Understanding Markets, Market Demand, and the Marketing Environment

Importance of Marketing
Marketing is important to business because of the following five reasons:
1. Slow sales growth.
2. Decline in sales.
3. Change in customer buying preferences.
4. Increase in competitions in the market
5. Increase in business expenditures.
Financial Success often depends on marketing ability. All business functions will not
really matter if there is no sufficient demand for products and services. Companies at
greatest risk are those that fail to carefully monitor their customers and competitors. Skilful
marketing is a never-ending pursuit.
Needs, Wants, and Demands
Needs- Needs are the basic human requirements (food, air, water, clothing and shelter +
recreation, education, and entertainment)
Wants- Needs become wants when they are directed to specific objects, and are shaped by
one’s society
Demands- Demands are wants for a specific product backed by an ability to pay
Five types of needs
• Stated Needs
• Real Needs
• Unstated needs
• Delight needs
• Secret Needs
• What is marketing?
Marketing deals with identifying and meeting human and social needs. It means
“meeting needs profitably". American Marketing Association’s formal definition of
Marketing: Marketing is an organizational function and a set of processes for creating,
communicating, and delivering value to customer and for managing customer
relationships in ways that benefit the organization and its stakeholders.
– Marketing Management- the art and science of choosing target markets and
getting, keeping, and growing customers through creating, delivering, and
communicating superior customer value
 – Social definition: Marketing is a societal process by which individuals and
groups obtain what they need and want through creating, offering, and freely
exchanging products and services of value with others
– Managerial definition: “the art of selling products”
The Production Concept
– Consumers will prefer products that are widely available and inexpensive . Focus:
achieving high production efficiency, low costs, and mass distribution. It is useful
when (1) the demand for a product exceeds the supply; (2) the product’s cost is too
high. Examples: Standard Raw Materials and Components, CD, LCD.
The Product Concept
– Consumers will favor those products that offer the most quality, performance, or
innovative features. Focus: making superior products and improving them over time.
Examples: Digital Camera, CPU.
The Selling Concept
– Consumers and businesses, if left alone, will ordinarily not buy enough of
organization’s products. Focus: undertake an aggressive selling and promotion effort.
Examples: unsought goods: encyclopedias, funeral plots, foundations.
The Marketing Concept
– The key to achieving its organizational goals consists of the company being more
effective than competitors in creating, delivering, and communicating superior
customer value to its chosen target markets.
Difference between the Sales Concept and the Marketing Concept:
The Societal Concept
A principle of enlightened marketing that holds that a company should make good
marketing decisions by considering consumers’ wants and Society’s welfare as a whole. Ex.
Padega India Tabhi to Badhega India Campaign from P&G, Classmate Notebooks from ITC,
etc

EIGHT DIFFERENT DEMAND STATES IN MARKETING:

1. Negative demand - Conversional Marketing

Which is created if the product is disliked in general. The product might be

beneficial but the customer does not want it. For example – Dental work where
people don’t want problems with their teeth and use preventive measures to avoid the
same.
2. Nonexistent demand – Stimulation Marketing

Consumers may be unaware of or uninterested in the product. For example-

College students may not be interested in a foreign language course.
3. Latent demand - Developmental Marketing

Consumers may share a strong need that cannot be satisfied by an existing

product. For example - I want to eat bacon that is really good for me. I want a
computer with a battery that lasts a long time.
4. Declining demand - Remarketing

Consumers begin to buy the product less frequently or not at all. For example
- Packaged drinking water. People have begun to prefer tap water as it is more
environment friendly.
5. Irregular demand - Synchro Marketing

Consumer purchases vary on a seasonal, monthly, weekly, daily or even hourly

basis. For example - seasonal products like umbrellas, air conditioners or resorts .
6. Full demand -Maintenance Marketing

Consumers are adequately buying all products put into the marketplace. For
example - Medicine always have full demand.
7. Overfull demand - Demarketing
More consumers would like to buy the product than can be satisfied. For
example - food wheat, rice etc.
8. Unwholesome demand -Counter Marketing
 Consumers may be attracted to products that have undesirable social
consequences. For example - cigarette is the most common example of unwholesome
demand as it is harmful to the society but the customers are attracted towards these.
Marketing Environment
The market environment is a marketing term and refers to factors and forces that
affect a firm’s ability to build and maintain successful relationships with customers .
Components of Marketing Environment

Internal Environment
Micro Environment
Macro Environment

Micro Environment
The micro-environment affects the organization directly. It refers to the environment that
most closely linked to the firm. This environment is also not under the full control of
business. The business can influence this environment.
Components of micro environment.
• Customer
Customers are the actual buyer of our goods and services. The company must
study its customer markets closely since each market has its own special
characteristics.
• Supplier
Suppliers are firms and individuals that provide the resources needed by the
company. They are an important link in the company’s overall customer “value
delivery system.”
• Competitor
Conducting competitor analysis is critical for success of the firm. A marketer must
monitor its competitors’ offerings to create strategic advantage
• Marketing Intermediaries
Marketing intermediaries are firms that help the company to promote, sell, and
distribute its goods to final buyers.
I. Reseller
II. Physical distribution firms
III. Marketing service agencies
IV. Financial intermediaries
 • Public
A public is any group that has an actual or potential interest in or impact on an
organization’s ability to achieve its objectives. A company should prepare a marketing
plan for all of their major publics.
Public Group
I. Financial
II. Government
III. Media
IV. Local
V. General
VI. Citizen
VII. Internal

Macro environment
The macro environment is less controllable. The macro environment consists of much
larger wide-ranging influences (which impact the microenvironment) from the broader global
society. Here we would consider culture, political issues, technology, the natural
environment, economic issues and demographic factors amongst others.
Factors affecting Macro environment
1. POLITICAL FORCES
 2. ECONOMIC FORCES
3. SOCIAL AND CULTURAL FORCES
4. NATURAL FORCES
5. TECHNOLOGICAL FORCES
6. DEMOGRAPHIC FORCES
Political Environmental
• Government actions which affects the operations of a company or business. These
actions may be on local, regional, national or international level. Business
owners and managers pay close attention to the political environment to judge how
government actions will affect their company
Economic environment
• Economic Environment are the economic factors that have effects on the working of
the business. It includes system, policies and nature of an economy, trade cycles,
economic resources, level of income, distribution of income and wealth. It is very
dynamic and complex in nature and does not remain the same.
Social and cultural forces
• Social responsibility has move slowly into the marketing literature as an alternative
to the market concept. Socially responsible marketing is that business firms should
take the lead in eliminating socially harmful products
Natural Forces
• Involves the natural resources that are needed as inputs by marketers or that are
affected by marketing activities.
Technological Environment
• Most dramatic force now shaping our destiny. Changes rapidly. Creates new markets
and opportunities. Challenge is to make practical, affordable products. Safety
regulations result in higher research costs and longer time between conceptualization
and introduction of product.
Demographic Forces
• Demographic data helps in preparing geographical marketing plans, household
marketing plans, age and sex wise plans. It influences behavior of consumers which
in turn will have direct impact on market place. A marketer must communicate with
consumers anticipate problems ,respond to complaints and make sure that the firm
operates properly.