PRINCIPLES OF

MARKETING
UNIT 2: MARKETING ENVIRONMENT, RESEARCH AND CONSUMER
BEHAVIOUR
Definition of Marketing Environment
• A company’s marketing environment consists of the actors and
forces outside marketing that affect marketing management’s ability
to build and maintain successful relationships with target customers.
- Philip Kotler
The Company

• In designing marketing plans, marketing management takes other

company groups into account—groups such as top management,
finance, research and development (R&D), purchasing, operations,
and accounting. All of 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 strategies and plans made by top management.
Suppliers

• Suppliers form an important link in the company’s overall customer

value delivery network.
• They provide the resources needed by the company to produce its
goods and services.
• Most marketers today treat their suppliers as partners in creating and
delivering customer value. For example, Toyota knows the importance
of building close relationships with its suppliers.
• In fact, it even includes the phrase achieve supplier satisfaction in its
mission statement.
Marketing Intermediaries

• Marketing intermediaries help the company promote, sell, and distribute its
products to final buyers. They include resellers, physical distribution firms,
marketing services agencies, and financial intermediaries.
• Resellers are distribution channel firms that help the company find customers
or make sales to them. These include wholesalers and retailers who buy and
resell merchandise. Selecting and partnering with resellers is not easy.
• No longer do manufacturers have many small, independent resellers from
which to choose. They now face large and growing reseller organizations, such
as Walmart, Target, Home Depot, Costco, and Best Buy. These organizations
frequently have enough power to dictate terms or even shut smaller
manufacturers out of large markets.
Competitors

• The marketing concept states that, to be successful, a company must

provide greater customer value and satisfaction than its competitors
do.
• Thus, marketers must do more than simply adapt to the needs of
target consumers. They also must gain strategic advantage by
positioning their offerings strongly against competitors’ offerings in
the minds of consumers.
Publics
• The company’s marketing environment also includes various publics. A public is any
group that has an actual or potential interest in or impact on an organization’s
ability to achieve its objectives.
• We can identify seven types of publics:
1. Financial publics
2. Media publics
3. Government publics
4. Citizen action publics
5. Local publics
6. General publics
7. Internal publics
Continued…
• Financial publics. This group influences the company’s ability to
obtain funds. Banks, investment analysts, and stockholders are the
major financial publics.
• Media publics. This group carries news, features, and editorial
opinion. It includes newspapers, magazines, television stations, and
blogs and other Internet media.
• Government publics. Management must take government
developments into account. Marketers must often consult the
company’s lawyers on issues of product safety, truth in advertising,
and other matters.
Continued…
• Citizen-action publics. A company’s marketing decisions may be
questioned by consumer organizations, environmental groups,
minority groups, and others. Its public relations department can help
it stay in touch with consumer and citizen groups.
• Local publics. This group includes neighborhood residents and
community organizations. Large companies usually create
departments and programs that deal with local community issues and
provide community support.
Continued….
• General public. A company needs to be concerned about the general
public’s attitude toward its products and activities. The public’s image
of the company affects its buying.
• Internal publics. This group includes workers, managers, volunteers,
and the board of directors. Large companies use newsletters and
other means to inform and motivate their internal publics. When
employees feel good about the companies they work for, this positive
attitude spills over to the external publics.
Customers
• Customers are the most important actors in the company’s microenvironment. The aim of
the entire value delivery network is to serve target customers and create strong relationships
with them. The company might target any or all five types of customer markets.
• Consumer markets consist of individuals and households that buy goods and services for
personal consumption.
• Business markets buy goods and services for further processing or use in their production
processes.
• Reseller markets buy goods and services to resell at a profit.
• Government markets consist of government agencies that buy goods and services to produce
public services or transfer the goods and services to others who need them.
• International markets consist of these buyers in other countries, including consumers,
producers, resellers, and governments. Each market type has special characteristics that call
for careful study by the seller.
Macro-Environment
The 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.
• Marketers keep a close eye on demographic trends and developments
in their markets—both at home and abroad. They analyze changing
age and family structures, geographic population shifts, educational
characteristics, and population diversity.
The Economic Environment
• Markets require buying power as well as people. The economic environment
consists of economic factors that affect consumer purchasing power and spending
patterns.
• Marketers must pay close attention to major trends and consumer spending
patterns both across and within their world markets.
• Nations vary greatly in their levels and distribution of income.
• Some countries have industrial economies, which constitute rich markets for many
different kinds of goods.
• At the other extreme are subsistence economies; they consume most of their own
agricultural and industrial output and offer few market opportunities.
• In between are developing economies that can offer outstanding marketing
opportunities for the right kinds of products.
The Natural Environment
• The natural environment involves the natural resources that are
needed as inputs by marketers or that are affected by marketing
activities.
• Marketers should be aware of several trends in the natural
environment. The first involves growing shortages of raw materials.
Air and water may seem to be infinite resources, but some groups see
long-run dangers. Air pollution chokes many of the world’s large
cities, and water shortages are already a big problem around the
world
The Technological Environment
• The technological environment is perhaps the most dramatic force now
shaping our destiny.
• Technology has released such wonders as antibiotics, robotic surgery,
miniaturized electronics, smartphones, and the Internet. It also has
released such horrors as nuclear missiles, chemical weapons, and
assault rifles.
• Scientists today are researching a wide range of promising new
products and services, ranging from practical solar energy, electric cars
to powerful computers that you can wear or fold into your pocket to go-
anywhere concentrators that produce drinkable water from the air.
The Political Environment
• Marketing decisions are strongly affected by developments in the
political environment. The political environment consists of laws,
government agencies, and pressure groups that influence or limit
various organizations and individuals in a given society.
• Marketers need to know about the major laws protecting
competition, consumers, and society. They need to understand these
laws at the local, state, national, and international levels.
The Socio-Cultural Environment
• Enlightened companies encourage their managers to look beyond what the
regulatory system allows and simply “do the right thing.” These socially
responsible firms actively seek out ways to protect the long-run interests of
their consumers and the environment.
• To exercise their social responsibility and build more positive images, many
companies are now linking themselves to worthwhile causes.
• The cultural environment consists of institutions and other forces that affect
a society’s basic values, perceptions, preferences, and behaviors. People
grow up in a particular society that shapes their basic beliefs and values.
They absorb a worldview that defines their relationships with others.
• The major cultural values of a society are expressed in people’s views of
themselves and others, as well as in their views of organizations, society,
nature, and the universe.
Marketing Research
• Marketing research is the systematic design, collection, analysis, and
reporting of data relevant to a specific marketing situation facing an
organization.
• Companies use marketing research in a wide variety of situations. For
example, marketing research gives marketers insights into customer
motivations, purchase behavior, and satisfaction.
• It can help them to assess market potential and market share or
measure the effectiveness of pricing, product, distribution, and
promotion activities.
Features of Marketing Research
• Systematic Process
• Specific in Nature
• Scope
• Applied Research
• Bridges Company-Customer Gap
• Continuous in Nature
• Company Objectives
• Cost-Effective
Importance of Marketing Research
• Marketing-Mix Decisions
• Customer Satisfaction
• Competitive Advantage
• Corporate Image
• Forecasting Sales
• Expansion of Markets
• Dealer’s Relationship
• Brand Royalty
Areas of Marketing Research
• Consumer Research
• Dealer Research
• Product Research
• Promotion Research
• Pricing Research
• Place Research
• Market Research
• Sales Research
Marketing Information System
• A marketing information system consists of people, equipment and
procedures to gather, sort, analyze, evaluate and distribute needed,
timely and accurate information to marketing decision makers.
- Philip Kotler (2009)
• A marketing information system (MIS) consists of people and
procedures dedicated to assessing information needs, developing the
needed information, and helping decision makers use the information
to generate and validate actionable customer and market insights.
- Philip Kotler (2010)
Nature of MIS
• Systematic Process
• Professional Approach
• Unified and Centralized System
• Use of Latest Techniques
• Cost-Effective Information
• Decision-Making
• Ensures Regular Supply of Information
• Continuous in Nature
Components of MIS
Internal Records
• Many companies build extensive internal databases, collections of consumer and market
information obtained from data sources within the company’s network.
• The marketing department furnishes information on customer characteristics and
preferences, in-store and online sales transactions and interactions, and web and social
media site visits.
• The customer service department keeps records of customer satisfaction or service
problems.
• The accounting department provides detailed records of sales, costs, and cash flows.
• Operations reports on production, shipments, and inventories.
• The sales force reports on reseller reactions and competitor activities, and marketing
channel partners provide data on sales transactions.
• Developing and harnessing such information can provide powerful customer insights and
competitive advantage.
Marketing Intelligence
• Competitive marketing intelligence is the systematic monitoring,
collection, and analysis of publicly available information about
consumers, competitors, and developments in the marketplace. The
goal of competitive marketing intelligence is to improve strategic
decision making by understanding the consumer environment,
assessing and tracking competitors’ actions, and providing early
warnings of opportunities and threats.
• Good marketing intelligence can help marketers gain insights into how
consumers talk about and engage with their brands. Many companies
send out teams of trained observers to mix and mingle personally
with customers as they use and talk about the company’s products.
Marketing Research
• Marketing research is the systematic design, collection, analysis, and
reporting of data relevant to a specific marketing situation facing an
organization. Companies use marketing research in a wide variety of
situations.
• For example, marketing research gives marketers insights into
customer motivations, purchase behavior, and satisfaction. It can help
them to assess market potential and market share or measure the
effectiveness of pricing, product, distribution, and promotion
activities.
Marketing Decision Support System
• A Marketing Decision Support System (MDSS) is a coordinated
collection of data, systems, tools and techniques with supporting
software and hardware by which an organization gathers and
interprets relevant information from business and environment and
turns it into a basis for marketing action.
Importance of MIS
• Helps to Recognize Trends
• Facilitates Marketing Planning and Control
• Quick Supply of Information
• Quality of Decision Making
• Tapping Of Business Opportunities
• Provides Marketing Intelligence
• Helps Managers to Recognize Change
• Integration Of Information
Consumer Behavior
• Consumer behavior is the decision process and physical activity, which
individuals engage in when evaluating, acquiring, using or disposing of
goods and services
- Louden and Bitta
• Consumer buyer behavior refers to the buying behavior of final
consumers—individuals and households that buy goods and services
for personal consumption.
Features of Consumer Behavior
Process

Results in Influenced
Spread by Various
effect factors

Features of Different
Reflects for
Status Consumer Different
Behavior Consumers

Different
Vital For for
Marketers Different
Products
Varies
across
Regions
Importance of Consumer Behavior
Market
Opportunities

Customer Product
Loyalty Development

Timing for Promotional

Importance of Consumer
Marketing Mix
Behavior
Efforts

Media Pricing of
Selection Products

Distribution
Strategies
Factors Influencing Consumer Behavior
Buying Decision Process
THANK YOU