Unit 3:

Marketing Environment
• An environment can be defined as everything
which surrounds and impinges on a system.
• Systems of many kinds have environments
with which they interact
• Marketing can be seen as a system which must
respond to environmental change.
• Marketing environment refers to “external
factors and forces that affect the company’s
ability to develop and maintain successful
transactions and relationships with its target
customers
• The firm must be aware of what is going on in
its marketing environment and appreciate how
change in its environment can lead to changing
patterns of demand for its products
• The Marketing Environment includes the
• Internal factors (employees, customers,
shareholders, retailers & distributors, etc.) and
• the External factors( political, legal, social,
technological, economic) that surround the
business and influence its marketing
operations.
• The marketing environment can be broadly
classified into three parts:
• Internal Environment
• Microenvironment
• Macro Environment
 Internal Environment
• The Internal Marketing Environment includes
all the factors that are within the organization
and affects the overall business operations.
• These factors include labor, inventory, company
policy, logistics, budget, capital assets, etc.
which are a part of the organization and affects
the marketing decision and its relationship with
the customers.
• These factors can be controlled by the firm.
• The internal environment of the business includes all
the forces and factors inside the organization which
affect its marketing operations.
• These components can be grouped under the Five Ms
of the business, which are:
– Men
– Money
– Machinery
– Materials
– Markets
 Microenvironment
• The Micro Marketing Environment includes all those factors that are
closely associated with the operations of the business and influences its
functioning.
• The microenvironment factors include
• Customers,
• Employees,
• Suppliers,
• Retailers & distributors,
• Shareholders,
• Competitors,
• Government and
• General public.
 Customers
• Every business revolves around fulfilling
the customer’s needs and wants.
• Each marketing strategy is customer oriented
that focuses on understanding the need of the
customers and offering the best product that
fulfills their needs.
 Employees
• Employees are the main component of a
business who contributes significantly to its
success.
• The quality of employees depends on the
training and motivation sessions given to
them.
• Training & Development is crucial to impart
marketing skills in an individual.
 Suppliers
• Suppliers are the persons from whom the
material is purchased to make a finished good
and hence are very important for the
organization.
• It is crucial to identify the suppliers existing in
the market and choose the best that fulfills the
firm’s requirement.
 Retailers & Distributors
• The channel partners play an imperative role
in determining the success of marketing
operations.
• Being in direct touch with customers they can
give suggestions about customer’s desires
regarding a product and its services.
 Competitors
• Keeping a close watch on competitors enables
a company to design its marketing strategy
according to the trend prevailing in the market.
 Shareholders
• Shareholders are the owners of the company,
and every firm has an objective of maximizing
its shareholder’s wealth.
• Marketing activities should be undertaken
keeping in mind the returns to shareholders.
 Government
• The Government departments make several
policies viz. Pricing policy, credit policy,
education policy, housing policy, etc. that do
have an influence on the marketing strategies.
• A company has to keep track on these policies
and make the marketing programs accordingly.
 General public
• The business has some social responsibility
towards the society in which it is operating.
• Thus, all the marketing activities should be
designed that result in increased welfare of the
society as a whole
Every company is surrounded by seven types
of public
• Financial—banks, stock-brokers, financial institutions.
• Media—Newspaper, magazines, TV.
• Government—Government departments.
• Citizen—Consumer Organizations; environment
groups.
• Local— Neighbourhood residents, community groups.
• General—General Public, public opinions.
• Internal—Workers, officers, Board of Directors.
 Macro Environment
• The Macro Marketing Environment includes
all those factors that exist outside the
organization and can not be controlled.
• These factors majorly include Social,
Economic, Technological Forces, Political and
Legal Influences.
• These are also called as PESTLE framework.
 Political & Legal Factors
• With the change in political parties, several
changes are seen in the market in terms of
trade, taxes, and duties, codes and practices,
market regulations, etc.
• So the firm has to comply with all these
changes and the violation of which could
penalize its business operations.
 Economic Factors
• Every business operates in the economy and is
affected by the different phases it is
undergoing.
• In the case of recession, the marketing
practices should be different as what are
followed during the inflation period.
 Social Factors
• Since business operates in a society and has
some responsibility towards it must follow the
marketing practices that do not harm the
sentiments of people.
• The companies are required to invest in the
welfare of general people by constructing
public conveniences, parks, sponsoring
education, etc.
 Technological Factors
• As technology is advancing day by day, the
firms have to keep themselves updated so that
customers needs can be met with more
precision
 The following are the benefits of
environment analysis
• It helps in marketing analysis.
• It can assess the impact of opportunities and threats on the business.
• It facilitates the company to increase general awareness of
environmental changes.
• It is possible to develop effective marketing strategies on the basis
of analysis.
• It helps to capitalize the opportunities rather than losing out to
competitors.
• It facilitates to understand the elements of the environment.
• It helps to develop best strategies, in the light of analyzing “what is
going around the company”.
 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.