The technological and political environment and its implications for marketing decisions

Introduction

The marketing environment is the set of forces outside the marketing function that affect a firm's ability to build and keep relationships with its customers. The technological and political forces belong to the macro environment: the firm cannot control them, so it must watch them and adapt its marketing decisions to them. Both have been changing fast in India.

Technological environment

Current changes include smartphones and cheap mobile data, digital payments, e-commerce that widens the market to national and international customers and fast home-delivery services, artificial intelligence and data analytics, and new energy technologies such as electric vehicles. Their implications for marketing decisions:

1. Product decisions. New technology creates new products and shortens product life cycles. A phone maker, for example, may have to refresh its models every year, and a vehicle maker may need to plan electric models alongside its petrol ones.
2. Distribution decisions. Online marketplaces and fast-delivery apps open new channels; a snack brand may have to plan for local shops, modern retail and online channels at once.
3. Promotion decisions. Spending is moving to social media, search and influencer marketing, where messages can be targeted and their results measured.
4. Pricing decisions. Online price comparison makes prices transparent, and data allow dynamic pricing, as airlines and cab-hailing apps use.
5. Customer insight. Analytics of purchase data help firms segment customers and personalise offers, while also raising questions of data privacy.

Political environment

The political and legal environment consists of laws, government policies, agencies and political stability. Current changes and their implications:

1. Taxation: the Goods and Services Tax. From 1 July 2017 GST took the place of a long list of separate central and state indirect taxes, making the country one market in which a product is meant to carry a similar price everywhere, though some goods became dearer and others cheaper. A firm therefore resets its prices, and may resize its packs, whenever its product's GST rate changes, and it can plan prices and distribution for the whole country rather than state by state. The law's anti-profiteering provision requires the benefit of lower costs to be passed on to buyers, so a tax cut cannot simply be kept as extra margin.
2. Industrial and trade policy. Government programmes that encourage local manufacture can lead a firm to shift its sourcing within the country. It may also stress local production in its promotion; a change in import duty changes the landed price of imported goods.
3. Consumer protection. Consumer protection law acts against misleading advertising, so firms must be able to back the claims they make.
4. Data protection. Laws on personal data limit how firms may collect and use customer information, so a firm must plan its use of customer data in digital marketing.
5. Environmental regulation. Rules on packaging waste and pollution make packaging a decision with a legal side, not only a design one.
6. Political stability. A stable government encourages long-term investment and expansion of distribution.

Conclusion

Technological and political changes create both opportunities and threats. Firms that scan these forces regularly and adjust their products, prices, channels and promotion in time gain an advantage over those that react late.