MARKETING

ENVIRONMENT

Marketing environment
Marketing environment is defined as the totality of forces
that are external to the business and that affect and get
affected by the marketing activity of a firm
ENVIRONMENTAL SCANNING
Study of marketing environment starts with environment
scanning. This is a process of gathering, analyzing and
forecasting of external environment information to
identify opportunity and threats that a company faces
Need for environment scanning
o
o
o
o
o

Identify opportunities
Identify threats
Forecast demand
Develop appropriate business plan
Adjust the company strategy according as the changes in the
competitive environment

Marketing Environment
Marketing environment can be broadly
categorized into :
o
o

Micro environment
Macro environment

Micro Environment
Micro environment is that external forces which are very
close to company and have impact on value creation and
customer service.
The major forces of micro environment are:
Company
Suppliers

Intermediaries

MICRO
ENVIRONMENT

Customers

Publics

Competitors

Micro Environment
1. The Company
The company is directed by its marketing plan. The
marketing plan can be effective when it is being supported
by other functional departments
2. Intermediaries
Intermediaries are the firms that distribute and sell the goods
of the company to its customers. The intermediaries are
retailers, wholesalers, agents, brokers, jobbers and carry
and forwarding agents etc.
Retailers are the final link between the company and its
customers
3. Publics
Publics is the group that support the company through
financial resources, create an image of the company,
examining companys policy and developing attitude towards
the product.

Micro Environment
The publics can be classified into six. They are:
o
o
o

o
o

Financial Publics
Banks, investment houses, stockholders etc
Media Publics
Media like new papers, television channels, radio etc
Regulation Agencies
Regulation agencies that control the rules and
regulations of business (e.g.TRAI) & Insurance
Regulation Agency (IRDA)
Citizen Action Groups
Formed by consumers or environment groups ( E.g..
Greenpeace)
General Publics
Common publics that purchase the product
Internal Publics
Employees of the company who create better image of
the company

Micro Environment
Competitors
The competitors who compete with the company in the market
In addition to existing competitors, potential competitors
should also be anticipated.
Competition may arise from:
Small firms with low overheads producing duplicates
Firms which diversify into certain products by merely being in the
particular industry (e.g.. Pepsi entered into snacks business)
Firms which expand in the same vertical . For example, Godrej

Suppliers
Suppliers are the first link in the entire supply chain of the
company, so any cost escalation in this stage will have
direct effect on company
Many companies adopt Supplier Relation Management
System to manage them well
Suppliers are sources of competition now

Micro Environment
Customers

Customers are the final target to whom the products or service is

created.
Based on customers, the market can be broadly classified into:
a. Customer Market
b. Business Market
c. Reseller Market
d. Government Market
e. International Market

Macro Environment
Political &
Legal
Environment

Social &
Cultural
Demographic
Macro
Environment

Technological

Economic &
Natural

Macro Environment
Macro environment is studied with the
help of a technique called PEST
framework.
P Political and Legal
E Economic and Natural
S Social and Cultural
T Technology Environment

Macro Environment
Demographic Environment
Demography is the study of population
characteristics such as size, density, location,
gender composition, age structure, occupation
and religion.
o Demographic environment is analyzed on the
basis of the following factors:
o

Age structure of population

Marital status of population
Geographic distribution
Educational level
Migration
Occupation

Macro Environment
Political and Legal Environment
o Govt. policies, legislations,

regulations and stability

of government directly affect the marketing and
business in a country.
o The political and legal forces are groped into the
following four categories:
Monetary and fiscal policies
Social legislation and regulations
Eg. Environment protection act
Legislations, Policies and Regulations relating to
industries:
Eg. Labor Act, Factories Act and policies regarding
subsidies and change in tariff rate.
Legislation related to manufacturing, trading, marketing
etc. (Ref Page No:50)
Eg. Companies Act, Factories Act etc

Macro Environment
Economic, Monetary & Natural Environment
o
o

Ref Page No: 51 and 52

Natural Environment.
The major environment factors that should be
considered are:
Inadequate raw materials arising out of strict mining
regulations
Global warming and pollution levels
Regulatory world

Macro Environment
Social & Cultural Environment

Growing urbanization, increasing participation of women in

livelihood activities, advent of global cultural practices, greater
exposure to life styles practiced world wide etc. has altered
marketing efforts
Rural masses are exposed to urbanized life style due to
electronic media
The major changes that has been affecting marketing
activities are:
1. Working women and the rise of metro sexual man
2. Jet set people

Macro Environment
Technological Environment
Growth of IT has contributed much to reducing
cost, better automation, better communication
and the speed in which the service is offered.
o Bio-technology has revolutionized the types of
various products available in the market
o Nano technology has miniaturized products
and combined multi-product features but it has
created problems to the marketers to maintain
pace with
o

Difference between micro and

macro environment
Dimension Macro

Micro

Size

Large

Small

Control

Uncontrollable

Controllable

Uncertainty Very high

Low

Complexity High

Low

Examples

Customers, Publics,
Competitors, Suppliers,
Intermediaries

PEST