This consists of institutions and basic values and beliefs of a group of people. The values can also be further categorized into core beliefs, which passed on from generation to generation and very difficult to change, and secondary beliefs, which tend to be easier to influence. As a marketer, it is important to know the difference between the two and to focus your marketing campaign to reflect the values of a target audience.The task of the marketer is to find the similarities and differences in culture and account for these in designing and developing marketing plans.
Culture is the most basic cause of a person’s wants and behavior. Growing up, children learn basic values, perception and wants from the family and other important groups. Marketers are always trying to spot “cultural shifts” which might point to new products that might be wanted by customers or to increased demand.
Example is the video by Air Deccan, it was the airline which made low cost air travel possible in India and it was in reach of Middle class people also.In the video , the marketer has banked upon our cultural values ,the family system in which parents do everything for their wards , right from their education to marriage and children want to do something better for their parents when they are earning. They want to give them some facilities which they could not afford in their times.
This involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities.The current Trends shows some problems like shortages of raw materials,increased pollution and
increased government intervention due to these problems. As raw materials become increasingly scarcer, the ability to create a company’s product gets much harder. Also, pollution can go as far as negatively affecting a company’s reputation if they are known for damaging the environment. The last concern, government intervention can make it increasingly harder for a company to fulfill their goals as requirements get more stringent.In addition global warming and subsequent issue of carbon emission is also cynosure of everyone's eye.Today the natural environment is being used so that we do minimum harm to it and leave a better one for our future generations.
Example:-Vedanta's Aluminium plant project in Orissa invited criticism because it was violating the environmental norms.
Besides Lavasa ,a housing project near Pune has been in news for not following the government norms and Ministry of Environment and Forests withdrawing the clearance given earlier.
The political environment includes all laws, government agencies, and groups that influence or limit other organizations and individuals within a society. It is important for marketers to be aware of these restrictions as they can be complex.Marketers need to monitor the changing political environment because political change can profoundly affect a firm’s marketing.
At the most general level, the stability of the political system affects the attractiveness of a particular national
market. While western Europe is generally politically stable, the instability of many governments in less developed countries has led a number of companies to question the wisdom of marketing in those countries.
Governments pass legislation that directly and indirectly affects firms’ marketing opportunities. There are many examples of the direct effects on marketers, for example laws giving consumers rights against the seller of faulty goods. At other times the effects of legislative changes are less direct, as where legislation outlawing anti- competitive practices changes the nature of competition between firms within a market.
Governments are responsible for protecting the public interest at large, imposing further constraints on the activities of firms (for example controls on pollution, which may make a manufacturing firm uncompetitive in international markets on account of its increased costs).
The macroeconomic environment is very much influenced by the actions of politicians. Government is responsible for formulating policies that can influence the rate of growth in the economy and hence the total amount of spending power. It is also a political decision as to how this spending power should be distributed between different groups of consumers and between the public and private sectors.
Government policies can influence the dominant social and cultural values of a country, although there can be argument about which is the cause and which is the effect. (For example, did the UK government’s drive for economic expansion and individual responsibility during the late 1980s change public attitudes away from good citizenship and towards those of ‘greed is good’?)
Increasingly, the political environment affecting marketers includes supra-national organizations, which can directly or indirectly affect companies. These include trading blocs (e.g. the EV, ASEAN, and NAFTA) and the influence of worldwide intergovernmental organizations whose members seek to implement agreed policy (e.g. the World Trade Organization).
Example- In UK there is act passes called as UK bribery Act 2010 ,it covers all the companies which have presence in UK.Under this Act any company's employees or representatives can be persecuted if they are found guilty in act of bribery in UK or any other country.This even applies to the foreign companies which have presence in UK.
Another example,In USA ,Dodd frank act has come into picture, which makes compulsary for the Companies to list the Taxes,Royalties and other payments they make in other countries to be disclosed in their books.
“If there is anything that
is stead fast and unchanging, it is change itself. Change is inevitable, and
those organizations who do not keep up with change will become unstable, with
long-term survivability in question”
There are things, events, or
situations that occur that affect the way a business operates, either in a
positive or negative way. These things, situations, or events that occur that
affect a business in either a positive or negative way are called"driving
forces or environmental factors."
There are two kinds of driving forces;Internal driving forces, andexternal
driving forces.Internal driving forces are those kinds of things,
situations, or events that occur inside the business, and are generally under
the control of the company. Examples are as follows: · organization of machinery and equipment, · technological capacity, · organizational culture, · management systems, · financial management · employee morale.
External driving forces are those kinds of
things, situation, or events that occur outside of the company and are by and
large beyond the control of the company.
Examples of external driving
forces might be, the company itself, the economy, demographics, competition,
political interference, etc.Whether
they are internal or external driving forces, one thing is certain for both.
Change will occur! A company must be cognizant of these changes, flexible, and
willing to respond to them in an appropriate way. In order for a business to succeed and gain the
competitive edge, the business must know what changes are indeed occurring, and
what changes might be coming up in the future. I guess one might call this forecasting. Thus, critical to
the business is what we call"informational
resources."
Some examples of critical information might include the
following:
·Competition (what are
they doing?)
·Customer behavior
(needs, wants, and desires)
·Industry out look (local, national, global)
·Demographics (the change
populations, there density, etc.)
·Economy (are we peaking,
or moving negatively)
·Political movements
and/or interference
·Social environment
·Technological changes
·General environmental
changes
The
company
In designing marketing plans, marketing management should
take other company groups, such as top management, finance, research and
development (R&D), purchasing, manufacturing and accounting, into
consideration. All these interrelated groups form the internal environment .
Top management sets the company’s mission, objectives, broad strategies and
policies. Marketing managers make decisions within the plans made by top
management.
Marketing managers must also work closely with other
company departments. Finance is concerned with finding and using funds to carry
out the marketing plan. The R&D department focuses on the problems of designing safe and attractive
products. Purchasing worries about getting supplies and materials, whereas
Operations is responsible for producing the desired quality and quantity of
products. Accounting has to measure revenues and costs to help marketing know
how well it is achieving its objectives. Together, all of these departments
have an impact on the marketing department’s plans and actions. Under the
marketing concept, all of these functions must ‘think customer’ and they should
work in harmony to provide superior customer value and satisfaction.
Suppliers
Suppliers
also play a vital role in an organization's microenvironment. The relationship
between suppliers and organizations are built on a solid foundation of
value. The growth and the vision of the
organization depend heavily on the values that the suppliers can offer. Suppliers
are an important link in the company’s overall customer value delivery system.
They provide the resources needed by the company to produce its goods and
services. Supplier developments can seriously affect marketing. Marketing
managers must watch supply availability – supply shortages or delays, labor
strikes and other events can cost sales in the short run and damage customer satisfaction
in the long run. Rising supply costs may
force price increases that can harm the company’s sales volume. The extent to which organizations and
suppliers work together toward their respective or common goals is defined as
Joint action. In this Joint, the supplier contribute significantly in provides
sources of competitive advantages towards the organizations against other
competitors as well as save cost and achieve efficiency for the organization.
It is
important that the organization has a high communication frequency and
information sharing with its suppliers. A good frequent contact and information
sharing helps routine issues such as product availability, order handling and
delivery issues and reduce uncertainty. When the organization has frequent
communication with it's suppliers, it can give the supplier the chance for
operational improvements and product development. This can indirectly help the
organization because when the advice is accepted. Few examples are as follows:
1.In 2000 Ford's image was damaged when tyres
on its Explorer vehicles started exploding. These tyres were produced by
Bridgestone and the supplier ended up re-calling over 6.5 million tyres.
2. In 2007
Sony batteries in several Dell laptops caught fire which caused a terrible
public relations issue for the computer manufacturer and led to over 4 million
laptop batteries being recalled.
I’m
disappointed with you!!! This is some phrase that nobody wants to hear from
anybody. But lets face the fact... We just cannot make everyone happy, can’t
meet everyone’s expectations. Life is a tradeoff between what people expect
from you and what you can deliver. Guess I’m getting too analytical with life...
Can’t help it though!! MBA does tend to make you over-analytical.
People need to be satisfied with anything and
everything around them. It starts with the toothbrush they use, the car they
own, the special someone they love and so on... the list is just unending. But
the good thing is that the “satisfaction” criteria differ from person to
person. So, even if someone finds you useless, there are good chances that
someone else will find you perfect. Hence people try to adapt themselves so
that they are acceptable to the masses (a larger portion of the population).
The same is true for the products too. There is no ONE good product for
“everyone”. So the manufacturers try to concentrate on one group and try to
please them. And success depends on how well they(manufacturers) attract and
retain that target group.
Continuing on the analytical front... For every goal
to be established, there are a set of constraints to be overcome.
But
what are the general factors to be considered while designing a strategy to
launch a product??
What
are the companies supposed to deliver to make us happy?????
It’s
time for a little introspection...
Let’s
put it the other way... What do we want from a product????
The
answer to this question is what is known in marketing language as “Consumer Behavior“
Let’s
switch ourselves in the shoes of the marketers for a while...
All
the theory is well defined, but the problem is when we try to launch a
marketing strategy for a product. The consumers are confusing, they have
different tastes, different expectations, different backgrounds, different income
levels, and gender of course makes a huge difference (how else would you even
justify a colour called pink!)
I
give up... Let’s see what You Tube has to say about this...
And
you wonder why virgin mobile was a flop!!! It’s not just about the girls. Of course! Life is a lot about girls.
If
they had wanted to target the youngsters, they had to give an all round
perspective or the hot pick of the season and thats exactly what airtel was successful
in doing.
This
was an example of how consumers think and prefer products as per their
functions. But there is also a feel-good factor required for the product to be
successful in the market.
There
are a lot more factors than quality, price etc to persuade a consumer to buy
your product. These were some of the examples.
Phew!!
These consumers... oops!!! Thats us.. How demanding are we!!!
Now
lets get to some action... Competitors!!!
Not
only do the companies design products and strategies for the consumers, they
also have to craft it so as to get an edge over their counterparts too.
Some businesses
think it is best to get on with their own plans and ignore the competition.
Others become obsessed with tracking the actions of competitors (often using
underhand or illegal methods). Many businesses are happy simply to track the
competition, copying their moves and reacting to changes.
Competitor analysis
has several important roles in marketing:
• To help management
understand their competitive advantages/disadvantages relative to competitors
• To generate
understanding of competitors’ past, present (and most importantly) future
strategies
• To provide an
informed basis to develop strategies to achieve competitive advantage in the
future
But, What do we need
to know about our competitors ??
• Who are our
competitors?
• What threats do
they post?
• What is the
profile of our competitors?
• What are the objectives
of our competitors?
• What strategies
are our competitors pursuing and how successful are these strategies?
• What are the
strengths and weaknesses of our competitors?
• How are our
competitors likely to respond to any changes to the way we do business?
The demography of a region includes population size and composition,
as well as key socio-economic attributes such as literacy levels, occupation, gender, family size, age and wide or
narrow disparities in a society's distribution
of income.(for all age group) (for youngsters-college going)
Demographics are
significant because the basis for any market is people. Demographic characteristics
are strongly related to consumer buyer behavior in the marketplace and are good
predictors of how the target market will respond to a specific marketing mix.
Theoretically, the larger the total population in a region, the larger the
potential market that will exist. In addition, the composition of a population
in terms of age and sex will also influence the potential demand for specific
products. For example, if a company wishes to market disposable nappies abroad,
the number of women in a particular target market who are of child-bearing age
is an important influence on the potential demand for that product.
(for mommies)
In effect, demographic factors such
as literacy levels serve to stratify the total population into two different
segments - those people who are likely to be potential consumers and those who
are not.
for kids
for older generation
for ladies
for low income group
for executive class
for religious people
(for family)
An overall increase in population
size is therefore relevant to potential demand. Stratification of the overall
market by demographic characteristics also helps to identify significant
changes in potential marketing opportunities. For example, the ageing of the
post-War 'baby-boomers' is creating a growing worldwide market for products and
services geared to affluent and middle-income families.
Changes in the size and age
structure of the population are critical to many firms’ marketing.
Consider the following changes in
the structure of the Indian population and their effects on marketers.
There has been a trend for women to have fewer
children. There has also been a tendency for women to have children later
in life. In addition, there has been an increase in the number of women
having no children. Fewer children has resulted in parents spending more
per child (more designer clothes for children rather than budget clothes)
and has allowed women to stay at work longer (increasing household incomes
and encouraging the purchase of labour-saving products).
Alongside a declining number of children has been a
decline in the average house- hold size . There has been a particular fall
in the number of large households with five or more people and a
significant in- crease in the number of one-person households .
The
growth in small or one-person households has had numerous marketing
implications, ranging from an increased demand for smaller units of housing to
the types and size of groceries purchased. A single person buying for him or
herself is likely to use different types of retail outlets compared with the
household buying as a unit.
Another important microenvironment
factor is the publics (government, consumer associations, financial or media
publics). All of them can have an affect (positive or negative) on company's
reputation and marketing.
How technological factors affect the marketing environment?
Many marketing managers are already aware of the four Ps and how pleasing customers has become a major priority in marketing today. With increases in technology, however, customer approval is more important than ever before, and all aspects of business are rapidly advancing to conform to expectations of today's varied consumers. The internet has offered consumers the ability to not only rate a large number of products, but also easily provide their own reviews, opinions, and input into the most popular products.
The effect of this on production is that today's products are tested and engineered to be of the highest quality and also accommodate many customer needs. In terms of marketing management, it means being able to listen to the customers and not only what they like and dislike but what their needs are and how they can be met. One great example of how businesses have adapted to customers can be seen in the auto industry. Today's vehicles come standard with such things as mp3 players, navigational systems, Bluetooth capability, and even added cup holders and grocery bag hooks. Also, cars are now equipped with more added safety features than ever before.
With the increased availability of information on a variety of different products, today's consumers are more educated than ever before, demanding products that are made from the safest materials and production methods that are safer for the environment. Increased consumer demands for hybrid vehicles and cleaner fuel alternatives have also prompted further government regulations, incentives for vehicles that benefit the environment, and also increased government funding for research into other forms of fuel.
Fuel and the price of gas in today's economy is also another aspect that has greatly influenced the auto industry, and a number of other industries as well. While sales of larger SUVs and trucks are declining, more people are interested in smaller, compact cars that offer better fuel economy. Another advantage that technology has offered auto dealers and consumers alike is price comparison shopping and referrals. Now, when a customer is looking for a new vehicle, they can go online, research certain models, compare prices, and easily get a referral to a local dealership that offers the best price. For the dealers, this has lead to increased competitiveness and greater cost cutting, as well as no haggle pricing on the part of some companies.
With more and more people turning to the internet not only to shop, but also to do product research prior to buying, price comparison is becoming increasingly important. In fact, in a recent survey, it was determined that 58 percent of online shoppers felt that all ecommerce sites should offer a price comparison service that enabled them to make the best choices on the spot. Marketing management is shifting faster than ever before, and customer input and approval is valued much more today than ever before.
Professionals who have contact with customers are now "touching" with technology. With each passing day, sales, marketing, and even customer service positions are becoming increasingly focused on technology. In a one-on-one interview with SearchCRM.com, Stephen Diorio, President, IMT Strategies, shares his thoughts on the 12 impacts of technology on sales and marketing.
Diorio and IMT Strategies have identified 12 ways technology is changing the sales and marketing executive's job:
Collaborative Customer Relationship Management (CRM): Organizations must assemble and integrate customer relationship management (CRM) systems that enhance customer collaboration and build customer loyalty and exit barriers.
Outsourcing Sales and Marketing Functions: Organizations must strategically outsource sales and marketing budgets to a new generation of businesses, including marketing agencies, e-commerce utilities and service providers, and e-channel partners to obtain talent, technical expertise, and cost efficiencies.
Customer-Centric Organizations: Organizations must recast their familiar organizational and functional models, transforming them into a natural extension of customer segmentation, enterprise selling processes, and complex demand chain partnerships.
Operationalizing E-Care: Organizations must adopt enterprise-wide management of the customer care processes to ensure seamless service and enhanced intimacy across multiple-channel interfaces and throughout the customer lifecycle.
Hybrid Distribution Systems: Organizations must build multi-channel, hybrid distribution systems that leverage low-cost, high-touch technologies to improve cost efficiency, market coverage, and overall selling performance.
Value-Added Direct Sales: Organizations must migrate the role of direct sales to better align high-touch, face-to-face selling interactions with high-value and high-margin products and services.
Demand Chain Remediation: Organizations must restructure demand chain relationships to maximize value creation and customer access while leveraging costs and value-added channel partnerships.
Customer Interaction Centers: Organizations must consolidate and integrate call center, Web, e-mail, fax, and marketing technology assets to better manage selling resources, technology infrastructure, and customer interactions.
Product Channel Readiness: Organizations must design modular, "channel-ready" products optimized for specific sales channels, partners, and customer segments, improving personalization, ease of doing business, and transaction costs.
Dynamic Pricing & Trading: Organizations must creatively manage the impact of buy- and sell-side technologies and trading communities on margins and pricing.
Changing Role of Branding: Organizations must aggressively build brand equity in e-channels, in virtual communities, and across multiple selling partners, channels, and points of interaction (POI).
Interactive Direct Marketing: Organizations must deploy new tools, approaches, and strategies for anticipating or influencing the way customers buy.
Determining which of these twelve areas are of most importance to your specific organization is a first step in acknowledging the impact of technology on sales and marketing and in moving your organization into the world of e-business.
Economic conditions can have a marked impact on all aspects of business, including marketing, so it is important for any senior marketer to have a basic understanding of the workings of the economy.
The role of any government is to keep tight monetary control of the economy to ensure that inflation stays at a manageable, low rate, that levels of employment are high and that companies prosper and hopefully sell their products overseas to create a trade surplus. The government will use whatever measures it sees fit to keep the economy stable, and a good marketing team will always keep an eye on the economy to see what if anything they need to do to adjust their strategy in the light of economic changes.
One of the most basic pieces of economic theory is that of supply and demand. These two factors interact to influence the price that can be achieved for a product or service. If a product is very sought after, but there are very few available to buy, the price will be high as there is said to be an excess of demand relative to the supply. For more mundane products however, which are in abundant supply, maybe through a number of suppliers, there could be an excess of supply over demand, meaning that suppliers may need to drop their prices to achieve more sales.
A company should constantly assess the level of supply and demand in their marketplace in case of increased competition, or a sudden surge in demand for their product. In extreme cases, in markets such as financial services, suppliers might re-price their products from day to day, to get to the top of the "best buy" tables in a bid to stimulate demand.
The economic environment affects the demand structure of any industry/product .In order to assess the impact of these forces, it is necessary that a marketer examines the following factors in a greater detail:
1. Gross national product
2. Per Capita income.
3. Balance of payments position.
4. Industry life cycle and current phase through which the industry is passing .The different phases of this life cycle could be classified as recovery, boom, recession and depression.
5. Trends in the prices of goods and services specifically, whether the inflationary or deflationary trends are visible.
6. Fiscal policies and prime rate of interest charged by commercial banks.
Each of these factors can be an opportunity or a threat to a firm.
For example, if the prices of raw material , labor, and utilities like electricity are showing inflationary trends, the firm may have little option but to pass on this hike to the consumer in the form of increased prices .If the firm happens to be a in a monopolistic or an oligopolistic market, it might not face consumer resistance .But, if the firm is in a competitive industry, the consumer may resist or even shift his choice to the competing product. Inflationary trends in prices could pose a serious threat to a firm's survival. However, a market driven company may use this as an opportunity to analyse all its cost drivers and plan their minimization or elimination. Cost drivers are all those activities that affect the cost structure of a firm. Michael Porter in his classical work on Competitive Advantage and Competitive Strategy spells out cost drivers as:
Economies of scale
Learning and spillover costs.
Coordination among different activities.
Pattern of capacity utilization
Linkages with suppliers and channels,
Inter-relationships with other business units within a firm.
Vertical integration in a value activity.
Timing of an activity
Discretionary policies independent of other drivers like product policy, level of customer service provided, expenses on technology and marketing development activities , delivery time, served markets , channels used etc.,
Location of the firm,
Institutional factors like government regulation , tax holiday/rebates, tariffs, etc.
A marketer needs to understand the impact of these economic forces on his company's products and services.
The economy always has an impact on marketing--whether it is weak or strong. Interestingly, marketers may be affected positively or negatively by a strong or weak economy. Making lemons out of lemonade can benefit certain types of businesses in a weak economy - a strong economy can be negative for others. The bottom line: it pays to understand the market and the effect the economy will have on them.
Sell Straw Hats in Winter
Savvy marketers will continually monitor the external environment to determining how it might impact demand for their products and services, says Lin Grensing-Pophal, author of Marketing With the End in Mind; The tight economy in late 2009 and 2010 meant bad news for the travel industry, but good news for creative retailers who popularized the term staycation; and saw increased sales of outdoor furniture, grills and other items that families could enjoy in their own backyards.
Changing Media Impacts Media Buys
The newspaper industry has been reeling over the past few years as consumers have turned online for information. Fewer readers means lower demand from advertisers and decreased revenue for print outlets. The economic effects have resulted in job losses and even the dissolution of some daily papers. Members of the advertising industry need to keep a close eye on how the economy shifts the consumption of information--and the emerging role that technology is playing.
Even Good Times Can Be Bad
Oddly enough, even a very strong economy can hurt some types of businesses. Discount stores and fast food restaurants do well in a down economy, but may not do as well in a healthy economy as consumers turn to higher-end food providers. The bottom line in marketing in terms of economic impact is it all depends. It depends on who the market is and what the marketer is selling.
The effect of this on marketing can be that budgets may have to be cut, focusing on more cost effective marketing techniques and maybe promoting different, maybe cheaper products. It may also have an impact on the messages used. As people become more cautious, their tastes change and it may be necessary to appeal to their need for value. A car company for example may focus their ads less on the design and image of a car to focus more onfuel economy or value.
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