Where does the firm operate?

Needs

Offering (s)

What shapes needs?

Mega trends

Trends

FADS

What shapes needs?

Meaning Fad
whim, craze, hobby, freak, interest with exaggerated zeal, temporary fashion, notion, manner of conduct a direction or sequence of events

Specifics
unpredictable, shortlived, without social, political, economic significance

Example
mirror- effect range of sunglasses; Zapper (beard style) from Dil Chahta Hai

Trend

exhibits more momentum, predictability and durability slow to form, longlasting

health consciousness, upward social mobility age of service sector, Retirement age, Demography

Megatrend

large social, economic, political, technological changes

Major Megatrends towards 2020

Ageing

Urbanization
Globalization Technological Development Health & Environment Prosperity Commercialization Network Organizing Acceleration Individualization

Business Environment

Internal Environment

Business Decision

External Environment

OBJECTIVES
Tracking Trends & Identifying Opportunities in the

Marketing Environments:
Macroenvironment -- BIG Picture Microenvironment -- Closer-In Internal environment -- you & me

9/10/2012

5-7

Types of Environment
Business Environment
External Internal

Environment

Environment

Macro

Micro

BUSINESS ENVIRONMENT
Internal Environment
Competitive/Task /Operating /Micro Environment Macro/ General/ Remote Environment

Internal Environment
Value System Mission and Objective
Culture and Ethics

corporate image, goal strength

Management Structure and Nature Orgnzn.structure, policies, communication Internal power relationship Human resources
Openness, Cooperation Staffing, employee relations, training., turnover, motivation

Company image and brand equity goodwill, intellectual property

Physical assets and facilities
Land, buildings, plant, equipment

R&D and Technological capabilities facilities, MIS, data and information

Marketing resources Financial factors
4 Ps, segmentation investments, credit rating, assets, bottom lines

Business Environment
Internal Environment
Micro Environment Macro Environment

External Environment - Micro

Suppliers Customers Competitors Marketing Intermediaries Financiers Publics
relationship, fwd integration, cost, switching cost past, present, prospective; RFM analysis substitutes, product differentiation, best practices channel partners banks, financial institutions
Power groups, NGOs, opinion leaders, regulators, Media

Competitor Analysis
Who are the competitors of the firm? How are the competitors likely to respond to the strategies of others

What are the current strategies of the competitors?

Where is the competitor vulnerable?

What are their future goals and likely strategies?

What drives the competitor?

Business Environment
Internal Environment Micro Environment Macro Environment

External Environment - Macro

Political / government environment

Legal environment

Global environment

Technological environment

Socio/cultural environment

Demographic environment

Natural Environment

COMPONENTS OF THE MACRO- ENVT.

Demographic
Absolute population Population growth rate Population mix (Age, gender, religion) Literacy & Educational levels Household patterns Income distribution Rural- urban mobility Inter- state migration

Economic
Income levels (GDP) Savings Credit availability Foreign exchange reserves Inflation Propensity to save Import- export position Sectoral growth Capital market Investments

Economic Reforms
The New Economic Policies
Liberalization Measures
New Trade Policy
Macro-Economic Reforms
Lowering of import tariffs abolition of import license A more open EXIM regime Convertibility of rupee Encouragement to foreign investment Integrating Indias economy with the global economy

Marco-Economic Reforms and Structural Adjustments

Structural Adjustments
Phasing out subsidies Dismantling of price controls and introduction of market driven price environment Public sector restructure disinvestment Exit policy

New Industrial Policy

Liberalization of industrial licensing FERA liberalization MRTP liberalization Curtailment of public sector

Fiscal and monetary reforms Banking sector reforms Capital market reforms

COMPONENTS OF THE MACRO- ENVT.

Technological
Innovation and change Breakthroughs Creative destruction Imitation gap Accessibility Spread of usage

Political- legal
Stability Policy framework (business legislation) Special interest groups Strength of the judiciary

Natural factors
Greenhouse effect Global warming Depletion of the ozone layer Impact on the food chain Deforestation Soil erosion Desertification Air pollution from industrial effluents and vehicle emissions Water pollution from raw sewage and runoff of agricultural pesticides

Natural factors
Popularity of green products Reverse logistics Emergence of green parties Corporate environmentalism Consumer Environmental segments:
True black greens- environmental leaders and activists Greenback greens- lack of time; more likely to buy green Sprouts- environmental fence sitters, selective decisions Grousers- unimp. individual behaviour, generally disinterested

Apathetics- no environmental consciousness

Socio- cultural factors

Religious makeup: Hindu 81%, Muslim 13%, Christian 2%, Sikh 1% Main languages: Hindi 41%, Bengali 8.1%, Telugu 7.2%, Marathi 7%,

Tamil 5.9%, Urdu 5%, Gujarati 4.5%, Kannada 3.7%, Malayalam 3.2%, Oriya 3.2%, Punjabi 2.8%, Assamese 1.3%, Maithili 1.2%, other 5.9%. English is also an official language Cultural pluralism Arranged endogamy Patriarchal joint families

Demographic factors

Population: 1.15 billion, about 17% of the world population Growth rate: 1.6% Expected to surpass China by 2030 Expected to reach 1.853 to 2.181 billion by 2100 Age structure: 0-14 years: 31.5% (male 189,238,487/female 172,168,306) 15-64 years: 63.3% (male 374,157,581/female 352,868,003) 65 years and over: 5.2% (male 28,285,796/female 31,277,725) (2008 est.) Median age: total: 25.1 years male: 24.7 years female: 25.5 years (2008 est.) Sex ratio: 1.6 Average life expectancy (m/f): 67/72 Average number of children per mother: 2.9 Maternal deaths per 100,000 live births: 450 Infant deaths per 1,000 births: 76 Population mix: Indo-Aryan 72%, Dravidian 25%, Mongoloid and other 3%

Economic factors
GDP: US$ 1.25 trillion (2007) GDP per head: US$ 978 (nominal), US$ 2, 659 (real)
Agriculture: - 17% Industry: - 29% Service Sector: - 54%

Growth estimated at 7% this year and 6% next GDP up by 6.1% in Q1 of 2009-10 Foreign tourist visitors per year: 3,918,610 Unemployment rate: 6.8% Fiscal deficit: 6.8% (of GDP) Forex reserves in 2009: $267.71 billion

Economic factors
CRR (5%): is the Cash Reserve Ratio (rate) at which banks keep some portion of their deposits with the RBI, to deal with day-to-day operations Repo Rate (4.75%) Reverse Repo Rate (3.25%) SLR (24%): is the Statutory Liquidity Ratio at which banks need to kept short term securities such as Cash, Govt Securities, Precious Metals like Gold and Silver and other short term securities. WTO- TRIPS- TRIMS Prime lending rate (PLR)- 12.75% - 13.25% Savings rate: 3.5% Deposit rate: 7.5- 9.6% Micro- finance and Self help groups Exchange rates: Managed float system

Natural factors

Population expected to grow to 9 billion by 2050 Collective demand: the burning issue

Resource reserves: coal (fourth-largest reserves in the world), iron ore,

manganese, mica, bauxite, titanium ore, chromite, natural gas, diamonds, petroleum, limestone, arable land Land use: arable land: 48.83%; permanent crops: 2.8%; other: 48.37% (2005) Climate: varies from tropical monsoon in south to temperate in north Terrain: upland plain (Deccan Plateau) in south, flat to rolling plain along the Ganges, deserts in west, Himalayas in north Proportion of global carbon emissions: 4.43%

Natural factors

Approximately 45% land degraded Water erosion Soil acidity, alkalinity, salinity Water logging Wind erosion & complex problems

Increasing trend SPM levels Vehicular pollution Industrialisation

Quantitative limits to Water Use consuming 75% utilisable resource Domestic Activities Unsustainable consumption patterns Inadequate sanitation pollution Industrial Activities Unregulated extraction of ground water Discharge of toxic and organic waste water Agricultural Activities Inefficient Irrigation and farming practices Overuse of chemical fertilisers and pesticides

Natural factors

India biodiversity rich With 2.4% global land area has 8% biodiversity wealth One of the 17 mega diverse countries >45,500 plant and 91,000 animal species Mostly in 10% of our land area However rapid loss trends 10% wild flora and fauna in threatened list Many on the verge of extinction Prime Causes Anthropogenic habitat destruction Others poaching and hunting over exploitation of wild bioresources pollution and climate change

over 600 million people have no access to electricity 20 to 40% urban population in slums

Technological factors
Mobile telecom network expected to grow from over 300 million subscribers now to over 400 million by the end of 2009 Lowest worldwide telecom pricing M-marketing : SMS, mobile web, widgets and m-apps Entry of GPS into sub-Rs.10,000 mobile phones and midrange cars. The Energy Star logo will adorn appliances and adapters Green Lighting: Lighting will shift to compact fluorescent lamps (CFL) The car tech of 2009 will centre around fuel efficiency The fuel cell will power some car models The way we interact with devices is changing Cloud computing: companies will want to power their digital business on someone elses servers. Imitation gap

Political- legal factors

Govt. type: Federal republic Three issues dominate the political agenda: the crisis in farming; minority insecurity, with a wave of attacks by Hindus on Muslims and Christians threatening stability; and the rights of dalits, former untouchables who suffered centuries of discrimination separate personal law codes apply to Muslims, Christians, and Hindus Existence of political pressure groups and leaders Maoist insurgency in central and eastern India Repeated strong mandate for ruling party Rise in presence of regional parties

Political- legal factors

Govt. policy: Fiscal, Monetary, Income Literacy levels to be 80% by 2017 Generation of 10-15 th. cr. through disinvestment IT exemption limit raised; Rs50,000 for senior citizens Limit raised by Rs10,000 for tax payers, including women 10% surcharge on personal income tax scrapped Fringe Benefit Tax abolished Funds for housing, amenities for urban poor, up Rs3,973 crore Farm credit target up at Rs3,25,000 crore from Rs2,87,000 crore Interest rates incentive to farmers to repay loans on time Rs100 crore one-time grant to expand banks in unbanked areas Full interest subsidy for students in select institutions. Five lakh students to benefit Unique Identification Card to citizens in 12-18 months Rs2,113 crore allocated for IITs and new IITs