UNDERSTANDING THE

MARKET ENVIRONMENT

Marketing
Environment
A companys marketing environment
consists of the actors & forces
outside
marketing
that
affects
marketing managements ability to
build
&
maintain
successful
relationships
with
the
target
customers.
Philip Kotler
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Marketing Environment

Micro Environment Macro Environmen

Mkg Environment provides both opportunities and threats

Micro Environment
The actors close to the company
that affects its ability to serve
customers.
Company
Suppliers
Marketing Intermediates
Customers
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Competitors

Micro Environment

1. COMPANY
While formulating plans, Mkg managers must take into
account the other groups such as top mgt, finance, R &
D, purchasing, manufacturing, & accounting.
All these groups constitute a companys
microenvironment for the planners.
They should think about the consumer & work in
harmony to provide customer value & satisfaction.

2. SUPPLIERS

Developments in the supplier environment can have a

substantial effect on the companys mkg operations.
Price change, supply shortages, and other events
can interfere with the fulfillment of delivery promises to
customers & lose sales in the short run & damage
customer relationship in the long run

3. Mkg Intermediaries
Mkg Intermediaries are firms that aid the company in promoting, selling
& distributing its goods to the final buyers.
Physical Distribution firms assist the company in stocking & moving
goods from factory to their destinations.
Warehousing firms Stores and protects goods
Transportation firms move goods
Mkg Servicing Agencies assists the company in targeting &
providing its products to the right markets.
Financial intermediaries include banks, credit companies, insurance
companies, etc. that help with the buying & selling of goods, & also
insure against risk involved.
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4. CUSTOMERS
Customers belong to consumer markets, industrial markets,
reseller markets & international markets.
The taste and preferences of customers keeps on
fluctuating.
Only by studying the market demand & customerrelated factors on a regular basis can marketers carry out
their business activities successfully.
Marketers have to keep track of what customers
want, and grab emerging market opportunities.
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5. COMPETITORS
The competitors have to be identified, monitored to gain and
maintain customer loyalty.
Development of mkg plans and strategy is based on
knowledge about competitors activities.
Competitive
understanding

advantage
the

status,

competitors in the market.

building

also

strength

&

depends

on

weakness

of

6. PUBLIC
The company must also acknowledge a large group of publics that take
an interest. Whether welcome or not, in its method of doing business.
Most organizations establish public relations (PR) departments to plan
constructive relations with various publics. Every company is surrounded
by seven types of publics
Financial banks, stock brokers, financial institutions
Media newspaper, magazines, radio, TV
Government Government departments
Citizen action consumer organizations, environment groups
Local neighborhood residents, community groups
General general public public opinion
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Internal workers, officers, board of directors.

Macro Environment
The largest societal factors that affects the micro
environment. These are uncontrollable factors.
It includes factors such as,
Demographic
Economic
Natural
Technological
Political
Legal
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Cultural

Macro Environment

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1.Demographic
It is the study of human population in
terms of :
Age
Occupation
Gender

Education

Family Size

Religion

Income

Nationality

Ex Teenagers market have created marketing opportunities in India

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2.Economic Factors
Economic
Economic Areas
Areas
of
of Concern
Concern to
to
Marketers
Marketers
Distribution
Distribution of
of
Consumer
Consumer
Income
Income

Recession
Recession
Inflation
Inflation

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Distribution Of
Income
Income

distribution affects purchasing

power of people
Consumption pattern is affected by
income generation

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Inflation

16

Prices rise with no wage increase

Purchasing Power decreases

Increase profit margins by increasing

efficiency

Consumers reaction:
Search for lowest prices
Rely on coupons and sales

Recession

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Income, production and employment

fall

Reduced demand for goods and

services

3.Natural Factor
These also affect the pattern of industries

and marketing
Industries create pollution of air, water and
environment
The package in the form of plastic bags and
bottles create a lot of problems
Some governments have banned the use of
plastic bags.

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4.Technological Environment

Technological discoveries and

developments create
opportunities and threats in
the market. The marketers
should watch the trends in
technology.
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5.Political Factors
The political environment consists of laws, government
agencies that influence or limit various organizations and
individuals in a given society.
Substantial number of laws have been enacted to
regulate business and marketing to protect companies
from each other, to protect consumers from unfair trade
practices.

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6.Legal Factors
Marketers have to function within the legal framework
prevailing in the country. There have been many
legislations passed in India to control or guide businesses
and industry. There are legal regulations on products,
prices, distribution and promotion.
For example : Liquor and cigarette ads have been banned.

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7. Cultural Factors
Affect a societys basic values, perceptions, preferences, and behaviors.
Culture is the unified result of factors like religion, language, education
and upbringing. The following cultural characteristics can affect
marketing decision-making Persistence of core cultural values These are deep rooted and do not
change easily.
Ex: ethnocentrism, i.e., affinity to local made products and aversion to
foreign goods.
Shifts in secondary cultural values These can be changed and can
be moulded and manipulated easily.
Ex: The influence of film stars, models and celebrities on our young
peoples trend in hair styles, fashion of dresses and even lifestyles.
Marketers have a keen interest in anticipating cultural shifts in order to
spot new mkg opportunities or threats.
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