Meaning

The marketing environment refers to all internal and external factors, which directly or indirectly affects the organization’s decisions related to marketing activities. 

Internal factors are within the control of an organization; whereas, external factors do not fall within its control. 

The external factors include government, technological, economical, social, and competitive forces; whereas, organization’s strengths, weaknesses, and competencies form the part of internal factors. 

Micro Environment

Micro environment refers to the environment, which is closely linked to the organization, and directly affects organizational activities. 

It can be divided into supply side and demand side environment. Supply side environment includes the suppliers, marketing intermediaries, and competitors who offer raw materials or supply products. 

Let us discuss the micro environment forces in the following points: 

1. Suppliers: It provides raw material to produce goods and services. Suppliers can influence the profit of an organization because the price of raw material determines the final price of the product. Organizations need to monitor suppliers on a regular basis to know the supply shortages and change in the price of inputs.

2. Marketing Intermediaries: It helps organizations in establishing a link with customers. They help in promoting, selling, and distributing products. 

Marketing intermediaries include the following: 

Resellers: It purchases the products from the organizations and sell to the customers. Examples of resellers are wholesalers and retailers. 

Distribution Centers: It helps organizations to store the goods. A warehouse is an example of distribution center. 

Marketing Agencies: It promotes the organization’s products by making the customers aware about benefits of products. An advertising agency is an example of marketing agency. 

Financial Intermediaries: It provides finance for the business transactions. Examples of financial intermediaries are banks, credit organizations, and insurance organizations

3. Customers: Customers buy the product of the organization for final consumption. The main goal of an organization is customer satisfaction. The organization undertakes the research and development activities to analyze the needs of customers and manufacture products according to those needs.

4. Competitors: It helps an organization to differentiate its product to maintain position in the market. Competition refers to a situation where various organizations offer similar products and try to gain market share by adopting different marketing strategies. 

Macro Environment

Macro environment involves a set of environmental factors that is beyond the control of an organization. These factors influence the organizational activities to a significant extent. Macro environment is subject to constant change. The changes in macro environment bring opportunities and threats in an organization

Let us discuss these factors in details: 

i. Demographic Environment: 

Demographic environment is the scientific study of human population in terms of elements, such as age, gender, education, occupation, income, and location. It also includes the increasing role of women and technology. These elements are also called as demographic variables. Before marketing a product, a marketer collects the information to find the suitable market for the product.

Demographic environment is responsible for the variation in the tastes and preferences and buying patterns of individuals. 

The changes in demographic environment persuade an organization to modify marketing strategies to address the altering needs of customers. 

ii. Economic Environment: 

Economic environment affects the organization’s costs structure and customers’ purchasing power. The purchasing power of a customer depends on the current income, prices of the product, savings, and credit availability. 

The factors economic environment is as follows: 

Inflation: It influences the customers’ demand for different products. For example, higher petrol prices lead to a fall in demand for cars. 

Interest Rates: It determines the borrowing activities of the organization. For example, increase in interest rates for loan may lead organizations to cut their important activities. 

c. Unemployment: It leads to a no income state, which affects the purchasing power of an individual. 

d. Customer Income: It regulates the buying behavior of a customer. The change in the customer’s income leads to changed spending patterns for the products, such as food and clothing. 

e. Monetary and Fiscal Policy: It affects all the organizations. The monetary policy stabilizes the economy by controlling the interest rates and money supply in an economy; whereas, fiscal policy regulates the government spending in various areas by collecting the revenue from the citizens by taxing their income.

iii. Natural Environment: Natural environment consists of natural resources, which are needed as raw materials to manufacture products by the organization. The marketing activities affect these natural resources, such as depletion of ozone layer due to the use of chemicals. The corrosion of the natural environment is increasing day-by-day and is becoming a global problem. 

iv. Socio-Cultural Environment: 

Socio-cultural environment comprises forces, such as society’s basic values, attitudes, perception, and behavior. 

These forces help in determining that what type of products customers prefer, what influences the purchase attitude or decision, which brand they prefer, and at what time they buy the products. 

The socio-cultural environment explains the characteristics of the society in which the organization exists. 

The analysis of socio-cultural environment helps an organization in identifying the threats and opportunities in an organization. For example, the lifestyles of people are changing day-by-day. 

Now, the women are perceived as an active earning member of the family. If all the members of a family are working then the family has less time to spend for shopping. 

This has led to the development of shopping malls and super markets, where individuals could get everything under one roof to save their time.

v. Technological Environment: 

Technology contributes to the economic growth of a country. It has become an indispensible part of our lives. 

Organizations that fail to track ongoing technological changes find it difficult to survive in today’s competitive environment. 

Technology acts as a rapidly changing force, which creates new opportunities for the marketers to acquire the market share.

 Marketers with the help of technology can create and deliver products matching the life style of customers. 

Thus, marketers should observe the changing trends in technology.

vi. Political and Legal Environment: 

Political and legal environment consists of legal bodies and government agencies that influence and limit the organizations and individuals. 

Every organization should take care of the fact that marketing activities should not harm the political and legal environment prevailing in a country.

The political and legal environment has a serious impact on the economic environment of a country.

Consumer Behaviour

Buyer behavior refers to the decision and acts people undertake to buy products or services for individual or group use. It’s synonymous with the term “consumer buying behavior,” which often applies to individual customers in contrast to businesses.

Buyer behavior is the driving force behind any marketing process. Understanding why and how people decide to purchase this or that product or why they are so loyal to one particular brand is the number one task for companies that strive for improving their business model and acquiring more customers. 

Consumer Behaviour is the analysis of the individual’s responses and approaches to fascinate their wants and desires. It involves procedure by which consumers acknowledge their utilization issue, seeks for information, classify options feasible in the market, build a conclusion and select a product, utilize and adapt the product for comfort and pleasure.

Characters Affecting Consumer Behavior

Consumer behavior can be influenced by a wide range of factors, including psychological, social, cultural, and economic elements. Here are some key characters that can affect consumer behavior:

  1. Psychological Factors:
  • Perception: How consumers interpret information and stimuli can significantly impact their purchasing decisions.
  • Motivation: The needs, desires, and goals of individuals can drive their behavior as consumers.
  • Attitudes and Beliefs: Consumer attitudes and beliefs about products, brands, and companies can influence their choices.
  • Personality: Individual characteristics and traits can affect consumer preferences and decision-making processes.

2. Social Factors:

  • Family: Family dynamics, roles, and influence can shape consumer behavior, especially in purchasing decisions related to household products.
  • Reference Groups: People often look to reference groups (such as peers, colleagues, or social media influencers) for guidance and validation in their purchasing decisions.
  • Culture: Cultural values, norms, and traditions impact consumer preferences, tastes, and behaviors.
  • Social Class: Socioeconomic status can influence consumer behavior, with individuals from different social classes exhibiting distinct consumption patterns.

3. Personal Factors:

  • Demographics: Variables such as age, gender, income, occupation, education, and marital status can impact consumer behavior.
  • Lifestyle: Consumer lifestyles, including interests, activities, and opinions, affect their product choices and brand preferences.
  • Values: Personal values and ethics influence consumer decision-making, particularly in purchases related to social responsibility and sustainability.

4. Economic Factors:

  • Income: Disposable income and purchasing power determine consumers’ ability to buy goods and services.
  • Price Sensitivity: Consumers’ sensitivity to changes in prices affects their buying decisions and brand choices.
  • Economic Conditions: Economic indicators such as inflation, unemployment, and economic growth impact consumer confidence and spending habits.

5. Cognitive Factors:

  • Learning: Consumer learning from past experiences, advertising, and marketing efforts shapes their behavior and preferences.
  • Memory: Memory of past experiences with products, brands, and companies influences future purchasing decisions.
  • Decision-Making Processes: Cognitive processes such as problem-solving, decision heuristics, and decision-making biases affect consumer choices.

6. Environmental Factors:

  • Physical Environment: Factors such as store layout, ambiance, and atmosphere influence consumer perceptions and behavior.
  • Technological Environment: Technological advancements and innovations impact consumer behavior, especially in e-commerce and digital marketing.

Understanding these characters and their interactions can help businesses develop effective marketing strategies and tailor their offerings to meet the needs and preferences of consumers.

Types of Buying Behaviour

Consumer buying behavior can vary significantly depending on various factors such as the type of product or service being purchased, individual preferences, and situational influences. Here are some common types of buying behavior:

  1. Routine Buying Behavior:
  • This type of behavior involves low involvement and frequent purchases of low-cost items. Consumers typically have established brand preferences, and the decision-making process is quick and habitual. Examples include everyday groceries, toiletries, and basic household items.

2. Limited Decision-Making Buying Behavior:

  • Consumers engage in limited decision-making when purchasing products that are moderately important to them but don’t require extensive research or evaluation. They may consider a few brands or alternatives before making a decision. Examples include clothing, small appliances, and electronics.

3. Extensive Decision-Making Buying Behavior:

  • This type of behavior occurs when consumers are making significant purchases that involve high financial or personal risk. Consumers engage in extensive research, compare multiple options, and carefully evaluate features, benefits, and prices before making a decision. Examples include cars, houses, and expensive electronics.

4. Impulse Buying Behavior:

  • Impulse buying occurs when consumers make unplanned purchases based on sudden urges or emotions, often without much consideration of the consequences. Impulse purchases are typically driven by factors such as product displays, promotions, or emotional triggers. Examples include snacks at the checkout counter, fashion accessories, and novelty items.

5. Variety-Seeking Buying Behavior:

  • Consumers exhibiting variety-seeking behavior are constantly looking for new experiences and alternatives. They may switch between brands or try different products within a category to satisfy their desire for novelty and variety. This behavior is common in industries where there are many options available, such as food, beverages, and personal care products.

6. Brand Loyalty Buying Behavior:

  • Brand-loyal consumers consistently purchase the same brand or product over time, often out of a strong emotional connection, trust, or satisfaction with the brand. They may be less responsive to marketing efforts from competitors and more resistant to switching brands. Examples include loyal customers of certain smartphone brands, coffee chains, or clothing labels.

7. Situational Buying Behavior:

  • Consumer behavior can also be influenced by situational factors such as time pressure, mood, or specific occasions. For example, consumers may make different purchasing decisions when shopping for a gift, during holidays, or when they have limited time.

Understanding these various types of buying behavior can help businesses tailor their marketing strategies, product offerings, and customer experiences to better meet the needs and preferences of different consumer segments.

Consumer Buying Decision Process

The consumer buying decision process in marketing can be summarized in five stages:

  1. Problem Recognition:
  • This is when a consumer recognizes a need or problem, which can be triggered by internal factors (such as hunger or boredom) or external factors (like advertising or recommendations).

2. Information Search:

  • Once the need is recognized, the consumer seeks information about potential solutions. This can involve gathering information from various sources, such as friends, family, reviews, or conducting online research.

3. Evaluation of Alternatives:

  • The consumer evaluates different options available in the market based on factors like price, quality, brand reputation, and features. They may compare products or services to determine the best fit for their needs and preferences.

4. Purchase Decision:

  • After evaluating alternatives, the consumer makes a decision to purchase the chosen product or service. This decision can be influenced by various factors, including price, availability, and personal preferences.

5. Post-Purchase Evaluation:

  • After making the purchase, the consumer evaluates their satisfaction with the product or service. If satisfied, they are likely to become repeat customers and may even recommend the product to others. If dissatisfied, they may seek alternatives or express their dissatisfaction through feedback or returns.

Understanding these stages helps marketers develop strategies to influence consumer behavior at each step of the buying process, from creating awareness to fostering loyalty and advocacy.

Buying Decision Process for New Product

When consumers are considering purchasing a new product, the buying decision process typically involves several stages:

  1. Awareness and Interest:
  • Consumers become aware of the new product through various channels such as advertising, social media, word-of-mouth, or product launches. They develop an initial interest in the product based on its features, benefits, and how well it meets their needs or desires.

2. Information Search:

  • Once consumers are interested in the new product, they seek more information to understand its capabilities, uses, pricing, and availability. They may research online, read reviews, visit stores for demonstrations, or consult with friends and family who have experience with the product.

3. Evaluation of Alternatives:

  • Consumers compare the new product with alternatives available in the market. This may involve assessing competing products based on factors such as quality, price, brand reputation, features, and suitability for their specific needs.

4. Trial and Consideration:

  • Some consumers may engage in trial or demonstration of the new product before making a purchase decision. This could involve sampling, test-drives, or experiencing the product in-store. Trial helps consumers assess the product’s performance and fit with their expectations.

5. Purchase Decision:

  • After careful consideration, consumers make the decision to purchase the new product. Factors influencing this decision may include affordability, perceived value, urgency, and overall satisfaction with the product compared to alternatives.

6. Post-Purchase Evaluation:

  • Following the purchase, consumers evaluate their satisfaction with the new product based on its performance, quality, durability, and overall experience. Positive experiences may lead to repeat purchases and positive word-of-mouth, while negative experiences could result in returns, complaints, or negative reviews.

Throughout this process, marketers play a crucial role in providing relevant information, creating awareness, building excitement, and addressing consumer concerns to facilitate the adoption of the new product. Effective communication, education, and customer support can help guide consumers through each stage of the buying decision process and foster long-term satisfaction and loyalty.

Business Buying Behaviour

Business buying behavior, also known as organizational buying behavior, refers to the process by which organizations or businesses make purchase decisions to acquire goods, services, or solutions to meet their operational needs or achieve their strategic objectives. Unlike consumer buying behavior, which involves individual consumers making purchases for personal use, business buying behavior involves complex decision-making processes that consider various factors. Here are the key characteristics and components of business buying behavior:

  1. Rational Decision-Making:
  • Business buying decisions are typically rational and objective, driven by factors such as cost-effectiveness, quality, reliability, and performance. These decisions are often based on thorough analysis and evaluation of alternatives.

2. Complex Decision-Making Process:

  • Business buying decisions involve multiple stakeholders and departments within the organization, each with its own requirements, preferences, and evaluation criteria. The decision-making process may be lengthy and involve extensive research, consultations, and negotiations.

3. Buyer-Seller Relationships:

  • Business buyers often develop long-term relationships with suppliers and vendors based on trust, reliability, and mutual benefit. These relationships can influence buying decisions, with a focus on value-added services, customization, and ongoing support.

4. Professional Purchasing:

  • Business buying decisions are usually made by professional buyers or procurement teams who have expertise in evaluating suppliers, negotiating contracts, and managing supplier relationships. These buyers are trained to optimize purchasing decisions to achieve organizational objectives.

5. Group Decision-Making:

  • Buying decisions in organizations are often made by cross-functional teams or committees representing different departments and interests. These teams collaborate to assess needs, identify solutions, and make collective decisions that align with organizational goals.

6. Strategic Considerations:

  • Business buying behavior is influenced by strategic objectives, market conditions, industry trends, and competitive dynamics. Organizations may prioritize factors such as innovation, sustainability, risk management, and supplier diversity in their purchasing decisions.

7. Supplier Evaluation and Selection:

  • Businesses rigorously evaluate and select suppliers based on criteria such as price, quality, delivery capabilities, financial stability, technical expertise, and alignment with corporate values. Supplier performance and reliability are critical considerations in supplier selection.

8. Negotiation and Contractual Agreements:

  • Negotiation plays a significant role in business buying behavior, with buyers and sellers engaging in discussions to agree on terms, pricing, delivery schedules, and contractual obligations. Formal contracts are often used to document agreements and ensure compliance.

Understanding business buying behavior is essential for suppliers and marketers seeking to engage with business customers effectively. By recognizing the complexities and dynamics of the business buying process, organizations can tailor their offerings, marketing strategies, and customer relationships to meet the needs and expectations of business buyers.

Business Buying Process

The business buying process, also known as the organizational buying process, involves several stages that organizations go through when making purchase decisions to acquire goods, services, or solutions to support their operations. Here are the key stages of the business buying process:

  1. Identification of Need:
  • The buying process begins when an organization identifies a need or requirement for a particular product, service, or solution. This need may arise from changes in market demand, technological advancements, operational inefficiencies, or strategic objectives.

2. Problem Recognition:

  • Once the need is identified, the organization acknowledges that there is a problem or opportunity that needs to be addressed. This stage involves assessing the gap between the current state and the desired state, and recognizing the implications of not addressing the need.

3. Specification of Requirements:

  • The organization defines and specifies the requirements and criteria for the desired product, service, or solution. This includes detailing the technical specifications, performance standards, quality expectations, and other specific features or attributes needed to meet the identified need.

4. Search for Potential Suppliers:

  • Organizations conduct a search for potential suppliers or vendors who can fulfill their requirements. This may involve researching existing suppliers, seeking recommendations, issuing requests for proposals (RFPs) or requests for quotations (RFQs), and exploring new sources through trade shows, industry events, or online platforms.

5. Proposal Evaluation and Supplier Selection:

  • Suppliers submit proposals or bids in response to the organization’s requirements. The organization evaluates these proposals based on criteria such as price, quality, reliability, technical capabilities, past performance, and compatibility with organizational objectives. After thorough evaluation, the organization selects the supplier(s) that best meet its needs.

6. Negotiation and Contracting:

  • Once a supplier is selected, the organization enters into negotiations with the supplier to finalize the terms and conditions of the purchase agreement. This includes negotiating pricing, payment terms, delivery schedules, warranties, service levels, and other contractual provisions. Both parties work towards reaching a mutually beneficial agreement.

7. Order Placement:

  • After negotiations are concluded and the terms are agreed upon, the organization places an order with the chosen supplier(s). This involves formalizing the purchase order, specifying quantities, delivery dates, and any other relevant details, and transmitting it to the supplier for processing.

8. Delivery and Performance Monitoring:

  • The supplier delivers the ordered goods, services, or solutions according to the agreed-upon terms and conditions. The organization monitors the supplier’s performance to ensure compliance with the contract, including adherence to quality standards, on-time delivery, and resolution of any issues or discrepancies that may arise.

9. Feedback and Evaluation:

  • After the purchase is completed, the organization gathers feedback from relevant stakeholders to evaluate the supplier’s performance and the overall effectiveness of the purchase decision. Lessons learned from the buying process are used to inform future purchasing decisions and improve procurement practices.

By understanding and effectively managing each stage of the business buying process, organizations can streamline their procurement activities, mitigate risks, maximize value, and ultimately achieve their strategic objectives.

Check out other notes on marketing:

Unit -1 Introduction To Marketing

Unit-2 Marketing Analysis

Unit-3 Market Segmentation

Unit-4 Products, Services and Brands

Unit -5 Pricing

Unit-6 Distribution Channel and Logistics

Unit-7 Promotion

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