The market environment is a marketing term and it refers to all of the forces outside of marketing that affect marketing management's ability to build and maintain successful relationships with target customers. Company, its suppliers, distributors, and its competitors are also impacted by what is happening in the world. To succeed therefore, it is necessary to continuously monitor, anticipate, and adapt, to that environment, and wherever possible, shape that environment. The market environment consists of both the macro environment and the micro environment.
This environment influences the organization directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. This determines the relationship between consumers, suppliers, distributors, public and dealers.
This includes all factors that can influence and organization, but that are out of their direct control. A company does not generally influence any laws (although it is accepted that they could lobby or be part of a trade organization). It is continuously changing, and the company needs to be flexible to adapt. There may be aggressive competition and rivalry in a market. Globalization means that there is always the threat of substitute products and new entrants. The wider environment is also ever changing, and the marketer needs to compensate for changes in culture, politics, economics and technology. The acronym “PEST” is used to describe framework for the analysis of these macro environmental factors.
PEST Analysis of the Mobile Phone Industry
There are many factors in the macro-environment that will affect the decisions of the managers of any organisation. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To help analyse these factors managers can categorise them using the PESTEL model. This classification distinguishes between following factors:
Political –legal environment
This environment is composed of laws, government agencies, and pressure groups that influence and limit various organizations and individuals .Sometimes these laws create new opportunities for business. Various political and legal factors affect a particular industry. By crossing the critical100 million mark, India has one of the largest mobile service markets in the world. In last two years alone, mobile phone users have jumped from 50 million to over 100 million. Other than the trend of growing Household income in India, the recent mobile market expansion in India has been driven mainly by enlightened regulation and market innovation. We explore some of the drivers below:
The Indian Government has been promoting market liberalisation and simplifying regulation.
Indian government has issued new type of unified licences to operators, enabling them to provide both fixed and mobile services. Fixed-Mobile convergence makes the bundling of services easier and operators are offering much wider choice of product to consumers. The unified licences also allow interconnectivity across contiguous circles ; it is no longer necessary to route inter-circle traffic through a National Long Distance operator which causes delay and increases costs.
Lowering of Interconnect Charges
Lowering interconnection charges has direct impact on mobile service tariff and interconnection traffic will be boosted significantly, both fixed to mobile and mobile to mobile services will benefit.
Made Licence Fees 10%-15% of Revenue instead of a fixed amount irrespective of the operators revenue. The fixed amount licence fee posed a serious entry barrier to smaller operators and service providers before, now with fee linked with revenue, small players can...