to a specific firm• Suppliers

• Customers

• Intermediaries

• Competition

External elements impacting company’s marketing program

Co’s marketingprogram

Demographics

Economicconditions

Competition

Technology

Social &cultural

Political & Legal

Demographics

Years

Age group2001 2006 2011 2016

0 – 14 366(35.6) 262(32.5) 355(29.7) 343(27.1)

15 – 59 598(58.2) 673(60.4) 747(62.5) 811(64)

60+ 65(6.3) 78(7) 94(7.9) 113(8.9)

Age distribution & projection of Indian population, in millions.

Statistical outline of India, 2003-04, Jan 2004, Tata Services Ltd.

Characteristics of population

• Size• Distribution…age, sex, rural-urban• Growth…absolute, sectors• Profile & character…nuclear family, working

women, youth, literacy, BPL

EDUCATION LEVEL

OCCUPATION

Illiterate School upto 4 yrs/lit but no formal education

Schooling

5-9 yrs

SSC/HSC Some college

but not graduate

Graduate/

post graduate, general

Graduate/ postgraduate

professional

Unskilled worker E2 E2 E1 D D D D

Skilled worker E2 E1 D C C B2 B2

Petty trader E2 D D C C B2 B2

Shop owner D D C B2 B1 A2 A2

Businessman/industrialist with nos. of employees….none

D C B2 B1 A2 A2 A1

Businessman/industrialist with nos. of employees….1-9

C B2 B2 B1 A2 A1 A1

Businessman/industrialist with nos. of employees….10+

B1 B1 A2 A2 A1 A1 A1

Self employed professional D D D B2 B1 A2 A1

Clerical/salesman D D D C B2 B1 B1

Supervisory level D D C C B2 B1 A2

Officer/Executive….. junior C C C B2 B1 A2 A2

Officer/Executive….. senior B1 B1 B1 B1 A2 A1 A1

Socio-Economic classificationBased on education & occupation of the chief wage earner

Impact of the environment

• Affects buying behavior• Demographic shifts

– Children, teens, youth, women– Disposable surpluses– Emergence of the rural markets

• Social & cultural changes– Lifestyle changes– Values and beliefs– Time poor society– Working women

• Technological impact– Concern for the natural environment– Tech savvy generation– E-marketing

Impact of the external environment

• Variables are– The firm’s market

• The changes taking place

• Emergence of new markets

• Maturing of the markets

– The suppliers• Competitiveness

• Quality consciousness

• New generation

– The intermediaries• Source of revenue

• Avenue of market reach & presence

The challenge

• External elements……uncontrollable • Internal elements……..controllable

– Supporting functions like production, finance, HR, R&D, Image– Marketing variables…the 4 P’s & the 7P’s

• Concept of Marketing Mix