Chapter-4

Marketing Environment

This Chapter consists of :

 Meaning and Features of marketing Environment

 Components of Marketing Environment: Internal and External.
 Impacts of Marketing Environment on a Firm’s Marketing Activities

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Prepared and written by Hem Raj Gurung (Lecturer of Sagarmatha College, Devdaha, Rupandehi)
  Meaning of Marketing Environment:
Marketing environment consists of forces that directly or indirectly influences organization’s
marketing activities. Marketing Environment refers to all forces that affect its development
performance and outcomes. It inluences attainment of the marketing goal. It can be the internal
and external. Internal environmental process provides strength and weakness for marketing and
external environmental forces provides opportunities and threats for marketing.

According to Keith Davis;” Marketing environment is the aggregate of all conditions, events and
influences that surrounds and affect it.”

According to Philip Kotler;” Marketing environment consists of the actors and forces outside
marketing that affect marketing management’s ability to build and maitain successful
relationship with target customers.”

A marketing manager has to understand situation or surrounding where the marketing grows
and progresses which is called the environment. Such environment directly or indirectly affects
the marketing activities and functions of an organization. Therefore, they are called marketing
environment.

 Features of marketing environment:

The features of marketing environment are:

a. Complex:
Marketing environment is complex. It is complicable and it provides uncertainty to the
marketing.
b. Dynamic:
Marketing environment is highly dynamic. It keeps on changing. Technological changes
strongly influences it.
c. Sensitive:
Marketing environment has high degree of sensitivity. Success of marketing heavily depends
on satisfaction of consumers. For this marketers must know the need,taste and preferences
of consumer which change over time. So, marketing firms must be highly sensible in
knowing the needs of consumers.
d. Uncertainty:
Marketing environment is full of uncertainties. No marketing firms can accurately estimate
the events that occur in future and their possible result in advance. Anything happen at any
time.
e. Multifaceted:
Marketing environment is multifaceted. Firms perceive environmental changes differently.
f. Far reaching impact:

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Prepared and written by Hem Raj Gurung (Lecturer of Sagarmatha College, Devdaha, Rupandehi)
 It has far reaching impact on marketing. It provides strength, weaknesses, opportunities and
threats (SWOT) to marketing.
g. Uncontrollable:
The different forces of marketing environment cannot be controlled by the marketers
whenever they required. For eg: Needs and wants of the customers.

Components of Marketing Environment:

Marketing environment consist of forces that influence its ability to attain goals. Its components are

1. Internal environment
2. External environment

1. Internal Environment:
It consists of condition and forces inside the marketing. It is also known as micro environment. It
is located within marketing and provides strength and weaknesses to marketing. It is semi
controlable by marketing. It includes marketing scope and stakeholders:
A. Marketing Scope:
It includes different factors which are as follows:
a. Organizational objectives:
Objectives are desired outcome. It cannot be profit only.They can be multipal and
marketing activities must be conducted within the objectives.
b. Organizational policies:
Firm should have policies for a certain time preiod. Policies of the firm are guidelines for
the decision making and future courses of action. Marketers make different policies for
different objectives. Marketing must deal with diffrent stakeholders within the policies
guidelines.
c. Organizational resources:
Resources are also the main factors of internal environment. Resources may be physical,
human, financial and information. They directly and indirectly affect to the marketing
activities of the firm.
d. Orgainzational structure:
Organizatinal structure is the overall framework for organizational roles, rules,
hierarchy, relations and authority. It aslo includes individual, groups, units and their
inter-relationships. Marketing department must function within the organizational
structure.

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Prepared and written by Hem Raj Gurung (Lecturer of Sagarmatha College, Devdaha, Rupandehi)
 e. Organizational Culture:
Culture is shared values, norms, beliefs,customs and symbols that guide behaviour in
marketing. Ornizational culture is also a factor of internal environment. Culture means
the assumptions that members of an organzation share in common. Every organizations
has its own culture. Organzitional culture has a powerful influence on the process of
organizational change and decision making.

B. Marketing Stakeholders:
They are important environment of marketing. They affects the marketing activities. They
are relevant for achievement of marketing objectives and goals. The factors consist in it are
described as follows:

a. Customer:
They can be individual and institutional customers. They pay money for product and
marketing satisfy their needs and wants. Marketing should aim for total customer
satisfaction.

b. Suppliers:
They supply inputs to marketing. They are supplier of raw materials and finished product.
The relationship with supplier are essential which should be long term.

c. Competitors:
Marketers compete for customers. Competition is every where which directly affects the
marketing activities.

d. Government:
Government regulates marketing . Its policies affects marketing activities. It protects
consumer and societal interest and marketing by prohibitin unfair trade practices.

e. Financial Institutions:
Marketing depends on financial institutions for the supply of funds. They can be banks,
insurance companies and other financial institutions. Good working relationship with the
financial institution is important for maketing.

f. Labour Unions:
Marketing must manage its labour relations. It should co-operate with labour unions
and should deal with multipal labour union.

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Prepared and written by Hem Raj Gurung (Lecturer of Sagarmatha College, Devdaha, Rupandehi)
 g. Pressure groups:
They are special interest groups which are within organization. They use several process
to pressurize marketing to protect their interest. Example: Consumer associations,
environemental groups etc.

h. Media:
Marketing must deal with media. Every action of marketing is subject to media
reporting, public relation programs are needed to promote image and prducts. Media
can be print, visual, audio and others.

2. External Environment:
It is also known as Macro enverionment. External environment consists of condition and forces
outside the marketing organization. It provides opportunities and threats. It cannot be
controlled by marketing organization. It affects the climate and surroundings in which marketing
operates. It includes different components and forces which are as follows:
a. Political Legal Environment:
It includes law of government agencies, pressure groups, political system, political
institutions, political philoshopies, laws and laws administrations etc. that influences various
marketing organizations and individuals in a society. Political environment of a country has
an important impact on the marketing activities. Politicians develop laws and political
system that shape the economic activities in a country. Marketing systems are affacted by
government and monetary policies, fiscal policies, import and exports policies,custom duty
etc. So Political legal environment involves:
- Government policies
- Governement agencies
- Pressure groups
- Laws.
- Power blocks
- Regional groups

b. Ecomomic Environment:
Economic Environment consists of some significant factors that affects the marketing
activities. It consists of factors that affects consumer purchasing power and
spending ,interest rates like money supply, price level, consumer credit etc. A marketing
program is affected by such economic factors as the current and anticipated stage of the
business cycle, inflation and interest rates.
- General economic condition: prosperity, recession, deppression, recovery.
- Buying power of consumer: inflation, disposable income, willingness to spend,
availability of credit etc.

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Prepared and written by Hem Raj Gurung (Lecturer of Sagarmatha College, Devdaha, Rupandehi)
 c. Socio –Cultural Environment:
Socio cultural forces refers to the attitudes,beliefs, traditions, religion, language,norms,
values, customs and life style of individual in a society. It can influence the welfare of a firm
in long run. A good socio cultural environment analysis combines the following
components:
- Demographic: population size, growth, migration and urbanization.
- Life style
- Social forces
- Cultural forces:values, beliefs, religions and traditions.

d. Technological Enivronment:
Technology is the most dynamic of the external environment forces and inluences people’s
life style, consumption behivior and attitude. Technological environment is the forces that
creates new technology by creating new product product and market opportunities. It is a
very strong force that cannot be neglected by any organization in these modern days. The
major technological aspects to be considered by marketing are:
- Levels of technology
- Pace of technological changes
- Trend of technology
- Cost and benefit of using new technology

e. Natural Environment:
Natural environment of marketing consists of all geographical and physical forces such as
natural resources, location, topography and climate. This forces is very important in a
country like Nepal where both opportunities and threats result from the country’s
topography, climate and location.
- Natural resources: raw materials, energy and water, forests,minerals, oil etc.
- Location:
- Topography: it plays important role in marketing for transportation of raw materials and
finished product.
- Climate: Very Hot and Very Cold.

Impacts of Marketing Environment on a Firm’s Marketing Activities:

Marketing peroms a number of activities like purchasing, selling, branding, grading, standardizing,
advertising, whole selling and many others for the satisfaction of consumers. Marketing firms formulate
various plans ,programs, policies and strategies for the implementation of theri activities. But the plans
and policies of the marketers get affected by the various elements of environment. The change on

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Prepared and written by Hem Raj Gurung (Lecturer of Sagarmatha College, Devdaha, Rupandehi)
several environmental forces presents both opportunities and threats to marketing. In this regards,
marketing environment has both positive and negative impact on firms’s marketing activities.

1. Positive impact:
Environment provides a number of opportunities to the business organization. It creates the
positive impacts on a firm’s Marketing activities due to the strong and favourable economic
policy, political stability, fair competition etc. This positive impacts of marketing environment on
the firm’s marketing activities are listed as below:
- it provides opportunities
- it Reduces Uncertainty.
- It helps to indentify consumer’s need.
- it helps in marketing goal achievement.
- it helps to identify the strength.
- it provides information.

2. Negative Impact:
Sometimes marketing environment may have the negative impact on firm’s marketing activities.
Such negative impact occur due to uncertainty, unstable politics, unhealthy competitions,
frequent changes in economic policies, changes in socio-culture and technological factors etc.
The major nagetive impacts of marketing environment on a firm’s marketing activities are
mentioned as below:
- It increases in uncertainty.
- Gives threats to the firm.
- It causes political instability.
- Creates difficulties to goal achieve.
- Increase in competition.
- Difficult in management and their activities.

End of the Chapter- 4

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Prepared and written by Hem Raj Gurung (Lecturer of Sagarmatha College, Devdaha, Rupandehi)