Pricing objectives

Pricing is the process of translating the value of product or service into quantitative terms and adding to it the revenue a firm wants to earn after considering all the expenses occurred both in monetary and non monetary forms. Price is the outcome of pricing which is kept unchanged for a certain period of time.

Pricing considers all the factors like cost of procurement of raw materials, cost of production, cost of transportation, distribution, marketing, packaging, and sales promotion, competition, purchasing power of target market, government policies, etc.

Pricing includes setting objectives, identifying the factors governing price, formulating price policies, formulating strategies for setting prices, implementing them and controlling them.

Some of the objectives of pricing are as follow:

1. Return on investment: Main objective of pricing is that the price decided for a product should be able to bring satisfactory return on investment so that the firm gets motivation and viability to carry on the production of a product.

2. Profit maximisation: When product gets acceptance in the market firms try to maximise their profits by way of pricing by keeping the price of a product high.

3. Price stability: When the price of a product is volatile its consumers are confused therefore companies try to keep the price stable to win the confidence of consumers.

4. Under the reach of target market: This is also one of the basic objective of pricing where price of the product is kept at the level where the target market can easily afford it.

5. Social welfare: Sometimes social welfare is the objective when a company keeps the price of a product at minimum possible level so that they can serve the beneficiary. It happens mostly with generic and basic products run by some NGO or non-profit organisation working with social welfare objective.

6. Complying Government policies: In the process of pricing a product government policies for maximum price including taxes have to be kept in mind. Price of the product needs to be in compliance with the law of the land.

7. Beating competition: When a firm runs a product with the objective to beat the competition it may follow low price policy to penetrate the market and increase its market share.

8. In line with firm's objectives: In whatever stage of product of a firm be in product life cycle its pricing is directly influenced with that. It means pricing objectives are directly proportional to a firm's objectives.

9. Bringing satisfactory profits to channel partners: After a product is manufactured it reaches to its customers via different channels who are called traders or intermediaries having monetary interests. Pricing has to cater their interest and profits to sell the products to final customers.

10. Consumers' satisfaction: A product is made for the ultimate customer who uses it. Pricing of a product should be such that a consumer feels satisfaction while buying and using the product. It should not be too high that the customer feels it does not worth it and nor too low that customer feels it is of sub quality.

Marketing : Share increasing strategies

After a firm has seen growth in its business and reaped profits from it but the business has now become stagnant and growth slowed down. The business needs to expand its horizon to increase its market share to increase its profit. Some of the strategies to increase market share are as follow:

1. The firm should look at the customers it presently has as an asset and should do all the efforts to sustain them. If it tries to look out for new customers and doesn't pay attention to the present customer base then acquiring new customers is of no use as the firm still has same or even less customers as old customers have left them.

2. By the expansion of geographic area business may acquire new customers and expand its market share. They can do it by expanding their sale to new state or even new country by means of export.
3. The firm can tap new customers in the present geographic area who are not using their products by way of schemes and promotion.
4. New uses of the same product can be found out and suggested to the market via advertising like does Dettol.
5. New variants of the product can be brought for capturing different tastes and interests of customers like Colgate introduced many variants of toothpaste like colgate maxfresh, colgate total, colgate herbal, colgate active salt, etc.
6. Up-gradation in manufacturing process for manufacturing upgraded product according to the market demand helps in increasing market share.
7. Exploring new niches is always a good way to increase market share.
8. Product innovation of products in demand helps the company to stay ahead in the competition.
9. Strengthening the brand image and making it popular among customers automatically pulls the demand of products.
10. Customer relationship management helps in sustaining the current customer base and bringing new customers via word of mouth communication.
11. Brand or product promotion via advertising, contests, sponsorship, CSR, helps in increasing sale of a product.

Marketing : Brand building strategies

Branding is one of the important processes of marketing. Be it a big business or a small one branding has its say everywhere. Difference between branded and non branded goods or services can be seen and felt easily. In today's world of internet and technology as much easy it has become to communicate that much difficult it has become to be seen as committed to that communication.

Its not like once you have created or developed a brand and now rest of your life you can bank upon

Branding

that. The business has to continuously evolve its brand with time. Some of the brand building strategies are as follow:

1. Define the brand: It includes how a business sees its brand and what are the traits it want to be associated with it. How it want the consumers to look at and feel about the brand. What values of the firm they want to attach with the brand. It helps in defining the brand.

2. Composition of brand: Here the firm has to decide upon the things that present the brand to the outer world. Like brand name, logo, colour, design, music, etc.

3. Target and positioning of the brand: Once the brand is ready now here comes the step to make it open to the world and present it to the consumers. Now comes the question how to covey the values of the brand to the consumers. Advertising is one of the ways to do it but only advertising can not do the work. Business needs to show its values through its product, services and conduct.

Not only consumers but employees are also a vital part of this brand building. The conduct an organisation does with its employees is seen in their interaction with the consumers.

4. Review the brand: After the brand has been exposed to the market it needs to be reviewed periodically on the grounds of company's philosophy which may change with time, its effectiveness, its influence, the value it holds for consumers, competition, etc.

5. Reaffirm the brand: If any changes need to be incorporated it should be as business is an ongoing process and needs and wants of consumers changes with time. New demographics occur with new thinking which needs to be addressed without delay.

The brand should be relaunched with freshness and new values.

Apart from above I would like to share some new age branding strategies which I recently read in an article on www.forbes.com contributed by Glenn Llopis:

1. See consumers engagement that others don't.
2. Establish an identity that is easily relatable.
3. A lifestyle platform that inspires people and communicates hope.
4. Continuous innovation with flawless timing and execution.
5. Promote the genuine spirit of giving.
6. Serve others to leave a legacy.

For reading the article in detail you can click here.

Marketing : Brands Meaning and Role

According to American Marketing Association," A brand is a name, term, symbol or a design, or a combination of them which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors."

Brands

Brands represent a product, service or company which have their values embodied in it. Like Tata is known for its strength, reliability and quality and McDonalds for quality and pocket friendly burgers. They make it easy for the company to get into the mind of its customers.

A good brand is mostly simple and short which is easy to identify like Apple if someone talking about electronics and heard the name Apple or seen its icon they know its one of the world's top most company manufacturing iphones, tablets, laptops Mac books, etc. Apple has been successfully able to make its name in the premium market.

Sometimes people themselves become a brand like Sachin Tendulkar, Aamir Khan and Amitabh Bacchan are brands themselves. Many times people go to the movie theater only by knowing the star-cast of the movie because those actors have been consistent in their performances and the choice of films they do that always entertain them and prove to be value for their money.

Brands can be read, seen, heard or felt they are the intangible assets of a company. The qualities associated with them can not be build only by advertisements the product they are representing should be able to perform on the said quality standards.

Role of Brands in marketing

Brands play a very important role in the success of a business. some of them are:

1. They help in making the product identifiable. There are so many companies selling the same product in the same market brands for them are like names given to human beings.

2. They make it easy to advertise for the product. A product with a brand name is easy to advertise and become known to people like it was easy for Rahul Gandhi to enter the politics with Gandhi surname.

3. Products with brand names becomes easily acceptable by the customers like ITC launched sunfeast biscuits under its brand and was easily accepted by the people as a good brand in biscuits.

4. It becomes easy for a company to expand its product mix under a successful brand like ITC has varied product mix tobacco, hotels, agriculture produce, soaps, biscuits, etc.

5. Brands provide an assurance of quality to the customer which saves his money and energy in researching and looking out for appropriate product which enable the company to charge a premium on price.
6. Middlemen who are involved in the business of branded goods have many advantages as they don't need to expend on advertisement and there is less risk of loss.
7. Brands pull the sale of products and thus increase the profit.
8. Brands protect fluctuation of price.
9. Consumer is satisfied after using the product of a good brand as he feels value for money.
10. Sale of the product comes automatically under the name of an accepted brand.

Marketing : Product Life Cycle (PLC)

Products also have a life cycle just like humans. They also have different stages in their life as they move forward in their journey of life.

The concept of PLC is based on following assumptions:

1. Products have a limited life.
2. Product sales passes through different stages which offer different challenges, opportunities and problems.
3. Profits rise and fall at stages of PLC.
4. Products require different strategies of marketing, human resource, finance, purchase, manufacturing, etc in different stages of its life cycle.

These different stages of life of a product can be plotted on a chart named as PLC. Where X axis represents time and Y axis represents sales and profit. Sales are always greater than the realisation of profit.

Different stages of Product Life Cycle (PLC)

Basically, PLC is a tool which allows a business  to examine the stage of its product in the market through its sales and profit in particular time period. After that it can chalk out a strategy to over come the problems faced by the product in the market. Lets have a look at the different stages of product life cycle and problems and opportunities it generally faces in that stage:

1. Introduction stage: It is the stage of introduction of product in the market. The company has to make heavy investments in order to launch and run a product in the market for the first time. Sales volume are very slow and profits are generally non existent or are negative. If a company is able to sustain and overcome it, then only it reaches the next stage.

2. Growth: If the product has been accepted by the market its sale grows rapidly and the business start making profit very steeply. There is awareness in the market about the brand and product. Product starts facing competition therefore marketing expenditure increases.

3. Maturity: After the product has seen substantial growth and reached to masses it starts facing stagnation in sales and rate of growth of  sales declines. Profits may increase or come down due to competition. The business has to make expansion and promotional strategy, offer different models of the same product, find new niche markets, offer discounts, schemes, etc to sustain in the market. This is the longest stage of PLC.

4. Decline: After the fruits of maturity has been reaped product faces huge decline in sales and its declining stage of product life cycle starts. Profits start falling severely. Competition becomes cut throat and market share start declining fast. Company may focus on only profitable markets.

At this stage business may decide to make investments in fixed assets for technology up-gradation that may revive the product and manufacture totally new kind of variants. Innovation and up-gradation may be the best strategy at this stage if the company wants to continue the product or divestment or elimination of the product is the other option.

Shortcomings of product life cycle:

Although PLC is a good tool to asses a product's future prospects and strategy it is not the only life cycle of a product. A product may show other pattern of life cycle apart from this and be unpredictable. Not all the products necessarily reach the decline phase or a product may never see a decline.

Sometimes it is difficult to asses the stage of a product, it may seem to be maturity but it may come out to be decline without passing through maturity.

Life span of different stages may be very different from this. Maturity need not always be the longest stage instead introduction stage may be the longest.

If a temporary fall in profits mistakenly taken as decline and plan for its discontinuance have been started it will lead it to decline even when actually it was not.

Marketing : Static and Dynamic understanding of BCG Matrix

BCG matrix is a growth - share matrix depicting the position of a corporation's portfolio of business units with comparison to each other on a single plot. It was developed by Bruce Henderson of Boston Consulting Group in 1970s.
                                 

BCG Growth - Share Matrix

           
This matrix considers two factors important for the growth and success of a firm one is market growth rate and another is relative market share. The matrix is plotted along these two factors. Market growth rate is the overall industry's growth rate, as much high it is that much attractive it is to be in that business. An increased market growth rate leads to consumption of cash. Relative market share is the firm's market share in comparison to the market leader in that sector. An increased market share leads to the generation of cash and it is generally a good position for a business unit to have a high market share as it is able to capitalise on its experience curve and employ cost advantages.

There are four segments on the basis of different combinations of these factors:

1. Cash Cows : This is a situation for a business unit when the market growth of its industry is low but relative market share of the firm is high. This may be a result on the product life cycle when the business had really gained a significant market share during the growth days of market and it is still able to maintain that when the market growth rate had slowed down.

It means business is consuming less funds as market growth is slow but it is generating more funds as it has dominance in the market share because of its experience in the market. And due to this the business has been able to cut its cost and being more productive in less funds.

It does not need funds for investment in fixed assets, research or mass marketing but only for operations and to target the target customers.

These kind of businesses are good as long they can survive or should be retained even if small investments needed to run it as it can fund the corporation's growing units with least attention and investment. Just giving the fruits of corporation's hard work in its old years.

2. Stars : A business unit comes under stars when both its market growth rate and relative market share are high. It means the business unit needs more funds to satisfy its need for expansion and up-gradation, fixed investments, research, marketing,etc. At the same time when its market share is increasing it is able to generate more funds from volume sales, new customer acquisition, etc. Its net profit may be even out with its funds consumption. The business is in growth stage of product life cycle.

This is the right time to invest in it by pouring in funds from the corporations' other business units which may be from cash cows or by divesting loss making units.

3. Question Marks : Some business units become question mark when they have low relative market share in highly growing market. They tend to consume more funds but lack in funds generation. These are also in the growth stage of product life cycle.

There may be some problem with the way of carrying business because if the market is growing it means the industry's other competitors are growing and they are hitting the nail at the right place. We can take the example of Nokia, it was the king of mobile handset market in India but with the inception of low price handset companies like Micromax and smart phones from Samsung it started loosing its market share even when the market growth rate was very high.

These units need more and more funds for carrying out business but even on this they do not turn out to be profitable and make losses and thus there is a question mark on them they are also called problem child.

 If the corporation's philosophy allows it may be better to chalk out the actual problem and try to solve it, it may be regarding not getting sufficient funds or some procurement, production, finance,marketing or sales related problem or sell it as Nokia sold its handset business to Microsoft.

4. Dogs : Businesses which have relatively low market share in the slowly growing market are called dogs. They neither consume much funds nor generate enough funds. This stage generally comes in the late maturity time of product life cycle when the market growth rate has slowed down.

It may not be wrong to say that we are in the wrong business as even being for a long time in the same business since its growth the business has not been able to gain sufficient market share and still struggling with profits.

Retrenchment may be the best option for these units.

Shortcomings of B.C.G matrix:

BCG matrix is not much relevant in today's scenario. As it considers only two factors market growth rate and relative market share important for taking decisions in business. There are many other factors which play important role in a business's success like no.of competitors, size of the market, sector of the business, etc.

A business unit may have very small market share in comparison to competitors but it may have complete hold on the niche it is playing in.

A corporation's all the business units need not necessarily be dependent on each other.

According to matrix when a business seems to be a dog it may in actual be a cash cow for the corporation.

Its not necessary that particular strategy is applicable to all the situations, many things also depend on corporation's philosophy and situations that whether it want to stay in the market at any cost or its objective is to make money only or to keep its presence in the market or philanthropy.

Although BCG matrix may not be so relevant in today's world but it still provides a basic tool for the understanding of business and business decision making.

Marketing : Product Positioning

Al Ries and Jack Trout popularized the concept of positioning in their book Positioning: The Battle for Your Mind. According to them positioning is what a marketer does to mind of the consumer and not to the product itself. Marketers communicate the changes through price, name or package and not the product actually.

According to Philip Kotler "product positioning is the way product is defined by the consumers on important attributes - the place the product occupies in consumers mind relative to competing products".

In marketing after segmentation and targeting comes positioning which allows marketers to build the kind of image they want in the mind of target customers of their products by highlighting its attributes they want consumers to remember when they think of the product. Like, Lifebuoy focuses on antibacterial or germs killing attributes of its products be it soap, handwash or hand sanitizer. On the other hand Lux positions its products soaps and bodywashes as beauty products which helps in enhancing beauty with a touch of luxury and glamour.

Thus Lifebuoy and Lux both differentiate themselves clearly even on offering the same product soap.

Product positioning strategy

Positioning Strategy includes the following steps:

1. Identifying the right competitive advantages.
2. Selecting the right competitive advantage.

The right competitive advantage can be chosen on the following bases:

1. Important
2. Distinctive
3. Superior
4. communicable
5. Pre-emptive
6. Affordable
7. Profitable

3. Communicating the right competitive advantage (i.e. positioning) effectively in the mind of  target market.

The marketer needs to identify the position its product holds in the mind of target market in comparison to its competitors. Then needs to effectively communicate the attributes which he is providing which may be superior or differentiated from their competitors to which the target market gives value like lower price, or some extra or special feature which may justify the higher price to its customers so that they feel they are getting full value in buying that product instead of buying competitor's product.

Marketing - Role and Relevance of Segmentation and Positioning

Market Segmentation

Market segmentation is the process of dividing the whole market into different segments to identify the smaller markets that exists with in a larger market. A consumer market is the sum of consumer who vary in their characteristics and buying behaviour.

"It is the process of dividing the heterogeneous market for any product into different segments of relatively homogeneous markets."

According to Philip Kotler "Market segmentation is the sub-dividing of a market into homogeneous sub-sect of customers where any sub-sect may conceivably be selected as a market target to be reached within a distinct marketing mix."

Bases of Segmentation

1. Geographic segmentation: Segmentation on the basis of geographical units such as nations, regions, states, etc.

2. Demographic segmentation: Segmentation on the basis of age, sex, income, family size, expenditure patterns, education, etc.

3. Psychographic segmentation: Segmentation on the basis of lifestyle, personality traits, social class, etc.

4. Behavioural segmentation: Segmentation on the basis of consumers buying behaviour such as consumers' usage rate, usage type, benefits sought from the product, brand loyalty, usage occasions, etc.

Properties of an effective segment

1. Distinguishable
2. Measurable
3. Accessible
4. Servable
5. Growing
6. Profitable
7. Appropriate size

Advantages of Market Segmentation

1. Focusing target market: It helps a marketer in targeting a particular market to which it can focus to sell its products. Like McDonalds targets college students or similar people for its "aloo tikki" burger who would like to spend less while eating out.

2. Market expansion: Marketer by way of market segmentation gets to know the needs of the customers better. Therefore they are able to introduce new innovative products which already has acceptance in the same market segment. Like Rekitt Benckiser company which deals mainly in home care, personal care, fabric care, etc segments introduced vanish shakti O2 in indian markets targeting people who were looking for some product especially for removing stains effectively.

3. Reducing risk: It helps in reducing the risk of time and money by marketing the right product to the right customer.

4. Increasing efficiency: Segmentation helps in increasing efficiency by making more focused efforts to the most profitable segments suited for a particular product.

Target Marketing

Target marketing is focusing one's marketing efforts to one or more selected market segments. It involves developing separate marketing mixes for each segment that is selected as target market.

Target market selection

In evaluating different market segments two factors are to considered:

1. The segment's overall attractiveness and 

2. The company's objectives and resources

Lets assume Ms as market and Ps as products.

1. Single segment concentration
In single segment concentration a firm focuses one product for one market segment only and it helps it to establish a strong market presence for that product.

	M1	M2	M3
P1
P2
P3

2. Selective specialisation
In selective specialisation a firm focuses different products for different markets. Like HUL offers different kind of products to different market segments.

	M1	M2	M3
P1
P2
P3

3. Product specialisation
In product specialisation the firm sells a particular product to the different segments of  the market. Like Colgate offers tooth pastes to different segments, it offers different tooth pastes for kids, youngsters, for people having sensitive teeth, etc.

	M1	M2	M3
P1
P2
P3

4. Market specialisation
In market specialisation the firm offers different products to the same market. Like again Colgate offers toothpastes, tooth brushes, mouth washes, etc for oral care market.

	M1	M2	M3
P1
P2
P3

5. Full market coverage

In this case the firm offers all the products to all the market segments. Like Maruti offers cars for almost all the segments of the market.

	M1	M2	M3
P1
P2
P3

Product Positioning

Use of internet as medium of marketing

Use of internet as medium of marketing

Now a days internet has become an integral part of most of our lifestyle. “Achieving organizational or individual goals by satisfying target market’s needs and wants effectively by using internet as a medium is called internet marketing.”

Internet Marketing includes SEO and additional online marketing tools one can use to gain the attention of potential customers. Different kind of internet marketing techniques listed below work to reach more and more people on internet and drive interested people to the website and allow to compete more effectively.

Email Marketing 

It is the easy, effective and affordable way to keep customers attract and coming back to one site. This is a form of direct permission based relationship marketing, which uses E-mail as a means of communicating messages to the target audience. An email marketing campaign allows businesses to promote a new product, send information about an upcoming corporate event or share important news about their business, products and services using attractive email newsletter to stay in regular touch with them and build strong customer relationships. It is best way to keep in touch. It is easy to start and quick to see the result with real time reports

Interactive advertising

Use of banner ads, Flash presentations and other interactive media to elicit active participation from recipients. They promote products and services and educate prospects. If well crafted, interactive advertising allows to engage consumers in direct and personal ways. And, they enable a sophisticated dialogue between organization and prospects which may affect buying decisions.

Blog marketing

A blog is a regularly updated collection of content like blogger.com, wordpress.com, indianbloggers.com and blogs.hindustantimes.com. From a business marketing view, blogs offer many benefits. Blogs provide an easy way to introduce fresh, relevant content to the website on a regular basis.

It also provides real time genuine information to the information seekers. Fresh content attracts more attention from the search engines.

Social Media Marketing
Social Media such as Facebook, twitter, Linkedin, Google+, etc are emerging as big markets. There are sponsored pages on facebook of different companies, groups and individuals. Facebook flash their ads on individual member’s profile according to their demography when the user click or like these pages facebook is paid and the individual’s information is accessible to the sponsor. Sponsors also run many contests and activities to gain attention or clicks.

Search Engine Optimization

It is the process of bringing business name on the first page of search engines like Google, Yahoo, Bing, etc. All of the Internet users use search engines as that is the primary method to find information/product or services online. Statistics Says: More than 8 out of 10 internet users look on search engines to find product or services they want to buy and 80% of searchers clicks on first page result on Google. So Search Engine Optimization is definitely worth the effort for all the websites those are serious about their business because customers are now looking online for service.

Pay Per Click (PPC) advertising

With this the keywords one believes prospects would type in the search bar when looking for similar products or services. For example, if one sell sofas, he would bid on the keyword "sofa", hoping a user would type those words in the search engine, see his ad, click it and buy. These ads are called sponsored links or sponsored ads and typically appear next to the natural (also known as “organic”) results on a search page. Money is paid for the ad only when the user clicks on it. Google AdWords and Yahoo! Search Marketing (formerly Overture) are currently the largest PPC providers. 

Here are some reasons that give an insight about why most of the businesses are using internet as a medium of marketing:

1.  More Visibility- Digital marketing makes it quick and easy for prospective and existing customers to find business, Product or Services.

2.  Brand growth- With the rise in social media, customers can now connect with a brand on a personal level.

3.  Less turnaround time to implement- As compared to the other marketing techniques, internet marketing can be implemented in less turnaround time.

4.  Highly monitored and Measurable results - The success of a web campaign can be easily monitored or measured by the traffic generation, number of clicks etc.

5.  Focus on target consumers- Digital Marketers can design their online marketing techniques targeted towards their potential consumers(who can vary by age group, education, profession, sex, location etc).

6.  Cost Effective- Digital marketing is most cost effective media to market product, services or brand online.

Marketing - Understanding Customer

Customer is the central point of all marketing activities. Manufacturers are producing those products which are needed by the customers. As the consumer behaviour differ from person to person the manufacturer must understand it. Knowledge of the buying motives of consumers is essential for a marketer/manufacturer, because it is buying motives that prompt the buyer to purchase. These motives may be food and drink, fear, bargain, etc. Consumer behaves in a particular manner as directed by his inner motive. It is in the interest of the marketeer that he study and analyse the buying motives.

According to D. J. Durian, "Buying motives are influences or considerations which provide the impulse to buy, induce action or determine choice in the purchase of goods and services."

Classification of Buying motives:
1. Primary Buying Motives: These motives are necessary for human life. For example, food, clothes, house, social recognition, freedom from fear and dangers, comfort ant to attract opposite sex.
2. Secondary Buying Motives: These motives are the motives learnt by human being from the society. For example, to bargain, to earn the profits, to collect information, efficiency, convenience, style, reliability and prestige.

Various stages of Buying Motives or Decision Making Process in Buying:
A decision to buy a product is taken after passing through different stages. These stages differ form product to product. A decision to buy a product of daily use is taken with in a second but a decision to buy a durable product is taken after critical study of many factors. Generally, a buyer goes through following stages when he decides to buy a product:
1. Feeling of Unsatisfied Needs: A consumer is a social being. He feels many needs but finds himself unable to fulfill all these needs due to his limited resources. Therefore, he determines a order of preference for satisfying his needs. Determination of such order of preference is the first stage of buying process. A marketer tries to convey the uses of his products to the consumers through his advertisement programmes.
2. Identification of alternatives: Determination of preference order sets the needs of a consumer in an order and the consumer starts to fulfill his needs one by one. He determined the need to be satisfied first of all. Then he tries to identifies different alternatives available to study his need. He frames an opinion with regard to the size, brand, uses, and price, etc. of these alternatives.
3. Evaluation of these alternatives: Now merits and demerits off all the alternatives are evaluated. It helps the consumer in choosing the best possible alternative. After selecting the best alternative, the consumer proceeds to buy it.
4. Post purchase feeling: Buying process does not end with the purchase of product. It includes the feelings of consumers after they have purchased the products. At this stage, attempts are made to understand the extent to which the buyers feel themselves satisfied with their purchases. Such information is very useful for the marketer.

Different environments and their influences on marketing

Marketing Environment

An organization operates basically in three types of environments macro, micro and internal environment. These environments also affect the marketing activities of an organization and they have direct and indirect effect on these activities. Some of the element of these environments are controllable and some are non controllable for the organizations. A brief description of these environments and their effect on the firms are as follow:

The Macro Environment This environment can be studied in the form of PEST Analysis.

1. Political Environment: It includes how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as tax policy, labour law, law, trade, tariffs, and political stability. Furthermore, governments have great influence on the health, education, and infrastructure of a nation.
2. Economical Environment: It includes economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy
3. Social Environment: It includes the cultural aspects, health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. Companies may change various marketing strategies to adapt to these social trends (such as offering innovative health insurance schemes).
4. Technological Environment: It includes technological aspects such as R&D activity, automation, technology incentives and the rate of technological change such as how to market products on internet effectively. Technological shifts can affect costs, quality, and lead to innovation.

The Micro Environment These are internal factors close to the company that have a direct impact on the organization’s strategy. These factors include:

1. Customers: Marketing organizations survive on the basis of meeting the needs, wants and providing benefits to their customers.

2. Suppliers: Increase in raw material prices will have a knock on affect on the marketing mix strategy of an organization. Prices may be forced up as a result.

3. Shareholders: Satisfying shareholder needs may result in a change in tactics of marketing organization. Many internet companies who share prices rocketed in 1999 and early 2000 have seen the share price tumble as they face pressures from shareholders to turn in a profit.

4. Media: Consumer programmes with a wider and more direct audience can also have a very powerful and positive impact. It enforces organizations to change their marketing strategies.

5. Competitors: Marketing is all about differentiation. What benefit can the organization offer which is better than their competitors. Can they sustain this differentiation over a period of time from their competitors? Competitor analysis and monitoring is essential for an organization to maintain its position within the market. 

The Internal Environment It refers to the combination of elements inside the organization on which it has full control. These are as follow:

1. Employees: Employing the correct sales force and keeping it motivated is an essential part of the strategic planning process of a marketing organization. Training and development plays an essential role particular in service sector marketing in-order to gain a competitive edge.  This is clearly apparent in the airline industry.
2. Processes: Internal processes and procedures affect the product delivery, after sales services, customer satisfaction, etc. It is a very important aspect in services marketing.
3. Culture of the organization: It refers to whether the culture is supportive to marketing objectives of the organization?

Marketing Mix

The marketing mix principles (also known as the 4 p’s.) are used by business as tools to assist them in pursuing their objectives it was given by Jerome McCarthy in 1960. The marketing mix principles are controllable variables, which have to be carefully managed and must meet the needs of the defined target group. Four P’s of marketing mix are Product, Price, Place and Promotion. Aim of marketing mix is putting the right product in the right place, at the right price, at the right time. A description of each is given below:

1.     Products: Products refers to the goods which are offered by the company to the customers. Decisions regarding products includes questions like

What should be the features of the product?

How it should look like?

How it should be branded and packaged?

What should be its quality? And the like

2.     Price: Price is the amount the customer pays for the product. Pricing decisions includes pricing policy, pricing objective and pricing strategy. It answers the question that what should be the best price of the product? taking into consideration firm’s objectives, competition, etc.

3.     Place: Place represents the location where a product can be purchased. It is often referred to as the distribution channel. It can include any physical store as well as virtual stores on the Internet.

4.     Promotion: Promotion refers to all the communication regarding the product to the customers. Different elements of promotion are Advertising, Personal Selling, publicity and sales promotion. There are various tools of promotion and company has to decide upon the best suitable way of promotion which can yield maximum returns or fulfill promotional objectives.

Marketing Concept, nature and scope, Marketing Myopia

The Marketing Concept
The term marketing concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions. It proposes that in order to satisfy its organizational objectives, an organization should anticipate the needs and wants of consumers and satisfy these more effectively than competitors.


Production Oriented: The focus of the business is not the needs of the customer, but of reducing costs by mass production. By reaching economies of scale the business will maximize profits by reducing costs.
Sales Orientation: The focus here is to make the product, and then try to sell it to the target market. It is basically a push concept of marketing concerned with selling the produced products and making profits, without caring what the customer needs are?
Market Orientation: Puts the customer first and at the heart of the business. The organization tries to understand the needs of the customers by using appropriate research methods, processes and developing products to satisfy their needs. In essence all activities in the organisation are based around the customer. The customer is the truly king.
In today’s competitive world putting the customer at the heart of the operation is strategically important. Whilst some organizations in certain industries may follow anything other then the market orientation concept, those that follow the market orientation concept have a greater chance of being successful.


Apart from these there can be many concepts of marketing like societal concept, product concept, branding concept, etc.

Meaning and definition of Marketing:

According to Philip Kotler, "Marketing Management is the analysis, planning, implementation and control of programmes designed to bring about desired exchanges with target audiences for the purpose of personal and of mutual gain. It relies heavily on the adoption and coordination of product, price, promotion and place for achieving responses."

Nature of Marketing:

Nature of Marketing evolves from its multidisciplinary coverage of activities which is as follow:

1.     Dynamic Process: Marketing is an ongoing activity which does not stop at any step. After finding customer’s needs and wants it needs to develop such products or services which can satisfy these needs and after this there is need to advertising, promotion, distribution, etc the process goes on.

2.     Customer Oriented: Marketing is customer oriented. Marketing is the process of finding needs and wants of customers and satisfying those needs profitably.

3.     All Encompassing: Marketing is all encompassing, it is not a single process it includes production planning, research, advertising, financial management, budgeting, selling, etc.

4.     Integrating: It integrates all the departments of an enterprise be it production, finance, IT, HR, etc.

5.     Creative: Marketing is creative in nature, it looks out for new ideas, views and activities and solves problems or encash opportunities in a creative way.

Scope of Marketing:

Marketing has a very wide scope it covers all the activities from conception of ideas to realization of profits. Some of them as discussed as below:

1.     Product Planning: It includes the activities of product research, marketing research, market segmentation, product development, determination of the attributes, quantity and quality of the products.

2.     Branding: Branding of products is adopted by many reputed enterprises to make their products popular among their customer and for many other benefits. Marketing manager has to take decision regarding the branding policy, procedures and implementation programs.

3.     Packaging: Packaging is to provide a container or wrapper to the product for safety, attraction and ease of use and transportation of the product.

4.     Channels of Distribution: Decision regarding selection of most appropriate channel of distribution like wholesaling, distribution and retailing is taken by the marketing manager and sales manager.

5.     Sales Management: Selling is a part of marketing. Marketing is concerned about all the selling activities like customer identification, finding customer needs, persuading customer to buy products, customer service, etc.

6.     Advertising: Advertisement decisions like scope and time of advertisement, advertisement message, selection of media, etc comes into marketing.

7.     Finance: Marketing is also concerned about the finance, as for every marketing activity be it packaging, advertising, sales force budget is fixed and all the activities have to be completed with in the limit of that budget.

8.     After Sales services: Marketing covers after sales services given to customers, maintaining good relationships with customers, attending their queries and solving their problems.

Marketing Myopia

Marketing Myopia is the short sighted and inward looking approach to marketing that focuses on the needs of the firm instead of defining the firm and its products in terms of the customers’ needs and wants. Such self centered firms fail to see and adjust to the rapid changes in their markets and despite their previous eminence falter, fail and disappear. This concept was given by Theodore C Lewitt.

Its theme is that the vision of most organizations is too constricted by a narrow understanding of what business they are in? By the influence of this concept many oil companies redefined their business as “energy” instead of just “petroleum”.