What is External Environment Marketing?

External environment in marketing refers to the set of external factors or forces that affect a company’s ability to market its products or services effectively. These external factors can include economic conditions, social and cultural trends, political and legal regulations, technological developments, and competitive pressures from other companies.

Companies, their competitors, and other players in the competitive world operate in the macro world. Decisions take shape in relation to the macro world, as a marketing manager cannot really influence these external, uncontrollable forces.

So, he needs to monitor the external world and try to moderate the effect of these external factors on his business. As we have mentioned, macro-environmental factors are grouped as the demographical, cultural, social, legal and political, economic, natural, and technological environment.

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Factors of External Environment

• Demographical Environment
  
• Cultural Environment
  
• Social Environment
  
• Legal Environment
  
• Political Environment
  
• Economic Environment
  
• Natural Environment
  
• Technological Environment

Demographical Environment

The most important environmental factor that needs proper and continuous monitoring is the demographical environment. Demography is the study of the population and its characteristics. Marketers are always interested in population-related growth indices because the eventual market growth rate, in the long run, depends largely on the growth of the population.

The slowing down of the population growth rate in the European economy has led marketers to look for emerging markets like India and China. Demographical studies reflect the population growth rate in cities, towns, urban areas, and villages, the age distribution of the population, educational level and household patterns, regional characteristics, and migration of the population.

Population growth provides an opportunity only when it is healthy and meaningful. If one evaluates the population growth, we can find that exponential growth is happening in countries where both the government and people can least afford it.

Population growth in sub-Saharan Africa and poor South East Asia are examples where growth has the most adverse impact in the form of malnutrition, higher child and mother mortality rate, and increased percentage of people below the poverty line.

Such growth is neither conducive to the world nor to the country. It has no scope to augment the demand or consumption pattern of such a large number of people in the bottom half of the pyramid. The second concern is related to the level of finite non-renewable resources.

A high level of population growth will fasten the consumption of these resources and the globe will be heading toward a catastrophe. Such uncontrolled growth of the population will lead to an insufficient food supply, depletion of key minerals and useful resources, and an increase in pollution levels.

A growth in population does not mean that the market is growing, because marketers need to see where the growth is happening. It is better to serve markets, which have fewer customers with paying capability than a large-sized, crowded market with few who can really afford to buy.

The high rise in population and subsequent curbing by legislation in countries like China and India offers challenges as well as threats to companies in the form of an increase in demand for certain products at one stage of the life cycle and a slump in another stage of the life cycle due to population squeeze.

The second most important factor is the population mix. If the majority of the population is vibrant and in the workforce, then they contribute towards the country’s growth and have a higher power of consumption, but as the population ages, their demand for products and services gets restricted. Let us take the Japanese population mix.

The percentage of people above sixty can outnumber people below thirty, leading to an imbalance in demographic as well as social dimensions.

A country with a high percentile population below ten will be a good market for children’s products like toys, milk food, dresses, and medicines whereas, for an aging population, demand for products that support digestion, viewing, and mobility and services like nursing and old age care will be high.

So a mix of population and variations in age distribution offers an opportunity for marketers. In the USA, marketers have categorized the population mix with terms like baby boomers, and x-generations. We are also using such kind of categorizations in the Indian market.

Though a market can be characterised by a geographical boundary to be called as a ‘country market’, like Indian market, but in reality it is the sum total of some sub markets identified more closely with the ethnic and language based classifications in India.

Though the Indian market can be characterised with demographic characteristics, but we understand that consumption, lifestyle and habits of people in different states varies significantly, putting pressure on the marketer to localise his offer for each of these markets. A consumer durable company has to offer a festive discount program throughout the year in different parts of the country

Example: During Dussehra in east, Onam in the south, Diwali in the north. Each group has certain wants and needs which evolves over a larger cultural backdrop of that particular state and it may not be evident in other states.

Consumption patterns also vary depending on the education level of the people. People who are educated and aware of their rights and demands will always make a concerted decision, compared to people who are illiterate.

Different educational groups often show different kind of consumption patterns. While it is difficult for clones to survive in a market where people have some level of education, they could survive in the rural heartland of India due to the poor level of education of the people. Literacy level is also another indicator of the population’s involvement in informed choices.

In a country like USA, where their are a large number of educated people, consumption decisions are more on the basis of brands, whereas in a sub Saharan African country, people will be involved in commodity based decision making.

Household patterns explain the family types in a demographic environment. We have seen the rise of nuclear family in urban India where parents with a child or two is the norm. This is not true for rural India where it is a joint family system. In majority of houses, we have seen families with grand parents living together.

A joint family provides economic, social and emotional security whereas nuclear families are more independent in nature. Number of divorces, single parenting and mutual cohabitation without marriage is on the rise in urban India.

Size of the family affects the stock keeping unit size and we have seen a growth of small size, convenience products on the retail shelf to support the claim that families are going smaller in urban India. Household incomes are on a rise due to both husband and wife taking up careers.

This has also led to growth in consumption and use of products and services that provide more convenience to the working women. Market for fast food, restaurants, convenience, packaged and processed food, consumer durables like refrigerators, washing machines and vacuum cleaners are on a rise in India.

The marketing manager should also monitor geographical shifts in population. Over the years, a large number of people have moved out of villages and rural areas to urban India in search of job and better conditions of living.

Rural exodus is a big crisis in a country like India because it affects the civic and urban amenities and results in large-scale exploitation of such a huge unorganised work force. Such exodus also affects the rural economic system.

People started moving out during the lean agricultural seasons and now they are not ready to go back to the rural heartland. This has resulted in growth of slums and crime in the society and poor usage of village resources like land, forest and water reserves.

But with such maladies, there is one key benefit for the marketer. These migrants are responsible for taking urban brands to the rural markets and increasing the awareness level of the rural people towards urban produce. The rural market is on a rise because for people from villages, any urban product is a status symbol. So they will like to posses products and services that will make them more urban.

From the above discussion we can conclude that though a national market looks like a huge market for the marketer it consists of a number of small markets, unique in their characteristics and behaving differently to a marketing program.

These markets are popularly called micro markets. These markets can be differentiated by the geographic location of the customer, age and gender distribution of the customer, lifestyle patterns, household income levels and other relevant demographic characteristics.

Such a micro approach in marketing helps the companies to focus on special market segments and design communications and other media vehicles exclusively for each of these segments. Demographic trends are not as abrupt as technological life cycles and marketers can monitor the demographic trends in market and design marketing offers to suit each target market segments.

Cultural Environment

Of all the environmental influences, cultural influences are subtler yet, far reaching in nature. While it is easier to measure how other environmental factors influence business, it is very difficult to do so for cultural factors.

They influence consumer’s beliefs, values and norms. Culture is the complex whole that includes knowledge, belief, art, morals, laws, custom and any other capabilities and habits acquired by a consumer as a member of the society. It is a distinct way of life of a group of people and their complete design of living.

It is everything that is socially learned and shared by the members of the society. It consists of material artefacts and non-material components. Material artefacts include all the physical substances that have been changed and used by people such as tools, roads, farms, products and services, which are produced and consumed.

Non-material components include the words people speak, the ideas, customs, beliefs and habits, the way customers shop, the desire of consumers for better and newer products and consumer response to sales.

The significance of culture in understanding human behaviour is that it extends our understanding to the extent to which people are more than just chemistry, physiology or a set of biological drives and instincts.

Although customers are biologically similar, their views of the world differ because they act differently due to their cultural background. So consumers with different cultural background influence the decision making process of the marketer.

We are witnessing a big consumption-related Cultural Revolution undergoing in India. The inherited Indian culture is strongly influenced by the western culture due to advent of television and high level of globalisation.

People are using products and services, which are mostly western. These are reflected in our food habits, dressing patterns, choice of fashion garments and also in the way of living. The degree of permissibility has increased substantially after the opening up of economy and the younger generations are found to be more westernised than the older generations.

Growth of multiplexes, large shopping malls, beauty parlours, discos and use of western outfits are examples of how cultural factors can influence the marketing decisions of a firm. Culture has peculiar characteristics. Although we have said that it is inherited but it can undergo changes from one generation to the other as people tend to invent new ways of living.

Marketer needs to understand that every culture has an ideological system, a technical system and an organisational system. An ideological system or mental component consists of ideas, beliefs, values and ways of reasoning that human beings learn to accept in defining what is desirable for them and the society at large.

A technical system consists of skills, crafts and arts that enable humans to produce material goods from natural environment. An organisational system such as family, social class makes it possible for humans to coordinate their behaviour effectively with actions of others.

Since culture is not instinctive, people learn it and marketers slowly try to put a systematic consumption learning system, through advertising and other promotional tools. Culture in itself is gratifying. It satisfies both innate and learned needs.

It consists of habits that will be gratified through practice. Because of this gratification, the habits are handed down from one generation to the other. People tend to learn about consumption from their elders and if elders do not perceive the product to be good enough, it is likely to affect the consumption of the young.

What implications does the cultural environment have on people and hence on the marketing decisions? Let us look at some of the emerging cultural trends and how they have affected our marketing practices.

The increasing search for pleasure, fun and enjoyment means that network ethic is evolving, in which leisure activities will occupy a more important place in people’s lives. New opportunities will continue to open up in travel, entertainment, sports, leisure oriented products, education and information industries.

As people shift their notion about individual rights and responsibilities and increasingly feel that they are entitled to such things as adequate retirement income, comprehensive health care, decent housing, college education, consumerism may be expected to increase giving an opportunity for marketers in these sectors to achieve greater success.

The growing emphasis on self-respect, sense of accomplishment and self-fulfilment, with its focus on inner rather than outer directed satisfaction, means that the consumers want to live life to the fullest. There is an unprecedented degree of interest in spending time, money and effort on maximising looks and feelings of vigour, vitality and well-being.

The ‘back to nature’ or ‘simple is better’ trend has been influential in the rejection of the artificial and acceptance of the natural. This has given a scope for growth of ayurvedic products and herbal products in Indian market.

Technological changes have also influenced the cultural context of consumption. While most of the industrialised nations have moved from a goods consuming to a service consuming culture, rapid changes in the information technology platform and innovations in communication has reduced the time spent for information to travel from producer to consumer.

People have started what we call virtual communities in which they make friendships and start building relationships over Internet. These virtual communities have a strong influence on their purchase processes also.

Another development is a move from materialistic society to post materialistic society, in which people are becoming more sensitive to the physical environment. It has forced marketers to be more sensitive to the environmental issues while designing marketing offers.

Social Environment

Perhaps social environment has maximum direct effect on consumers. Social forces shape consumption habit of people. Let us look at processed food in Indian markets. Due to changes in the lifestyle and more and more women taking up jobs, there is a rising demand for processed and packaged food.

Packaged brands of chicken and other frozen foods are doing well in the Indian market. The societal environment is the marketer’s relationship with society in general. It is an explanation of readiness of society to accept a marketing idea.

Example: Frozen, packed chicken is an acceptable product proposition but frozen beef may not be a good idea on the retail shelf in a large part of India.

Trust and confidence of the public in business as a whole is also influenced by societal impressions. Such relationships have been on the decline since the mid-1960s. Various opinion polls suggest that members of society are slowly losing confidence in major companies.

These declines should be viewed in a perspective that most of the public institutions in India are on a decline. People in government and trade unions are less popular than people in business. The societal environment for marketing has expanded both in scope and importance.

Today no marketer can initiate a strategy without taking the societal environment into account. Marketers should develop awareness on the manner in which the business decision is likely to affect the society.

The constant flux of societal issues requires that marketing managers place more emphasis on solving these questions through marketing than just applying standard marketing tools. Companies have started appointing managers to conduct public policy research and to study changing social environment’s future impact on business.

Of course, there are questions related to methods of measurement on the accomplishment of socially oriented objectives through marketing. A firm that is attuned to its societal environment must develop new ways of evaluating its performance.

Traditional income statements and balance sheets are no longer adequate. We need to develop models of social cost benefit analysis to measure the far-reaching impact of marketing decisions.

The social implications for marketing decisions is often more crucial in the international sphere than in the national market. Marketers must be aware of societal differences in the way that business affairs are conducted in different countries. Taste and consumer behaviour also vary from place to place.

Example: In India, brands like Dettol have a higher impact on people because of its burning sensation, whereas Savlon does well in Europe due to its mild nature. In rural India, black shampoo is preferred more because women feel that black shampoo makes hair look glossier.

Italians drink beer before sleep whereas Germans prefer them during lunch. McDonalds in India launched aloo tikki burgers as a special offer to make its products suitable and appealing to Indian consumers. Maggi noodles are more of a convenient food in Indian market than a staple food. In Italy, a US company that set a corn-processing plant found that its marketing effort failed because Italians think of corn as “pig food”.

Marketers in international business need to recognise societal differences between countries. Indian marketers should also recognise that there is a heterogeneous societal environment prevalent in India because of large geographic and societal variance among Indians.

The food, dressing and lifestyle of a Malayalee, is completely different from that of a person from Haryana. However a marketer needs to look at the commonality first and then make the offer adaptable to a specific geographic market with local adaptations. We can classify Indian markets into a number of sub markets on the basis of geographic location, religion, age, race, gender and other numerous determinants.

Gender, in specific, is another increasingly important societal factor. The feminist movement has had a decided effect on marketing, particularly on advertising and sales promotion. Television commercials feature women in more stereotyped roles than in previous years making it one of the most controversial issues of our times.

Marketers must continually monitor the changes in societal variables to keep the product relevant for the consumers. What seems to be out-of-bounds today may be tomorrow’s greatest market opportunity. We can see this in previously taboo subjects, such as feminine hygiene, offering a big market for sanitary napkins in India.

The marketing manager needs to understand how the consumers react to different products and marketing practices in a social setting. One of the most tragic and avoidable marketing mistakes is the failure of marketing managers to understand and appreciate societal differences within the Indian market.

The rise of consumerism and consumer movement is traced to the increasing public concern with making marketing more responsible towards its larger societal constituents.

Legal Environment

Legal environment also influences marketing decisions. We have understood from previous discussions that overall concern for business is increasing in society. More and more people are losing faith in the business systems. Government plays a great role in moderating the role of business in the society through legislation.

Business is expected to play a decent role and practice fair play but sometimes it is necessary to control business because the major motive of earning profit makes them compromise on the welfare aspect of business.

Although one can argue that in a free market economy, business should be self-regulated but experience of free market economy and roles played by large business houses in the past makes us more skeptic and this puts pressure on government to regulate business.

There has been a growth in number of legislations over a period of time to let the business know that before they play the game, they should learn the rules. Ignorance of the legal environment often results in loss of public life and goodwill and results in fines, embarrassing negative publicity and expensive civil damage suits.

It is an extremely difficult task to understand all the laws related to marketing because of the legislations at multiple levels. There are certain legislations brought at central government level whereas some are practiced differently in different states of India. This is a critical issue related to sales and different kind of taxes.

Though Value Added Tax (VAT) tries to simplify them, but it’s not always possible to bring uniformity in legislation across the states. Traditionally, the pricing and promotion variables have received the most legislative attention.

The idea of a free enterprise society and a free market economy has been gradually changing. At the time of Independence, the prevalent attitude was to control the business whereas post-’90s, they are allowed to act quite freely. In the past very often consumers were duped despite having strict legislation.

As the customers become more aware of their rights and due to the advancement of technology, customers have more offers and also more knowledge of product attributes and prices.

Yet with the increasing complexity of products, growth of big, impersonal businesses, as well as unfair or careless treatment of consumers by a few, the values of society changed and it is still felt that government needs to regulate business for the betterment of society.

Governments at state and central levels have responded with different kinds of legislation to protect consumers, and to attempt to maintain a competitive environment for business.

A bird’s eye view of different kinds of legislation that have been enacted in India to protect the consumer and force business to go for fair play makes us feel that the legislations are not adequate enough to protect the consumer. Laws like Monopoly Restricted Trade Practices (MRTP) and Foreign Exchange Regulation Act (FERA) are dumped in order to promote growth of free enterprise in India.

Business legislation in India can be classified into legislation covering corporate affairs, consumer protection, employee protection, specific sector protection like small scale industry, and protection of companies against hostile take over bids, protection against unhealthy price and distribution practices and related to deceptive advertising.

The legal framework for relationship between business and consumers is designed to encourage a competitive marketing system to employ and adhere to best business practices. Such protections are necessary because they make fair play possible and protect the quality manufacturer and promote a healthy business environment.

Though many people feel that Indian market is over regulated but the research by the author proves that customers are more vulnerable in Indian market as compared to developed nations.

Political Environment

The political environment can be one of the less predictable elements in a marketing environment. Marketers need to monitor the changing political environment because political change can profoundly affect a firm’s marketing.

Consider the following effects of politicians on marketing.

• At the most general level, the stability of the political system affects the attractiveness of a particular national market. While Western Europe is generally politically stable, the instability of many governments in less developed countries has led a number of companies to question the wisdom of marketing in those countries.
  
  Example: Wal-Mart couldn’t enter Indian market due to instable FDI policies in Indian marketing environment.
  
  
• Governments pass legislation that directly and indirectly affects firms’ marketing opportunities. There are many examples of the direct effects on marketers
  
  Example: Laws giving consumers rights against the seller of faulty goods. At other times the effects of legislative changes are less direct, as where legislation outlawing anti-competitive practices changes the nature of competition between firms within a market.
  
  
• Governments are responsible for protecting the public interest at large, imposing further constraints on the activities of firms.
  
  Example: Controls on pollution, which may make a manufacturing firm uncompetitive in international markets on account of its increased costs.
  
  
• The macroeconomic environment is very much influenced by the actions of politicians. Government is responsible for formulating policies that can influence the rate of growth in the economy and hence the total amount of spending power.
  
  It is also a political decision as to how this spending power should be distributed between different groups of consumers and between the public and private sectors.

Increasingly, the political environment affecting marketers includes supra-national organizations, which can directly or indirectly affect companies. These include trading blocs (e.g. the EV, ASEAN, and NAFTA) and the influence of worldwide intergovernmental organizations whose members seek to implement agreed policy (e.g. the World Trade Organization).

Economic Environment

Opportunity to consume largely depends on the kind of economic system in which the consumer makes purchases. In developed economies, consumer has more choice to make in the same category and more avenues are available to spend compared to a developing or agrarian economy.

The current state of the economy also influences the available disposable income for the consumer. Economic environment has the highest influence on the marketing decisions, as it affects the purchasing power of the consumer.

By economic environment we mean all those macro economic factors like income distribution, level of saving, debt and credit available to consumers and stage in business cycle. They affect the marketing decisions in combination with available economy of scale enjoyed by individual firms.

Situations in economic environment give opportunity and also generate threats to marketers. To illustrate, a company which sells price value products, has more scope to get higher customers in a declining economy compared to a luxury brand.

In a deteriorating economy, financial institutions do well as saving levels go higher and people stop consuming products which they would have done otherwise in a boom condition. So economic environment has a sizable influence on the way marketers operate.

The economic environment is extremely complex and it includes dynamic business fluctuations that tend to follow a cyclic pattern, generally composed of four stages, namely recession, depression, recovery and prosperity. The type, direction and intensity of a firm’s marketing strategy depend on the economic climate and business fluctuations.

The marketer should be aware about the economy’s relative position in the business cycle and how it will affect the position of his business. This requires the marketer to analyse forecasts of future economic activity.

Marketing strategy will vary with each stage of the business cycle. During prosperous times, consumers are usually more willing to buy than when they feel economically threatened. So marketers are expected to pay close attention to the consumer’s relative willingness to buy.

The aggressiveness of a firm’s marketing strategy is dependent upon current buying intentions. More aggressive marketing may be called for in periods of lessened buying interest so that companies can push their products through larger consumer benefits. Automobile makers across the globe follow such kind of strategy during the economic downturn stage.

While industry sales figures may experience cyclical variations, the successful firm has a rising sales trend line due to aggressive marketing. Such kind of persuasion of an aggressive marketing strategy depends on the manager’s ability to foresee, correctly estimate and reach new market opportunities.

Lifestyle patterns also affect the marketer’s decision. A lifestyle is the way a person decides to live his or her life. It concerns one’s family, job, social activities and consumer decisions. Lifestyles are reflections of the activities, interest and opinion of a person.

Changing lifestyles are a variable that influences marketing. We have seen that Indian upper middle class consumers have started foregoing additional income, in favour of leisure. The Double Income No Kids (DINK) is another lifestyle concept, affecting the demand patterns of products targeted for children segment.

Typical retirement ages are changing very fast. People are retiring early to enjoy life and travel to different parts of the country, giving a scope for growth in travel and tourism industry. All of these are lifestyle decisions that will affect the economic environment of the competitive marketing system.

Let us discuss how economic systems pass through and influence marketing strategy. Inflation can occur during any stage in the business cycle. Inflation is a rising price level resulting in reduced purchasing power for the consumer.

A person’s money is devalued in terms of what it can buy for him. Last few years have seen inflation being under control in India for which the value of money has not gone down as it used to be in the past when we experienced double-digit inflation.

Higher inflation leads to widespread concern over public policy to stabilise price levels and over ways of adjusting personally to the reduced spending power of consumers. Stagflation is a peculiar kind of inflation where an economy has high unemployment and a rising price level at the same time. Implementing a marketing strategy for increasing market share is difficult under such a circumstance.

Government uses fiscal policy and monetary policy to counter inflation. Fiscal policy concerns the receipts and expenditures of government. To combat inflation, an economy could reduce government expenditures, raise its revenue through primarily taxes or do a combination of both.

Monetary policy refers to the manipulation of the money supply and market rates of interest. In periods of rising prices, monetary policy may dictate that the government takes actions to decrease the money supply and raise interest rates, thus restraining purchasing power.

There are various marketing implications to both fiscal and monetary policy issues in battling against inflation. Higher taxes mean less consumer purchasing power, which results in sales decline for non-essential goods and services. Lower expenditure levels make the government a less attractive customer for many industries.

A lowered money supply means less liquidity is available for potential conversion to purchasing power. Another way in which inflation affects marketing is by modifying consumer behaviour. Modest increases in the general price level, often termed as creeping inflation, go largely unnoticed by customers.

But as purchasing power continues to decline, customers become more conscious of inflation, which leads to price-consciousness, which leads to three possibilities. Consumers can buy now believing that prices will go higher, decide to reallocate their purchasing pattern or postpone certain purchases.

Conversely, marketers also use demarketing strategy in a situation when the brisk demand exceeds manufacturing capacity or outpace the response time required to gear up a production line. Shortages may also be caused by a lack of raw materials, component parts, energy or labour.

It is a process of cutting consumer demand for a product back to a level that can be reasonably supplied by the firm. Some oil companies have done similar campaigns in India when oil prices soared high in recent past, where they gave tips on how to cut fuel consumption. Shortages sometimes force marketers to be allocators of limited supplies.

This is in sharp contrast to marketing’s traditional objective of expanding sales volume. Shortages require marketers to decide whether to spread a limited supply over all customers so that none are satisfied or to back-order some customers so that others (who are loyal and more profitable customers) can be completely supplied.

Shortages certainly present marketers with a unique set of marketing problems, which are quite different than the problems of plenty in a consumer market.

Natural Environment

Perhaps people are more concerned about natural environment today compared to yester years. The finite, non-renewable natural resources are being consumed very fast and there is little likelihood that they can be replenished in the near future.

Finite, non-renewable resources that include fuel and gasoline are heading towards a big energy crisis for the world. If we are not able to find out alternatives to fossil fuel consumption, it is going to reverse the process of development and growth across the globe.

The term ‘energy crisis’ refers to the general realisation that our energy resources are not limitless and hence one needs to conserve energy for future. Stringent legislations are being made across the globe to address this issue.

This crisis makes us rethink current allocation of energy resources. Existing sources are being expanded. Traditional resources, like coal, are being rediscovered. New ones are being sought. Perhaps the most important fact is that attempts are being made to cut waste in energy utilisation. Let us consider how the energy crisis is going to affect our tyre industry.

It may lead to reduced driving, causing a reduction in sales, lower new car sales, reducing the Original Equipment Market (OEM) for tyres and increasing cost of petroleum-based raw materials for the tyre industry.

Increased energy cost will automatically increase the cost of goods sold in the market. We have seen how the barrel price for fuel is increasing everyday in the international market and its subsequent effect on the increase in fuel prices in India.

People are also getting concerned about water, sound and air pollution levels. The level of observation towards pollution and control mechanism to curb the level of pollution is on an increase. In a recent judgment, the Supreme Court of India has banned a list of industries in New Delhi and has also stopped diesel driven public transportation system in the capital.

The role of the government is also changing. Instead of being a facilitator for industrial growth, government is promoting specific industries, which create less pollution. Special interest groups like European Peace Parliament serve as watchdogs to protect the nations from pollution menace.

Use of plastic is catching attention of people, as its usage brings more problems to the world. All these developments in the natural environment and concern of people towards these problems are on the rise, leading to more trouble for the modern day marketer. It is demanded of him to produce and market products, which are nature friendly and bio degradable, for the benefit of consumer and society at large.

Technological Environment

Technological changes occur in two ways. Some changes evolve over a period of time and consumers hardly mark the difference, as they do not alter their level of consumption. But some technological changes are so strong and disruptive in nature that they establish a new consumption patterns.

Technology is one of the dramatic forces that shape the lives of people. Every new technology that is of the second order is a force of creative destruction. Technology has accelerated the pace of change in the market place. Technological life cycles are shortening day by day and new product introduction has become a phenomenon of the market place.

Companies are open to exploit unlimited opportunities in the field of marketing in providing better products and services. Companies like Sony, 3M, Samsung, Wipro have increased their research and development budget manifold, so as to always be ahead of their competitors.

Nobody ever thought that revolution in the form of Internet technology will bring e-commerce to the forefront of business and customers will find web as an alternative channel of transaction. Companies like priceline.com, ebay.com and amazon.com are some of the successful stories in the era of Internet revolution.

Today marketing related transactions have crossed geographical boundaries and people can transact, trade and post their complaints at real time over the Internet. Revolutions in the world of biotechnology, genetic engineering are in the waiting, for the benefit of the consumers and the speed at which these changes embrace our civilisation makes past seem to lose its significance as a trend-setter for the future.

We are also seeing an increase in regulation due to technological changes. Laws related to protection of intellectual property rights and patents, cyber crime and fraud on Internet are on the increase. There is a global agreement to control the lawbreakers and bring new technology related business into order.

Decades ago people were hardly aware of products which are the common lingo of this generation. For example, the mobile handset, major Nokia had emerged the market leader in India in the first decade of the new millennium. Its range of feature phones at affordable prices made it one of the most sought after brands.

The dynamics of the market changed with the entry of smart phone maker Samsung. Feature phones offered functional value of verbal communication. Smart phones changed the functional value of mobile handsets by including applications for corporate and domestic usage.

The emergence of Android as an operating system for mobile phones forced other mobile manufacturing companies to amend their ways. Nokia failed to make the cut and finally in 2013, was acquired by Microsoft Corporation.