various factors affecting marketing function

7/29/2019 Various Factors Affecting Marketing Function

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Various factors affecting marketing function.The environmental factors that are affecting marketing function can be classified into :

1) Internal environment and2) 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 andfunction 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 ofmanagement..Etc.Factors like the amount of support the top management enjoys from

different levels of employees, shareholders and Board of Directors has important influenceon the marketing decisions and their implementation.

Finance and Accounting: Accounting refers to measure of revenue and costs to help themarketing 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 productsafe 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 externalagencies. 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 marketingefficiency. 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, andb) Micro environment

a) Micro environment: The environmental factors that are in its proximity. The factorsinfluence 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 marketingcapabilities. These are raw material suppliers, energy suppliers, suppliers of labor and

capital. According to Michael Porter, the relationship between suppliers and the firm


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epitomizes a power equation between them. This equation is based on the industrycondition 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 buyergroup.

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. Theseintermediaries may be individual or business firms. These intermediaries are middleman

(wholesalers, retailers, agents etc. ), distributing agency market service agencies andfinancial 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 servicesfor 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. Suchbuyers may be consumers, producers, resellers, and governments.

6) Competitors: Competitors are those who sell the goods and services of the same andsimilar 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 competitorsand 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 definedas 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 must

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 influencemarketing 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


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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 tomeans 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 non-renewal 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 forhis 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 andservices that have an impact on the business of an organization.

e) Political and Legal Forces: Developments in political and legal field greatly affect themarketing 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, pricingand 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 marketingsocially 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


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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 Page2.Executive Summary3.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
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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, andbrand 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 publicityandpublic relations electronic promotion (e.g.: web, ortelephone) word of mouth marketing (buzz)
http://en.wikipedia.org/wiki/Marketing_Researchhttp://en.wikipedia.org/wiki/Marketing_Researchhttp://en.wikipedia.org/wiki/Publicityhttp://en.wikipedia.org/wiki/Publicityhttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Publicityhttp://en.wikipedia.org/wiki/Marketing_Research


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viral marketing13.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


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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 aspecifiedperiod 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 presentconsumer 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 well-defined.

4. There should be a clear understanding about the product & service for which the marketpotential 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 ofa particular product or service is also necessary. It is important to remember that the estimatedmarket 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 oftotal demand which would theoretically be converged on at (infinite) rise of marketing

expenditures of all relevant providers.


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Market Share

The percentage of an industry or market's total sales that is earned by a particular companyover 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


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Consumer markets are the markets for products and services bought by individuals for theirown 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 dividedinto:

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 andtherefore 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 goodsExamples include office furniture, computer systems

Selling raw materials orcomponents

Examples include steel, coal, gas, timber

Selling services to businessesExamples 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.


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Factors Aff ecting Consumer Behavior :

1. Cultur e

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 ConsumersSocial Class People within a social class tend to exhibit similar buying behavior. Occupation Income Education Wealth

2. Social


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3. Personal

4. Psychological

Psychological

Factors


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The Buyer Decision Process


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Step 1. Need Recognition

Step 2. Information Search


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Step 3. Evaluation of Alternatives

Step 4. Purchase Decision


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Step 5. Post purchase Behavior

Bases for Segmentation in Consumer MarketsConsumer 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 SegmentationSome demographic segmentation variables include:

Age Gender Family size Family lifecycle Generation: baby-boomers, Generation X, etc. Income Occupation Education Ethnicity Nationality Religion Social class


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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 theage 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 economiesof 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


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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 measurableso that they can be identified.

Accessible: the segments must be reachable through communication anddistribution channels.

Substantial: the segments should be sufficiently large to justify the resourcesrequired to target them.

Unique needs: to justify separate offerings, the segments must responddifferently to the different marketing mixes.

Durable: the segments should be relatively stable to minimize the cost offrequent 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:


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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 morethan 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 firmstend 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.

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