Fundamentals of Marketing | ÀÅŔ

What is Market environment? 21, 21, 18

According to Philip Kotler, “A company’s marketing environment consists of the internal factors & forces,
which affect the company’s ability to develop & maintain successful transactions & relationships with the company’s
target customers.”

Discuss the elements of Marketing environment. 21, 21, 20, 18

Elements of Marketing:
1. The Internal Environment
➢ Strategy: A company's strategy outlines its market goals, objectives, and plans, including product
development, pricing, distribution, promotion, and other activities.
➢ Structure: A company's structure encompasses its business organization, ownership, management,
hierarchy, and reporting relationships, influencing decisions about the organization's hierarchy.
➢ Technology: Technology plays a crucial role in marketing by facilitating customer data collection,
communication, automation, customer service enhancement, and operational optimization.
➢ Culture: A company's culture, reflecting its values and beliefs, significantly influences its interactions
with customers, employees, and stakeholders, significantly impacting its market success or failure.
2. The External Environment
➢ Economic Factors: The macroeconomic environment significantly impacts companies' business
practices and product offerings, with factors like economic growth, inflation, exchange rates, and
interest rates playing crucial roles.
➢ Technological Changes: Technological advancements have significantly impacted marketing by
improving communication, service delivery, customer behavior tracking, and enabling more targeted
campaigns.
➢ Legal and Political Influences: Marketers must be aware of the potential impact of regulatory changes,
taxes, and legislation on their marketing activities.
➢ Socio-Cultural Influences: Socio-cultural factors and macro environment changes impact consumer
perceptions and opportunities for marketers. Understanding these factors is crucial for successful
marketing strategies.

Features of Marketing Environment

The features of the marketing environment include:
1. Dynamic nature: The marketing environment is constantly changing and evolving due to various external
and internal factors that influence it. Therefore, companies must be adaptable and responsive to these
changes to remain competitive.
2. Complexity: The marketing environment comprises various interconnected factors and forces that can be
difficult to understand and manage. These factors can interact in complex ways, making it challenging to
predict how they will affect a company's marketing efforts.

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3. Uncontrollability: Many external factors that make up the marketing environment are beyond the
company's control, such as economic changes, laws and regulations, and consumer behavior. As a result,
companies must be able to adapt and respond to these factors rather than trying to control them.
4. Influential: The marketing environment can significantly impact a company's marketing efforts and overall
success. Understanding and managing the various factors that make up the environment can help
companies develop effective marketing strategies and achieve their goals.
5. Interrelated: The different components of the marketing environment are interrelated and can impact each
other. For example, technological changes can influence consumer behavior, affecting a company's
marketing strategies.

Importance of Marketing Environment

A marketing environment is vast and diverse, consisting of controllable and uncontrollable factors. A good
grasp of marketing environment helps to:
▪ Identify opportunities: Understanding marketing environment helps identify market opportunities, such as
increased digital buying, and allocate resources accordingly to drive sales.
▪ Identify threats: Studying marketing environment helps identify potential threats, such as market leader
diversification, which can help re-strategize your marketing efforts to maintain and grow market share.
▪ Manage changes: Monitoring the marketing environment is crucial for marketing managers to forecast and
determine timely campaign strategies, enabling them to manage changes and maintain growth in a dynamic
economy.

How do the changes in the marketing environment. 18

the changes in the marketing environment:
1. Customer Needs: Change in customer's needs, priorities, demands has a very significant role in the change
in the marketing environment.
2. Competition: Every business has a main strategy to remain in the top, to be a successful business. This basic
instinct gives rise to the competition in the market against other this leads to the change in the marketing
environment.
3. Innovation: The innovation in the technology innovation in the marketing turned has created a change the
marketing environment.

The changing Marketing environment:

Types of marketing environments: There are two types –

1. Internal Environment
2. External Environment.
Types of external environments: There are two types –
1. Micro Environment.
2. Macro Environment.

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Define micro environment. 22, 20, 20, 18

The microenvironment consists of the actors close to the company that affect its ability to serve its
customers—the company, suppliers, marketing intermediaries, customer markets, competitors, and publics.

How the elements of micro environment affect marketing activities. 20, 20, 18
Factors In Micro Environment/Actors in the Microenvironment

1. The Company: Marketing management considers company groups like top management, finance, R&D,
purchasing, operations, and accounting, forming the internal environment, and making decisions within
these strategies and policies.
2. Suppliers: Suppliers are crucial for a company's customer value delivery network, but supply issues can
impact marketing. Marketing managers must monitor availability and costs to maintain supplier
satisfaction.
3. Marketing Intermediaries: Marketing intermediaries, including resellers, physical distribution firms,
marketing services agencies, and financial intermediaries, assist companies in promoting, selling, and
distributing products to final buyers.
4. Competitors: To succeed, companies must offer superior customer value and satisfaction, gaining a
strategic advantage by positioning their offerings against competitors in consumer minds.
5. 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.

Classification of public:
Publics are 7 types:
➢ 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 consider government developments and consult with
company lawyers on product safety, advertising truth, and other matters to ensure business success.
➢ Citizen-action publics. A company's public relations department can assist in maintaining
communication with consumer and citizen groups, ensuring their marketing decisions are not
questioned.
➢ Local publics. Large companies often establish departments and programs to address local community
issues and offer community support to neighborhood residents and community organizations.
➢ 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. Large companies utilize newsletters to inform and motivate their internal publics,
fostering a positive attitude among employees that positively impacts external publics.
6. Customers: Customers are an essential factor in the marketing environment. The main aim of marketing is
to make a product appealing to the customer and maintain a long-lasting relationship with them. There are
five different types of target customer markets for a business. They are listed below:
a. Business markets - They buy products to be processed to manufacture another item.
b. Consumer markets - Individuals or households consuming products or services for personal use.

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c. Government markets - Government agencies or organizations that purchase goods or services to

transfer them to those in need or for public services.
d. Reseller markets - Purchases goods and resells them for a higher price to make a profit.
e. International markets - All the types of customers mentioned above in another country.

Define macro environment. 22, 20, 18

Macro environment refers to all forces that are part of the larger society and affects the micro environment.

How the macroenvironment forces influence on marketing decision? 19

Describe the elements of macro environment. 22
Factors In Macro Environment/ Major Forces in the Company’s Macroenvironment

➢ Demography is the statistical analysis of the human population and its distribution, which companies
should consider when determining their marketing strategies.
➢ Economic Environment: The economic environment influences consumer purchasing behavior by either
increasing disposable income or reducing it, such as inflation, where the value of money decreases, making
it challenging to purchase more products.
➢ Physical Environment or Natural Forces: Companies must adapt policies within natural limits to efficiently
utilize resources like petroleum products, power, and water, or risk facing acute shortages.
➢ Technological Factors: Every new invention builds a new market & a new group of customers. A new
technology improves our lifestyle & at the same time creates many problems.
➢ Social & Cultural Factors: Social and cultural factors influence purchasing decisions, shaping lifestyles,
values, and beliefs. Marketing managers must study these cultures to anticipate changes and new
opportunities.
➢ Political Factors Marketing is significantly influenced by laws, government agencies, and groups that limit
societal organizations and individuals, making it crucial for marketers to be aware of these complex
restrictions.

Why competitor is a part of micro environment? Explain.

The competitive environment consists of certain basic things which every firm has to take note of. No
company, howsoever large it may be, enjoys monopoly. In the original business world, a company encounters
various forms of competition. The most common competition which a company’s product now faces is from
differentiated products of other companies.
For example, in the Color Television Market, Philips TV faces competition from other companies like
Videocon, Onida, BPL and others. This type of competition is called brand competition. It is found in all durable
product markets.
The consumer wants to purchase a two-wheeler, the next question in his mind is with gear or without gear,
100 cc or more than that, self-starter or kick starter, etc. This type is otherwise known as ‘Product form competition’.
Philip Kotler is of the opinion that the best way for a company to grasp the full range of its competition is
to take the viewpoint of a buyer. What does a buyer think about that which eventually leads to purchasing
something? So, tracing of the consumer mind set will help to retain the market share for all the firms.

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PESTLE analysis:

PEST analysis:

Political Economic Social Technological

Political stability Economic trends
Rgulation and de- Economic stability -
regulation. inflation, wages growth,
GDP, GNP
Statutes, laws, codes of
conduct. Exchange rates
Government funding, Trade agreements
subsdies, support for Seasonality and
specific industries.
economic cycles
Fiscal/monetary policy. Consumer confidence
Tax rates Consumer purchising
Trade agreements power - discretionary
incomes
Demographic changes - Innovation,
population growth, age breakthroughs or
distribution, population technological
density, grographic developments.
distribution.
New product materials or
Consumer attitudes - ingedients, new
tastes and preferences packaging solutions
Social influencers - role Improved production
models, opinion leaders. processes or business
Shopping habits - models.
preferred channels, New ways of transacting
channels switching, business
online & offline New machinery or
shopping. software.

Show the differences between micro and macro environment. 21, 18

Micro environment Macro environment
Micro environment is defined as the nearby Macro environment refers to the general
environment, under which the firm operates. environment, that can affect the working of all
business enterprises.
COSMIC, i.e. Competitors, Organization itself, Suppliers, PESTLE, i.e. Political, Economic, Socio-cultural,
Market, Intermediaries and Customers. Technological, Legal and Environmental.
Specific nature of elements General nature of elements
Some extent factors are controllable. No factors can be control.
It influences directly and regularly It influences indirectly and distantly

What is financial public? 22

Public finance is the management of a country's revenue, expenditures, and debt load through
various government and quasi-government institutions.

How do the changes on the economic environment affect marketing decisions? Explain. 21
Economic factors that affect marketing:
Marketing plan success relies on creativity and effort, but factors like inflation, demand, supply, interest
rates, taxes, and recession impact market spending and product prices, directly impacting customers.
1. Inflation rates reduce purchasing power: Inflation impacts customers' purchasing power, causing a
decrease in purchasing power and increased tax rates on real capital gains, necessitating more effective
marketing strategies.
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2. Changes in disposable income impact spending: Increased disposable income and tax rates can decrease
customer spending, impacting specialty products and services, and potentially affecting revenue for
businesses.
3. Recession impacts everyone's bottom line: A recession, lasting over six months, impacts employment,
income, and GDP. However, recession marketing factors can benefit businesses, such as debt consolidation
agencies and discount-oriented companies.
4. Interest rates affect credit purchases: High-end goods, like jewelry and cars, are often purchased on credit,
and increased interest rates can make them more expensive for those unable to pay cash.
5. Ecological forces influence consumer attitudes: Environmental concerns, including air and water pollution,
are causing businesses to adapt their strategies, with customers increasingly choosing sustainable products
and government policies promoting natural resource management.
6. Technology shapes buying behavior: Technological advances, such as social media, artificial intelligence,
and machine learning, are disrupting the business landscape, influencing customer behavior and creating
new market opportunities. Businesses must stay updated and innovate to succeed.

Customer satisfaction: Customer satisfaction is a measure of how well a company's products, services and overall
customer experience meet customer expectations.
❖ The most important asset of any organization is its customers.
➢ Satisfied customers are the lifeblood of any organization.
➢ Product’s perceived performance in delivering value relative to buyer’s expectations is customer
satisfaction
❖ It is the person’s feeling of pleasure or disappointments, resulting from comparing a product’s perceived
performance (outcome), in relation to his/ her expectations.
➢ Perceived performance below expectations = dissatisfied customer
➢ Perceived performance meets expectations = satisfied customer
➢ Perceived performance exceeds expectations = delighted customer.

Customer value:
❖ Customer Value also known as Customer Perceived Value.
➢ It is the difference between the prospective customer’s evaluation of all the benefits and all the
costs of an offering and the perceived alternatives.
➢ “The perceived worth of the set of benefits received by a customer in exchange for the total cost
of the offering, taking into consideration available competitive offerings and pricings.”
➢ Value is the perception of the benefits associated with a good, service, or bundle of goods and
services (i.e., the customer benefit package) in relation to what buyers are willing to pay for them.
❖ Total customer value is the perceived monetary value of the bundle or economic, functional, and
psychological benefits customers expect from a given market offering.
❖ Total customer cost is the bundle of costs customers expect to incur in evaluating, obtaining, using, and
disposing of the given marketing offering.

What is a ‘Value Chain’? Briefly explain Michael Porter’s value chain analysis. 20
A value chain refers to the full lifecycle of a product or process, including material sourcing,
production, consumption and disposal/recycling processes.”
Michael Porter identified a set of interrelated generic activities, which are common to a wide range of firms,
and framed it as a model called Value Chain.
Michael Porter's value chain analysis:

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According to Porter (1985), identified two sets of activities:

1. Primary activities: Primary activities are directly concerned with creating and delivering a product. These
activities aim at creating value that exceeds the cost of providing the product or service, thus generating a
profit margin.
2. Support activities: Support Activities facilitate the primary value chain activities. Support activities assist
the primary activities in helping the organization achieve its competitive advantage.
The primary activities are:
1. Inbound Logistics - involve relationships with suppliers and include all the activities required to receive,
store, and disseminate inputs.
2. Operations - are all the activities required to transform inputs into outputs (products and services).
3. Outbound Logistics - include all the activities required to collect, store, and distribute the output.
4. Marketing and Sales - activities inform buyers about products and services, induce buyers to purchase
them, and facilitate their purchase.
5. Service - includes all the activities required to keep the product or service working effectively for the buyer
after it is sold and delivered.
Support activities are:
1. Procurement - is the acquisition of inputs, or resources, for the firm.
2. Human Resource management - consists of all activities involved in recruiting, hiring, training, developing,
compensating and (if necessary) dismissing or laying off personnel.
3. Technological Development - pertains to the equipment, hardware, software, procedures and technical
knowledge brought to bear in the firm's transformation of inputs into outputs.
4. Infrastructure - serves the company's needs and ties its various parts together, it consists of functions or
departments such as accounting, legal, finance, planning, public affairs, government relations, quality
assurance and general management.

How to change marketing decisions in an economic environment? Explain. 20

Changing marketing decisions in an economic environment involves a dynamic process that requires
understanding and adapting to both internal and external factors. Here’s a brief explanation:
▪ Internal Factors: Companies can improve their marketing strategies by adjusting elements like the 5Ms of
marketing and organizational culture within their control.
▪ External Factors: Companies can adapt their marketing decisions to changes in the microenvironment,
including customers, competitors, distributors, and suppliers, despite not being able to control these factors.
▪ Adapting to Economic Changes: Economic factors like inflation, interest rates, and consumer spending
patterns significantly impact market demand and purchasing power, necessitating companies to adjust
pricing strategies and marketing campaigns during economic fluctuations.
▪ Competitive Landscape: Economic changes can cause market shifts, necessitating companies to adapt their
marketing strategies to stay competitive and secure a strong market position.
Changing marketing decisions in an economic environment requires a thorough analysis of both internal
capabilities and external market conditions, followed by strategic adjustments to align with the current economic
landscape.

Why responding to marketing environment is a key point to success for marketers? 19

Responding to the marketing environment is crucial for marketers because it involves understanding and
adapting to the ever-changing external and internal factors that can impact a business’s success. Some key reasons
for it’s important:
1. Essential for Planning: Marketers need to be aware of the marketing environment to plan effectively. This
includes understanding customer needs, competitor strategies, and market trends.
2. Understanding Customers: The marketing environment helps marketers grasp the evolving preferences and
behaviors of customers, which is vital for tailoring products and services to meet their needs.
3. Tapping New Trends: By keeping a pulse on the marketing environment, marketers can identify and
leverage new trends, giving them a competitive edge.
4. Keeping a Check on Threats: Awareness of the marketing environment allows marketers to anticipate and
mitigate potential threats, such as new regulations or emerging competitors.

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5. Harping on Opportunities: Marketers can seize opportunities, like technological advancements or shifts in
consumer behavior, by responding proactively to changes in the marketing environment.
6. Understanding the Competition: Knowing the marketing environment helps in analyzing competitors’
actions and developing strategies to maintain or improve market position.
7. Helps in Building Strategy: A well-understood marketing environment is a foundation for building robust
marketing strategies that align with both the company’s goals and market realities.
8. Innovation: A dynamic marketing environment encourages continuous innovation, ensuring that the
company’s offerings remain relevant and appealing to customers.
In essence, the ability to respond to the marketing environment allows marketers to stay agile, informed, and
ahead of the curve, which is essential for long-term success.

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