Global Environment

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Components of a Global Environment

GLOBAL ENVIRONMENT

GLOBAL ENVIRONMENT: There are eight types of global environments. They are:

1) Demographic Environment
2) Economic Environment
3) Natural Environment
4) Technological Environment
5) Political Environment
6) Legal Environment
7) Social Environment
8) Cultural Environment

Demographic Environment:

Demographic trends are highly reliable for the short & intermediate run.
The main demographic force that marketers monitor is population, because markets are made up from people.

Marketers are keenly interested in the size and growth rate of population in cities, regions, and nations; age distribution and ethnic mix; educational levels; household patterns and regional characteristics & movements.


Worldwide Population Growth: The world population is showing explosive growth. It totaled 6.1 billion in 2000 and will exceed 7.9 billion by the year 2025.

Population growth highest in countries & communities that can least afford it.

In developing countries while the death rate has been falling considerably due to modern medicine, the birth rate has remained fairly stable. Feeding, clothing and educating children, while also providing a rising standard of living, is nearly impossible in these countries.

A growing population does not signify a growing market unless these markets have sufficient purchasing power. E.g. the Chinese Govt. in order to curb the population has passed regulations limiting families to one child. Hence these children are fussed and pampered and known as ‘ little emperors’ in China.


These children are being showered with everything from candies to computers as a result of the “six pocket syndrome.” As many as six adults – great grandparents, grandparents, parents, and aunts & uncles- may be indulging the whims of each child.

This trend has encouraged toy companies like Japan’s Bandai Company, Denmark’s lego group, and the US’s Mattel to aggressively enter the Chinese market.

Population Age Mix: National populations vary in their age mix. At one extreme is Mexico, a country with very young population & rapid population growth.

At the other extreme is Japan,a country with one of the world’s oldest population. There is a global trend toward an aging population A population can be subdivide into 6 age groups: preschool, school age children, teens, young adults aged 25-40, middle-aged adults aged 40-65, and older adults aged between 65 and up.

For marketers, the most populous age groups ( the most dominant age group in any population) shape the marketing environment.

The American population is indicated by various terms such as ‘Baby Boomers’ (1946-1964), Gen-X (1965-1976), Gen-Y (1977-1999), Gen-Z (2000 onwards). Gen-Y & Gen-Z are also referred to as ‘Net-Gens’- because of their obsession, fluency & comfort with the Internet.

Sex Ratio/ Gender Issue:

Sex Ratio is ratio of men to women(No.of Men:No. of Women)
Gender is a social construct & Sex is a biological construct.
The sex ratio provides an indication regarding the need for goods & services that are sex specific. Correspondingly, their marketing potential will increase or decrease.
The term ‘Gender’ refers to the social perception regarding the roles played by men & women in the society. In a gender neutral society, more goods & services that are women friendly can be advertised and promoted.

Household Patterns:

Traditionally, we had joint families, then changed to Nuclear families. Now there are many others like single-live-alones, adult-live-togethers’ of one or both sexes, single-parent families, childless married couples, double income no kids(DINK).

More people are divorcing or separating, choosing not to marry, marrying later or marrying without the intention to have children.

Each group has a distinctive set of needs & buying habits. For example, people in the SSWD group ( single, separated, widowed, divorced) need smaller apartments, smaller appliances etc. Marketers must consider the needs of non-traditional households.

Each type of structure may require different kinds of products & services.
Income Level: Income level of the population determines its ability to use certain goods & services. This in turn determines the advertising potential.
Educational Level: The population in any society falls into distinctive groups based on their education.

They could be illiterates, high school drop-outs, high school diplomas, college degrees, professional degrees. In Japan, 99% of the population is literate. The educational background will determine the kind of goods and services that can be offered to the population & the types of advertisements that can be produced.

Economic Environment:

Economic Structure- The market situation is referred as Economic Structure.
The economic level of a country is the single most important environmental element to which the foreign marketer must adjust the marketing task.
The stage of economic growth within a country affects the attitudes toward foreign business activity, the demand for goods, distribution systems found within a country, and the entire marketing process.
In static economies, consumption patterns become rigid, and marketing is typically nothing more than a supply effort.
In dynamic economies, consumption patterns change rapidly. Marketing is constantly faced with the challenge of detecting & providing for new levels of consumption, and marketing efforts must be matched with ever-changing market needs and wants

Economic development presents a two-sided challenge.

1) A study of the general aspects of economic development is necessary to gain empathy for the economic climate within developing countries.
2) The state of economic development must be studied with respect to market potential, including the present economic level and the economy’s growth potential.

The current level of economic development dictates the kind and degree of market potential that exists, while knowledge of the dynamism of the economy allows the marketer to prepare for the economic shifts and emerging markets.

Economic development is generally understood to mean an increase in national production that results in an increase in the average per capita gross domestic product(GDP).

GDP & GNP are two measures of a country’s economic activity. GDP is a measure of the market value of all goods & services produced within the boundaries of a nation, regardless of asset ownership. Unlike GNP, GDP excludes receipts from that nation’s business operations in foreign countries, as well as the share of reinvested earnings in foreign affiliates of domestic corporations.

Economic development, as commonly defined today, tends to mean rapid economic growth- improvements achieved in “decades rather than centuries”- & increases in consumer demand.

The United Nations uses a system to classify a country’s stage of economic development based on its level of industrialization. It groups countries into 3 categories: MDCs (more developed countries)- industrialized countries with high per capita income such as Canada, England, France, Germany, USA, Japan; LDCs(less-developed countries)- industrially developing countries just entering world trade, many of which are in Asia & Latin America, with relatively low per capita incomes; and LLDCs(least-developed countries)- industrially under-developed, agrarian, subsistence societies with rural populations, extremely low per capita income levels and little world trade development. They are found in Central Africa & parts of Asia.


The UN system has been criticized because it no longer seems relevant in the rapidly industrializing world today. In addition, many countries that are classified as LDCs are industrializing at a very rapid rate while others are advancing at more traditional rates of economic development.

Countries that are experiencing rapid economic expansion & industrialization and do not exactly fit as LDC or MDCs are more typically referred to as newly industrialized countries(NICs).These countries have shown rapid industrialization of targeted industries & have per capita incomes that exceed other developing countries. They have instituted significant free-market reforms & therefore attract both trade and foreign direct investment. Chile, Brazil, Mexico, South Korea, Singapore & Taiwan are some of the countries that fit this description- exporters of steel, automobiles, machine tools, clothing, electronics as well as markets for imported goods


Brazil, large exporter- exports alcohol, carbon, steel, orange juice, soy-beans,& weapons(world’s 6th largest weapon exporter). Ships cars, trucks & buses to Third World Countries- Volkswagen has produce more than 3 million VW Beetles in Brazil.

Markets require purchasing power as well as people. The available purchasing power in an economy depends on current income, prices, savings, debt and credit availability.
Marketers must pay careful attention to trends affecting purchasing power because they can have a strong impact on business, especially, if the products are targeted to high-income groups and price-sensitive consumers.


There are four types of industrial structures-

1) Subsistence economies(few opportunities for marketers)- African countries.
2) Raw- material- exporting economies like Zaire(copper) and Saudi Arabia(Oil), with good markets for equipment, tools, supplies and luxury goods for the rich.
3) Industrializing economies, like India, Egypt and the Philippines, where a new rich class and a growing middle class demand new types of goods.
4) Industrial economies, which are rich markets for all kinds of goods.


Income & Wealth Distribution in the Economy-

In global economy, marketers need to pay attention to the shifting income distribution in countries around the world, particularly where the affluence levels are increasing.
Marketers distinguish countries with 5 different income- distribution patterns-
1) very low incomes 2) mostly low incomes 3) very low, very high incomes 4) low, medium, high incomes and 5) mostly medium incomes.

Currency Stability- Foreign Exchange Rate- The foreign exchange rate is the rate at which the currency of a country is exchanged against the currency of another. It is the price of one currency against another currency. The exchange between rupee & dollar refers to the number of rupees exchanged or are required to be given to obtain one dollar.

Exchange rate is determined by the monetary authorities in a fully controlled system. Monetary authorities decide the rate based on demand and supply forces. In a free market, exchange rate is determined purely by market forces i.e. demand for and supply of foreign exchange.

Monetary Mechanism & Control: (Central Bank) Mechanism & Control refers to the policies that are made by the Central Bank. It shows how effective the bank’s policy could be.

Inflation: Too much money chasing too few goods.
Fiscal Measures: Taxation policies.

Natural Environment:
It comprises of I) Forests ii) Rivers iii) Climate
iv) Mineral wealth v) Disaster
The deterioration of the natural environment is today a matter of global concern. Air & water pollution have reached dangerous levels in many cities of the world.

‘Greenhouse gases’- due to the burning of fossil fuels
Depletion of the ozone layer due to certain chemicals
Increasing shortages of water- All of these and more is of growing concern today.

In Western Europe- ‘green parties’ have pressed for public action to reduce industrial pollution.

The recent problems concerning ‘Natural Environment’ may be indicated as:
a) Scarcity of resources due to unscrupulous usage.
b) Increase in pollution & the creation of ‘Asian Brown Haze’- the pollution ring above the Asian scene is turning black from light brown. It has created a dent in the Ozone layer that leads to global warming in an overall manner. This leads to floods and other disasters.

New regulations have hit certain industries badly.
Steel companies & public utilities have had to invest in pollution control equipment & more environmentally friendly fuels.The auto industry introduced expensive emission controls in cars. Companies, hopefully will adopt practices that will protect the natural environment.

Anti-Pollution measures- Industrial activity does damage the Natural Environment-chemical pollutants, littering of environment with plastic, bottles and other packaging materials.

A large market has been created for pollution-control solutions such as recycling centers.

Governments in many countries promote a clean environment- though the efforts vary- poorer nations lack the funds or political will to do so.

Technological Environment:

Technology is today changing people’s lives. Technology has released big wonders that have been beneficial to mankind but also has seen some horrors too.
The economy’s growth rate is affected by how many major new technologies are discovered.

Backward countries nave poor infrastructure, lack of know-how, lack of finance.

Developing countries have a steady economic growth, scientific advancement.

Highly developed countries- Media convergence, media boom- Virtual Reality- enabling an individual to experience a 3D effect in the internet. Fuzzy logic technology- provides the 6th sense to consumer durables like washing machines & refrigerators.

Political Environment:

Political environment is a comprehensive term, includes political parties, government agencies, pressure groups that influence and control individuals & organizations in society.

These factors may vary considerably between nations. A country may have- Democracy, where there is maximum freedom; Military Regime; Communist Regime or Monarchy.

However, irrespective of the type of political set up, trade and industry will flourish depending on the stability of the government in the country.


Economic systems provide another base for classification of governments. They can be- Capitalist Economy, Socialist Economy, Mixed Economy.
In a capitalist / free market economy, an entrepreneur is free to invest and produce goods of his choice. The government exercises minimum control in planning and regulating the working of market.

In a socialist economy, the govt. has absolute control over various factors of production and its allocation among various units. The govt. decides what to produce and what should be consumed. This concept is now wearing out- the downfall of Soviet Union has brought an end to communist philosophy excepting in Cuba.


In mixed economy, a combination of capitalist and communist economic system. Allows investments by private and public sectors.
A number of political risks also govern the political environment such as social unrest in the country, unfriendly foreign policies of the government.


Legal Environment:
Provides laws, rules, regulations and procedural formalities laid down by the govt. there may be laws related to every element of the marketing mix such as Product Quality, Pricing, Packaging, Cancellation of agreements etc.
Constitutional Provisions

Consumer protection Laws (Consumer protection act of 1986, RTI, MRTP- Monopolies & Restrictive Trade Practices of 1969- yoga, haldi, neem- US & other nations trying for a patent right over them).
Legal machinery , through which grievances are settled.
Parliamentary Act, generates from constitutional practices.
Public Awareness/ Public Activism.

Socio- Cultural Environment:

Purchasing power is directed towards certain goods and services and away from other according to people’s tastes and preferences. Society shapes the beliefs, values and norms that largely define these tastes and preferences
Views of themselves: People vary in the relative emphasis they place on self-gratification. E.g. people who think they are “pleasure seekers” sought fun, change and escape on the other hand others sought “self realization”. Marketers must realize that there are many different groups of people with different views of themselves.



Views of others: People are concerned about the homeless, crime and other social problems at the same time they are also people who are seeking out their “own kind”. These trends portend a growing market for social support products such as health clubs, cruises, religious activities etc. they also suggest a growing market for “social surrogates” things that allow people who are alone to feel they are not e.g. Chat rooms, social networking sites – ORKUT, television etc.

Views of organizations: People vary in their attitudes towards corporations, government agencies and other organizations. There has been an overall decline in organizations loyalty due to various reasons such as downsizing, and lack of good corporate governance e.g. Enron. So many see work as a chore to earn money rather than earning job satisfaction. Such an outlook has several marketing implications such as winning employee and customer confidence, ensuring that they are good corporate citizens and that their consumer messages are honest


View of society: People vary in their attitude toward society, some defend it, some run it, some take what they can from it, some want to change it, some seek deeper meaning from it. Consumption patterns often reflect social attitudes. Makers tend to eat well and dress well, changers usually live more frugally etc.

Views of nature: Some people feel subjugated with nature while other may feel in harmony with it. A long term trend has been mankind’s growing mastery of nature through technology. However now people have realized that nature can be destroyed by human activities. Hence business have evolved to protect nature by not using CFC gases, not undergoing animal testing etc. other business have evolved which takes people closer to nature like white water rafting, hiking, camping etc.


Views of universe: People vary in their beliefs about the origin of the universe & their place in it. Most Americans are monotheistic, although religious conviction and practice have been waning through the years. Certain evangelical movements are reaching out to bring people back into organized religion. Some of the religious impulse has been redirected into an interest in Eastern religions, mysticism, the occult, and the human potential movement. As people lose their religious orientation, they seek self-fulfillment & immediate gratification. At the same time, every trend seems to breed a countertrend, as indicated by a worldwide rise in religious fundamentalism. Here are some other cultural characteristics of interests to marketers: the persistence of core cultural values, the existence of subcultures, and shifts of values through time.

High persistence of cultural values
The people living in a particular society hold many core belief and values that tend to persist. Core beliefs and values are passed on from parents to children and are reinforced by major social institutions – schools, temples, business and governments. Secondary beliefs and values are more open to change. Thus marketers shall have some chance of changing secondary values but a little chance of changing core values.


Existence of subcultures
Each society contains subcultures, groups whit shared values emerging from their special life experience or circumstances. Members of subcultures share common beliefs, preferences and behaviors. To the extent that sub cultural groups exhibit different wants and consumption behavior, marketers can choose particular subculture as target markets.
Marketers sometimes reap unexpected rewards in targeting subcultures. They have always loved teenagers because they are society's trendsetters in fashion, music, entertainment etc. Marketers also know that if they attract someone as a teen there is always a good chance they will keep the person as a customer later in life. E.g. Pepsi, Lays etc.

Shifts of secondary cultural values through time
Although core values are fairly persistent, cultural swings do take place. In the 1960’s hippies, the Beatles, Elvis Presley and other cultural phenomena had a major impact on young people’s hairstyles, clothing and life goals. Today’s young people are influenced by newer heroes and activities.
 
Components of a Global Environment

GLOBAL ENVIRONMENT

GLOBAL ENVIRONMENT: There are eight types of global environments. They are:

1) Demographic Environment
2) Economic Environment
3) Natural Environment
4) Technological Environment
5) Political Environment
6) Legal Environment
7) Social Environment
8) Cultural Environment

Demographic Environment:

Demographic trends are highly reliable for the short & intermediate run.
The main demographic force that marketers monitor is population, because markets are made up from people.

Marketers are keenly interested in the size and growth rate of population in cities, regions, and nations; age distribution and ethnic mix; educational levels; household patterns and regional characteristics & movements.


Worldwide Population Growth: The world population is showing explosive growth. It totaled 6.1 billion in 2000 and will exceed 7.9 billion by the year 2025.

Population growth highest in countries & communities that can least afford it.

In developing countries while the death rate has been falling considerably due to modern medicine, the birth rate has remained fairly stable. Feeding, clothing and educating children, while also providing a rising standard of living, is nearly impossible in these countries.

A growing population does not signify a growing market unless these markets have sufficient purchasing power. E.g. the Chinese Govt. in order to curb the population has passed regulations limiting families to one child. Hence these children are fussed and pampered and known as ‘ little emperors’ in China.


These children are being showered with everything from candies to computers as a result of the “six pocket syndrome.” As many as six adults – great grandparents, grandparents, parents, and aunts & uncles- may be indulging the whims of each child.

This trend has encouraged toy companies like Japan’s Bandai Company, Denmark’s lego group, and the US’s Mattel to aggressively enter the Chinese market.

Population Age Mix: National populations vary in their age mix. At one extreme is Mexico, a country with very young population & rapid population growth.

At the other extreme is Japan,a country with one of the world’s oldest population. There is a global trend toward an aging population A population can be subdivide into 6 age groups: preschool, school age children, teens, young adults aged 25-40, middle-aged adults aged 40-65, and older adults aged between 65 and up.

For marketers, the most populous age groups ( the most dominant age group in any population) shape the marketing environment.

The American population is indicated by various terms such as ‘Baby Boomers’ (1946-1964), Gen-X (1965-1976), Gen-Y (1977-1999), Gen-Z (2000 onwards). Gen-Y & Gen-Z are also referred to as ‘Net-Gens’- because of their obsession, fluency & comfort with the Internet.

Sex Ratio/ Gender Issue:

Sex Ratio is ratio of men to women(No.of Men:No. of Women)
Gender is a social construct & Sex is a biological construct.
The sex ratio provides an indication regarding the need for goods & services that are sex specific. Correspondingly, their marketing potential will increase or decrease.
The term ‘Gender’ refers to the social perception regarding the roles played by men & women in the society. In a gender neutral society, more goods & services that are women friendly can be advertised and promoted.

Household Patterns:

Traditionally, we had joint families, then changed to Nuclear families. Now there are many others like single-live-alones, adult-live-togethers’ of one or both sexes, single-parent families, childless married couples, double income no kids(DINK).

More people are divorcing or separating, choosing not to marry, marrying later or marrying without the intention to have children.

Each group has a distinctive set of needs & buying habits. For example, people in the SSWD group ( single, separated, widowed, divorced) need smaller apartments, smaller appliances etc. Marketers must consider the needs of non-traditional households.

Each type of structure may require different kinds of products & services.
Income Level: Income level of the population determines its ability to use certain goods & services. This in turn determines the advertising potential.
Educational Level: The population in any society falls into distinctive groups based on their education.

They could be illiterates, high school drop-outs, high school diplomas, college degrees, professional degrees. In Japan, 99% of the population is literate. The educational background will determine the kind of goods and services that can be offered to the population & the types of advertisements that can be produced.

Economic Environment:

Economic Structure- The market situation is referred as Economic Structure.
The economic level of a country is the single most important environmental element to which the foreign marketer must adjust the marketing task.
The stage of economic growth within a country affects the attitudes toward foreign business activity, the demand for goods, distribution systems found within a country, and the entire marketing process.
In static economies, consumption patterns become rigid, and marketing is typically nothing more than a supply effort.
In dynamic economies, consumption patterns change rapidly. Marketing is constantly faced with the challenge of detecting & providing for new levels of consumption, and marketing efforts must be matched with ever-changing market needs and wants

Economic development presents a two-sided challenge.

1) A study of the general aspects of economic development is necessary to gain empathy for the economic climate within developing countries.
2) The state of economic development must be studied with respect to market potential, including the present economic level and the economy’s growth potential.

The current level of economic development dictates the kind and degree of market potential that exists, while knowledge of the dynamism of the economy allows the marketer to prepare for the economic shifts and emerging markets.

Economic development is generally understood to mean an increase in national production that results in an increase in the average per capita gross domestic product(GDP).

GDP & GNP are two measures of a country’s economic activity. GDP is a measure of the market value of all goods & services produced within the boundaries of a nation, regardless of asset ownership. Unlike GNP, GDP excludes receipts from that nation’s business operations in foreign countries, as well as the share of reinvested earnings in foreign affiliates of domestic corporations.

Economic development, as commonly defined today, tends to mean rapid economic growth- improvements achieved in “decades rather than centuries”- & increases in consumer demand.

The United Nations uses a system to classify a country’s stage of economic development based on its level of industrialization. It groups countries into 3 categories: MDCs (more developed countries)- industrialized countries with high per capita income such as Canada, England, France, Germany, USA, Japan; LDCs(less-developed countries)- industrially developing countries just entering world trade, many of which are in Asia & Latin America, with relatively low per capita incomes; and LLDCs(least-developed countries)- industrially under-developed, agrarian, subsistence societies with rural populations, extremely low per capita income levels and little world trade development. They are found in Central Africa & parts of Asia.


The UN system has been criticized because it no longer seems relevant in the rapidly industrializing world today. In addition, many countries that are classified as LDCs are industrializing at a very rapid rate while others are advancing at more traditional rates of economic development.

Countries that are experiencing rapid economic expansion & industrialization and do not exactly fit as LDC or MDCs are more typically referred to as newly industrialized countries(NICs).These countries have shown rapid industrialization of targeted industries & have per capita incomes that exceed other developing countries. They have instituted significant free-market reforms & therefore attract both trade and foreign direct investment. Chile, Brazil, Mexico, South Korea, Singapore & Taiwan are some of the countries that fit this description- exporters of steel, automobiles, machine tools, clothing, electronics as well as markets for imported goods


Brazil, large exporter- exports alcohol, carbon, steel, orange juice, soy-beans,& weapons(world’s 6th largest weapon exporter). Ships cars, trucks & buses to Third World Countries- Volkswagen has produce more than 3 million VW Beetles in Brazil.

Markets require purchasing power as well as people. The available purchasing power in an economy depends on current income, prices, savings, debt and credit availability.
Marketers must pay careful attention to trends affecting purchasing power because they can have a strong impact on business, especially, if the products are targeted to high-income groups and price-sensitive consumers.


There are four types of industrial structures-

1) Subsistence economies(few opportunities for marketers)- African countries.
2) Raw- material- exporting economies like Zaire(copper) and Saudi Arabia(Oil), with good markets for equipment, tools, supplies and luxury goods for the rich.
3) Industrializing economies, like India, Egypt and the Philippines, where a new rich class and a growing middle class demand new types of goods.
4) Industrial economies, which are rich markets for all kinds of goods.


Income & Wealth Distribution in the Economy-

In global economy, marketers need to pay attention to the shifting income distribution in countries around the world, particularly where the affluence levels are increasing.
Marketers distinguish countries with 5 different income- distribution patterns-
1) very low incomes 2) mostly low incomes 3) very low, very high incomes 4) low, medium, high incomes and 5) mostly medium incomes.

Currency Stability- Foreign Exchange Rate- The foreign exchange rate is the rate at which the currency of a country is exchanged against the currency of another. It is the price of one currency against another currency. The exchange between rupee & dollar refers to the number of rupees exchanged or are required to be given to obtain one dollar.

Exchange rate is determined by the monetary authorities in a fully controlled system. Monetary authorities decide the rate based on demand and supply forces. In a free market, exchange rate is determined purely by market forces i.e. demand for and supply of foreign exchange.

Monetary Mechanism & Control: (Central Bank) Mechanism & Control refers to the policies that are made by the Central Bank. It shows how effective the bank’s policy could be.

Inflation: Too much money chasing too few goods.
Fiscal Measures: Taxation policies.

Natural Environment:
It comprises of I) Forests ii) Rivers iii) Climate
iv) Mineral wealth v) Disaster
The deterioration of the natural environment is today a matter of global concern. Air & water pollution have reached dangerous levels in many cities of the world.

‘Greenhouse gases’- due to the burning of fossil fuels
Depletion of the ozone layer due to certain chemicals
Increasing shortages of water- All of these and more is of growing concern today.

In Western Europe- ‘green parties’ have pressed for public action to reduce industrial pollution.

The recent problems concerning ‘Natural Environment’ may be indicated as:
a) Scarcity of resources due to unscrupulous usage.
b) Increase in pollution & the creation of ‘Asian Brown Haze’- the pollution ring above the Asian scene is turning black from light brown. It has created a dent in the Ozone layer that leads to global warming in an overall manner. This leads to floods and other disasters.

New regulations have hit certain industries badly.
Steel companies & public utilities have had to invest in pollution control equipment & more environmentally friendly fuels.The auto industry introduced expensive emission controls in cars. Companies, hopefully will adopt practices that will protect the natural environment.

Anti-Pollution measures- Industrial activity does damage the Natural Environment-chemical pollutants, littering of environment with plastic, bottles and other packaging materials.

A large market has been created for pollution-control solutions such as recycling centers.

Governments in many countries promote a clean environment- though the efforts vary- poorer nations lack the funds or political will to do so.

Technological Environment:

Technology is today changing people’s lives. Technology has released big wonders that have been beneficial to mankind but also has seen some horrors too.
The economy’s growth rate is affected by how many major new technologies are discovered.

Backward countries nave poor infrastructure, lack of know-how, lack of finance.

Developing countries have a steady economic growth, scientific advancement.

Highly developed countries- Media convergence, media boom- Virtual Reality- enabling an individual to experience a 3D effect in the internet. Fuzzy logic technology- provides the 6th sense to consumer durables like washing machines & refrigerators.

Political Environment:

Political environment is a comprehensive term, includes political parties, government agencies, pressure groups that influence and control individuals & organizations in society.

These factors may vary considerably between nations. A country may have- Democracy, where there is maximum freedom; Military Regime; Communist Regime or Monarchy.

However, irrespective of the type of political set up, trade and industry will flourish depending on the stability of the government in the country.


Economic systems provide another base for classification of governments. They can be- Capitalist Economy, Socialist Economy, Mixed Economy.
In a capitalist / free market economy, an entrepreneur is free to invest and produce goods of his choice. The government exercises minimum control in planning and regulating the working of market.

In a socialist economy, the govt. has absolute control over various factors of production and its allocation among various units. The govt. decides what to produce and what should be consumed. This concept is now wearing out- the downfall of Soviet Union has brought an end to communist philosophy excepting in Cuba.


In mixed economy, a combination of capitalist and communist economic system. Allows investments by private and public sectors.
A number of political risks also govern the political environment such as social unrest in the country, unfriendly foreign policies of the government.


Legal Environment:
Provides laws, rules, regulations and procedural formalities laid down by the govt. there may be laws related to every element of the marketing mix such as Product Quality, Pricing, Packaging, Cancellation of agreements etc.
Constitutional Provisions

Consumer protection Laws (Consumer protection act of 1986, RTI, MRTP- Monopolies & Restrictive Trade Practices of 1969- yoga, haldi, neem- US & other nations trying for a patent right over them).
Legal machinery , through which grievances are settled.
Parliamentary Act, generates from constitutional practices.
Public Awareness/ Public Activism.

Socio- Cultural Environment:

Purchasing power is directed towards certain goods and services and away from other according to people’s tastes and preferences. Society shapes the beliefs, values and norms that largely define these tastes and preferences
Views of themselves: People vary in the relative emphasis they place on self-gratification. E.g. people who think they are “pleasure seekers” sought fun, change and escape on the other hand others sought “self realization”. Marketers must realize that there are many different groups of people with different views of themselves.



Views of others: People are concerned about the homeless, crime and other social problems at the same time they are also people who are seeking out their “own kind”. These trends portend a growing market for social support products such as health clubs, cruises, religious activities etc. they also suggest a growing market for “social surrogates” things that allow people who are alone to feel they are not e.g. Chat rooms, social networking sites – ORKUT, television etc.

Views of organizations: People vary in their attitudes towards corporations, government agencies and other organizations. There has been an overall decline in organizations loyalty due to various reasons such as downsizing, and lack of good corporate governance e.g. Enron. So many see work as a chore to earn money rather than earning job satisfaction. Such an outlook has several marketing implications such as winning employee and customer confidence, ensuring that they are good corporate citizens and that their consumer messages are honest


View of society: People vary in their attitude toward society, some defend it, some run it, some take what they can from it, some want to change it, some seek deeper meaning from it. Consumption patterns often reflect social attitudes. Makers tend to eat well and dress well, changers usually live more frugally etc.

Views of nature: Some people feel subjugated with nature while other may feel in harmony with it. A long term trend has been mankind’s growing mastery of nature through technology. However now people have realized that nature can be destroyed by human activities. Hence business have evolved to protect nature by not using CFC gases, not undergoing animal testing etc. other business have evolved which takes people closer to nature like white water rafting, hiking, camping etc.


Views of universe: People vary in their beliefs about the origin of the universe & their place in it. Most Americans are monotheistic, although religious conviction and practice have been waning through the years. Certain evangelical movements are reaching out to bring people back into organized religion. Some of the religious impulse has been redirected into an interest in Eastern religions, mysticism, the occult, and the human potential movement. As people lose their religious orientation, they seek self-fulfillment & immediate gratification. At the same time, every trend seems to breed a countertrend, as indicated by a worldwide rise in religious fundamentalism. Here are some other cultural characteristics of interests to marketers: the persistence of core cultural values, the existence of subcultures, and shifts of values through time.

High persistence of cultural values
The people living in a particular society hold many core belief and values that tend to persist. Core beliefs and values are passed on from parents to children and are reinforced by major social institutions – schools, temples, business and governments. Secondary beliefs and values are more open to change. Thus marketers shall have some chance of changing secondary values but a little chance of changing core values.


Existence of subcultures
Each society contains subcultures, groups whit shared values emerging from their special life experience or circumstances. Members of subcultures share common beliefs, preferences and behaviors. To the extent that sub cultural groups exhibit different wants and consumption behavior, marketers can choose particular subculture as target markets.
Marketers sometimes reap unexpected rewards in targeting subcultures. They have always loved teenagers because they are society's trendsetters in fashion, music, entertainment etc. Marketers also know that if they attract someone as a teen there is always a good chance they will keep the person as a customer later in life. E.g. Pepsi, Lays etc.

Shifts of secondary cultural values through time
Although core values are fairly persistent, cultural swings do take place. In the 1960’s hippies, the Beatles, Elvis Presley and other cultural phenomena had a major impact on young people’s hairstyles, clothing and life goals. Today’s young people are influenced by newer heroes and activities.

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