Marketing Environment concerns the influences or variables of the external and internal environment of a firm that controls the marketing management’s capability to construct and preserve the flourishing relationships with the consumer. An assortment of environmental forces affects a company’s marketing arrangement. A few of them are governable while others are unmanageable. It is the task of the marketing manager to modify the company’s policies together with the shifting environment. Macro and micro environment comprise the structure of the marketing environment.
? Definition of Marketing Environment:
According to Philip Kotler,
“A company’s marketing environment consists of the internal factors & forces, which affect the company’s ability to develop & maintain successful transactions & relationships with the company’s target customers.”
? Overall Market Environment
The overall Marketing environment is the snowballing form of the aspects that encapsulate inside themselves the capability of a firm to bond with the customers and in addition, the strength of the product as a driver of development to the firm. The macro environment consisting of wider societal authorities, and the micro environment which incorporates the influences related to a company, together form the general marketing environment of a company.
? thus the marketing environment is comprised of the following two key factors-
1. Micro-factors inside the firm.
2. Macro-factors linked to economic, social, cultural aspects etc. This Assignment will look in detail the macro environment.
? Micro Environment in Marketing:
Micro-environment elements are close to the firm and incorporate the suppliers, showcasing delegates, consumer markets, public, and competition and marketing intermediaries. Micro-environment likewise concerns the inward environment of the organization and influences marketing as well as all the departments like management, R;D, finance, Human assets, purchasing, operations and bookkeeping.
? Macro Environment in Marketing:
The Macro environment is the uncontrollable factor of the company. For this reason, it has to structure its policies in the limits set by these factors. Macro-environment on the whole deals with the demographic, economic, technological, natural, socio-cultural and politico-legal environment aspects of the markets. Let us now look into these elements in detail.
It is characterized as the factual investigation of the human populace ; its dissemination. This is a standout amongst the most impacting variables, in light of the fact that it manages the individuals who structure the business. An organization ought to study the populace, its conveyance, age structure, and so forth before choosing its strategy of marketing. Each faction of populace acts in a different way, relying on a range of factors, for example, age, status, and so on. If these variables are measured, a company can manufacture only those products which suit the necessity of the buyers. In this respect, it is said that, ‘to comprehend the business sector you must comprehend its demography’.
2. Economic Environment
Economic components are general monetary value, investment rates, exchange rates, inflation rate, fiscal strategies, balance of payments and so forth. An organization can effectively offer its products just when individuals have enough cash to spend. The financial environment influences a customer’s buying behaviour either by expanding his disposable income or by decreasing it. E.g. During inflation, the money value decreases. Thus, it is troublesome for them to buy more products. The income of the customer should likewise be considered. E.g. In a business sector where both wife & husband work, their acquiring power will be more. Consequently, organizations may offer their products effortlessly.
3. Physical Environment
These components incorporate the climate, atmosphere, environmental change, accessibility of water, accessibility of raw materials and so on. A company has to implement its policies contained by the restrictions set by nature. A man can enhance the nature, however, can’t find an option for it. Nature offers resources, however, in a restricted way. The product manager has to use it proficiently. Companies must discover the best mix of production for the purpose of productive usage of the accessible assets. Else, they may confront intense deficiency of resources.
4. Technological Factors
Technological variables incorporate the innovative work, robotization, development of web and other communication innovations, innovation inducements and barriers to technology. From the consumer’s perspective, change in innovation implies change in the living standard. In this respect, it is said that, ‘Technologies figure a person’s Life’.
Each new innovation creates another business ; another group of clients. Another innovation enhances our way of life ; in the meantime creates numerous issues. E.g. Invention of different purchaser comforts like washing machines, blenders, and so forth have brought about enhancement in our way of lifestyle yet it has made serious issues like shortage of power, similarly, innovation in autos has enhanced transportation, however, it has brought about the issues like air ; noise contamination, more accidents etc. In plain words, following are the effects of technological aspects on the market:
a. Creation of new desires
b. Creation of new industries
c. May wipe out old industries
d. May augment the expenditure of R;D.
5. Social ; Cultural Factors
The vast majority of us buy in light of the impact of cultural ; social elements. The lifestyle, qualities, convictions, and so on is dead set besides everything else by the society in which we live. Every society has its own culture. Culture is a blend of different variables which are exchanged from more established eras ; which are gained. Our conduct is guided by our way of life, family, instructive foundations, dialects, and so on. Social components are the cultural and social viewpoints, which incorporate health cognizance, the growth rate of population, age distribution, career approach and the importance of security.
The society is a mix of different groups with diverse cultures ; subcultures. Every society has its own conduct. The marketing manager of a company must study the society in which he works. E.g. in India, we have distinctive cultural groups like Kashmir’s, Punjabis, Assamese, and so forth. The marketing manager of a company ought to observe these distinctions before finalizing the marketing schemes.
The role of Culture
Culture is part of the external influences that impact the consumer. That is, culture represents influences that are imposed on the consumer by other individuals.
The English anthropologist, E.B. Taylor, defined culture as: “That complex whole which includes knowledge, belief, art, morals, custom, and any other capabilities and habits acquired by a man as a member of society.” From this definition, we make the following observations:
Culture, as a “complex whole,” is a system of interdependent components.
Knowledge and beliefs are important parts. In the U.S., we know and believe that a person who is skilled and works hard will get ahead. In other countries, it may be believed that differences in outcome result more from luck. “Chunking,” the name for China in Chinese literally means “The Middle Kingdom.” The belief among ancient Chinese that they were in the center of the universe greatly influenced their thinking.
Other issues are relevant. Art, for example, may be reflected in the rather arbitrary practice of wearing ties in some countries and wearing turbans in others. Morality may be exhibited in the view in the United States that one should not be naked in public. In Japan, on the other hand, groups of men and women may take steam baths together without perceived as improper.
On the other extreme, women in some Arab countries are not even allowed to reveal their faces. Notice, by the way, that what at least some countries view as moral, may in fact be highly immoral by the standards of another country. For example, the law that once banned interracial marriages in South Africa was named the “Immorality Act,” even though in most civilized countries this law, and any degree of explicit racial prejudice, would itself be considered highly immoral.
Within each culture are numerous sub-groups with their own distinguishing modes of behaviour.
In the United States black Americans represent the largest racial/ethnic sub-culture. In the UK it is the Asian Community. American marketing firms realize that it is impossible to treat such a large group of consumers as a homogeneous mass, a number studies though indicate that their consumption habits are significantly different from those of the remainder of Americans. As a result, American firms are now designing products and advertising campaigns aimed specifically at this large minority markets. This has now also happened in the UK. Indeed, although the UK is more culturally homogeneous than the USA, firms can no longer ignore the cultural differences of the ethnic population. Ethnic heterogeneity is slowly being recognized by more enlightened firms as potential source of marketing opportunities.
Cannon highlights a number of interesting examples of marketing opportunities and problems related to sub-cultures.
• Products may need to meet special religious needs (e.g. kosher foods).
• Marketing intermediaries may be different (e.g. the importance of small, Asian-run, shops)
• Consumer tastes may differ (e.g. Cadbury Typhoo’s Poundo Yam, aimed mainly at consumers of Caribbean origin)
• Language can be a problem in marketing communications (e.g. in the UK, 77 per cent of Pakistani origin women and 43 percent of Pakistani-origin men cannot speak working English).
The culturally aware marketing firm will recognize that sub-cultures represent distinct market segments and will seek to increase their awareness of the needs, attitudes and motivations of sub-groups.
Culture has several important characteristics:
1. Culture is comprehensive. This means that all parts must fit together in some logical fashion. For example, bowing and a strong desire to avoid the loss of face are unified in their manifestation of the importance of respect.
2. Culture is learned rather than being something we are born with. We will consider the mechanics of learning later in the course.
3. Culture is manifested within boundaries of acceptable behaviour. For example, in American society, one cannot show up to class naked, but wearing anything from a suit and tie to shorts and a T-shirt would usually be acceptable. Failure to behave within the prescribed norms may lead to sanctions, ranging from being hauled off by the police for indecent exposure to being laughed at by others for wearing a suit at the beach.
4. Conscious awareness of cultural standards is limited. One American spy was intercepted by the Germans during World War II simply because of the way he held his knife and fork while eating.
5. Cultures fall somewhere on a continuum between static and dynamic depending on how quickly they accept change. For example, American culture has changed a great deal since the 1950s, while the culture of Saudi Arabia has changed much less.
Dealing with culture: Culture is a problematic issue for many marketers since it is inherently nebulous and often difficult to understand. One may violate the cultural norms of another country without being informed of this, and people from different cultures may feel uncomfortable in each other’s presence without knowing exactly why (for example, two speakers may unconsciously continue to attempt to adjust to reach an incompatible preferred interpersonal distance).
Warning about stereotyping: When observing a culture, one must be careful not to over-generalize about traits that one sees. Research in social psychology has suggested a strong tendency for people to perceive an “out-group” as more homogenous than an “in-group,” even when they knew what members had been assigned to each group purely by chance. When there is often a “grain of truth” to some of the perceived differences, the temptation to over-generalize is often strong. Note that there are often significant individual differences within cultures.
Cultural lessons: We considered several cultural lessons in class; the important thing here is the big picture. For example, within the Muslim tradition, the dog is considered a “dirty” animal, so portraying it as “man’s best friend” in an advertisement is counter-productive. Packaging, seen as a reflection of the quality of the “real” product, is considerably more important in Asia than in the U.S., where there is a tendency to focus on the contents which “really count.” Many cultures observe significantly greater levels of formality than that typical in the U.S., and Japanese negotiator tend to observe long silent pauses as a speaker’s point is considered.
Cultural characteristics as a continuum: There is a tendency to stereotype cultures as being one way or another (e.g., individualistic rather than collectivistic). Note, however, countries fall on a continuum of cultural traits. Hofstede’s research demonstrates a wide range between the most individualistic and collectivistic countries, for example; some fall in the middle.
Hofstede’s Dimensions: Gert Hofstede, a Dutch researcher, was able to interview a large number of IBM executives in various countries, and found that cultural differences tended to center around four key dimensions:
Individualism vs. collectivism: To what extent do people believe in individual responsibility and reward rather than having these measures aimed at the larger group? Contrary to the stereotype, Japan actually ranks in the middle of this dimension, while Indonesia and West Africa rank toward the collectivistic side. The U.S., Britain, and the Netherlands rate toward individualism.
Power distance: To what extent is there a strong separation of individuals based on rank? Power distance tends to be particularly high in Arab countries and some Latin American ones, while it is more modest in Northern Europe and the U.S.
Masculinity vs. femininity involves a somewhat more nebulous concept. “Masculine” values involve competition and “conquering” nature by means such as large construction projects, while “feminine” values involve harmony and environmental protection. Japan is one of the more masculine countries, while the Netherlands rank relatively low. The U.S. is close to the middle, slightly toward the masculine side. (The fact that these values are thought of as “masculine” or “feminine” does not mean that they are consistently held by members of each respective gender—there are very large “within-group” differences. There is, however, often a large correlation of these cultural values with the status of women.)
Uncertainty avoidance involves the extent to which a “structured” situation with clear rules is preferred to a more ambiguous one; in general, countries with lower uncertainty avoidance tend to be more tolerant of risk, Japan ranks very high. Few countries are very low in any absolute sense, but relatively speaking, Britain and Hong Kong are lower, and the U.S. is in the lower range of the distribution.
Although Hofstede’s original work did not address this, a fifth dimension of long term vs. short term orientation has been proposed. In the U.S., managers like to see quick results, while Japanese managers are known for take a long term view, often accepting long periods before profitability is obtained.
High vs. Low context cultures: In some cultures, “what you see is what you get” the speaker is expected to make his or her points clear and limit ambiguity. This is the case in the U.S. if you have something on your mind; you are expected to say it directly, subject to some reasonable standards of diplomacy. In Japan, in contrast, facial expressions and what is not said may be an important clue to understanding a speaker’s meaning. Thus, it may be very difficult for Japanese speakers to understand another’s written communication. The nature of languages may exacerbate this phenomenon while the German language is very precise, Chinese lacks many grammatical features, and the meaning of words may be somewhat less precise. English ranks somewhere in the middle of this continuum.
Ethnocentrism and the self-reference criterion: The self-reference criterion refers to the tendency of individuals, often unconsciously, to use the standards of one’s own culture to evaluate others. For example, Americans may perceive more traditional societies to be “backward” and “unmotivated” because they fail to adopt new technologies or social customs, seeking instead to preserve traditional values. In the 1960s, a supposedly well read American psychology professor referred to India’s culture of “sick” because, despite severe food shortages, the Hindu religion did not allow the eating of cows. The psychologist expressed disgust that the cows were allowed to roam free in villages, although it turns out that they provided valuable functions by offering milk and fertilizing fields. Ethnocentrism is the tendency to view one’s culture to be superior to others. The important thing here is to consider how these biases may come in the way in dealing with members of other cultures.
It should be noted that there is a tendency of outsiders to a culture to overstate the similarity of members of that culture to each other. In the United States, we are well aware that there is a great deal of heterogeneity within our culture; however, we often underestimate the diversity within other cultures. For example, in Latin America, there are great differences between people who live in coastal and mountainous areas; there are also great differences between social classes.
Language Issues: Language is an important element of culture. It should be realized that regional differences may be subtle. For example, one word may mean one thing in one Latin American country, but something off-colour in another. It should also be kept in mind that much information is carried in non-verbal communication. In some cultures, we nod to signify “yes” and shake our heads to signify “no;” in other cultures, the practice is reversed. Within the context of language:
There are often large variations in regional dialects of a given language. The differences between U.S., Australian, and British English are actually modest compared to differences between dialects of Spanish and German.
Idioms involve “figures of speech” that may not be used, literally translated, in other languages. For example, baseball is a predominantly North and South American sport, so the notion of “in the ball park” makes sense here, but the term does not carry the same meaning in cultures where the sport is less popular.
Neologisms involve terms that have come into language relatively recently as technology or society involved. With the proliferation of computer technology, for example, the idea of an “add-on” became widely known. It may take longer for such terms to “diffuse” into other regions of the world. In parts of the World where English is heavily studied in schools, the emphasis is often on grammar and traditional language rather than on current terminology, so neologisms have a wide potential not to be understood.
Slang exists within most languages. Again, regional variations are common and not all people in a region where slang is used will necessarily understand this. There are often significant generation gaps in the use of slang.
Writing patterns, or the socially accepted ways of writing, will differs significantly between cultures.
In English and Northern European languages, there is an emphasis on organization and conciseness. Here, a point is made by building up to it through background. An introduction will often foreshadow what is to be said. In Romance languages such as Spanish, French, and Portuguese, this style is often considered “boring” and “inelegant.” Detours are expected and are considered a sign of class, not of poor organization. In Asian languages, there is often a great deal of circularity. Because of concerns about potential loss of face, opinions may not be expressed directly. Instead, speakers may hint at ideas or indicate what others have said, waiting for feedback from the other speaker before committing to a point of view.
Because of differences in values, assumptions, and language structure, it is not possible to meaningfully translate “word-for-word” from one language to another. A translator must keep “unspoken understandings” and assumptions in mind in translating. The intended meaning of a word may also differ from its literal translation. For example, the Japanese word “hai” is literally translated as “yes.” To Americans, that would imply “Yes, I agree.” To the Japanese speaker, however, the word may mean “Yes, I hear what you are saying” (without any agreement expressed) or even “Yes, I hear you are saying something even though I am not sure exactly what you are saying.”
Differences in cultural values result in different preferred methods of speech. In American English, where the individual is assumed to be more in control of his or her destiny than is the case in many other cultures, there is a preference for the “active” tense (e.g., “I wrote the marketing plan”) as opposed to the passive (e.g., “The marketing plan was written by me.”)
Because of the potential for misunderstandings in translations, it is dangerous to rely on a translation from one language to another made by one person. In the “decentring” method, multiple translators are used.
The text is first translated by one translator—say, from German to Mandarin Chinese. A second translator, who does not know what the original German text said, will then translate back to German from Mandarin Chinese translation. The text is then compared. If the meaning is not similar, a third translator, keeping in mind this feedback, will then translate from German to Mandarin. The process is continued until the translated meaning appears to be satisfactory.
Different perspectives exist in different cultures on several issues; e.g.:
Monochromic cultures tend to value precise scheduling and doing one thing at a time; in polychromic cultures, in contrast, promptness is valued less, and multiple tasks may be performed simultaneously. (See text for more detail).
Space is perceived differently. Americans will feel crowded where people from more densely populated countries will be comfortable.
Symbols differ in meaning. For example, while white symbols purity in the U.S., it is a symbol of death in China. Colours that are considered masculine and feminine also differ by culture.
Americans have a lot of quite shallow friends toward whom little obligation is felt; people in European and some Asian cultures have fewer, but more significant friends. For example, one Ph.D. student from India, with limited income, felt obligated to try buying an airline ticket for a friend to go back to India when a relative had died.
In the U.S. and much of Europe, agreements are typically rather precise and contractual in nature; in Asia, there is a greater tendency to settle issues as they come up. As a result, building a relationship of trust is more important in Asia, since you must be able to count on your partner being reasonable.
In terms of etiquette, some cultures have more rigid procedures than others. In some countries, for example, there are explicit standards as to how a gift should be presented. In some cultures, gifts should be presented in private to avoid embarrassing the recipient; in others, the gift should be made publicly to ensure that no perception of secret bribery could be made.
Kotler observed that human behaviour is largely the result of a learning process and as such individuals grow up learning a set of values, perceptions, preferences and behaviour patterns as the result of socialisation both within the family and a series of other key institutions. From this we develop a set of values, which determine and drive behavioural patterns to a very large extent.
According to Schiffman and Kanuk, values include achievement, success, efficiency, progress, material comfort, practicality, individualism, freedom, humanitarianism, youthfulness and practicality. This broad set of values is then influenced by the subcultures like nationality groups, religious groups, racial groups and geographical areas, all of which exhibit degrees of difference in ethnic taste, cultural preferences, taboos, attitudes and lifestyle.
The influence of subcultures is subsequently affected by social stratification or social class, which acts as a determinant of behaviour. Social class is determined by a series of variables such as occupation, income, education and values rather than by a single variable. People within a particular social class are more similar than those from different social classes, but they can move from one social class to another in due time and circumstances.
Cultural factors consist of a) Culture, b) Sub culture and c) Social class.
a) Culture: Culture is the most fundamental determinant of a person’s want and behaviour. The growing child acquires a set of values, perception preferences and behaviours through his or her family and other key institutions. Culture influences considerably the pattern of consumption and the pattern of decision-making. Marketers have to explore the cultural forces and have to frame marketing strategies for each category of culture separately to push up the sales of their products or services. But culture is not permanent and changes gradually and such changes are progressively assimilated within society.
Culture is a set of beliefs and values that are shared by most people within a group. The groupings considered under culture are usually relatively large, but at least in theory a culture can be shared by a few people. Culture is passed on from one group member to another, and in particular is usually passed down from one generation to the next; it is learned, and is therefore both subjective and arbitrary.
The differences in tastes are explained by their respective cultures rather than by some random differences in taste between individuals; the behaviours are shared by people from a particular cultural background.
Language is also particularly culturally biased. Even when a language is shared across cultures, there will be differences according to the local culture; differences between Hindi accents and choice of words of various places like Mumbai, Delhi or Bihar are clearly understandable.
While cultural generalities such as these are interesting and useful, it would be dangerous to make assumptions about individuals from other countries based on the kind of general findings in Hofstadter’s work. Individuals from within a culture differ more than do the cultures from each other: in other words, the most individualistic Indian is a great deal more individualistic than the most conformist American. Having said that, such generalisations are useful when approaching mass markets and are widely used when planning mass advertising campaigns such as; TV commercials.
Culture can change over a period of time, although such changes tend to be slow, since culture is deeply built into people’s behaviour. From a marketing viewpoint, therefore, it is probably much easier to work within a given culture than to try to change it.
b) Sub-Culture: Each culture consists of smaller sub-cultures that provide more specific identification and socialisation for their members. Sub-culture refers to a set of beliefs shared by a subgroup of the main culture, which include nationalities, religions, racial groups and geographic regions. Many sub-Cultures make up important market segments and marketers have to design products and marketing programs tailored to their needs.
Although this subgroup will share most of the beliefs of the main culture, they share among themselves another set of beliefs, which may be at odds with those held by the main group. For example, Indians are normally seen as orthodox, conservative people, but rich, up-market youths do not hesitate to enjoy night parties with liquor and women. Another example is that, the urban educated or upper class exhibits more trace of individualism although Indian culture is mostly collective in nature.