UNIT II
2.1 MARKETING ENVIRONMENT
1. Meaning of Marketing Environment
·
The marketing environment
refers to all external and internal factors that affect a company’s ability to
build and maintain successful relationships with customers.
·
It includes forces that are controllable
(like company policies, marketing strategies) and uncontrollable
(like economic conditions, competitors, social trends).
·
Marketers must constantly monitor this
environment to adapt strategies and remain competitive.
2. Components of Marketing Environment
The marketing environment can be studied under two
categories:
A) Micro Environment
(Internal Environment)
These are factors within or directly connected to the company that influence
marketing decisions:
1. Company
(Organization itself) – Structure, policies, culture, and
resources.
2. Suppliers
– Provide raw materials and components; shortages or delays affect marketing.
3. Marketing
Intermediaries – Wholesalers, retailers, distributors,
logistics partners who help in product movement.
4. Competitors
– Other businesses offering similar products; their pricing, promotion, and
innovation shape strategies.
5. Customers
– The target audience (individuals, businesses, government, international
markets).
6. Publics
– Any group that has interest in or impact on the company (media, financial
institutions, local communities).
B) Macro Environment (External
Environment)
These are larger forces beyond the company’s direct control. A famous
framework to study these is PESTLE Analysis:
1. Political
Factors
o
Government stability, taxation policies, trade
regulations, foreign policies.
o
Example: Ban on certain products (like plastics)
forces firms to adapt.
2. Economic
Factors
o
Inflation, interest rates, economic growth,
employment levels, disposable income.
o
Example: In recession, people cut down on luxury
goods and focus on essentials.
3. Social
and Cultural Factors
o
Lifestyles, values, traditions, demographics,
education, health consciousness.
o
Example: Rising demand for organic food due to
health awareness.
4. Technological
Factors
o
Innovations, digitalization, automation, online
platforms.
o
Example: Growth of e-commerce and digital
marketing.
5. Legal
Factors
o
Consumer protection laws, labor laws,
environmental laws, intellectual property rights.
o
Example: Misleading advertisements may face
legal penalties.
6. Environmental
Factors
o
Sustainability issues, climate change,
eco-friendly products, CSR expectations.
o
Example: Pressure to reduce carbon footprint and
use green packaging.
3. Importance of Marketing Environment
·
Helps identify
opportunities and threats – spotting trends early gives a
competitive edge.
·
Assists in strategy
formulation – marketing plans can be aligned with social,
economic, and legal conditions.
·
Improves adaptability
– companies that monitor their environment can quickly respond to changes.
·
Customer satisfaction
– understanding customer needs influenced by culture, economy, and technology
leads to better products.
·
Risk reduction
– awareness of government policies or competitor moves reduces uncertainty.
2.2
MARKET SEGMENTATION
1. Meaning
Market
segmentation is the process of dividing a broad market into
smaller, more manageable groups of consumers who share similar needs,
preferences, or characteristics. Instead of treating all customers the same,
businesses target each segment with tailored products, promotions, and pricing.
2. Importance of Market Segmentation
a) Better
understanding of customers – businesses know exactly what
different groups want.
b) Efficient
use of resources – marketing budget is spent more wisely on the
right audience.
c) Competitive
advantage – helps design unique offers that differentiate from
competitors.
d) Customer
satisfaction & loyalty – personalized strategies improve
relationships.
e) Improves
profitability – focusing on profitable segments maximizes
returns.
3. Bases of Consumer Market Segmentation
There are four main bases for
segmenting consumer markets:
A) Geographic
Segmentation
·
Dividing markets based on location.
·
Examples: Region (north/south/east/west), city
size, rural vs. urban, climate (hot/cold).
·
E.g., selling snow boots in colder regions vs.
sandals in tropical regions.
B) Demographic Segmentation
·
Most common and measurable base.
·
Variables: Age, gender, income, occupation,
education, family size, religion, nationality.
·
E.g., luxury brands target high-income groups;
toys target children.
C) Psychographic Segmentation
·
Based on lifestyle, personality,
interests, values, social class.
·
E.g., gyms target health-conscious lifestyle
groups; adventure brands target risk-taking personalities.
D) Behavioral Segmentation
·
Based on customer behavior
toward a product.
·
Variables:
o
Benefits sought (quality, price, convenience)
o
Usage rate (light, medium, heavy users)
o
Brand loyalty (loyal vs. switchers)
o
Occasion-based (festivals, weddings, holidays).
·
E.g., chocolate sales increase during
Valentine’s Day (occasion-based).
2.3 TARGETING
After segmentation, the next step in marketing is
Targeting.
Targeting means evaluating each
market segment and selecting one or more segments to serve with specific marketing
strategies. It ensures that the company’s efforts are directed toward the most
profitable and suitable customer groups.
In simple terms, targeting is about deciding "which
customers" you want to focus on and tailoring your
products, pricing, promotion, and distribution to meet their needs effectively.
Importance of Targeting
a) Helps
in efficient use of resources by focusing only on
specific groups instead of the whole market.
b) Increases
customer satisfaction, since marketing messages
and products are tailored to their needs.
c) Improves
competitive advantage, as the company can
position itself better in the chosen market.
d) Supports
better brand loyalty and long-term profitability.
Key Factors to Consider in Targeting
When selecting target markets, marketers evaluate each segment using several
factors:
1. Segment
Size and Growth
o
Is the segment large enough to be profitable?
o
Is it growing, shrinking, or stable?
o
Example: Targeting urban millennials for online
food delivery because the segment is rapidly growing.
2. Segment
Attractiveness
o
How competitive is the segment?
o
Are there too many strong competitors,
substitutes, or powerful suppliers/distributors?
o
Example: Entering the smartphone market is tough
due to high competition from Apple and Samsung.
3. Company
Objectives and Resources
o
Does the company have the resources (financial,
technical, human) to serve the segment?
o
Does the segment align with the firm’s mission
and vision?
4. Profitability
Potential
o
Will the segment bring enough revenue compared
to the costs of serving it?
5. Accessibility
o
Can the company reach and serve
the segment effectively through distribution and communication channels?
6. Differentiability
o
The segment must be distinct and respond
differently to marketing efforts compared to other groups.
7. Compatibility
o
Is the segment culturally, socially, and
ethically suitable for the brand?
o
Example: A premium brand may not target
low-income groups as it doesn’t align with its image.
2.4 POSITIONING
Meaning
Positioning refers to how a brand or product is placed in the minds of
consumers compared to competitors.
In simple terms, it answers:
👉 “What do we want
customers to think when they hear our brand name?”
For example:
·
Volvo = Safety
·
Apple = Innovation &
Premium Quality
·
McDonald’s = Fast, Affordable Food
So, Positioning = creating a unique image,
identity, and perception of the product in the target customer’s mind.
Importance of Positioning
1. Differentiation
– helps a product stand out in a crowded market.
2. Brand
Image – builds strong associations (luxury, trust,
affordability, etc.).
3. Customer
Loyalty – people return to brands that occupy a clear position
in their mind.
4. Efficient
Marketing – messages and campaigns become focused.
5. Competitive
Advantage – makes it hard for competitors to copy or replace.
2.5 POSITIONING METHODS
Companies can position their products in different ways depending on their
target market and goals:
1. Positioning
by Product Attributes/Features
o
Highlighting specific characteristics like
quality, durability, style, or technology.
o
Example: Dyson vacuum cleaners –
advanced technology and suction power.
2. Positioning
by Benefits/Value Offered
o
Focusing on the benefit the customer gets.
o
Example: Sensodyne toothpaste –
relief from tooth sensitivity.
3. Positioning
by Price/Quality
o
Either as a high-quality premium brand OR as a
low-cost affordable option.
o
Example: Rolex – premium quality;
Walmart – low price leader.
4. Positioning
by Use or Application
o
Highlighting the specific usage of the product.
o
Example: Gatorade – sports and
energy drink for athletes.
5. Positioning
by Product Class/Category
o
Comparing against or creating a new product class.
o
Example: Margarine positioned as
a healthier alternative to butter.
6. Positioning
by Competitor
o
Directly comparing with rivals to stand out.
o
Example: Pepsi vs. Coca-Cola
advertisements.
7. Positioning
by Cultural Symbols
o
Using well-known symbols, icons, or cultural
values.
o
Example: Maharaja Mac by
McDonald’s in India (localized positioning).
