Module II:
Marketing Environment
Marketing Environment consists of two components:
I) Micro Environment:
Micro environmental factors which influence the marketing decisions of the
company are:
i) Organization's Internal Environment,
ii) Supplier
iii) Marketing intermediaries,
iv) Competitors and
v) Consumers.
i) Organization’s Internal Environment: Organization’s financial; production
and human resource capabilities influence its marketing decision, to a large extent.
For instance, while deciding about the sales produce the additional quantities or
not. If the existing facilities are not enough and expansion to plant and machinery
is required, it is necessary to think about financial capabilities.
ii) Supplier: For production of goods or services, you require a variety of inputs.
Success of the marketing organization depends upon the smooth and continuous
supply of inputs in required quantities on reasonable terms. The timely supply of
specified quality and quantity makes the producer to ‘keep up the delivery
schedule and the quality of the final product. The dependence on the supplier is
naturally more when the number of suppliers is more.
For example, expect payment in advance, and goods are supplied on the basis of a
waiting list, whereas others may be ready to supply on credit basis.
iii) Intermediaries: Producers use the services of a number of intermediaries to
move their products to the consumers. The dealers and distributors etc are the
marketing intermediaries. There are also other intermediaries like transport
organizations, warehousing agencies, etc., who assist in physical distribution. Their
cost of service, accessibility, safe and fast delivery, etc.
iv) Competitors: Apart from competition on the price factor, there are other forms
of competition like product differentiation. There are also competitors who use
brand name, dealer network. Or close substitute products as the focal point. Their
advertising may present several real or false attributes of their product. If one
advertises that his product has an imported technology, the other may say that he is
already exporting his product. Competitors are those who sell the goods and
services of similar description in the same market. Identification of competitors is
of utmost importance. Therefore it is essential to build an efficient system of
marketing.
v) Customers: A firm may be selling directly to the ultimate users, the resellers,
the industries, the Government or international buyers. It may be selling to any one
or all of these customers. Each type of consumer market has certain unique
characteristics and the marketer should be fully acquainted with the art of
persuading and selling to these consumers. The environment presented by
customer profile will have a direct influence on these marketing activities.
II. Macro Environment:
The macro environmental factors that exert influence on an organization’s
marketing system are:
i) Demographic environment
ii) Economic environment
iii) Natural environment
iv) Technological environment
v) Political and legal environment
vi) Socio-cultural environment.
Demographic environment:
Demography is the study of population in terms of size, density, location, age,
gender, occupation etc. These factors have a huge impact on the marketing
decisions of the company.
For example, a growth in population means increasing human needs which results
in the expansion of product markets, if there is sufficient purchasing power.
Economic environment:
It consists of factors related to the means of production and distribution of wealth
that have an impact on the functioning of an organization. It affects the spending
power of people. Further economic development and growth affects the product
choice of the customers.
For example- per capita income, Balance of payment position, Gross national
product, inflation, deflation etc.
Physical environment/Natural environment: Components of physical forces are
the earth’s natural renewable and non renewable resources. Natural renewable
resources are forests, food products from agriculture or sea. Non renewable
resources are finite such as oil, coal, minerals etc. both these components often
change the level and type of resources available to a marketer for his production.
Technological environment:
Advances in technology are an important uncontrollable environment for marketers
in two ways: First, they are totally unpredictable; and secondly, the adoption of
new technology is often prevented by constraints imposed by internal and external
resources. It is a source of new and better products.
For example: Advancement in communication and infrastructural technology-
electronic marketing, video conferencing etc.
Political and legal environment:
These factors include the policies related to public sector, small scale industries,
sick industries, import and export, licensing, development of backward areas etc.
the vast governmental network of laws and regulations have varied impact on
marketing activities.
Socio- Cultural environment:
It comprises of society and culture. A society is a set of relations among people
including their social status and roles. Culture consists of attitudes, customs,
beliefs and values of a society.
There are different degrees with which people adopt them. Religion is also an
important component of culture which has implications for the marketer.
