Name: Harshit Pansari

Roll No.: 23
Section: C
Course: B. Com (Hons.)
Subject: Marketing
Question 1
Impact of Macro Environment on Marketing Strategy:
1️) Political-Legal Environment,
2) Economic environment,
3) Socio cultural environment,
4) Technological environment,
5️) Demographic environment,
6️) Natural environment.

Macro environment has a huge impact on the marketing strategy a firm is aiming at, but
before heading over to it let us first understand what is Macro Environment and what are the
factors affecting it.

So, macro environment refers to the set of conditions that exist in the economy as a whole,
rather than in a particular sector or region. In general, the macro environment includes trends
in the gross domestic product (GDP), inflation, employment, spending, and monetary and
fiscal policy.

It can be categorised into the following:

1) Political-Legal Environment - The political environment consists of laws,

government agencies, and pressure groups that influence or limit various
organizations and individuals in a given society.
Following are the factors that affect it:
● Government type and stability
● Freedom of press, rule of law and levels of bureaucracy and corruption
● Regulation and de-regulation trends
● Social and employment legislation
● Tax policy, and trade and tariff controls
● Environmental and consumer-protection legislation

No matter how much petty or irrelevant these factors might seem but they strongly affect the
marketing decisions. Below are a few examples mentioned which briefly explain the role of
this environment.

Examples:

● Vimal Elaichi: In the businesses which dwell in tobacco products, the political
and legal environment has never been certain and supporting, to state it
 exactly, government of India doesn’t permit any explicit or implicit promotion
of tobacco products via any platform.

However, this has not deterred the ability of tobacco companies to advertise
their product and take benefit that arises through it. But tobacco is banned in
India, how do they do it? Well, they do it by exploiting a loophole, and what is
that?

Heard of misidentification? Yes, that’s how they do it.

Take the infamous Vimal for instance, Vimal is a tobacco giant which also
deals in elaichi which hardly counts a penny in their revenue. But that elaichi
is their Trojan Horse, it’s the way they exploit the loophole. “Bolo juba kesari”
their famous title hardly gives a glimpse of elaichi, but rather promotes the
gutka in an implicit yet profound way.

● Royal Stag: Royal Stag is another such example. They claim in their
advertisements to be a music series, but cunningly promote alcohol. It’s pretty
evident when they say “Small Milate Jaao, large banate jaao” they are not
referring to their Music CDs. In fact, I don’t think anybody even purchases
their CDs. They dwell in alcohol and advertise their CDs (Alcohol in the name
of CDs)
 This logo of the company depicts a bottle of whisky and not any CDs, yet their
advertisement carries it.

● Zoom: When the pandemic restrained people from moving out of their home,
with government all over the world imposing lockdown. Students, employees
and businessmen got stuck at home, they couldn’t physically reach out to their
workplaces.
This is where Zoom acted as a helping hand and within no time it became so
ubiquitous that all classes of people could perform their work or studies while
sitting on their couches.
This saved people from loss of labour and earning, and the usage became so
profound that even today, people use it to overcome regional barriers.
Zoom’s revenue literally zoomed, and the reason for it was the prevailing
political environment which was supporting these digital ventures and hence
zoom pulled many out of the pandemic.

● 1991 reforms: The kind of environment before the LPG policies of 1991 was
highly socialistic and promoted licence raj, owing to this the entry of foreign
business was restricted and the situation was same even for the domestic ones,
 they had to go through highly complex bureaucratic procedures owing to
which establishing business was a nightmare for many. The political
environment was highly uncertain, government was taking up the
responsibilities of each kind.

Marketing was not possible in such a scenario as neither did the environment
offer any channels, nor were there enough incentives for this sector to develop.

Owing to this the marketing segment commenced its growth only after 1991,
this example helps us understand the vitality of political environment in
marketing.

2) Economic Environment - The economic environment comprises factors affecting

consumer purchasing power and spending patterns. Marketers must pay close
attention to major trends and consumer spending patterns both within their markets
and outside. Following are the factors affecting it
● Stage of business cycle
● Current and project economic growth, inflation and interest rates
● Unemployment and labour supply
● Labour costs
● Levels of disposable income and income distribution
● Impact of globalisation
● Likely impact of technological or other change on the economy

These factors are of critical significance when a firm lays out their marketing strategies,
following are the examples of it.

Examples:

● Jio: Till 2016 telecom companies were exploiting the unaware Indian internet
consumers by charging exorbitant amounts, owing to this the penetration was
 extremely low as Indian consumers were price sensitive and hence couldn’t afford the
internet at that price point, along with that even the usage was low.

The Indian business tycoon Mukesh Ambani saw an opportunity in this and rolled out
free data plans for Jio along with unlimited calling. This single initiative disrupted the
whole telecom business, people were purchasing Jio sims recklessly and the firm
turfed out competition in no time.

Of course, this marketing initiative or more appropriately ‘marketing stunt’ costed

Ambani a fortune but within a year Jio turned into a gold mine, generating revenue in
9 zeros.

Here, Jio understood the economic situation of Indian telecom users appropriately and
capitalised on it.

● Nano: When we’re considering examples for a macro environment, we necessarily

seek success in it, however, in this case we’ll be discussing nano a master project
which failed to improper marketing.

Nano as we can recall was a car project to meet the needs of middle to lower middle
class of Indian Consumers who aspired to buy a four-wheeler but couldn’t afford it
due to hefty pricing. Nano rightly understood the economic environment and went to
build the most affordable car, for them distribution wouldn’t have been a problem as
it was a project by the mighty ‘TATAs’.
 However, they failed at one thing miserably, i.e., marketing. Tata wanted to market
Nano as a very affordable product for the masses. But its marketing was done in such
a way that rather can promoting the product as affordable they marketed it as cheap.
Now understand car is not just a product to carry a good bunch of 4-5 people, but it’s
a status symbol as well.

That’s the catch in Nano’s case, they devalued their product at such a level that people
avoided buying it altogether. Think of it where would you look cool, in a Bullet or in
an equally priced Nano?

The answer to this answers the reason by behind failure in targeting the economic
environment correctly.

● Mutual Fund: “Inflation is eating your money”, “With FDI you don’t get any extra
penny”, “Mutual Funds Sahi hai” and a lot more similar statements have been made
popular by awareness programs of mutual fund.

These are nothing but marketing strategies which take the complete advantage of the
market economics. And these statements are true as we end up losing our money as it
becomes lesser each second due to inflation, when we invest in FDI the returns only
help us cover the inflation.

If we want to make an extra penny while investing then equity is the key,
straightforward investing into companies might be a bit risky affair, this is where
mutual fund comes in. They give you 2 digit returns with a minimum risk.

Through correct advertising and in the right economic environment, they have been
successful in creating a landmark for their product.

3) Socio-Cultural Environment - The cultural environment is made up of institutions

and other forces that affect a society’s basic values, perceptions, preferences, and
behaviours. People grow up in a particular society that shapes their basic beliefs and
values. They absorb a world view that defines their relationships with others.
 ● Population growth rate and age profile
● Population health, education and social mobility, and attitudes to
● these
● Population employment patterns, job market freedom and attitudes
● to work
● Press attitudes, public opinion, social attitudes and social
● taboos
● Lifestyle choices and attitudes to these
● Socio-Cultural changes

These factors profoundly affect the marketing decisions and following examples offer an
illustration for it as well.
Example:

● McDonald’s: The fast-food retail giant McDonald’s, before its foray into India used
to deal largely in beef and other non-veg products for its burger filling, but these items
were considered sacred or taboo in India.

But McDonald’s couldn’t leave 1/7th of the world just because of these cultural
factors. They wanted to capture the unpenetrated market.

Now this time they had to modify their product to suit the culture prevalent here. So,
they conducted a thorough market research, wherein they identified Indian affinity
towards ‘Aloo Tikki’, hence Mc Aloo Tikki was born and along with-it similar
alternatives which had the power to serve the needs of all kind of Indian Diversity.
The change became a hit in India and Mc Donald a success along with it.

● Coca-Cola: Coca-Cola the famous brand behind the ubiquitous soft drink which
recently lost Cristiano Ronaldo as its brand ambassador along with a plunge in its
shares. However, besides this particular instance they have been very successful in
advertising, take their “Share a coke” campaign as an example, which also will be our
subject for understanding how socio-cultural factors affect marketing.

So, Coca-Cola identified that their consumers were not feeling a connect with them.
For this derived a unique advertising campaign, wherein they launched bottles
labelled Bort, Laura, Sophia and a whole host of other names matching the Australian
consumers.

This spiralled a wave of people gifting their colleagues the coke on just small
occasions and they felt a connect. Owing to this Coca-Cola’s demand was increased
multi-fold.

A similar campaign was launched in India. However, they identified that the naming
convention might not work in India, so they developed their marketing taking
“relations” as the foundation of their campaign.

They labelled bottles as Bhai, Boss, Abu and a similar set of relations, which people
were not supposed to give to the identical “Bhai” or “Boss”. They gave it to person
whom they perceived as these things. An example could be a man giving ‘boss’ titled
bottle to his wife. This whole exercise made the campaign a lot more enough and
hence bolstered the business of the firm.
 ● Cadbury: India is land of diversity and culture where varied festivals are celebrated
throughout the year. In this festivals Indian follow some traditions like giving sweets
or ‘mithai’ in Indian dialect.

Cadbury which produces chocolates saw an opportunity of this age-old tradition. They
identified that purpose of these traditions was to gift a sweet stuff not specifically
‘mithai’, so they asked the Indian consumers to gift their beloved ‘Dairy Milk’,
‘Celebration packs’ to their friends & relatives.

For this they launched their advertising campaign “Kuch acha hojaye, kuch mitha
hojaye”. People loved the relatable stories that these advertisements displayed and
hence this advertisement was a runaway success.

4) Technological Environment - The technological environment is perhaps the most

dramatic force shaping our destiny. Technology has released wonders such as
antibiotics, robotic surgery, miniaturized electronics, laptop computers, and the
Internet. It also has released horrors such as nuclear missiles, chemical weapons, and
assault rifles.
● Impact of emerging technologies
● Impact of Internet, reduction in communications costs and
● Increased remote working
● Research and Development activity
● Impact of technology transfer

This environment has by far been the most dynamic advertisement as it captures the major
breakthrough into the technology which can disrupt the market

Examples:
● SRK AI ad: AI has enabled us to perform the tasks which we never even thought of,
but how has been its encounter with TV ads?
In this example, we’ll cover exactly that

Cadbury launched its AI powered AD, titled “NotJustACadburyAd” and it indeed

wasn’t. They rolled out this advertisement to support the small businesses which saw
their revenues depleting. In this ad they partnered with Rephrase to create an
advertisement which can update itself specifically with respect to the pin codes of
different locations. Not just that, shopkeepers can create their own Ad and get
themselves promoted by one of the biggest brand ambassadors Sharukh Khan.

This advertisement saw a positive response from netizens and people all over India
loved it.

Zomato tried the same thing with the delivery partners, however due to a small error,
their advertisement saw a backlash. This also indicates that Marketers need to be
cautious while dealing with technology.

● Grofers: Grofers or rather blinkit, which deals in the delivery of groceries, was one of
the early movers. They were doing good in their business, but then Zepto happened.
Zepto completely changed the market dynamics with their promise to deliver
groceries within a short span of just 10 minutes. Now, who would buy from Grofers
and wait for 60 minutes?
 Grofers had to follow the suit and for this it even rebranded itself as ‘Blinkit’,
suggesting - get your goods within a blink of eyelids.

Now one might argue, “All of this is okay, but what about technological environment
here?”

Well, how do you think they deliver goods in just 10 minutes? It's the advanced
technology through which they feed in the algorithms. With the market data they
have, they estimate the orders beforehand and prepare for it in advance.

● Lenskart: Internet has come good on us for a lot of things, be it ordering at comfort
on your couch or getting goods delivered within your doorstep. However, one thing
which still troubles the consumer is they have to order these clothes without even
trying, one might think, “Okay, this t-shirt seems nice, but how would I look in it?”

Not sure about your t-shirts but Lenskart offers you to try their glasses virtually, using
augmented reality (AR), through this you can not only get goods delivered but also try
them and see how it looks on you.
 5) Demographic Environment - Demography is the study of human populations in
terms of size, density, location, age, gender, race, occupation, and other statistics. The
demographic environment is of major interest to marketers because it involves people,
and people make up markets.
● Changing Age Structure of the population
● Changing household patterns
● Geographic shifts in population
● Impact of Diversity
● Proportion of educated workforce
Examples:
● CRED: CRED is a start-up founded by the famous, ‘Kunal Shah’, who made it a
unicorn within a span of 2 years. Amazing, right?
They did it by targeting a particular demographic segment, i.e., niche segment in India
who hold credit cards. But the story is not just about them targeting a niche but also
them providing demographic segmentation to other businesses. How’s that you ask?

Ever wondered how CRED makes money, they give you all those free rewards and
points but for what? It’s for your credit information or credit score. They in turn will
sell this information to banks and other lending institutions who can capitalise on it by
targeting the customers who have high credit ratings.

Paytm is one other such company which capitalises on this information, and their
partners capitalise on this information by marketing to segments.

This makes marketing much more effective as you’re targeting your target audience
very specifically.

● ZARA: ZARA is a clothing brand which capitalises on speed and the consumers who
buy on impulse. They generate profits as large as 85% on their clothes, much higher
than the industry average.
How do they do it?
They are able to do it because they have segmented their market pretty well, they only
open their outlets in Porsche areas where the Individuals living nearby are affluent
 and who don’t have time to hover from shop to shop, and offering them unmatchable
and trendy fashion with no need to look elsewhere it became their favourites.

● Ditto Insurance: The first thing which comes in my mind when I hear the word
demographics is insurance. Insurance by far relies on the demographics of their
consumers. If you’re a young and fit individual you can purchase it at low premiums,
but you’re someone with ailments, then good luck with paying your premiums,
because they’re going to be hefty.

However, here the story is not just about any Insurance company but rather an
Insurance Advisory, a start-up named Ditto. They simplify insurance and help you
choose the best policy for you.

And for the demographic part is their newsletter division Finshots, which brings them
customer. They identified that the under penetration of Insurance in India is due to the
unawareness of Insurance among masses and hence finshots was born to make people
more aware about the finance and insurance. It’s a free daily newsletter which has
more than 500k subscribers, and the readers of finshots become the customers of
Ditto.
 6) Natural Environment: The natural environment involves natural resources that are
needed as inputs by marketers, or affected by marketing activities. Environmental
concerns have grown. In many cities around the world, air and water pollution have
reached dangerous levels.
● Effect of pollution
● Availability of resources
● Sustainable modes of production
● Sustainable product

Climate change is real, officials all over the world are taking initiatives to tackle it, marketing
is no exception to it and the following examples illustrate this further.

Example:
● Mamaearth: Mamaearth is a fast-growing Indian personal care brand, which
produces toxin free skincare products. They have grown exponentially since their
inception in 2016. The main reason behind their success could be attributed to two
marketing factors.
Firstly, they claim to produce the organic products which are free from all the toxic
chemicals which can harm the skin. Owing to this they have created an image of a
company which offers organic goods and since organic goods are trendy mama earth
gains through it.
Secondly, they have partnered with a lot of influencers, and through them it has also
promoted its initiative of planting 1 million trees, or 1 tree for every order placed.
This environmental initiative is highly applauded by the Indian consumers who have
appraised it through their pockets.

● Adani Group: Recently, Indian business tycoon Gautam Adani became the 2nd
richest man in the world, reason? The all-time high prices of its stocks.
Adani Group’s stocks have been rising incessantly, and much of it could be attributed
to ESG (Environment, Social and Governance). ESG has become a very important
factors for investors while picking a stock, and companies which go green are rated
high on ESG rating platforms like TCFD, SASB, etc.
 Now going green definitely promotes investment, and Adani group being one of the
pioneers in this have capitalised on this largely. Their recent target of emitting Net
Zero carbon by 2050 being a recent example.

● Swach Bharat, Swach Abhyan: Now this one is a government initiative and
definitely not for the purpose of business, but in this example, we’ll explore how
government and India has benefitted through marketing of this campaign.

So, with the inception of Modi government came the need to fulfil the points in their
manifestos with one of them being ‘Swach Bharat, Swach Abhyan’.

This initiative was widely promoted through all the media platforms and
municipalities became super active in keeping their cities clean, this not only
improved the standard of living but also created a positive image of India in the
outside world. Because of this trust only the other nations believed when Modi
quoted, “We plan to become Net Zero by 2070”, a statement too big for a developing
country like India, but as the sentiments were positive, it was received with applause
by everyone and India received FDI in large amounts. This was one such initiative
without any critique.

Along with that it was also one of the factors behind the success of BJP in polls, as it
was a fulfilment of their manifestos.
 The success behind this initiative could be attributed to the successful promotion,
which made the masses aware why cleanliness is important.

Question 2
Differentiate between Price Skimming and Penetration Pricing

Basis Price Skimming Penetration Pricing

Meaning Price skimming is a product pricing Penetration pricing is a strategy where

strategy by which a firm charge the prices are set low to attract new
highest initial price that customers customers and increase the product’s
will pay and then lowers it over time. market share. With this method, you
As the demand of the first customers enter the market rapidly and grow a
is satisfied and competition enters the loyal client base. Profits are lower in
market, the firm lowers the price to the short term, but the high number of
attract another, more price-sensitive early sales compensates for the small
segment of the population. margins. Finally, when the demand
The skimming strategy gets its name increases, you can set the price
from "skimming" successive layers of higher.
cream, or customer segments, as
prices are lowered over time.

Object Create short term gains Penetrate the market

Margin High Low

Demand Price inelastic Price elastic

Sales Small quantity is sold due to high Bulk quantities are sold because of
price low price

Pros - Low-cost impact - Customer Conversion

- Maximize early revenue - Improved brand royalty
- Adaptable Strategy - Reduced Competition
- Innovative - Sustainable

Usage - Highly Selective Customers - Existing Competition

- Unknown Demand - Entry barriers
- Innovative Product - Introductory Campaign
- Products with Patent - High inventory turnover
- Low Price Elasticity - High Price Elasticity

Examples 1) Apple: Apple is a renowned 1) Jio: Jio a phenomenal success

 brand which creates disruption of reliance used penetration
with the launch of every new pricing to capture its market.
product. The hype of its As it initially rolled out free
product is so immense that voice and data feature.
people are willing to pay any
amount for it. This initiative transformed the
whole telecom industry and
This is largely owing to the along with this transformation,
quality products they make, Jio captured a large market
which no other brand can share and created a large loyal
match. customer base.

Later, using this brand image

Jio launched its mobile
handsets which were a
This quality has bought apple runaway success, with their
loyal customers, whose price being low, yet revenue
demand is almost inelastic and profits were high.

2) Netflix: Netflix is a powerful

2) Johnson & Johnson: J&J is a example of using market
baby care and pharma giant, penetration pricing to edge out
which has its product available a major competitor. In the late
all across the world. 1990s and 2000s, DVD rentals
were becoming mainstream.
It follows the model of price
skimming, still it enjoys From the outset, Netflix
supernatural profits, how’s emphasized ease and
that you ask? affordability to attract
Blockbuster customers.
Well, it’s primarily because
the goods they sell are Penetration pricing and an
patented products, and you can innovative idea allowed
earn any amount you want on Netflix to build its subscriber
a medicine with patent. base and reach profitability in
2003, five years after opening.
 For instance, they manufacture
Bedaquiline which is a drug
for the treatment of
Tuberculosis and hence a
necessity. These patents help
firm generate large amount of
revenues.
The low initial price point let
customers test their new
service and make the switch.
In 2007, the company’s
convenient online streaming
service propelled it into the
future.

Bibliography:

https://www.healthknowledge.org.uk/public-health-textbook/organisation-management/5b-
understanding-ofs/assessing-impact-external-influences
https://www.coca-colacompany.com/au/news/share-a-coke-how-the-groundbreaking-
campaign-got-its-start-down-under
https://www.outlookindia.com/website/story/india-news-how-the-notjustacadburyad-
campaign-us-using-ai-to-bring-joy-to-local-c/398614
https://finshots.in/archive/is-blinkit-going-to-make-it/
https://www.indiatimes.com/worth/news/the-success-story-of-zara-
559147.html#:~:text=Raising%20%2452%20Million-
,The%20Core%20Of%20Zara's%20Success%20Story,is%20just%2060%25%2D70%25.
https://bwdisrupt.businessworld.in/article/Mamaearth-Pledges-to-Link-Every-Order-To-a-
Tree-Which-They-Will-Grow-/16-10-2020-332191/
https://finshots.in/archive/indias-battle-against-tuberculosis/
https://www.brex.com/blog/penetration-pricing-strategy/

Note: The bibliography contains the link of only a few examples and theory, as
for the rest I have used my own GK and awareness of the facts.