Unit 2: Marketing Environment

Marketing Environment: Concept of Environment,

Macro Environment & Micro Environment –
Components and characteristics, Needs & Trends,
Major forces impacting the Macro Environment &
Micro Environment, Need for analyzing the Marketing
Environment. Analyzing the Political, Economic, Socio-
cultural, Technical and Legal Environment.
Demographics.
“A company’s marketing environment
consists of the internal factors & forces,
which affect the company’s ability to
develop & maintain successful transactions
& relationships with the company’s target
customers”.
-Philip Kotler
 Macro Environment
Macro environment refers to all forces that are part
of  the larger society and affects the  micro
environment. It includes demography, economy,
politics, culture, technology, and natural forces.
Macro environment is less controllable.
 Micro Environment
The micro environment refers to the forces that are close
to the marketing organization and directly impact the
customer experience. It includes the organization itself,
its suppliers, marketing intermediaries, customers,
markets or segments, competitors, and publics.
Happenings in micro environment is relatively
controllable for the marketing organization.
Need of marketing Environment
Need for Environment analysis
Environmental analysis attempts to give an extensive
insight as to the current market conditions as well as of
impact of external factors that are uncontrollable by
the marketers. These variables play an important role
in convincing potential customers regarding changes in
market trends, market conditions etc.
Spotting opportunities and treats.
Trends in macro and micro environment
 Incomes
Life-style
Demographic Environment
Education
Social Class
Occupation
Age
o Infants
o School Going Teens
o Young Adults
o Adults
o Senior Citizens
o Women
General Economic Conditions:
o Agricultural Trends
o Industrial output Trends
Economic Environment
o Per Capita Income Trends
o Price Levels
o Impact of Government Policy
o Economic Systems

Industrial Conditions
 Market Growth
 Demand pattern of the Industry
 Its stage in product life cycle

Supply Sources for production

 Land
 Labour
 Capital
 Machinery & Equipment etc.
Physical Environment
It involves the natural resources that are needed as inputs by
marketer or those that are affected by marketing activities.
Marketer should be aware of trends like shortage of raw
materials, increased population, and increased governmental
intervention in natural resource management.
Technological Environment
Political Environment
It consists of factors related to the management
of public affairs and their impact on the business
of an organization.
The political environment includes laws,
government agencies, and pressure groups that
influence and limit various organizations and
individuals in a given society.
 Legal Environment
Making decisions are strongly affected by laws
pertaining to competition, price setting,
distribution arrangement, advertising etc.
It is necessary for marketer to understand the legal
environment of the country.
The following laws affected business in India:
 Indian Contract Act 1872
 Factories Act 1948
 Essential Commodities Act 1955
 Trade and Merchandise Act 1958
 Environment Protection Act 1986
Social & Cultural Environment

Socio cultural forces refers to the attitudes, beliefs,

norms, values, lifestyles of individuals in a society.
Some of the important factors and influences operating
in a social environment are the buying and the
consumption habits of the people , their languages,
customs and traditions, tastes and preferences,
education and all factor that affect the business.
Marketing Environment Classified as:
Controllable Forces: Controllable forces consist of
marketing policies and marketing strategies. Marketing
policies are framed by the firm depending on its marketing
philosophy. The top management is responsible for framing
broad policies. Marketing strategies are developed by middle
level management.
Uncontrollable forces:
 The external forces are divided into micro-environment and macro-
environment. The micro-environment consists of the suppliers,
marketing intermediaries, customers etc. while the macro-
environment consists of the demography, socio- cultural, political,
economical, technical, legal environments etc.
 Micro Environment
These factors are close to the company.
- organizational internal environment
- suppliers
- market intermediaries
- customers
- competitors
- public
 The Company
In designing marketing plans, marketing management
takes other company groups into account – Finance,
Research and Development, Purchasing, Manufacturing,
Accounting, Top Management etc.
 Company’s suppliers
Suppliers provide the resources
needed by the company to
product its goods and services.
They are important links in the
companies overall customer
“Value Delivery System”
Marketing managers must
watch supply availability-
supply a shortage and delays,
labour strikes and price trends etc.
Marketing Intermediaries
It include resellers,
physical distribution firms,
marketing service agencies
and financial
intermediaries.
They help to company to
promote, sell and distribute
its goods to final buyers.
Physical Distribution.
Customers
Customers markets consists of individuals and
households that they buy goods and services for
personal consumption.
 Competitors
The firm should consider its own size and industry position
compared to those of its competitors.
 Public
Companies must put their primary energy into effectively
managing their relationship with their customers, distributor
and suppliers , their overall success will affected by how other
publics in the society view their activity.
Every company is surrounded by seven types of public:
o Financial- banks, stock brokers, financial institutions
o Media- Newspapers, Magazines, TV
o Government- Government departments
o Citizen- Consumer organizations, environment groups
o Local- Neighborhood residents, community groups
o General- General Public, public opinions, social welfare
o Internal- workers, officers, Board of the directors.
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