MARKETING MANAGEMENT

Chapter 2
UNDERSTANDING THE
MARKETING ENVIRONMENT
 Chapter 2
Understanding the Marketing
Environment

Definition and Concepts

 “A company’s marketing environment consists of the actors and

forces outside marketing that affect management’s ability to build
and maintain successful relationships with target customers.”
(Philip Kotler)
 The microenvironment consists of the following actors close to the
company that affect its ability to serve its customers: (1) The
company (2) The suppliers (3) The marketing intermediaries (4)
The customer markets (5) The competitors (6) The public.
 The macro environment consists of the following larger societal
forces that affect the microenvironment: (1) Demographic (2)
Economic (3) Natural (4) Technological (5) Political (6) Legal (7)
Cultural.

Marketing Management
Himalaya Publishing House Dr. K. Karunakaran
 Chapter 2
Understanding the Marketing
Environment

Microenvironment Macro environment

Marketing Management
Himalaya Publishing House Dr. K. Karunakaran
 Chapter 2
Understanding the Marketing
Environment

Opportunities

Examples of Opportunities Posed by Marketing Environment in India

1. The New Economic Policies of the Government of India in general.
2. The New Industrial Policy.
3. Liberalisation of industrial licensing.
4. Foreign Exchange Regulation Act (FERA) and Monopolies and Restrictive
Trade Practices Act (MRTP) liberalization.
5. Curtailment of and disinvestments in public sector.
6. The New Trade Policy – lowering of import tariffs, abolition of import
licenses, convertibility of rupee, globalisation, etc.
7. Fiscal and monetary reforms, banking sector reforms, capital market reforms.
8. Removal or phasing out of subsidies.
9. Encouragement to foreign direct investment (FDI).
10. Dismantling of price controls and introduction of market-driven price
environment.

Marketing Management
Himalaya Publishing House Dr. K. Karunakaran
 Chapter 2
Understanding the Marketing
Environment

Threats

Examples of Threats Posed By Marketing Environment In India

1. Entry of Multi-National Companies (MNCs) into the Indian market on a large
scale increases the competition for products and services.
2. ‘Survival of the fittest’ rule forces many weaker and small-scale companies to
close down due to non-viability.
3. Big players start buying smaller players through mergers and acquisitions.
4. Removal of subsidy affects profitability and viability of many industries.
(Fertiliser industry is one such affected sector where units had to close down
or stop products of certain products).
5. Banks and insurance sector came under competitive environment and were
compelled to operate viably, at par with the private sector.
6. In general, many industrial units across India faced a destabilization
consequent to the economic reforms. Their markets, market shares and profits
came under severe pressure and viability became a big question.

Marketing Management
Himalaya Publishing House Dr. K. Karunakaran