UNIT 1 (a)

INTRODUCTION TO MARKETING
1. Before Marketing, let us understand “MARKET” first.
2. A market is a medium that allows buyers and sellers of a specific
good or service to interact in order to facilitate an exchange.
3. Involves exchanges, Negotiations which can be:-
Face to Face
At certain place
On telephone
Internet/Website
Tele-Marketing
4. Middlemen also play role, facilitate marketing function /
exchange
 Wholesalers
 Retailers
 Dealers / Agent
 Franchises
 E-Tailers
Meaning
 Marketing is about identifying & meeting human and social needs.
 Marketing : process of finding customer needs and serving those
needs profitably.
 Essence of Marketing : providing desired value to customers.
 Goal of Marketing is to attract & retain customers through long-
term satisfaction of their needs.
 Marketing is a group of business activities to create & promote
consumer demand & to direct their flow of goods, services from the
original manufacturers to final consumers through the process of
various levels of distribution
 Marketing Management is the art & science of choosing target
markets & getting, keeping & growing customers through creating,
delivering & communicating superior customer value.
 1. As per American Marketing Association

Marketing is the activity, set of Instructions & processes for

creating, communicating, delivering & exchanging offerings that
have value for customers, clients, partners & society at large.

2. Marketing covers 3 basic activities :-

• Discovery of consumer needs, interests, choices revealing the

marketing opportunities.
• Matching the organizational Resources and limitations, Strengths &
weaknesses with the product demanded by the customers.
• Formulating and implementing marketing mix with the ultimate
goals of profitability for the firm & consumers satisfaction.
 A Simple Marketing System
Communication

Goods/Services
Industry Market
Money

Information
 Marketing communication

Sellers MARKETING – Buyers

THE CIRCLE
OF EXCHANGE
Flow of
Products Flow of
Money

Feedback
-Information
- Satisfaction
- dissatisfaction
Marketing jobs carried out formally by:-

Sales Managers,
Salesmen,
Advertising Managers,
Promotion Managers,
Marketing Managers,
Marketing Researchers,
Customer Service Managers,
Brand Managers,
President-Marketing.
Importance to Society
1. Marketing Helps in Satisfaction of wants:

 Marketing is very helpful in transfer, exchange and movement of

goods. Goods and services are made available to customers
through various intermediaries’ viz., wholesalers and retailers etc.
 Marketing is helpful to both producers and consumers.
 To the former, it tells about the specific needs and preferences of
consumers and to the latter about the products that manufacturers
can offer.
 Thus, marketing has great importance in providing goods necessary
to fulfill human needs.
2. Marketing Is Helpful In Raising And Maintaining The Standard
Of Living Of The Community:

 By making available the uninterrupted supply of goods and services

to consumers at a reasonable price, marketing has played an
important role in raising and maintaining living standards of the
community.
 Community comprises of three classes of people i.e., rich, middle
and poor. Everything which is used by these different classes of
people is supplied by marketing.
 In the modern times, with the emergence of latest marketing
techniques even the poorer sections of society have attained a
reasonable level of living standard.
 This is basically due to large scale production and lesser prices of
commodities and services.
 Marketing has infact, revolutionised and modernised the living
standard of people in modern times.
3. Marketing Creates Employment:

 Marketing is complex mechanism involving many people in one

form or the other.
 The major marketing functions are buying, selling, financing,
transport, warehousing, risk bearing and standardisation, etc.
 In each such function different activities are performed by a large
number of individuals and bodies.
 Thus marketing generates sufficient scope for employment to
thousands of people and improve their income levels.

4. Marketing creates Utility:

 The performance of marketing function is all important, because it
is the only way through which the concern could generate revenue
or income and bring in profits.
 Marketing does provide many opportunities to earn profits in the
process of buying and selling the goods, by creating time, place
and possession utilities.
E.g. Exchange of goods offered creates possession utility while time
utility and place utility is created due to warehousing and
transportation.

5. Marketing Acts create stability :

 In modern times marketing has become a very complex and
tedious task.
 Economic growth depends on economic stability. Economic
stability depends on balance between production
and consumption, i.e. demand and supply.
 To maintain balance in production and consumption marketing is
necessary. Marketing maintains this balance and stabilizes the
economy.
 As a result, producers are depending largely on the mechanism of
marketing, to decide what to produce and sell.
 With the help of marketing techniques a producer can regulate his
production accordingly.
Importance to Organisations
1. Marketing as a Source of Income and Revenue:

 The performance of marketing function is all important, because it

is the only way through which the concern could generate revenue
or income and bring in profits.
 Marketing does provide many opportunities to earn profits in the
process of buying and selling the goods, by creating time, place
and possession utilities.
 This income and profit are reinvested in the concern, thereby
earning more profits in future.
 Marketing should be given the greatest importance, since the
very survival of the firm depends on the effectiveness of the
marketing function.
2. Marketing Acts as a Source of New Ideas:
 The concept of marketing is a dynamic concept. It has changed
altogether with the passage of time.
 Such changes have far reaching effects on production and
distribution.
 With the rapid change in tastes and preference of people,
marketing has to come up with the same.
 Marketing as an instrument of measurement, gives scope for
understanding this new demand pattern and thereby produce and
make available the goods accordingly.
3. Marketing information
 An entrepreneur has to take decisions in an ever-changing
environment.
 Entrepreneurs have to search new products, new customers, new
market, new process of production and so on.
 Producer can collect all this information from various marketing
sources and can introduce changes in their production, and can
survive in the competition.
4. Marketing Acts as a Basis for Making Decisions:
 A businessman is confronted with many problems in the form of
what, how, when, how much and for whom to produce?
 In the past problems was less on account of local markets. There
was a direct link between producer and consumer.
 In modern times marketing has become a very complex and
tedious task. Marketing has emerged as new specialized activity
along with production.
 As a result, producers are depending largely on the mechanism of
marketing, to decide what to produce and sell.
 Hence, “Success” of business and proper decision making are
interdependent and all this is possible due to marketing.
What is Marketed?
 The scope of marketing deals with the question, ‘what is
marketed?’
 According to Kotler, marketing deals with ten types of entities.
1. Goods:
 Physical goods constitute the major part of a country’s production
and marketing effort. Companies market billions of food products,
and millions of cars, refrigerators, television and machines.
2. Services:
 As economies advance, a large proportion of their activities is
focused on the pro­duction of services. Services include the work of
airlines, hotels, car rental firms, beauticians, software
programmers, management consultants, and so on. Many market
offerings consist of a mix of goods and services. For example, a
restaurant offers both goods and services.
3. Events:
 Marketers promote events. Events can be trade shows, company
anniversaries, entertainment award shows, local festivals, health
camps, and so on.
 For example, global sporting events such as the Olympics or
Common Wealth Games are promoted aggressively to both
companies and fans.

4. Experiences:
 Marketers create experiences by offering a mix of both goods and
services.
 A product is promoted not only by communicating features but
also by giving unique and interesting experiences to customers.
 For example, Maruti Cars comes with Bluetooth technology to
ensure connectivity while driving, similarly residential townships
offer landscaped gardens and gaming zones.
5. Persons:
 Due to a rise in testimonial advertising, celebrity marketing has
become a business. All popular personalities such as film stars, TV
artists, and sportspersons have agents and personal managers.
They also tie up with PR agencies for better marketing of oneself
6. Places:
 Cities, states, regions, and countries compete to attract tourists.
Today, states and coun­tries are also marketing places to factories,
companies, new residents, real estate agents, banks and business
associations. Place marketers are largely real estate agents and
builders.
 They are using mega events and exhibitions to market places. The
tourism ministry is also aggressively promoting tourist spots locally
and globally.
7. Properties:
 Properties can be categorized as real properties or financial
properties.
 Real property is the ownership of real estates, whereas financial
property relates to stocks and bonds.
 Properties are bought and sold through marketing.
 Marketing enhances the need of ownership and creates possession
utility. With improving income levels in the economy, people are
seeking better ways of saving money.
 Financial and real property marketing need to build trust and
confidence at higher levels.

8. Organizations:
 Organizations actively work to build image in the minds of their
target public. The PR department plays an active role in marketing
an organization’s image.
 Marketers of the services need to build the corporate image, as
exchange of services does not result in the owner­ship of anything.
 The organization’s goodwill promotes trust and reliability.
 The organization’s image also helps the companies in the smooth
introduction of new products.
9. Information:
 Information can be produced and marketed as a product.
 Educational institutions, encyclopedias, non-fiction books,
specialized magazines and newspapers market information.
 The production, packaging, and distribution of information is a
major industry.
 Media revolution and increased literacy levels have widened the
scope of information marketing.

10. Idea:
 Every market offering includes a basic idea. Products and services
are used as platforms for delivering some idea or benefit.
 Social marketers widely promote ideas. Maruti Udyog Limited
promoted safe driving habits, need to wear seat belts, need to
prohibit children from sitting near the driver’s seat, and so on.
 Nature of Marketing
1. Marketing is an Economic Function
 Marketing embraces all the business activities involved in getting
goods and services , from the hands of producers into the hands
of final consumers.
 The business steps through which goods progress on their way to
final consumers is the concern of marketing.
2. Marketing is a Legal Process by which Ownership Transfers
 In the process of marketing the ownership of goods transfers from
seller to the purchaser or from producer to the end user.
3. Marketing is a System of Interacting Business Activities
 Marketing is that process through which a business enterprise,
institution, or organization interacts with the customers and
stakeholders with the objective to earn profit, satisfy customers,
and manage relationship.
 It is the performance of business activities that direct the flow of
goods and services from producer to consumer or user.
 4. Marketing is a Managerial function
 According to managerial or systems approach – “Marketing is the
combination of activities designed to produce profit through
ascertaining, creating, stimulating, and satisfying the needs and/or
wants of a selected segment of the market.”
 According to this approach the emphasis is on how the individual
organisation processes marketing and develops the strategic
dimensions of marketing activities.
5. Marketing is a social process
 Marketing is the delivery of a standard of living to society.
 According to Cunningham and Cunningham (1981) societal
marketing performs three essential functions:-
 Knowing and understanding the consumer’s changing needs and
wants;
 Efficiently and effectively managing the supply and demand of
products and services; and
 Efficient provision of distribution and payment processing systems.
6. Dynamic Process: Marketing is an ongoing activity which does not
stop at any step. After finding customer’s needs and wants it needs
to develop such products or services which can satisfy these needs
and after this there is need to advertising, promotion, distribution,
etc the process goes on.
7. Customer Oriented: Marketing is customer oriented. Marketing is
the process of finding needs and wants of customers and satisfying
those needs profitably.
8.  Creative: Marketing is creative in nature, it looks out for new ideas,
views and activities and solves problems or encash opportunities in
a creative way.
9. Marketing is an Art and Science
Scope of Marketing
Marketing has a very wide scope it covers all the activities from
conception of ideas to realization of profits. Some of them as
discussed as below:

1. Product Planning: It includes the activities of product research,

marketing research, market segmentation, product development,
determination of the attributes, quantity and quality of the
products.
2. Branding: Branding of products is adopted by many reputed
enterprises to make their products popular among their
customer and for many other benefits. Marketing manager has to
take decision regarding the branding policy, procedures and
implementation programs.
3. Packaging: Packaging is to provide a container or wrapper to the
product for safety, attraction and ease of use and transportation
of the product.
4.     Channels of Distribution: Decision regarding selection of most
appropriate channel of distribution like wholesaling, distribution
and retailing is taken by the marketing manager and sales manager.
5.     Sales Management: Selling is a part of marketing. Marketing
is concerned about all the selling activities like customer
identification, finding customer needs, persuading customer to buy
products, customer service, etc.
6.     Advertising: Advertisement decisions like scope and time of
advertisement, advertisement message, selection of media, etc
comes into marketing.
7.     Finance: Marketing is also concerned about the finance, as for
every marketing activity be it packaging, advertising, sales force
budget is fixed and all the activities have to be completed with in
the limit of that budget.
8.     After Sales services: Marketing covers after sales services given
to customers, maintaining good relationships with customers,
attending their queries and solving their problems.
Core Marketing Concepts
 Philip Kotler, the eminent writer, defines modern marketing as,
“Marketing is social and managerial process by which individuals
and groups obtains what they needs and wants through creating
and exchanging product and value with others.”
 Careful and detailed analysis of this definition necessarily reveals
some core concepts of marketing:
1. Needs, Wants, and Demands
 Most basic concept of fundamental marketing is that of human
needs, wants, and demands.
 Human needs are states of felt deprivation. Marketers did not
create these needs; they are a primary part of the human makeup.
 Basic physical needs for food, clothing, warmth, and safety; social
needs for belonging and affection; and individual needs for
knowledge and self-expression; are needs of human.
 Wants are needs shaped by culture and individual personality.
Every human being requires food but what form they take food is
different dew to cultural and social attributes of an individual.
 One person may like a burger or hot-dog another might like french
fries or rich.
 Individuals’ cultural and social features shape the wants.
 With buying power, wants become demands.
 Needs and wants drive people to demand for products and
services.

2. Market Offerings
 Consumers’ needs and wants are satisfied through market
offerings.
 Market offerings are some combination, mixture, or blend of
physical products, services, information, ideas, or experiences
offered to a market to satisfy a need or a want.
3. Target Markets, Positioning and Segmentation

 Marketers can rarely satisfy everyone in the market.

 So they start with ‘Market segmentation’- To identify and profile
different groups of buyers.
 Target segments present the greatest opportunity – those needs
the firm can meet in a superior fashion.
 For each chosen target market, the firm develops a market
offering, which is positioned as offering some central benefit.
 Marketers view the sellers as constituting the industry and
the buyer as constituting the market.
 Positioning is an effort to influence consumer perception of a
brand or product relative to the perception of competing brands or
products.
 Its objective is to occupy a clear, unique, and advantageous
position in the consumer's mind.
4. Value and Satisfaction

 Consumers usually face a wide-ranging array of products and

services in forms of “market offerings” that might satisfy a certain
need. How do they choose among these many market offerings?
 A customer always forms expectations about the value and
satisfaction that various market offerings will deliver and buy them
for that reason.
 Customer value and customer satisfaction are key building blocks
for developing and managing customer relationships.
 Marketers must be careful to set the right level of expectations.
 Overcooked it or under-cooked market offerings will not help the
marketers capture value in return of the customer satisfaction.
 Satisfied customers will buy again and tell others about their good
experiences on the other hand dissatisfied customers will
eventually switch to competitors and surely demotivate others
from buying the product.
5. Marketing Channels:

 To reach a target market marketer uses three different kinds of

marketing channels:
1. Communication channel: The marketer uses communication
channels to deliver and receive messages from target buyers.
These consist of dialogue channels (newspaper,TV,e mail, toll free
numbers).
2. Distribution channels: To display and deliver the physical product
or service to the buyer or user. They include various trade
channels such as distributors, wholesalers, retailers etc.
3. Service channels: They include the banks and insurance
companies that facilitate transactions along with warehouses,
transportation companies which help to carry to carry out
transactions.
6. Supply Chain

 A supply chain is a network between a company and its suppliers

to produce and distribute a specific product, and the supply chain
represents the steps it takes to get the product or service to the
customer. 
 Supply chain represents a value delivery system.
 When a company moves upstream or downstream, the aim is to
capture a higher percentage of supply chain value.

 Supply chain management is a crucial process, because an

optimized supply chain results in lower costs and a faster
production cycle.
7. Competition:
 Competition includes all the actual and potential rival offerings and
substitutes that a buyer might consider.
 Four levels of competition:
1. Brand competition: Similar products or services to the same
customers at similar prices.
2. Industry competition: All companies making the same product or
the class of product.
3. Form competition: All companies manufacturing the products
that supply the same service.
4. Generic competition: All companies that compete for the same
consumer money.
5. Example: Company – Volkswagen
Brand competition: Honda, Toyota and other medium price
automobiles
Industry competition: All automobile manufacturers
Form competition: Automobiles + Motorcycles + Bicycles + Trucks
Generic competition: Consumer durables + Foreign Vacations +
New Homes
8. Marketing Environment

 Competition represents only one force in the environment in which

the marketer operates.
 The marketing environment consists of the task environment and
the broad environment.
1. The task environment includes the immediate actors involved in
producing, distributing, and promoting the offering.
 The main actors are company, suppliers, distributors, dealers, and
the target customers.
 Included in the supplier group are material suppliers and service
suppliers such as marketing agencies, advertising agencies,
banking and insurance companies, transportation and
telecommunication companies.
 Included with distributors and dealers are agents, brokers,
manufacturer representatives, and others who facilitate finding
and selling to consumers.
2. The broad environment consists of six components:
demographic environment, economic environment, natural
environment, technological environment, political-legal
environment, and social-cultural environment.
 These environments contain forces that can have a major impact
on the actors in the task environment.
 Market actors must pay close attention to the trends and the
developments in these environments and then make timely
adjustments to their marketing strategies.
Company Orientation towards
Marketplace
EVOLUTION OF MARKETING
1) The Production Concept
 The companies who believe in this philosophy think that if the
goods/services are cheap and they can be made available at many
places, there cannot be any problem regarding sale.
 Keeping in mind the same philosophy these companies put in all
their marketing efforts in reducing the cost of production and
strengthening their distribution system.
 In order to reduce the cost of production and to bring it down to
the minimum level, these companies indulge in large scale
production.
 This helps them in effecting the economics of the large scale
production. Consequently, the cost of production per unit is
reduced.
 The utility of this philosophy is apparent only when demand
exceeds supply.
 Its greatest drawback is that it is not always necessary that the
customer every time purchases the cheap and easily available
goods or services.
2. Product Concept

 Those companies who believe in this philosophy are of the opinion

that if the quality of goods or services is of good standard, the
customers can be easily attracted.
 The product concept holds that the consumers will favor products
that offer the most in quality, performance, and innovative
features.
 Under this concept, marketing strategies are focuses on making
continuous product improvements.
 The basis of this thinking is that the customers get attracted
towards the products of good quality.
 On the basis of this philosophy or idea these companies direct
their marketing efforts to increasing the quality of their product.
3. Selling Concept

 Those companies who believe in this concept think that leaving

alone the customers will not help. Instead there is a need to attract
the customers towards them.
 They think that goods are not bought but they have to be sold.
 The basis of this thinking is that the customers can be attracted.
 Keeping in view this concept these companies concentrate their
marketing efforts towards educating and attracting the customers.
 Their aim is to sell what they make rather than make what the
market wants.
 This concept offers the idea that by repeated efforts one can sell-
anything to the customers. This may be right for some time, but
you cannot do it for a long-time.
 If you succeed in enticing the customer once, he cannot be won
over every time.
 On the contrary, he will work for damaging your reputation.
Therefore, it can be asserted that this philosophy offers only a
short-term advantage and is not for long-term gains.
 This approach is applicable in the cases of unsought goods like life
insurance, vacuum cleaner, fire fighting equipments including fire
extinguishers.
4. Marketing Concept
 The marketing concept holds- “achieving organizational goals
depends on knowing the needs and wants of target markets and
delivering the desired satisfactions better than competitors do”.
 Here marketing management takes a “customer first” approach.
 Under the marketing concept, customer focus and value are the
routes to achieve sales and profits.
 The marketing concept is a customer-centered “sense and
respond” philosophy.
 The job is not to find the right customers for your product but to
find the right products for your customers.
 The marketing concept and the selling concepts are two extreme
concepts and totally different for each other.
 In short, it can be said that it is a modern concept and by adopting
it profit can be earned on a long-term basis.
 The drawback of this concept is that no attention is paid to social
welfare.
Difference between Selling Concept and
Marketing Concept
No. The Selling Concept The Marketing Concept
1 undertakes a large-scale selling and undertakes activities such as; market research,
promotion effort
2 The Selling Concept is suitable with The Marketing Concept is suitable for almost
unsought goods—those that buyers do any type of product and market.
not normally think of buying, such as
insurance or blood donations.

3 Focus of the selling concept starts at the Focus of the marketing concept starts at
production level. understanding the market.
4 Any company following selling concept Companies that are following the marketing
undertakes a high risk concept requires to bare less risk and
uncertainty.

5 The Selling Concept assumes –“customers Instead of making assumption, The marketing
who are coaxed into buying the product concept finds out what really the consumer
will like it. Or, if they don’t like it, they requires and acts accordingly to them.
will possibly forget their disappointment
and buy it again later.”

6 The Selling Concept makes poor Marketing concept works on facets gathered by
assumptions. its “market and customer first” approach.
Societal Marketing Concept
 This concept stresses not only the customer satisfaction but also
gives importance to Consumer Welfare/Societal Welfare.
 This concept is almost a step further than the marketing concept.
Under this concept, it is believed that mere satisfaction of the
consumers would not help and the welfare of the whole society
has to be kept in mind.
 The societal marketing concept holds “marketing strategy should
deliver value to customers in a way that maintains or improves
both the consumer’s and society’s well-being”.
 It calls for sustainable marketing, socially and environmentally
responsible marketing that meets the present needs of consumers
and businesses while also preserving or enhancing the ability of
future generations to meet their needs.
 The Societal Marketing Concept puts the Human welfare on top
before profits and satisfying the wants.
 For example, if a company produces a vehicle which consumes less
petrol but spreads pollution, it will result in only consumer
satisfaction and not the social welfare.
 In short, it can be said that this is the latest concept of marketing.
The companies adopting this concept can achieve long-term profit.
 RELATIONSHIP MARKETING (RM)
1. Relationship marketing is about forming long-term relationships
with customers. Rather than trying to encourage a one-time sale,
relationship marketing tries to foster customer loyalty by
providing exemplary products and services.
2. This is different than most normal advertising practices that focus
on a single transaction; watch ad A and buy product B.
3. Relationship marketing, by contrast, is usually not linked to a
single product or offer. It involves a company refining the way
they do business in order to maximize the value of that
relationship for the customer. 
4. Relationship marketing mainly involves the improvement of
internal operations. Many customers leave a company not
because they didn't like the product, but because they were
frustrated with the customer service. If a business streamlines its
internal operations to satisfy all service needs of their customers,
customers will be happier even in the face of product problems.
5. Technology also plays an important role in RM.
Holistic Marketing
 Holistic marketing concept is a part of the series on concepts of
marketing and it can be defined as a marketing strategy which
considers the business as a whole and not as an entity with various
different parts.
 Holistic marketing is an integrative marketing paradigm that
considers the full scope of a business as opposed to narrowly
focusing on the development or execution of particular marketing
activities. 
 “A marketing strategy that is developed by thinking about the
business as a whole, its place in the broader economy and society,
and in the lives of its customers. It attempts to develop and
maintain multiple perspectives on the company’s commercial
activities.” 
 Holistic marketing concept involves interconnected marketing
activities to ensure that the customer is likely to purchase their
product rather than competition.
Example of Holistic marketing concept

 An organization will have different departments like sales and

marketing, accounting and finance, R&D and product development
and finally HR and operations.
 Thus, if you want to implement a holistic marketing concept in
your organization, you need to ensure that R&D and product
development take the feedback from marketing and sales to launch
the product which is most likely to attract customers.
 On the other hand they need to work closely with accounting and
finance to find out the exact budget for the project. Sales and
marketing need to communicate to the HR the right kind of people
that they need, and finally, admin and operations need to devise a
plan to retain these people.
MARKETING ENVIRONMENT
1. Marketing activities are influenced by several factors inside and
outside a business firm.
2. These factors or forces influencing marketing decision-making are
collectively called marketing environment.
3. It comprises all those forces which have an impact on market and
marketing efforts of the enterprise.
4. According to Philip Kotler, marketing environment refers to
“external factors and forces that affect the company’s ability to
develop and maintain successful transactions and relationships
with its target customers”.
5. The firm must be aware of what is going on in its marketing
environment and appreciate how change in its environment can
lead to changing patterns of demand for its products.
6. It also needs to assess marketing opportunities and threats present
in the surroundings.
Importance of Environment Analysis:
1. It helps in marketing analysis.
2. It can assess the impact of opportunities and threats on the
business.
3. It facilitates the company to increase general awareness of
environmental changes.
4. It is possible to develop effective marketing strategies on the basis
of analysis.
5. It helps to capitalize the opportunities rather than losing out to
competitors.
6. It facilitates to understand the elements of the environment.
7. It helps to develop best strategies, in the light of analyzing “what
is going around the company”.
Micro Environment Factors

1. Competitors:
 The competitive environment consists of certain basic things which
every firm has to take note of. No company, howsoever large it may
be, enjoys monopoly. In the original business world a company
encounters various forms of competition. The most common
competition which a company’s product now faces is from
differentiated products of other companies.
 For example, in the Colour Television Market, Philips TV faces
competition from other companies like Samsung, LG, Sony and
others. 
2. Customers:
 According to Peter. F. Drucker, “There is only one valid definition
of business purpose, that is to create a customer.” The business
enterprises aim to earn profit through serving the customer demand.
It now thinks more in terms of profitable sale rather than more sales
volume for its sake. Today marketing of a firm begins and also ends
 Now a days, a business firm to be successful, must find customers for its
products. This is the reason the customers thus constitute the most
important element in the micro environment of business. Products sales
depend mainly on the degree of consumer satisfaction.
 In fact, this is a reason that gives more importance to customer satisfaction
surveys. are individuals, business enterprises, institutions and government.
 From the company’s point of view it is always better to have customer
from various groups and regions for that easily sustains demand for the
company’s product.

3. Suppliers:
 Suppliers are either individuals or business houses. They combined
together; provide resources that are needed by the company. Now the
company necessarily should go for developing specifications, searching
for potential suppliers, identifying and analysing the suppliers and
thereafter choose those suppliers who offer best mix of quality, delivery
reliability, credit, warranties and obviously low cost.
4. Public:
 Literally word ‘public’ refers to people in general. According to Philip
Kotler, “A public is any group that has an actual or potential interest in or
impact on a company’s ability to achieve its objectives.” The
environmentalists, consumer protection groups, media persons and local
people are some of the well-known examples of publics.
 The company has a duty to satisfy the people at large along with
competitors and the consumers. It is an exercise which has a larger impact
on the well-being of the company for tomorrow s stay and growth.
 Creating goodwill among public, helps to get a favourable response for a
company.
5. Marketing Intermediaries:
 Market intermediaries are either individuals or business houses who come
to the aid of the company in promoting, selling and distributing the goods
to the ultimate consumers. They are Middlemen (wholesalers, retailers and
agents), distributing agencies, market service agencies and financial
institutions. Most of the companies find, it is too difficult to reach the
consumers.
 In such a cases the agents and distribution firms help to reach the product
to the consumer.
 Any type of intermediary, the company must take into active
consideration, the following aspects:
(i) The company has also to constantly review the performance of both
middlemen and others helping its efforts periodically. If necessary, it may
take recourse to replacement of those who no longer perform at the
expected level.
(ii) Middlemen come into being to help overcome the discrepancies in
quantities place, time, assortment and possession that would otherwise
exist in a given condition.
(iii) It is advantageous and also efficient to work through the established
Marketing channels instead of creating one and thus going for
experiments.
(iv) The manufacturer has to decide the most cost-effective method of
intermediaries to reach the product to consumer that will help to increase
the profit.
 ECONOMIC ENVIRONMENT
 Economic environment refers to the economic factors and forces that
affect the functioning of the business enterprise.
 The factors that affect the economic environment are :-
i)     Economic policies: The economic policies of the Government (Such as
monetary policy, fiscal policy, foreign policy, taxation policy, industry
policy, licensing policy, labour policy etc) have far reaching effects on the
performance of all business enterprises. A particular policy can create
either an opportunity or a threat to the business enterprise. e.g the liberal
policy of the government relating to the entry of Multinational corporation
in India may be a threat to small scale industries.
ii)  Economic Conditions:- The economic conditions of a country ( such as
availability of various resources, per-capita income, distribution pattern of
income, prices of goods and services, rate of inflation, present state of
economic cycle, rate of capital formation, rate and growth of GNP<
conditions of capital market and stock market etc.) can also influence the
policies of all business enterprises.
 The stage and rate of economic development determine the size of
domestic market affecting the business.
iii)  Economic Systems:  The economic system prevailing in the country
(such as Capitalistic or socialistic or mixed economic system) affects all
business enterprises to a great extent. Economic system determines extent
of control of the Government over the activities of business enterprises.

 The general economic systems are changing rapidly. Governments are

trying to introduce liberalization globalization of business. WTO has been
playing a significant role.  Thus new dimension of economy will boost up
new avenues for business enterprises.
Some Aspects of Economic
Environment:
1. Role of Private and Public sector
2. Rate of growth of GDP, GNP, and Per Capita Income
3. Rate of Saving and Investment
4. Balance of Trade
5. Balance of Payment
6. Transport and Communication System
7. Money Supply in the Economy
8. International Debt
 Socio-Cultural Environment:
 There are many social and cultural factors like- social values and beliefs
of people, traditions , customs and conventions, family structures, literacy
level and education, work culture, awareness  of rights, changing life
styles, society’s expectation from business etc. effect strategies of all
 business concerns.
 For example, celebration of Diwali, Id, Christmas, Guru Parv etc in India
provides significant opportunities for greetings cards and gift
manufacturing companies, sweets and confectionery producers, tailoring
outlets and many related business.
 Similarly demand for branded consumer items is increasing rapidly among
middle and upper-middle class of people. People have become more
conscious of quality and safety of products. Society has become more
environment and health conscious.
 Culture heritage of a particular region determines the types of products to 
be produced and services to be rendered.
Socio-cultural Environment
 Life styles and needs of people are fast changing with the change in
culture and social environment. Business enterprises should
understand cultural preferences and produce goods and services
accordingly.
 Modern life style has increased the demand for fast food industry,
automatic electric appliance and other life style products.
 Growing awareness about health has lead to demand for health
foods, gyms and exercise equipments, yoga and other slimming
centers and  quality of life.
Political Environment

 Political environment constitutes all the factors related to

government affairs such as type of government in power, attitude of
government towards different groups of societies, policy changes
implemented by different governments etc.
 The political environment has immediate and great impact on the
business transactions so businessman must scan this environment
very carefully.
 Some Aspects of Political Environment:

1. Present political system

2. Constitution of the country
3. Profile of political leaders
4. Government intervention in business
5. Foreign policy of government
6. Values and ideology of political parties
Demographic Environment
 Demography is the study of the human population living in an area,
their age, jobs, income, spending habits, ethnicity, gender and so
on.
  In terms of marketing and business, this study of human
population actually leads to an identification of the potential
customers.
 A study of the demographic environment is one of the most used
methods to identify and reach out to potential customers.
 A marketer is, however, required to keep in mind the dynamic
attributes of such an environment and keep updating the data that
is collected on a continuous basis.
 Researchers typically have two objectives in this regard: first, to
determine what segments or subgroups exist in the overall
population; and second, to create a clear and complete picture of the
characteristics displayed by typical members of each segment.
 Once these profiles are constructed, they can be used to develop a
 For eg- Age, is an important consideration for marketers. Age allows
marketers to target products that are relevant to a specific age to the
desired demographic. Data is collected from a variety of points and the
analyzed. In the long run marketers are able to design their marketing
campaigns according to the target age.
 After evaluating the demographic information, determining what segment
or subgroup exists within the population, recommendations are made to
change, increase, decrease or expand on the type of goods
or services offered.
 Marketers data may alter the way or where a product or service is sold in
order to reach a market segment that has the most potential as buyers.
 A demographic profile can be used to determine when and
where advertising should be placed so as to achieve maximum results. 
Legal Environment

Legal environment constitutes the laws and various legislations passed in

the parliament. The businessman cannot overlook the legislations because he
has to perform his business transactions within the framework of legal
environment.
Most of the time legal environments puts constraint on the businessman but
sometimes they provide opportunities also. The common instances of Indian
legal environment which have influenced business transactions recently are:
1. Deregulation of capital market has made it easy for businessman to collect
capital from primary market.
2. Removal of control from the foreign exchange and liberalization in
investment is encouraging foreign investors and NRIs to invest in Indian
capital market.
3. Advertisement of alcoholic product is prohibited.
4. Compulsory to give statutory warning in Tobacco production.
5. Delicencing policy of industries.
Aspects of Legal Environment
1. Various laws and legislative acts.
2. Legal policies related to licensing.
3. Legal policies related to foreign trade.
4. Statutory warnings essential to be printed on label.
5. Foreign Exchange Regulation and Management Act.
6. Laws to keep a check on Advertisements.
 Technological Environment
 Technological environment refers to changes taking place in the method
of production, use of new equipment and machineries to improve, the
quality of product.
 The businessman must closely monitor the technological changes taking
place in his industry because he will have to implement these changes to
remain in the competitive market.
 Internet has provided new opportunities and challenges to every business.
    Retailers have direct link with suppliers who replenish their stocks when
needed.
    Airlines, railways and other modes of transport offer online services to
people for booking and checking seat availability. Banking transactions
can be executed with a click of the mouse.
   Advancement in the field of Engineering products and methods of
production has made it possible to undertake production on a largest
possible scale..
Aspects of Technological Environment
 Invention of smart phones has changed the way businessmen use
their mobile phone for communication and excess their business
links.
   Similarly modern transport system, automatic machines, extensive
research for new sources of energy (Atomic and Solar), bio
technology, improved production processes, collaboration and
transfer of technology between etc can have direct impact on the
working of modern business enterprises.
 ASPECTS OF TECHNOLOGICAL ENVIRONMENT
1. Various Innovations and Inventions.
2. Scientific Improvements.
3. Developments in IT sector
4. Import and Export of Technology.
5. Technological Advances in Computers.