Module II
MARKETING ENVIRONMENT
MARKETING ENVIRONMENT
Refers to factors influencing a
company’s ability to serve customers.
Includes internal (inside the company)
and external factors.
Some factors are controllable, while
others require adaptation.
Understanding it helps businesses
overcome challenges.
According to Philip Kotler, “A
company’s marketing environment
consists of the actors and forces
outside marketing that affect a
MARKETING
ENVIRONMENT company’s ability to build &
maintain successful transactions &
relationships with the company’s
target customers.”
MARKETING ENVIRONMENT
Internal Environment: Factors inside the company’s control.
External Environment: Factors outside the company.
Micro-Environment: Immediate surroundings affecting
operations.
Macro-Environment: Broad societal forces shaping the
market.
Internal environment
• Refers to company-specific factors under
its control.
• Grouped under the "Five Ms":
• Men: Employees and their skills.
• Money: Budget and financial resources.
• Machinery: Tools, equipment, and
technology.
• Materials: Raw materials needed for
production.
• Markets: Target customers and their
needs.
• Includes departments like sales,
marketing, HR, and manufacturing.
External Environment
MICRO-ENVIRONMENT MACRO-ENVIRONMENT
a) The Company a) Demographic Environment
b) Economic Environment
b) Company’s Suppliers
c) Natural/Physical Environment
c) Marketing Intermediaries
d) Technological Environment
d) Customers
e) Political Environment
e) Existing Competitors f) Legal Environment
f) Public g) Social and Cultural Environment
Microenvironment
Microenvironment consists of factors close
to the company that affect its ability to
serve its customers
Part of the external environment closest to
the company.
Directly influences the company’s
operations and ability to serve customers.
Includes forces like suppliers, customers,
competitors, and public opinion.
Requires constant monitoring to stay
competitive.
Micro Environment
a) The Company
b) Company’s Suppliers
c) Marketing Intermediaries
d) Customers
e) Existing Competitors
f) Public
The Company
Departments influencing marketing plans:
Finance: Allocates budgets for marketing
activities.
R&D: Designs innovative products.
Purchasing: Manages raw material supplies.
Manufacturing: Ensures quality and quantity in
production.
Accounts: Tracks revenues and expenses.
Cross-department collaboration ensures
consistent marketing strategies.
Suppliers
Provide resources like raw materials for
production.
Key Considerations:
Supply Availability: Avoid delays or
shortages.
Price Trends: Rising costs can affect
pricing strategies.
Collaboration: Strengthens the supply
chain.
Risks: Strikes or disruptions can harm
operations and customer satisfaction.
Marketing Intermediaries
Marketing intermediaries are firms that help the
company to promote, sell and distribute its goods
to final buyers.
Bridge the gap between the company and
customers.
Types of intermediaries:
Resellers: Wholesalers and retailers who sell
products.
Physical Distribution Firms: Warehouses and
transport companies.
Marketing Service Agencies: Advertising,
research, and media agencies.
Financial Intermediaries: Banks, credit
companies, and insurers.
Customer
Types of markets:
Consumer Markets: Individuals buying for
personal use.
Business Markets: Companies buying for
production.
Reseller Markets: Buying to resell for profit.
Government Markets: Buying for public
services.
International Markets: Buyers in other
countries.
Each market type requires tailored strategies.
Competitors
Companies offering similar products or
services.
Analyze competitors’ strengths and
weaknesses.
Develop unique strategies to gain a
competitive edge.
Adapt to industry trends and market shifts.
Consider firm size when planning
strategies.
The Marketing concept states that to be successful, a company must
provide greater customer value and satisfaction than its competitors do
Publics
Publics is any groups that have an actual or potential
interest in or impact on an organizational ability to
achieve its objective.
Groups influencing the company’s success, such as:
Financial: Banks and investors.
Media: TV, newspapers, and online platforms.
Government: Regulatory bodies.
Citizen Groups: Environmental and consumer
organizations.
Local Publics: Community groups and residents.
General Public: Public opinion about the company.
Internal Publics: Employees and management.
Companies must maintain a positive image with all
publics.
Macroenvironment
Macroenvironment consists of the large
societal forces that affects the entire
microenvironment.
Both an opportunity and threat
Factors existing outside the organization
that cannot be controlled.
Affect the company, industry, and micro-
environment.
Demographic, Economic, Natural, Technological,
Political, Legal, Social and Cultural
environments.
Demographic Environment
Demography is the study of human populations in terms of size,
density, location, age, gender, race, occupation, and other statistics.
Identifies current and potential customers.
Influences consumption patterns and product demand.
Key Demographic Variables
Income: Determines purchasing power and
status.
Lifestyle: Activities, interests, opinions
influencing purchases.
Gender: Products targeting males and females
separately.
Education: Shapes income, occupation, and
purchasing decisions.
Social Class: Groups with similar values and
lifestyles.
Age: Tailored marketing strategies for infants,
teens, adults, senior citizens.
Economic Environment
The economic environment consists of factors that
affect consumer purchasing power and spending
patterns.
Refers to external economic factors that impact
businesses and organizations on a large scale.
Key Components
Economic Growth: GDP, national income, and industrial
growth.
Inflation/Deflation: Impact on purchasing power and
costs.
Interest Rates: Influence on borrowing and investment.
Employment Levels: Affects consumer spending and
labor market.
Exchange Rates: Impact on imports, exports, and
profitability.
Natural Environment
The natural environment involves the natural resources
that are needed as inputs by marketers or that are affected
by marketing activities
The natural environment includes physical and
biological factors such as climate, natural resources,
ecosystems, and biodiversity.
Resource availability influences production.
Climate changes affect operational strategies (e.g.,
agriculture, tourism).
Regulations for sustainable use of resources.
Key Components
Climate: Temperature, rainfall, weather patterns.
Natural Resources: Water, forests, minerals, fossil fuels.
Ecosystems: Interaction of living organisms with their
environment.
Biodiversity: Variety of life forms, crucial for ecological balance.
Technological Environment
The external factors related to technological
advancements that influence businesses, industries, and
society.
Enhances productivity and efficiency
Drives innovation and competitiveness
Shapes consumer behavior and preferences
Requires continuous adaptation to new tools
Key Components
Emerging technologies (AI, robotics, blockchain, etc.)
Research & Development (R&D) trends
Automation and digitalization
Technological infrastructure (internet, 5G, etc.)
Political and Legal Environment
Refers to the influence of government policies, laws, and
political stability on business operations.
Changes in government policies can create
opportunities or threats.
High political stability encourages investment, while
instability increases risk.
Key Components
Government Stability: Impact of stable or unstable political
conditions.
Trade Regulations: Rules for importing and exporting
goods.
Tax Policies: Corporate taxes, VAT, or GST affecting profits.
Legal Environment: Laws related to labor, consumer
protection, and businesses.
Socio - Cultural Environment
The socio-cultural environment refers to the shared
beliefs, values, customs, and behaviors of a society that
influence businesses and individuals.
Determines consumer behavior and demand
Influences marketing strategies and product
development
Affects workforce diversity and human resource
policies
Key Factors
Cultural Values & Beliefs: Traditions, lifestyle, ethics, and social
norms
Education & Literacy Levels: Impacts consumer awareness and
workforce skills
Social Trends: Changes in preferences, consumption patterns,
and lifestyles
Family Structures: Influence on buying decisions and social
behavior
Competitive Environment
The entrance of future competitors is often difficult to
predict and can have a major effect on existing
businesses
A company must satisfy the needs and wants of
consumers better than its competitors do in order to
survive
Thank you
