Marketing Environment

Introduction
• Marketing is a general term used to describe all the various activities involves in
transferring goods and services from producers to consumers. ex: sales promotion,
packaging, distribution channel, pricing and many other functions.
• Marketing activities must begin with understanding of the marketing environment.
• The marketing environment consists of all the factors or forces outside marketing
that affect the marketing management’s ability to develop and maintain successful
relationships with its target customers.
Meaning:
• The various external forces that can directly or indirectly affect the many activities of
an organization”. All conditions, entities events and factors surrounding an
organization that influence its activities of marketing.
• It is the study and interpretation of the political, economic, social and technological
events and trends which influence a business or market.
• Environmental scanning is a process of gathering, analyzing and dispensing
information for tactical or strategic purposes.
Objectives
 To understand elements of the environment
 To observed understand the changes which are occurring in the environment.
 To analyze market situations
 To fit the organization properly into the environment so effective strategies can be
developed
 To identify SWOT analysis in the business
 To manage the planning the organization’s future course of action.
Marketing environmental factors:
 I. Internal factors: Generally called controllable factors. Internal factors are those
factors which occur inside the business organization. It is a means of marketing
programmers to understand their role within the marketing process. It is an ongoing
process that occurs strictly within a company or organization. Ex:
 Financial resources
 Employee morale
 Management system
 Organizational culture
 Marketing research
  Machinery and equipment
 Marketing mix
 Information etc.
• II. external factors:
A. Micro environmental factors: Those factors which close to a business that have a direct
impact on its business operations and success. Micro environment” is the environment that
exists within a company or organization and can influence daily operations Ex:
 Company itself
 Suppliers
 Marketing intermediaries
 Customers
 competitors
 Public
B. Macro environmental factors:
It refers to all forces that are part of the larger society and affect the micro
environment. Macro environmental factors are the external, uncontrollable forces that
affect a company's performance and decision making. These factors are very important
and have a tremendous influence on the operations of the marketer.
• Demographical factors:
• The study of human population in terms of size, location, age, gender, race,
occupation and other statistics. The factors are:
 Population
 Growth of rural population
 Changing family system
 Education level
 Occupation
 Age
 Gender etc.
• Economic environment:
 Economic conditions are affecting organizations directly or indirectly. Prices of goods
and services are determined by economic condition. Consumer habits are affected by
economic conditions, purchasing power and willingness to spend result in effective
demand influenced by economic conditions. It includes:
 Employment level and its structure
  Economic conditions
 Economic policies
 Interest rates
 Exchange rates
 Savings and investment
 Economic system
 Prices and inflation
 Income distribution
 business cycle
 Productivity and profitability etc.
• SOCIAL and CULTURAL factors:
S&C factors are important to consider while creating and implementing a
marketing strategy of a company. Marketing manager should be aware of understanding these
factors. Every individual has different sets of habits, beliefs and principles which help to
develop the himself. Ex:
 social class
 reference group
 family and their culture
 customs
 lifestyles
 education
 language
 law of religion
 values
 attitudes
 Habits etc.
• Political and legal factors
Those factors which are related to governmental affairs. Ex: type of government, political
parties, Govt. attitude towards various industries etc. The factors are:
 Taxation policy
 Trade regulations
 Unemployment policy
  Health and safety law
 Product safety
 Advertisement regulations
 consumer protection law
• Technological factors
 Modern and fast technology which can make the marketing business more efficient,
gives more choices to the society. Computer technology has had an enormous impact
on education and health care etc. technology is a critical factor in economic
development because of the advances of international communication, transfer of
technology.
 Therefore, it is one of the fastest changing factors in the macro environment. With the
development of the internet, companies are now able to economically develop market
themselves on a global level.
• Other factors
 Natural factors: It is another important factor of the macro environment. This
includes the natural resources that a company uses as inputs and affects their
marketing activities.
 International factors: ex: EXIM policy, rules and regulations, consumer behavior
etc.
Global Environment:
• The global environment is a collection of factors that affect businesses on a global
scale, while global marketing is a strategy that focuses on marketing a company's
products or services internationally:
• The global environment includes factors that affect businesses on a global scale, such
as:
• Technology
• Nature
• Economy
• Culture
• Demographics
• Political factors
• Legislation
• Consumerism trends
Global marketing:
 • Global marketing is a strategy that focuses on marketing a company's products
or services internationally.
• It treats the world as a single market
• It adopts a uniform marketing approach to all locations.
• It's particularly suited to products and services that have universal appeal
• It's different from international marketing, which tailors marketing activities to
each region and country.
Marketing environment of India
• India's marketing environment is influenced by a variety of internal and external
factors, including:
• Diversity: India's diverse religions, languages, social customs, and regional
characteristics can be both an advantage and a challenge for marketers. While there is
potential for a wide range of products and services, marketers must adapt their
strategies to suit different tastes and values.
• Socio-cultural environment: A set of beliefs, customs, practices, and behaviors that
exist within a population. For example, the sale of meat and alcohol is restricted in
some areas, while there are large sales of utensils, apparel, and e-appliances during
festive seasons.
• Economic and political policies: India has recently shown signs of welcoming
foreign investment and fair competition. However, there are still some obstacles for
foreign firms.
• Physical environment: India's natural resources, weather conditions, land shapes, and
water resources can change the types and levels of resources available to marketers.
For example, India imports petrol and other products because it doesn't have enough
petroleum resources.
• Technological environment: Technological advancements can make production out
of date. For example, digital printing has reduced the cost of large print jobs.
Benefits of environmental analysis:
 It encourages the internal employees to perform better.
 It creates common understanding of the business organization
 It encourages employees to offer superb service to the success of the business.
 It improves customer retention and individual development
 It creates good coordination and cooperation among department of the business
 Planning and direction
 Information storage and processing
 Proper collection and reporting
  Implementation.
Consumer Behaviour:
• Understanding, analyzing, and keeping track of consumer behavior is critical for
businesses.
• Consumer behavior is the actions and decisions that people or households make when
they choose, buy, use, and dispose of a product or service.
• Consumer buying behavior is the process and actions individuals
undertake when making purchasing decisions.
• Consumer behavior is the study of the elements that influence
individuals’ purchasing decisions, including environmental, psychological,
and societal factors.
Definition:
• Philip Kotler defines consumer behavior as “the study of how people buy, what they
buy, when they buy, and why they buy”.
• According to Engel, Blackwell, and Mansard, 'consumer behavior is the actions and
decision processes of people who purchase goods and services for personal
consumption'.
What factors influence consumer behavior while purchasing?
• Situational factors: They are temporary in nature and include physical factors such
as a store’s location, layout, colors, music, lighting, and even scent. Companies try to
make these factors as favorable as possible. Other situational factors include holidays,
time, and moods of the consumer.
• Personal factors: These factors include demographic factors such as age, gender,
income, occupation, etc. It also depends on one’s interests and opinions. To further
understand consumers, companies also look more closely at their lifestyles – their
daily routine, leisure activities, etc.
• Social factors: This factor also includes social class, level of education, religious and
ethnic background, sexual orientation, customer orientation, and people around you –
family, friends, or social network. Different cultures have varying customs and rituals
that influence how people live their lives and what products they purchase.
• Psychological factor: A person’s ability to understand information, perception of
needs, and mindset influence consumer behavior. One’s reaction to a marketing
campaign will depend on one’s beliefs and state of mind.
Theories of Consumer Behaviour:
• Learning theory:
 • Learning theory is a foundation of consumer behavior that explains how consumers
acquire information and change their behavior based on that information. Learning
theory can help marketers understand how consumers interpret brands and develop
strategies to encourage purchases.
• Here are some learning theories that apply to consumer behavior:
• Behavioral learning theory
• Observational learning
• Psychoanalytic theory:
• It is also known as Freudian theory, is a model of consumer behavior that suggests
that unconscious psychological forces influence purchasing decisions. The theory is
based on Sigmund Freud's ideas that personality is a result of unconscious desires,
instincts, and early childhood experiences. Here are some ways that psychoanalytic
theory is applied to consumer behavior:
• Unconscious motivations: Consumers may make purchases based on unconscious
desires, such as status, security, or pleasure.
• Symbolism: Marketers use symbolism and imagery in ads to appeal to consumers'
subconscious desires. For example, luxury brands may use aspirational images to
appeal to consumers who desire social status.
• Personality traits: Marketers can segment markets based on which parts of the
psyche are dominant in influencing consumer behavior. For example, the id is the part
of the psyche that represents instinctive, spontaneous desires, while the superego
represents internalized societal norms and values.
• Emotional benefits: Marketers can associate products with emotional benefits.
• Brand identities: Marketers can create brand identities that tap into consumers'
subconscious desires.
Economic theory:
• The theory of consumer behavior is a microeconomic concept that explains how
people decide what to buy and how much to pay for it. It's based on the idea that
people make purchases to satisfy their needs and wants, and try to get the most
satisfaction from each purchase. Here are some concepts in the theory of consumer
behavior:
• Utility maximization: Consumers make calculated decisions to get the most
benefit from their purchases.
• Non-satiation: People are rarely satisfied after one shopping trip and want to
consume more.
• Decreasing marginal utility: Consumers lose satisfaction with a product as
they consume more of it.
Maslow's Theory of Motivation in Consumer Behaviour:
 • Maslow's theory of Hierarchy of Needs specifies that human needs are hierarchical,
with basic physiological needs at the bottom and self-actualization needs at the top.
The model suggests that when people try to satisfy lower level needs, they do not
attempt to gratify the higher one.
• Hierarchy of Needs
• Physiological Needs: The basic needs such as food, water, shelter, and
warmth.
• Safety Needs: Security, stability, and protection from physical and emotional
harm.
• Social Needs: Belongingness, love, and relationships.
• Esteem Needs: Self-esteem, recognition, and status.
• Self-Actualization: Improvement of self, realization of one's capabilities to
their fullest, and self-actualization.
The Howard Sheth Model of Consumer Behavior:
• It is a framework that explains how consumers make decisions by considering a
variety of factors, including psychological, social, and marketing stimuli. The model
was developed by John Howard and Jagadish Sheth and published in 1969 in their
book ‘The Theory of Buyer Behaviour’.
How to collect data on consumer behavior?
 Surveys
 Focus groups
 Interviews
 Observations
 Experiments
 Data analysis
Objectives of studying Consumer Behavior:
 Understanding consumer needs and preferences
 Predicting consumer buying behavior
 Exploring decision-making processes
 Segmenting and Targeting markets
 Assessing customer satisfaction and loyalty
 Adapting to changing consumer trends
 Strategizing businesses for growth
Consumer Buying Process:
  Find a Problem
 Gather Information
 Find Solutions
 Make a Purchase
 Review the Purchase
Importance of Consumer Behavior to Marketers
• To understand buying behavior of consumers
• To create and retain the customers through online stores
• To understand the factors influencing consumers’ buying behavior.
• To understand the consumer’s decisions to dispose a product or services.
• To increase the knowledge of sales person influence consumer to buy product.
• To Optimize Marketing Strategies
• Improve Customer Service
• Predicting Market Trend
Key Types of Customer Behavior Models:
• There are several types of behavior models, each offering a unique perspective on
how consumers make decisions. These models are divided into two main groups:
• Traditional customer behavior models
• Learning Model: Focuses on how consumers learn and make choices based
on their experiences.
• Economic Model: Emphasizes the role of pricing models and consumer
income in rational buying decisions.
• Psychoanalytical Model: This model examines unconscious motivations and
desires underlying consumer behavior.
• Sociological Model: Highlights the influence of social groups, culture, and
social class on how consumers behave.
Contemporary customer behaviour models:
• Engel-Kollat-Blackwell (EKB) Model: It is a marketing framework that helps
marketers understand the consumer decision-making process. Outlines customer
decision-making stages, including need recognition, information search, evaluation,
purchase, and post-purchase behavior. The model was developed in the 1960s and
depicts consumer behavior as a problem-solving process. The EKB model has five
stages:
 • Need recognition: Consumers become aware of a need, desire, or interest to
purchase a product or service
• Information search: Consumers research the product and options from
competitors
• Evaluation of alternatives: Consumers compare the product to their past
experiences and needs to determine if it's the best fit
• Purchase decision: Consumers decide to purchase the product that best meets
their needs
• Post-purchase evaluation: Consumers assess their experience with the
product and decide whether to continue using it or make another purchase
• Black Box Model: Views consumer responses to external variables (marketing,
environment) as primary, with the internal decision process considered a “black box”.
A black box model is a system that only provides inputs and outputs, without
revealing how it processes information internally.
• Black box models can be complex and difficult to understand, even for programmers
and data scientists. The lack of transparency can make it difficult to: Understand the
model's behavior, Detect potential biases or errors, and Hold the model accountable
for its decisions.
• Hawkins-Stern Model: Focuses on impulsive purchases, suggesting that visual signs
and sudden needs can trigger unplanned buying. The Hawkins-Stern Model is a
consumer behavior model that focuses on impulse buying and the factors that
influence it:
• Impulse buying process: The model outlines four stages of the impulse
buying process:
• External stimulus: An attractive product or promotional display triggers an
internal response
• Internal response: The consumer develops a heightened desire or impulse
• Evaluation: The consumer considers the benefits and drawbacks of the
impulse
• Decision: The consumer decides to act impulsively and make the purchase
• Howard-Sheth Model: Emphasizes rational decision-making, outlining how
consumer inputs lead to constructs (like attitude and intention) and, ultimately,
purchase outcomes.
Online Consumer Behaviour:
• This is the new way of digital revolution and businesses worldwide have realized their
worth.
• It refers to the use of an electronic medium to carry out commercial transactions.
 • A client who purchases on the internet is called a online consumer.
• E-Commerce/online is not only limited to online sales, but also covers;
• Preparation of estimates sales
• Consulting the users
• Provision of an electronic catalogue
• Access plan to point of sales
• Online payment
• Delivery Tracking
• After- sales- services
Meaning:
• Online Consumer Behaviour is the study of the intersection between online
consumers and online business.
• Consumer Buying Behavior refers to the buying behavior of the ultimate consumer.
• It includes the study of why, where, when, how and under what conditions consumers
consume different goods or services.
• Buying Behavior is the decision processes and acts of people involved in buying and
using products.
Why do people purchase products online?
 Convenience
 Easy to buy
 Free shipping
 Time saving
 Comparison of prices
 Range of products
 Better prices
Why people don’t purchase products online?
• Feel products
• Privacy concerns
• Returning products
• After sales
• Buy in stores
 • Shipping cost

Factors of Online Customer Behavior:

• The External Factors are the ones beyond the control of the customers. They can
divide into five sectors namely demographic, socio-economic, technology and public
policy; culture; sub- culture; reference groups; and marketing.
• Internal Factors are the personal traits or behaviors which include attitudes, learning,
perception, motivation, self image.
• The Functional Motives is related to the consumer needs and include things like
time, convenience of shopping online, price, the environment of shopping place,
selection of products etc.
• The Non-Functional Motives related to the culture or social values like the brand of
the store or product.