Understanding of Marketing Environment

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Understanding of Marketing Environment
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Marketing Environment

• Demographic
• Economics
• Natural
• Technological
• Political-legal
• Social-cultural.

PEST DN
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Managers should know how markets work.

• The Reasons.
• 1. Supply and demand have a great deal to do with
  market size and product prices.
• 2. The marketing managers understand how
  consumers make their buying decisions and how
  they respond to changes in price and other
  factors.

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The Reasons.

• 3. Long-term profits require that the product
  seller has a correct picture of costs, and how
  prices of inputs to the production process.
• 4. Managers be able to see the market setting
  that their firm faces and alter their decision
  making.

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Demand States and Marketing Tasks

• Meaning
• ?????????????? ?????????? ???????????????????
  ??????????????????????????????????????? ????
  ????????????? ???????????????????
• Marketing Task
• ??????????????????????????????????????????????????
  ??? ?????????????????????????????????????
  ?????????????????????????

• 1. Negative Demand
• ???????????????????????

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Demand States and Marketing Tasks

• Meaning
• ????????????????????????????????
  ????????????????????????????????
  ?????????????????????????????
• Marketing Task
• ????????????????????????????????????????
  ??????????????????????????????????????????????????
  ???????????????????????????????

• 2. No Demand
• ???????????? ??????????????????

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Demand States and Marketing Tasks

• Meaning
• ??????????????????????????????????????????????
  ???? ?????????????????????????
• Marketing Task
• ??????????????????????????????????????????????????
  ??????????????????????????????????????????????

• 3. Latent Demand
• ??????????????????

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Demand States and Marketing Tasks

• Meaning
• ??????????????????????????????????????? ????
  ???????????????? ??????????? ??????????
• Marketing Task
• ??????????????????????????????????????????????????
  ??????? ??????????????????????????????????????????
  ???? ???? ?????????????????????????
  ?????????????????????????????????

• 4. Declining Demand
• ??????????????

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Demand States and Marketing Tasks

• Meaning
• ????????????????????????????????????????????????
  ???? ????????????????????????????????????
  ???????????????????????????? ???? ??????
  ?????????
• Marketing Task
• ?????????????????????????????????????????????????
  ???? ???????????????????????? ?????
  ??????????????????????????

• 5. Irregular Demand
• ?????????????????????

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Demand States and Marketing Tasks

• Meaning
• ??????????????????????????????????????????????????
  ?
• Marketing Task
• ????????????????????????????????????????????
  (Demand Maintenance Marketing) ?????????????????

• 6. Full Demand
• ??????????????

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Demand States and Marketing Tasks

• Meaning
• ??????????????????????????????????????????????????
  ???????????????????????????????
  ?????????????????? ???? ?????????????????
• Marketing Task
• De-marketing ???????????????????????????????????
  ???????? ?????????????????????????????
  ?????????????????????? ??????????????

• 7. Overfull Demand
• ???????????????????

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Demand States and Marketing Tasks

• Meaning
• ???????????????????????????? ????
  ??????????????????? ???? ??????
• Marketing Task
• ???????????????? (Counter Marketing)
  ????????????????????????????????????
  ??????????????????????????????????????????????????
  ??

• 8. Demand
• ????????????????????????????

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?????????????????????????

• ??????????????????????????????????????????????????
  ???
• ?????????????????????????????????????????????????
  ????? ???????????????????????????????????????????
  ??? ?????????????????????????????????
  ??????????????????????????????????????????????????
  ????

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?????????????????????????

• 1.????????????????????????????????????????????????
  ??????????????????????????????
  ??????????????????????????????????????????????????
  ??????????????
• 2. ??????????????????????????????????????
• 3. ??????????????????????????????????????????????
  

15
?????????

• Profit Total Revenue - Total Cost
• II TR-TC
• ????????????????????????????? ???????????????????
  ????????????????????????? TR ??? TC
  ???????????????????????????? TR ???? ?? TC
  ???? ????????? TR ????? TC ???????? ???
• ??????????????????? ??? Price
  ??????????????????????????????????????????????????
  ?????????

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?????????????????

• Total Revenue Price
  Quantity
• 1,000,000 1
  1,000,000
• 1,000,000 2
  500,000
• 1,000,000 5
  200,000
• 1,000,000 100
  10,000
• 1,000,000 1,000
  1,000
• 1,000,000 10,000
  100
• 1,000,000 100,000
  10
• 1,000,000 1,000,000
  1

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• Price Quantity Total Revenue Elasticity
• 1.00 90 90 -
• 1.50 80 120 -0.22
• 2.00 70 140 -0.38
• 2.50 60 150 -0.57
• 2.75 55 151.25 -0.83
• 3.00 50 150 -1.00
• 3.50 40 140 -1.20
• 4.00 30 120 -1.75
• 4.50 20 90 -2.67
• 5.00 10 50 -4.50

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Total Revenue and Price Changes

• ???? ?????????
• .????? Ed lt 1 ???????????????????
• .????? Ed 1 ???????????????????????
• .????? Ed gt 1 ????????????????????????

• ???? ??????
• .????? Ed lt 1 ????????????????????????
• .????? Ed 1 ???????????????????????
• .????? Ed gt 1 ???????????????????

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Demand Curve
Total Revenue
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The Demand for Food Products

• The Law of Demand states that, other things
  being equal, quantity demanded falls as price
  increases.
• Under these situations might this law not hold
  true.
• For luxury products such as diamonds or food
  products such as caviar.
• If buyers associate price with quality, the
  higher-priced brand is, in the mind of consumer,
  a different product than the lower-version

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The Economic Model of Demand

• QD f( PO, PS, I, T)
• QD Quantity demanded
• PO The products price
• PS The price of substitute products
• I Consumers Incomes
• T Consumers Tastes and preferences (
  equivalent to needs and wants)
• f function

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Determinant of Demand

• .?????????????????? (Own Price)
• .?????????????????????????????(Price of
  Substitute)
• .??????????????????????????????? (Price of
  Complement)
• .?????????????????? (Incone)

• .??????? (Population)
• .????????????????????????????? (Taste and
  Preferences)
• .?????? (Seasonality)

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Determinant of Demand (con.)

• ?????????????????
• ?????????????????????????? ,
• ?????????????????
• ?????? , ???????????????????
• ????????????? , ????
• ???????????????????
• ??????
• ??????
• ??????????

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Determinant of Demand (con.)

• ????????????????????
• ??????????????????
• ??????????????????????
• ?????? , ?????? ??????????????
• ?????? , ?????????????????
• ???????????
• ????????????
• ????????????
• ?????????????

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The Relationship between Quantity Demanded and
the Products price

• The economic measure of the sensitivity of
  quantity sold to price changes is called price
  elasticity of demand.
• PED gt 1 Elastic
• PED lt 1 Inelastic

PED ? Q / Q ? P / P
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The Demand Curve for a Food Product
Price
Price
P2
P1
DB
DA
Q2
Q1
Quantity
Quantity
Q4
Q3
Inelastic
Elastic
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Determinants of Price Elasticity of Demand

• Available substitutes for a good
• Consumer Income
• Necessities versus Luxuries
• The share of spending on good in the consumer s
  budget
• Short or long run
• Trade

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Availability of Substitutes and Price Elasticity

• If a product B is seen to be a close substitute
  for product A in the minds of buyers, they
  will be able to switch easily to product B in
  response to an increase in the price of product A.

Consumers perception of closeness
Positioning
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Availability of Substitutes and Price
Elasticity(con.)
Price
Haagen-Dazs vanilla ice cream
Vanilla-flavored ice cream
All ice cream
Dairy Product
Food
o
Quantity
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Demand and the Price of Substitute Products

• The impact of a change in the price of one
  product on sales of another is measureed by the
  cross-price elasticity of demand(XED).
• XED is the percentage change in quantity of
  product A demanded resulting from a 1 percent
  change in the price of product B.
• XED ? QA / QA
• ? PB / PB

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The Effect of Consumer Income on Demand

• Income Elasticity of Demand (IED) is the
  percentage change in quantity demanaded in
  response to a 1 percent change in household
  income.
• IED ? Q /
  Q
• ? I /
  I

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Relationship between Food Consumption and Income
Per capita food consumption
Zone A
Zone B
Zone C
IED gt 1
IED lt 1
IED lt 0
Per capita income
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Impact of Marketing Activity on Demand
Price
Marketing activity moves demand curve to right
and makes it more inelastic.
D2
D1
Quantity
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Understanding of Agribusiness Supply

• Production is the use of inputs to create an
  output that has economic value.
• Production Process is how an agribusiness
  combines the various inputs to create an output.

Cost
Economic Efficiency
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Production Decisions

• What to produce?
• How to produce?
• How much to produce?
• When to produce?

The answer rest on - the demand for
product - the cost of the input
Technologically Efficient and Economically
Efficient
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Production Function
Output (ice cream)
TP3
Greater Technical Efficiency
Less Technical Efficiency
TP2
TP1
Input (labor)
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?????????????????????????????????????????

• ??????????????????????????????????????????????????
  ??????????????????????????????????????????????????
  ?????????????????????????
• ????????????????????????????? ? ?????????
  ??????????? (Marginal Cost) ??????????????????
  (Marginal Revenue) ????????????????????????????

MC MR
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The Supply of Food Products

• The supply of food product is determined by
• The products price
• The price of alternative products that compete
  for the resources of the producing copany
• The price of inputs used in the production
  process
• The changes in technilogy in the production
  process.

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Impact of Changes in Price on Quantity Supplied
Price
Price
S1
S1
P2
P2
P1
P1
Q1
Quantity
Q1
Q2
Q2
Quantity
ES gt 1
ES lt 1
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Factors Influence the Elasticity of Supply

• 1. Availability of alternative enterprises.
• 2. Time.
• 3. Perishability / Storability.
• 4. Excess capacity
• 5. Industry Structure and Organization

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The Non-price Determinants of Supply

• 1. Changes in the prices of other goods
• 2. Expectations of future selling price
• 3. Number of sellers in the market
• 4. Changes in production costs
• 5. Changes in technology

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Supply Curve Shifters
Price
S1
S2
S0
Supply curve shifts to right when Input price
decrease Technology improves Price of
alternative product decrease
Supply curve shifts to left when Input price
increase Price of alternative product
increase
Quantity