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Tuesday 21 August 2012

Marketing Environment: Cultural Factors


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.

Marketing Environment: Natural Factors


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.





Marketing Environment: Political Factors


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.

Introduction


“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, and external 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“

Still pondering what it is... A professor always explains things better than a student... take a look at this...

http://www.youtube.com/watch?feature=fvwp&v=LI_WwbgwYfs&NR=1

 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...
Our product should also be well designed and should serve a purpose…
For example,
I don’t think even God could help you with products like these… let alone the consumers.

Also, the strategy should be able to sense the vein of the consumers, if not at least the target group.
Compare the two ads,
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.
Check this out…
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 war begins here…




These were some of the ad campaigns launched by pepsi to knock out coke... whoa!!! don't mess with pepsi...

At the end of the day, may be it a product or person, he has to plan his strategies to survive through his competition and external demands. 

at the same time .. not lose his sanity too .. which i guess you'd have realised how hard it is
And that is exactly what i'm trying to do ..

Cheers :)


Marketing Environmentt: Demographic Factors


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.

Marketing Environment - Technological Factors

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.