Page 37 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes 1. What demographic trends will affect the market size of the industry?
2. What demographic trends represent opportunities or threats?

Economic Environment

Economic environment determines the strength and size of the market. The purchasing power
in an economy depends on current income, prices, savings, circulation of money, debt and credit
availability. Income distribution pattern determines the marketing possibilities. The important
point to consider is to find out the effect of economic prospects and inflation on the operations
of the firms.

Government Environment

Business is highly guided and controlled by government policies. Hence the type of government
running a country is a powerful influence on business and marketing gets affected.

1. What changes and regulations are possible and what will be their impact?
2. What are the political risks of operating in a governmental jurisdiction?
3. What are the incentives the government may offer that might affect business?
4. What are the taxes and duties that may be levied and might affect business?

Legal Environment

Firms prefer to operate in a country where there is a sound legal system such as in US. Marketers
must have a good working knowledge of the major laws protecting consumers, competitions
and organisations. Laws like MRTP, Consumer Protection Act, Intellectual Property Right, FEMA,
Labour Laws etc., can considerably affect business operations.

Political Environment

Political pressure groups influence and limit organisations e.g., the case of Enron in Maharastra
and KFC in Karnataka. Special interest groups and political action committees put pressure on
business organisations to pay more attention to consumer’s rights, minority rights, and women’s
rights.

Cultural Environment

The beliefs, values and norms of a society determine how individuals and organisations relate
to each other. The core beliefs of a particular society tend to be persistent, as the American value
system of work, charity and honesty. It is difficult for marketers to change these core values,
which have a major bearing on marketing operations in as much as they set the stage for
marketing activity and consumer response.

Technological Environment

The most important factor, which is controlling and changing the human society and even
impacting the future, is technology. Technology has literally transformed the way people think,
work and relax. Man could realise his dream of putting an astronaut on the lunar surface, the
moon, going to the other side of the globe within a few hours, and even exploring the mysteries
of the solar system. With the latest developments in genetic engineering, man is extending the

30 LOVELY PROFESSIONAL UNIVERSITY