Marketing Environment Unit 2

Marketing Environment “ A company marketing environment consists of the actors and forces that affect the company’s ability to develop and maintain successful transactions and relationship with its target customers.” – Philip Kotler It is thus important for marketer to understand marketing environment so that They are able to maximize the most out of their positive factors. They are able to manage and minimize the impact of negative factors.

Features of Marketing Environment Changeable in nature: Forces in marketing environment are changeable in nature; they go on changing over time; such as habit of people, their needs and wants, technology, demographic character of the people, politics, rules and regulations, competition, etc. Create constraints and threats: Marketing environment is dynamic in nature and may create constraints and threat to the management over time. Relevant to the marketing decision-making: Marketing environment is potentially relevant to the marketing decision making; a marketer needs to consider each and every component of marketing environment while making a rational decision. Strong source of opportunities: A marketer identifies business opportunities from among the marketing environmental forces.

Some Trends in Marketing Environment The booming global economy The increasing power of Dollar The increasing pressure of open economy and globalization The increasing competition in the world market The increasing trend of privatization The increasing political unrest in the world The increasing cultural divisions Breakdown of cold war and shift of political power to few countries Increasing role of women in society and politics Economic miracle of East Asian countries Development and adoption of new technologies Massive development in information technology

Classification of Marketing Environment External Environment Micro Environment Macro Environment Internal Environment

Internal Environment/Task Environment Internal marketing environment refers to collection of factors within the firms itself. Internal factors include those forces, which can be controlled or manipulated by the management whenever required. The major components are: Production facilities Financial capabilities Human resources Research and development capability Company image Objective, policy, and structure of the organization

External Environment An external environment consists of environmental forces that are outside the firm. It consists of micro and macro environment. Both of these micro and macro environments are uncontrollable in nature and have considerable effect on any organizational system.

A. Micro environment The micro environment comprises of those elements of the environment which remain close to the company and affect the ability to serve its customers. It can not be controlled by the organization but organization has greater influence on it. It consists of: Suppliers Marketing intermediaries Customers Competitors Publics

B. Macro Environment Macro environment refers to all the external and uncontrollable forces that influence an organization. They are the forces that shape opportunities and pose threat to the organization. For a company to sustain and succeed in ever changing marketing environment, it is important to understand the dynamics of macro environment.

External Environment is not controllable External Marketing Environment Demographics Social Change Economic Conditions Political & Legal Factors Technology Competition Environmental Scanning Target Market Product Distribution Promotion Price External Environment is not controllable Ever-Changing Marketplace Physical / Natural

The macro-environment is the assessment of the external forces that act upon the firm and its customers, that create threats & opportunities Production facilities Financial capabilities Human resources Research & development Company image Objectives, Policy, Structure of organization

Economic Environment Level of income Economic policy of the government Rate of inflation Level of employment Demographic Environment Total population and its growth Structure of population distribution

Socio Cultural Environment Demographics of society: The people of different places, gender, education background, marital status etc. Cultural value of society: the religious structure of society, role of men and women, existence of sub-cultures, etc. Socio-economic characteristics of society: reflects the level of income of the society or family, distribution of income in society, level of employment and unemployment, saving capacity of society or family etc. Ageing of population: increase in the age of population Consumerism: is the social movement in favor of or against the goods and services offered by a marketer or a company

Technological environment: Technological environment consists of all the factors and forces related to change or development in IT, machines and equipments, management information system, automation, processes etc. Political and legal environment Type of government and permanency of government Government laws, rules and regulations Health and safety legislation Power and influence of government agencies Increasing pressure groups Political climate

6. Natural Environment Availability of natural resources Unstable cost of energy Increased levels of environment pollution Increased global warming Government intervention in natural resource management Competitive Environment Competitive factors: Nature and degree of market competition that are – Monopoly market Competitive market Monopolistic market Oligopoly market Threats of new entrants

Reactive and Proactive Marketing From the view point of company investment in customer-relationship building, there are five stages of marketing, namely – basic marketing, reactive marketing, accountable marketing, proactive marketing and partnership marketing. Proactive marketing involves the implementation of prepared strategies, whereas reactive marketing involves tactics employed when opportunities arise. A major difference is that with proactive marketing you have a marketing plan; with reactive marketing, you don’t.

Features of Proactive Marketing The indicators of business involved in proactive marketing involve- Creating a written marketing plan, based on homework, analysis and research. It is viewed and treated as a manageable business process. Is not done based on fads or desperation, but only with time-honored methods. Referrals are regularly generated through incentive programs, social media and other means. ‘Spray and Pray’ blasts of bulk mail, coupons and emails are never used. Profits are increasing. Moreover, the owners are happy and in control of their lives.

Features of Reactive Marketing The indicators of business involved in reactive marketing involve- No written marketing strategy and or plan. Referrals occur whenever the customer decides to call. Marketing is inconsistent and weak. When marketing is done, it is usually a, “lets try this latest fad”. The attitude towards marketing is exasperation, and resentment.

Marketing Environment in Nepal Economic Environment: Nepal is an agrarian country. Contribution of agriculture sector to the country’s real GDP and employment is high. Farming is still labor-intensive. In terms of income, Nepal has per capita income of about US $ 700 which is quite low. Income distribution is unbalance in Nepal. Country has adopted free market economy by introducing Privatization Act 1994. Foreign goods and traders have dominant role in the country’s economy. More specifically, Nepal’s foreign trade and internal trade are heavily dominated by a single neighboring country India.

Demographic Environment: Nepal has approximately 27 million population having equal status of male and female. About 90% population lives in rural areas. The process of urbanization is increasing rapidly. Since all the marketing opportunities have been concentrated in urban area, migration rate from hills to Terai and city areas has been increasing. Nepal has multi-religion groups, including Hinduism, Buddhism, Muslim, and Christianity dominated by Hindus. Cultural forces are very powerful; people spend more money during festivals like Dashain, Tihar, Chhath etc.

Political-legal Environment: Frequent changes in government and national policies and laws have posed a great challenge not only to production and business sectors but also to the foreign investment and tourism sector. - Effective rules and regulations regarding marketing activities are lacking in Nepal. Though Consumer Protection Act was introduced in 1997, its implications are still far reaching the country.

Technological Environment: Nepal is a labor-abundant country and it is comparatively cheap. Industrial development has not taken proper direction in Nepal, so the use of appropriate technology still shy. Modern and appropriate technology has been gradually emerging. Transfer of advanced technology into the country is taking place from multinational and international companies. New innovations are probably non-existent in Nepal.

Natural Environment: Topographically, Nepal is classified into three regions – the northern Himalayan range, the middle mountain region and the southern plain terai. The climate varies sharply with altitude resulting varied resources for varied plantations. Nepal is poor in other natural resources except water so there are tremendous opportunities for marketing of hydropower. Scenic beauties are world famous and are the attractions for tourism industry.

Competitive Environment: The size of Nepalese market is small so the domestic industries lack cost and value effectiveness. As a result, their competitive power is weak compared to foreign competitors. Most of the industries have to depend upon imported raw materials resulting cost-inefficiency. Nepalese market is basically seller-oriented and the bargaining power of the people is weak. Market competition exist in certain products like instant noodles, alcohol and beer.