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Various factors affecting marketing function.

The environmental factors that are affecting marketing function can be classified into : 1) Internal environment and 2) External environment Internal Environment of Marketing: This refers to factors existing within a marketing firm. They are also called as controllable factors, because the company has control over these factors: a) it can alter or modify factors as its personnel, physical facilities, organization and function means, such as marketing mix, to suit the environment. There are many internal factors that influence the marketing function, they are: Top Management: The organizational structure, Board of Director, professionalization of management..Etc.Factors like the amount of support the top management enjoys from different levels of employees, shareholders and Board of Directors has important influence on the marketing decisions and their implementation. Finance and Accounting: Accounting refers to measure of revenue and costs to help the marketing and to know how well it is achieving its objectives. Finance refers to funding and using funds to carry out the marketing plan. Financial factors are financial policies, financial position and capital structure. Research and Development: Research and Development refers to designing the product safe and attractive. They are technological capabilities, determine a company ability to innovate and compete. Manufacturing: It is responsible for producing the desired quality and quantity of products. Factors which influence the competitiveness of a firm are production capacity technology and efficiency of the productive apparatus, distribution logistics etc., Purchasing: Purchasing refers to procurement of goods and services from some external agencies. It is the strategic activity of the business. Company Image and Brand Equity: The image of the company refers in raising finance, forming joint ventures or other alliances soliciting marketing intermediaries, entering purchase or sales contract, launching new products etc. In organization, the marketing resources like organization for marketing, quality of marketing, brand equity and distribution network have direct bearing on marketing efficiency. They are important for new product introduction and brand extension, etc.. External Environment of Marketing. External factors are beyond the control of a firm; its success depends to a large extent on its adaptability to the environment. The external marketing environment consists of: a) Macro environment, and b) Micro environment a) Micro environment: The environmental factors that are in its proximity. The factors influence the companys non-capacity to produce and serve the market. The factors are: 1) Suppliers: The suppliers to a firm can also alter its competitive position and marketing capabilities. These are raw material suppliers, energy suppliers, suppliers of labor and capital. According to Michael Porter, the relationship between suppliers and the firm

epitomizes a power equation between them. This equation is based on the industry condition and the extent to which each of them is dependent on the other. The bargaining power of the supplier gets maximized in the following situations: a) The seller firm is a monopoly or an oligopoly firm. b) The supplier is not obliged to contend with other substitute products for sale to the buyer group. c) The buyer is not an important customer. d) The suppliers product is an important input to the buyers business and finished product. e) The supplier poses a real threat of forward integration. 2) Market Intermediaries: Every producer has to have a number of intermediaries for promoting, selling and distributing the goods and service to ultimate consumers. These intermediaries may be individual or business firms. These intermediaries are middleman (wholesalers, retailers, agents etc. ), distributing agency market service agencies and financial institutions. 3) Customers: The customers may be classified as : 1) Ultimate customers: These customers may be individual and householders. 2) Industrial customers: These customers are organization which buy goods and services for producing other goods and services for the purpose of other earning profits or fulfilling other objectives. 3) Resellers: They are the intermediaries who purchase goods with a view to resell them at a profit. They can be wholesalers, retailers, distributors, etc. 4) Government and other non-profit customers: These customers purchase goods and services to those for whom they are produced, for their consumption in most of the cases. 5) International customers: These customers are individual and organizations of other countries who buy goods and services either for consumption or for industrial use. Such buyers may be consumers, producers, resellers, and governments. 6) Competitors: Competitors are those who sell the goods and services of the same and similar description, in the same market. Apart from competition on price, there are like product differentiation. Therefore, it is necessary to build an efficient system of marketing. This will bring confidence and better results. 7) Public: It is duty of the company to satisfy the people at large along with its competitors and the consumers. It is necessary for future growth. The action of the company do influence the other groups forming the general public for the company. A public is defined as any group that has an actual or potential interest in or impact on a companys ability to achieve its objective. Public relations are certainly a broad marketing operation which mus t be fully taken care of. Macro Environment: Macro environment factors act external to the company and are quite uncontrollable. These factors do not affect the marketing ability of the concern directly but indirectly the influence marketing decisions of the company. These are the macro environmental factors that affect the companys marketing decisions : a) Demographic Forces: Here, the marketer monitor the population because people forms markets. Marketers are keenly interested in the size and growth rate of population in

different cities, regions, and nations ; age distribution and ethnic mix ; educational levels; households patterns; and regional characteristics and movements. b)Economic Factors: The economic environment consists of macro-level factors related to means of production and distribution that have an impact on the business of an organization. c) Physical Forces: Components of physical forces are earths natural renewal and nonrenewal resources. Natural renewal forces are forest, food products from agriculture or sea etc. Non- renewal natural resources are finite such as oil, coal, minerals, etc. Both of these components quite often change the level and type of resources available to a marketer for his production. d) Technological Factors: The technological environment consists of factors related to knowledge applied, and the materials and machines used in the production of goods and services that have an impact on the business of an organization. e) Political and Legal Forces: Developments in political and legal field greatly affect the marketing decisions. sound marketing decision cannot be taken without taking into account, the government agencies, political party in power and in opposition their ideologies, pressure groups, and laws of the land. These variables create tremendous pressures on marketing management. Laws affect production capacity, capability, product design, pricing and promotion. Government in almost all the country intervenes in marketing process irrespective of their political ideologies. f) Social and Cultural Forces: This concept has crept into marketing literature as an alternative to the marketing concept. The social forces attempt to make the marketing socially responsible. It means that the business firms should take a lead in eliminating socially harmful products and produce only what is beneficial to the society. These are numbers of pressure groups in the society who impose restrictions on the marketing process. Controllable factor or often called as "Marketing Mix. Now days it remember as "4P's" It includes: Product, Price, Place and Promotion. 2. Uncontrollable factors are often called as "Environmental Factors" it includes: Political factors, Economical

Marketing Plan A marketing plan may be part of an overall business plan. Solid marketing strategy is the foundation of a well-written marketing plan. While a marketing plan contains a list of actions, a marketing plan without a sound strategic foundation is of little use.

In detail, a complete marketing plan typically includes:[4] 1. Title Page 2. Executive Summary 3. Current Situation - Macro environment economy legal government technology ecological sociocultural supply chain 4. Current Situation - Market Analysis market definition market size market segmentation competitors' strengths and weaknesses 5. Current Situation - Consumer Analysis nature of the buying decision demographics psychographics buyer motivation and expectations loyalty segments 6. Current Situation - Internal company resources financial people time skills

objectives mission statement and vision statement financial objective marketing objectives long term objectives 7. Summary of Situation Analysis external threats external opportunities internal strengths internal weaknesses success factors in the industry 8. Marketing Research information requirements research methodology research results 9. Marketing Strategy - Product product mix product strengths and weaknesses product life cycle management and new product development Brand name, brand image, and brand equity the augmented product 10.Marketing Strategy - segmented marketing actions and market share objectives by product by customer segment by geographical market by distribution channel 11.Marketing Strategy - Price pricing objectives pricing method (e.g.: cost plus, demand based) pricing strategy (e.g.: skimming, or penetration) discounts and allowances 12.Marketing Strategy - Promotion promotional mix advertising sales promotion publicity and public relations electronic promotion (e.g.: web, or telephone) word of mouth marketing (buzz)

viral marketing 13.Marketing Strategy - Distribution geographical coverage distribution channels physical distribution and logistics electronic distribution 14.Implementation personnel requirements assign responsibilities give incentives training on selling methods financial requirements management information systems requirement monitoring results and benchmarks contingencies (what ifs) 15.Financial Summary assumptions breakeven analysis 16.Scenarios prediction of future scenarios plan of action for each scenario 17.Appendix pictures and specifications of the new product results from research already completed

Concept of Market Potential and market Share: Market potential is the valuation of the sales revenue from all the supplying channels in a market. In other words, it is the potential money making capability of a firm if it capitalizes all advantages and everything goes its way. MARKET POTENTIAL ANALYSIS The concept of market potential is defined as the maximum demand response possible for a given group of customers within a well defined geographic area for a given product or service over a specified period of time under well defined competitive environmental conditions. We will further split up this definition: 1. Market potential is the maximum demand response under certain assumptions(ultimate demand) 2. Relevant customer for the product and service. It is not merely the present consumer but also the potential consumer so that maximum possible demand is achieved 3. The geographic area for which market potential is to be determined should be welldefined. 4. There should be a clear understanding about the product & service for which the market potential is to be estimated. 5. The time period for which market potential is estimated should be specific.6. Finally, a clear understanding of environmental & competitive conditions relevant incases of a particular product or service is also necessary. It is important to remember that the estimated market potential sets an upper boundary on the market size and can be expressed in either units and/or sales Market potential consists of the upper limit of total demand which would theoretically be converged on at (infinite) rise of marketing expenditures of all relevant providers.

Market Share The percentage of an industry or market's total sales that is earned by a particular company over a specified time period. Market share is calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period. This metric is used to give a general idea of the size of a company to its market and its competitors.

A percentage of total sales volume in a market captured by a brand, product, or company. The proportion of industry sales of a good or service that is controlled by a company. The percentage of sales of a particular product achieved by a single company in a given period of time. Concept of Consumer Market and Organizational Market Consumer Markets

Consumer markets are the markets for products and services bought by individuals for their own or family use. Goods bought in consumer markets can be categorised in several ways: Fast-moving consumer goods (FMCG's) These are high volume, low unit value, fast repurchase Examples include: Ready meals; Baked Beans; Newspapers Consumer durables These have low volume but high unit value. Consumer durables are often further divided into: White goods (e.g. fridge-freezers; cookers; dishwashers; microwaves) Brown goods (e.g. DVD players; games consoles; personal computers) Soft goods Soft goods are similar to consumer durables, except that they wear out more quickly and therefore have a shorter replacement cycle Examples include clothes, shoes Services (e.g. hairdressing, dentists, childcare) Industrial Markets/Organizational Market Industrial markets involve the sale of goods between businesses. These are goods that are not aimed directly at consumers. Industrial markets include Selling finished goods Examples include office furniture, computer systems Selling raw materials or components Examples include steel, coal, gas, timber Selling services to businesses Examples include waste disposal, security, accounting & legal services

Consumer Buying Behavior


Consumer Buying Behavior refers to the buying behavior of final consumers (individuals & households) who buy goods and services for personal consumption.

Factors Affecting Consumer Behavior: 1. Culture Most basic cause of a person's wants and behavior. Values Perceptions Subculture Groups of people with shared value systems based on common life experiences. Hispanic Consumers African American Consumers Asian American Consumers Mature Consumers Social Class People within a social class tend to exhibit similar buying behavior. Occupation Income Education Wealth 2. Social

3. Personal

4. Psychological

Psychological Factors

The Buyer Decision Process

Step 1. Need Recognition

Step 2. Information Search

Step 3. Evaluation of Alternatives

Step 4. Purchase Decision

Step 5. Post purchase Behavior

Bases for Segmentation in Consumer Markets


Consumer markets can be segmented on the following customer characteristics. Geographic Demographic Psychographic Behavioralistic Geographic Segmentation The following are some examples of geographic variables often used in segmentation. Region: by continent, country, state, or even neighborhood Size of metropolitan area: segmented according to size of population Population density: often classified as urban, suburban, or rural Climate: according to weather patterns common to certain geographic regions Demographic Segmentation Some demographic segmentation variables include: Age Gender Family size Family lifecycle Generation: baby-boomers, Generation X, etc. Income Occupation Education Ethnicity Nationality Religion Social class

Many of these variables have standard categories for their values. For example, family lifecycle often is expressed as bachelor, married with no children (DINKS: Double Income, No Kids), full-nest, empty-nest, or solitary survivor. Some of these categories have several stages, for example, full-nest I, II, or III depending on the age of the children. Psychographic Segmentation Psychographic segmentation groups customers according to their lifestyle. Activities, interests, and opinions (AIO) surveys are one tool for measuring lifestyle. Some psychographic variables include:

Activities Interests Opinions Attitudes Values

Behavioralistic Segmentation Behavioral segmentation is based on actual customer behavior toward products. Some behavioralistic variables include:

Benefits sought Usage rate Brand loyalty

Market Segmentation Market segmentation is the identification of portions of the market that are different from one another. Segmentation allows the firm to better satisfy the needs of its potential customers. The Need for Market Segmentation The marketing concept calls for understanding customers and satisfying their needs better than the competition. But different customers have different needs, and it rarely is possible to satisfy all customers by treating them alike. Mass marketing refers to treatment of the market as a homogenous group and offering the same marketing mix to all customers. Mass marketing allows economies of scale to be realized through mass production, mass distribution, and mass communication. The drawback of mass marketing is that customer needs and preferences differ and the same offering is unlikely to be viewed as optimal by all customers. If firms ignored the differing customer needs, another firm likely would enter the market with a product that serves a specific group, and the incumbant firms would lose those customers. Target marketing on the other hand recognizes the diversity of customers and does not try to please all of them with the same offering. The first step in target marketing is to identify different market segments and their needs. Requirements of Market Segments

In addition to having different needs, for segments to be practical they should be evaluated against the following criteria: Identifiable: the differentiating attributes of the segments must be measurable so that they can be identified. Accessible: the segments must be reachable through communication and distribution channels. Substantial: the segments should be sufficiently large to justify the resources required to target them. Unique needs: to justify separate offerings, the segments must respond differently to the different marketing mixes. Durable: the segments should be relatively stable to minimize the cost of frequent changes. A good market segmentation will result in segment members that are internally homogenous and externally heterogeneous; that is, as similar as possible within the segment, and as different as possible between segments. Bases for Segmentation in Consumer Markets Consumer markets can be segmented on the following customer characteristics. Geographic Demographic Psychographic Behavioralistic Geographic Segmentation The following are some examples of geographic variables often used in segmentation. Region: by continent, country, state, or even neighborhood Size of metropolitan area: segmented according to size of population Population density: often classified as urban, suburban, or rural Climate: according to weather patterns common to certain geographic regions Demographic Segmentation Some demographic segmentation variables include: Age Gender Family size Family lifecycle Generation: baby-boomers, Generation X, etc. Income Occupation Education Ethnicity Nationality Religion Social class Many of these variables have standard categories for their values. For example, family lifecycle often is expressed as bachelor, married with no children (DINKS: Double Income, No Kids), full-nest, empty-nest, or solitary survivor. Some of these categories have several stages, for example, full-nest I, II, or III depending on the age of the children. Psychographic Segmentation Psychographic segmentation groups customers according to their lifestyle. Activities, interests, and opinions (AIO) surveys are one tool for measuring lifestyle. Some psychographic variables include:

Activities Interests Opinions Attitudes Values Behavioralistic Segmentation Behavioral segmentation is based on actual customer behavior toward products. Some behavioralistic variables include: Benefits sought Usage rate Brand loyalty User status: potential, first-time, regular, etc. Readiness to buy Occasions: holidays and events that stimulate purchases Behavioral segmentation has the advantage of using variables that are closely related to the product itself. It is a fairly direct starting point for market segmentation. Bases for Segmentation in Industrial Markets In contrast to consumers, industrial customers tend to be fewer in number and purchase larger quantities. They evaluate offerings in more detail, and the decision process usually involves more than one person. These characteristics apply to organizations such as manufacturers and service providers, as well as resellers, governments, and institutions. Many of the consumer market segmentation variables can be applied to industrial markets. Industrial markets might be segmented on characteristics such as: Location Company type Behavioral characteristics Location In industrial markets, customer location may be important in some cases. Shipping costs may be a purchase factor for vendor selection for products having a high bulk to value ratio, so distance from the vendor may be critical. In some industries firms tend to cluster together geographically and therefore may have similar needs within a region. Company Type Business customers can be classified according to type as follows: Company size Industry Decision making unit Purchase Criteria Behavioral Characteristics In industrial markets, patterns of purchase behavior can be a basis for segmentation. Such behavioral characteristics may include: Usage rate Buying status: potential, first-time, regular, etc. Purchase procedure: sealed bids, negotiations, etc.