Purpose of marketing environment analysis:
- To know where the environment is leading, to observe & size up the relevant events & trends in the environment.
- Strategic response to environment is possible only with proper environment analysis.
- To assess the scope of various opportunities and shortlist those that can favourably impact the business.
- To help secure the right fit between the environment and the business unit which is the crux of marketing.
The marketing environment consist of the following factors:
Demographic is a major element to be studied in environment analysis. Several factors relating to population, such as size, growth rate, age distribution, religious composition, need to be studied. Aspects such as composition of workforce, household patterns, regional characteristics, population shifts etc. also need to be studied as they are a part of demographic environment.
Socio-cultural environment is another important component of the environment. Culture, traditions, beliefs, values & lifestyles of the people in each society constitute the socio-cultural environment.
Culture is the combined result of factors like religion, language, education & upbringing. Meaningful, information on the consumption habits, lifestyles & buying behaviour can be obtained through a survey of socio-cultural environment. Cultural shifts carry with them marketing opportunities as well as threats.
Social class is one important concept in socio cultural environment. A social class is determined by income, occupation, location, of residence etc. Each class has its own standards with respect to lifestyle, behaviours etc., they are known as class values or class norms. These values have a strong bearing on the consumption pattern & buying behaviour.
The factors to be considered under economic environment are:
- General Economic conditions
- Economic conditions of different segments of the population, their disposable income, purchasing power etc.
- Rate of growth of the economy, rate of growth of each sector of the economy
- Income, prices & consumption expenditure
- Credit availability & interest rates
- Inflation rate
- Foreign exchange reserves
- Exchange rates
- Tax rates
- Behaviour of capital market
Economic environment is a by- product of the political environment, since economic & industrial policies followed by a nation greatly depends on its political environment. Political environment has several aspects, industrial growth depends on the political environment. Legislation regulating business are also a product of the political configuration. Apart from this political stability, form of govt. elements like social & religious organizations, media & pressure grips & lobbies of various kinds also form the part of political environment
Business firms depends on natural resources. Raw material is one major part of these resources & firms are concerned with their availability, they need to know whether there will be a shortage in any of the critical raw materials, they also need to know the trends governing their cost. Besides raw materials, they are also concerned about energy, its availability as well as cost.
Issues like environmental pollution, protection of wild life & wealth are the factors concerned with ecology & govt. is becoming active bargained in environmental issues.
Firms with products whose demand depends on climate & firms depending on climate dependent raw materials will be particularly concerned with this factor. These firms should study the climate in depth and decide their production location & marketing territories respectively.
For a firm technology affects not only its final products but also its raw material processes & operations as well as its customer segments e.g. IT Industry, Telecom industry.
Options Available in Technology:
A firm should assess the relative merits and costs effectiveness of alternate technologies. It should analyse technological changes taking place in the industry.
Govt’s Approach in Respect of Technology:
Regulations by the govt. in matters relating to technology restrict the freedom of operation of business firm. There may be areas where technology may support the use of modern technology or they may ban technologies that are potentially unsafe.
Firms should scan the technology environment and select technologies that will be appropriate for the firm & the given product – market situation. They should forecast technological trends, assess current & emergency techniques.
Business should operate within the framework of prevailing legal environment. They must understand all legal provisions.
Legal environment depends on:
- Corporate affairs
- Consumers protection
- Employee protection
- Sectoral protection
- Corporate protection
- Protection of society
- Regulations on products, prices & distribution
- Control on trade practices
- Protecting national firms against foreign firms
January 03, 2018