Lecturer B.B.

Kathayat 1
 Learning Objectives

After completing this chapter, students should be able to:

→ Understand the meaning & concept of marketing environment.

→ Recognize the key features of marketing environment.

→ Identify the types or classification of marketing environment.

→ Know about reactive and proactive marketing in general.

→ Ascertain the importance and scope of marketing environment analysis.

→ Examine and describe the marketing environment in Nepal

Lecturer B.B.Kathayat 2
 1. Meaning & Concept of Marketing Environment

❖ Typically, the term “environment” has been derived from a French word
“Environia” which means to surround.

❖ Environment refers to anything [biotic & abiotic] that is directly or

indirectly surrounding to the business or nun-business organizations.

❖ Both the business and non-business organizations establishes, operates,

grows and dies within the environment and even society.

“Environment refers to institutions or forces that affect the

organizational performance.” – Stephen P. Robbins and Mary Coulter

“Environment is the aggregate of all conditions, events and influences

that surround the business and affect it.” – Keith David

❖ Environmental forces are internal and external, wide and changeable in

nature. Therefore, it is very difficult to predict the impacts of these forces
on organizational productivity.

Lecturer B.B.Kathayat 3
 Cont……
❖ The marketing environment refers to all
internal and external factors, which directly
or indirectly influence the organizational
decisions related to marketing activities.
“Marketing environment consists
of all the actors and forces that affect the company’s
ability to develop and maintain successful
transactions and relationship with its target
customers.” - Philip Kotler

“The marketing environment

consists of external forces that directly or indirectly
influences on organizational acquisition of inputs and
creation of outputs.” – Pride and Ferrell

❖ Basically, marketing environment can be

classified into two parts such as (i) Internal
environment and (ii) External environment.

Lecturer B.B.Kathayat 4
2. Key Features of Marketing Environment

Internal &
External

Biotic & Dynamic &

Abiotic Changeable

Features of
Marketing
Difficulties in Environment Short-term &
Prediction Long-term
Impact

SWOT Multifaceted
Analysis & Versatile

Lecturer B.B.Kathayat 5
 Cont…..
1). Internal & External: An internal marketing environment consists of factors
that management easily control and reflects strengths and weaknesses.
Besides that, the external marketing environment includes all factors that
management cannot control and reflects opportunities and challenges.

2). Dynamic & Changeable: Most of the factors of marketing environment are
dynamic and changeable likewise; technology, politics, economic policies,
population and government laws and regulations.

3). Short-term & Long-term Impact: The factors of marketing environment

may can creates short-term and long-term impacts on organizational
performance based on their nature and emergence.

4). Multifaceted & Versatile: The changing forms of environmental forces have
multiples impacts. Some organizations benefited from those kinds of
changes and some organizations bears losses from changes.

Lecturer B.B.Kathayat 6
 Cont……

5). SWOT Analysis: Basically, top level management needs to analyze

marketing environment for identifying the strengths, weaknesses,
opportunities and threats of the organization while operating marketing
functions and decisions.

6). Difficulties in Prediction: There is difficulty to predict the impacts of

marketing environment because of some variables have uncertainty in
nature.

7). Biotic & Abiotic: Marketing environment consists with living things and non-
living things such as human resource, physical resource, psychology and so
on.

Lecturer B.B.Kathayat 7
 3. Types or Classification of Marketing Environment

1) Owners/Investors
2) BOD/CEO
3) Organizational Resources
Internal
4) Organizational Objectives
Environment 5) Organizational Structure
6) Organizational Culture

Micro Environment
Types of Marketing 1) Customers
Environment 2) Suppliers
3) Competitors
4) Intermediaries
5) The Company
External 6) Public & Government
Environment
Macro Environment or
(PESTEL) Analysis
1) Political
2) Economic
3) Social-cultural
4) Technological
5) Environmental
6) Legal & Regulatory

Lecturer B.B.Kathayat 8
 Cont……
[1] Internal Environment: The internal environment of the business includes all
the forces and factors inside the organization which affect its marketing
operations. It can be defined as a controllable environment of the
organization likewise:
1) Owners/Investors: The group of people who invested their amount of money in an
organization.
2) BOD & CEO: Board of Directors is the shareholder’s superior committee and CEO is the
general manager of the organization and assess the overall direction and strategy of the
organization.
3) Organizational Resources: Resources consist with 5Ms such as; Money, Manpower,
Materials, Machine, and methods.
4) Organizational Objective: Objective refers to the specific steps a organization will take
to achieve a desired result. It must be SMART.
5) Organizational Structure: Structure defines how activities such as task allocation,
coordination, and supervision are directed toward the achievement of organizational
aims.
6) Organizational Culture: Culture refers to the total system of shared assumptions,
values, and beliefs, which governs how people behave in organizations.

Lecturer B.B.Kathayat 9
 Cont…...
[2] External Environment: The external environment constitutes factors and forces
which are external to the business and on which the marketers have little or no
control. The external environment can be categorized into two parts such as:
[a] Micro Environment: The micro-component of the external environment is also
known as the task environment. It comprises of external forces and factors that are
directly related to the business such as:
1) Customers: Customers comprise of the target groups of people who participates to
purchase goods and services for personal use or resale and reproduction.
2) Suppliers: Suppliers include all the parties which provide resources needed by the
organization like raw materials, spare parts etc.
3) Competitors: Competitors are the players in the same market with same goods and
services and targets similar customers as that of the organization.
4) Intermediaries: Market intermediaries include parties involved in distributing the goods
and services of the organization.
5) The Company: Marketing is one of the core functional department of the company. The
management and operations of this department depends on the company’s objectives,
policies, structure and other departments like production, finance, human resource,
research & development and so on.
6) Public & Government: Public is made up of any other group that has an actual or
potential interest or affects the company’s ability to serve its customers. Government is a
total system to govern the states, community and society.
Lecturer B.B.Kathayat 10
 Cont……
[b] Macro Environment: The macro component of the marketing
environment is also known as the general or broad environment. It
constitutes the external factors and forces which affect the industry as a
whole indirectly. The forces and factors associated with this environment
cannot controllable for the organizational. Also, it can be defined as PESTEL
Analysis.
1) Political: It consists with political parties, political ideologies, political system, political
instability/stability, trade union, pressure groups, regional associations and so on.
2) Economic: It comprises of economic systems, economic policies, trade cycle, inflation,
income, expenditure and saving.
3) Social-Cultural and Demographic: The social-cultural aspects lifestyle, values, culture,
prejudice and beliefs of the people. The demographic is characterized as population size,
density, location, age, gender, race, and occupation.
4) Technological: It constitutes innovation, technological alternatives, innovation
inducements, pace of technology, digitalization, automation, artificial intelligence,
research and development etc.
5) Ecological or Environmental: It includes the natural environment in which the business
operates. This includes the climatic conditions, environmental change, accessibility to
water and raw materials, natural disasters, pollution etc.
6) Legal & Regulatory: It includes government laws, policies, procedures prevailing in the
country to maintain security and safety of the public, society and community.

Lecturer B.B.Kathayat 11
 4. Reactive and Proactive Marketing
Reactive Marketing
❖ Reactive marketing is a marketing
strategy that takes place because
of unforeseen competition.
❖ It means that the marketing
strategy undertaken in response
to the actions of a competitor
without predetermined plan and
actions.
❖ Reactive marketing is one of the
most widely used marketing
approach that involves tactics
being employed when
opportunities or challenges arises.
It waits for crisis to happen and
then reacts.
Lecturer B.B.Kathayat
Proactive Marketing
❖ Proactive marketing is a marketing
strategy that takes place for
original creation not for
competitor’s responses.
❖ It means that marketing strategy
consists with predefined plan and
actions, environmental analysis
and forecasting .
❖ Proactive Marketing is a form of
marketing that allows for
marketers to be agile, real-time,
data-driven, and adaptable to the
ever-changing space of what their
target audience could be seeking.
It tries to explore the imminent
issues and their solution in
advance.
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Reactive Marketing
❖ Reactive marketing strategies are
usually very much conservative as
they have no written plan,
strategy and waits for external
influences before taking action.
❖ Companies that rely too much on
reactive marketing strategy may
miss new or emerging business
opportunities.
❖ Reactive marketing strategy is
often used as a response to your
competitor’s actions.
Lecturer B.B.Kathayat
Cont……
Proactive Marketing
❖ Proactive Marketing strategies
typically develop from proper
marketing plan , a company’s
analysis of internal strengths and
external opportunities and
threats.
❖ Companies that rely on proactive
marketing strategy do not miss
the new or emerging business
opportunities.
❖ Proactive marketing strategy is
often used as a response to your
customer’s needs or demands.
13

Reactive Marketing
❖ Reactive is when you deal with
things that happened when you
are not prepared such as
defensive, imitative and
responsive.
❖ A reactive marketing strategies
are weak in the area of quality
control & assurance.
Rea-life example----------------- If a hotel
manager assumes everything is fine until
he/she receives a customer complaint,
he/she is using a reactive strategy. The
weakness of this approach is that many
dissatisfied customers do not complain
to management; they simply go
elsewhere next time and advise others
to do the same.
Lecturer B.B.Kathayat
Cont……
Proactive Marketing
❖ Proactive is when you make good
course of actions or plans to
prevent something from
happening such as environment
analysis, research & development
and creativity and innovation.
❖ A proactive marketing strategy is
good in the area of quality control
& assurance.
Real-life example-------------- In this case
the hotel manager could include making
careful hiring decisions, fostering a
customer service culture among the staff,
checking with guests during their stay to
ensure their needs are being met and
any other actions likely to prevent
customer dissatisfaction.
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 5. Importance and Scope of Marketing Environment Analysis

❖ Each and every business organizations, no matter how big or small, they
establishes and operates within the environment.

❖ Typically, every organizations’ survival, growth, earnings, reputation,

present and future existence depends on their internal and external
environment. The importance of marketing environment analysis are as:
→ To recognize strengths and weaknesses of the organization.
→ To explore new opportunities and threats of the organization.
→ To understand customer buying behavior.
→ To make general awareness or predict uncertainty.
→ To optimal utilization of resources such as 5Ms.
→ To find out competitor's strengths and weakness.
→ To formulate long-term plan and strategies.
→ To maintain competitive advantages
→ To improve quality of goods and services.
→ To fulfill and satisfy customers needs, wants and demands.
→ To collect relevant information for making rational decisions.
→ To maximize profit or maximize wealth of the organization.

Lecturer B.B.Kathayat 15
 6. The Marketing Environment in Nepal

❖ Nepal is a landlocked and developing country in

South Asia.

❖ Nepal mainly situated in the Himalayas, mid-

Himalayas and Plain regain.

❖ The political & governing system of Nepal based on

Federal Democratic Republic.

❖ Area: 147,516 km²

❖ Human Development Index (HDI): 0.559 ❖ Population: 28.61 29.14 million [WB/CBS, 2020]
[WB/CBS, 2020]
✓ Life Expectancy: 71.17 years
✓ Literacy Rate: 67.91%
✓ Per Capita Income: $1039

❖ Trade Deficit: Rs. 1099.9 Billion, increased

by 13.5% in the previous fiscal year
[WB/CBS, 2020]

❖ Gross Domestic Product (GDP): 7.2%, out

of 100% the remittance contribution to
GDP 28.7% [WB/CBS, 2020]

Lecturer B.B.Kathayat 16
 Cont……

Political Environment

Economic Environment

Nepalese Social-Cultural Environment

Marketing
Environment Technological Environment

Ecological Environment

Legal Environment

Lecturer B.B.Kathayat 17
 Cont……
Political Environment
→ It is defined as the state, government, institutions and laws together with the public and
private stakeholders.
→ The major setback for any business or marketing activities of business organization in
Nepal concerned with the political aspect is the lack of strong and consistent government.
→ For many decades the Nepal hasn’t been able to have a strong and consistent government
hence the rise in corruption, unclear foreign policies, minimal economic development, etc
directly affecting the marketing ability of domestic business organizations.
→ For this, now marketing managers will pay attention to political environment to see how
government or political decisions and actions will influence marketing activities of
businesses.
Economic Environment
→ Nepal is an under-developing country , due to various factors the economic performance
of our nation has been below par.
→ There is an increasing gap between rich and poor, heavy dependence on remittance which
will affect the performance of the economy in the long run.
→ Lack of different financial policies regarding private businesses attempts to create
difficulties to improve productivity.
→ The slow economic growth and increasing unemployment negatively affects the marketing
environment of Nepal.
→ For this, now marketing managers needs to be explored economic issues and grasps
opportunities and eliminates threats.

Lecturer B.B.Kathayat 18
 Cont……
Social-Cultural Environment
→ The major portions of Nepalese population live in rural areas with very small marketing
activities and most of the people are uneducated and some how, they have no basic
ideas about how marketing activities done by the businesses.
→ Major religion being Hindu and with joint family structure the major number of
population are very traditional in thinking which affects the marketing strategies of
businesses.
→ The god faith, oath and beliefs of Nepalese societies also may influences to the activities
of businesses associated with marketing like, production, pricing, promotion and even
placing.
→ For this, now marketing managers requires to acknowledge the social-cultural aspects to
eliminates some misunderstanding and diversify their business.
Technological Environment
→ Nepal is far behind in use of contemporary technologies because of the lack of capital,
acquisition and utilization of advance technologies.
→ There is lack of skills manpower on marketing research and development with very
minimal level of creativity, innovation and even technological transfer.
→ Still , most of the business organization’s activities heavily dependence on manual and
older technologies.
→ For this, now marketing managers needs to rethink about marketing research and
development, utilization of latest technologies through skills enhancement and so on.

Lecturer B.B.Kathayat 19
 Cont……
Ecological Environment
→ Due to rapid changes in global warming, industrialization, environmental problems in
sectors such as water, air, waste, energy and forestry in Nepal are reaching a crisis point.
→ Besides that, the Nepalese government and private organizations have been trying to
solve issues related to environment by various means such as crops or plants cultivation,
making social awareness, green marketing and applying the concepts of corporate social
responsibility.
→ For this, now marketing managers needs to Implement recycling habits into business is
one of the most effective ways to help lessen landfill waste, conserve natural resources,
reduce pollution, cut down on energy consumption, and slow down global warming.

Legal Environment
→ Due to the political interests and instability, Nepal seems to has a very poor legislative and
administrative system today. The major fault in Nepalese legal system is the lack of clarity
in many laws, rules and regulation.
→ Tax burden is relatively higher in Nepal than other SAARC counties lacking simplicity,
transparency and competitiveness. Beside that, there is a lack of beneficial trade policies
marketers or businesses bears some losses from decades.
→ For this, now marketing managers must attempts to analyze the legal issues related to
government, business and industries.

Lecturer B.B.Kathayat 20
 Home Assignment 2 [Sample Questions]

Q1. What do you know about marketing environment? Explain its features.
Q2. Why we needs to analyze the marketing environment? Explain.
Q3. What are the types or classifications of marketing environment? Explain in
brief.
Q4. In which environmental factors we can identify the weakness and strengths
of our business? Explain.
Q5. What is a micro environment of marketing? Explain its components.
Q6. Do you know the macro environment of marketing? Explain its components.
Q7. How reactive marketing is differing from proactive marketing? Explain with
suitable examples.
Q8. What is marketing? Describe the impacts of macro environmental variables
in marketing decisions and actions.
Q9. What are the factors considers to analyze the marketing environment in
Nepal? Explain with examples.

Lecturer B.B.Kathayat 21
 Text or Reference Books

o Kotler, P. and Armstrong G.: Principles of Marketing, (13th ed.), Pearson,

India [Philip Kotler and Gray Armstorng]

o Saxena, R.:Marketing Management (new ed.), McGraw Hill, India [Rajan

Saxena]

o Agrawal, G.R.: Marketing in Nepal, Fundamentals, Management Strategy,

Educational Enterprise, KTM [Govinda Ram Agrawal)

o Thapa, G., Neupane, D., and Rai, B.: Fundamentals of Marketing, (new ed.),
Asmita Publication, KTM [Gopal Thapa, Dipendra Kumar Neupane and
Bharat Rai]

Lecturer B.B.Kathayat 22
Notes
After finalizing the chapter, your are required to solve and submit CS PDF
copy of answer sheet within the prescribed time and date. It contains with
20 marks. The obtaining marks will fairly accumulates in internal
evaluation. If anyone fail to submit this assignment within the dateline, I
throw out form the evaluation. Thus, please do not miss or neglect this
work.
Thank You!!!

B.B. Kathayat
Lecturer, Marketing
CN:9860451483
Mail ID: kathayatbb44@gmail.com

Lecturer B.B.Kathayat 23
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