Environment Of Marketing

What Is the Environment Of marketing?

The environment of marketing in general may be described as “surroundings that influence a particular activity”. The market is also impacted by a variety of elements that are part of the marketing environment.

The environment of marketing may be described as the factors and actors that impact a firm’s capacity to develop and sustain effective connections with its target consumers. The organizations that generate a variety of goods and services are impacted by a range of elements operating within and outside the company. The environment within which organizations operate is dynamic and unpredictable. The varied factors of the environment present a multitude of possibilities and threats to the organization. Hence, a marketer must generate marketing mix judgments as per the changes in the marketing environment.

The term marketing environment refers to the external factors and forces that affect a company’s ability to develop and maintain good marketing plans. It consists of various factors, both controlled and uncontrollable, that affect an organization’s marketing actions, choices, and total business success.

Need for business environmental analysis


The necessity for environment of business analysis originates from the awareness that businesses do not function in isolation but are continually impacted by external forces. Overall, doing a business environmental analysis is crucial for firms to proactively adjust to external changes, capture opportunities, manage risks, and make educated choices. It allows organizations to be competitive, responsive, and sustainable in a dynamic and developing environment. In study of the environment, five important stages are identified for the purpose of this environmental survey.

1. Audit of the Environment: This entails vouching, verifying, and inspecting the many factors of the environment. The various factors of the marketing environment are to be recognized, and a clear evaluation of these elements is to be done.
2. Assess the Nature of the Environment: The evaluation of the environment needs to be performed with reference to the identification of its nature in terms of micro, macro, controllable and uncontrollable, etc.
3. Key Environmental Factors:The important environmental elements that will have a substantial influence on marketing decisions are to be identified. Some of them are resources, manpower, technology, etc.
4. Identify opportunities and threats: In view of the changes in the factors of the environment, different opportunities and dangers are to be discovered. The prospects may come in the form of higher sales, markets, increased customer satisfaction, etc.
5. Strategic Decision-Making: The decisions are to be made in view of the study of the nature of environmental factors and the prospective possibilities and dangers, etc. The decisions are connected to changes in the combinations of product line and mix, price, advertising, distribution, etc.

What Are Types of Marketing Environment?

The environment of marketing may be classified as under :

  1. Internal
  2. External
    It can also be classified as
  3. Micro
  4. Macro
    Further, another classification is as under :
  5. Controllable forces
  6. Uncontrollable forces

Influence Of Environment On Marketing

The impact of environmental elements on marketing may be considered as follows:

1. Micro Marketing Environment:

The following are the components of a micro marketing environment:
a) Internal factors:

The company’s internal marketing environment consists of policy, financial and human resources, manufacturing technology, capacity, etc. The decisions connected to product planning, branding, packing, pricing, promotional spending, etc. are determined by the policies and attitudes of senior management. Any decision in connection with marketing is also based on the availability of financial and human resources.

The appropriate supply of money, the constant flow of resources, and the availability of trained, qualified, and talented workers will impact the decisions in the sphere of marketing. The use of technology (traditional and contemporary) and the capacity installed and usage of the plant and machinery will have a considerable impact on the marketing decisions. The marketing managers should make suitable decisions on the basis of the overall objectives of the firm and the objectives of the marketing department.
b) Influence of other groups:
The effect of other groups as components of the micro marketing environment may be examined as follows:

1. Suppliers:The organizations require a range of raw materials, inputs, and financing for a constant flow of their activities. The services of suppliers are of major relevance as they impact the company’s flow of production, delivery plans, production costs, and marketing efforts. A co-operative, An atmosphere, has to be built between the suppliers and the organization. The agencies that supply raw materials, banks, and other financial organizations that provide the necessary flow of credit to the organization play a significant role in the marketing decisions of any organization.
2. Intermediaries: Much of the marketing activity is impacted by the intermediaries. The intermediaries are businesses and persons involved in the physical distribution of products and services (agents, distributors, stockists, etc.) who provide time, place, and ownership utility for the items and services. The other forms of intermediaries include wholesalers, retailers, etc., who offer the required link between organizations and customers.

The marketing efforts are also done by transport corporations and storage organizations.
Transport businesses include rail, road, aviation, and water transport agencies, which are owned by Government and commercial entities. Other service businesses, such as advertising agencies, insurance companies, etc., are also active as intermediaries in marketing. These intermediaries provide superior service in an efficient and effective manner.

3. Customers: Another significant group in the microenvironment are customers. The clients form a highly essential feature in the microenvironment of a business, since they are the central point for marketing activity. The clients may be categorized as ultimate users or consumers, industrial users, governments, resellers, etc. The demands, wants, and expectations of each of the groups are varied, and consequently, the firms have to develop distinct marketing plans to fulfill these diverse groups. The marketing concept emphasizes that consumer pleasure is essential for the success of any marketing endeavor.

4. Competition: The marketing decisions of any business are impacted by the competition prevailing in the market. The competition may be in the form of ideal competition, monopolistic competition, etc. Today, many organizations force oligopolistic competition. The features of this sort of competition are no different in the case of items, services, and identical prices for all products in the same category. Advertising and sales promotion have an important role in influencing consumers. For example, in the case of toothpastes, soaps, TVs, refrigerators, automobiles, etc., the form of competition occurring is oligopoly. The competition for customers money also arises between non-similar items and services.

5. Other Public Organizations:
Marketing decisions are also impacted by a variety of public bodies. These include Government agencies, consumer councils, stock exchanges, the media, etc. These different groups always follow the decisions of the organizations and analyze them from the vantage point of providing social welfare. The reports that emerge in the newspapers and on TV on the success of each business give a framework for enhancing their functioning.

2. Macro Marketing Environment:

The variables of Macro marketing environment may be classified as

a) Economic Environment
b) Demographic Environment
c) Social – Cultural Environment
d) Political & Legal Environment
e) Technological Environment
These can be analyzed as under :

A. Economic Environment:

The economic environment is the most crucial component of the environment of marketing. The economic elements may be separated into economic circumstances prevailing in a country, industrial conditions, and the availability of resources for production.

a) Economic Conditions: The economic conditions prevailing in a country are related to different components like the economic system, per capita income trends, pattern of income distribution, pattern of savings and expenditure price levels, employment trends, agricultural and industrial output trends, impact of Government policies, etc.
b) Industrial conditions: The organizations have to grasp the effect of industrial circumstances, which include the market growth of the industry, demand patterns of the industry, and stage in the product life cycle.
c) Availability of resources for production: The supply of resources is necessary for production. Determine the inputs that are available for production. The most significant resources necessary for production are land, labor, money, machinery, and management.
The economic environment reflects the total economic state of a nation and assists in analyzing GNP per Capital, rate of economic growth, inflation rate, interest rates, unemployment, etc. Therefore, it is vital to evaluate the economic environment thoroughly before taking a decision.

B. Demographic Environment:

The demographic environment of a marketing refers to the study of population characteristics, such as age, gender, income, education, ethnicity, and geographic location, that impact customer behavior, market demand, and corporate tactics. Understanding the demographic context is vital for businesses to properly target their products or services and customize their marketing efforts to fit the demands and preferences of various client segments. Here are some significant components of the demographic environment:

1. Age: Age demographics have a crucial impact on defining consumer behavior and market demand. Different age groups have varied interests, demands, and spending power. For example, the tastes of millennials may differ from those of baby boomers. Businesses need to consider age-related aspects when producing goods, marketing efforts, and customer experiences.

2. Gender: Gender demographics are another key aspect for organizations. Preferences, hobbies, and purchase patterns might vary between genders. Effective marketing strategies generally take gender-related aspects into consideration to target certain client segments and develop customized content and experiences.

3. Income: Income levels impact customers’ purchasing power and inclination to spend on items and services. Understanding income demographics helps firms choose pricing strategies, product positioning, and marketing approaches. Businesses may change their services to cater to different income levels or adjust their marketing efforts to appeal to certain income groups.

4. Education: Education levels can affect customers’ knowledge, interests, and preferences. Businesses may need to consider educational demographics when creating marketing messaging, packaging, and distribution routes. Educational demographics can also impact the adoption of technology and digital platforms among consumers.

5. Ethnicity and Culture: Ethnicity and cultural origins impact customer behavior, tastes, and buying patterns. Businesses that operate in multicultural marketplaces or target specific ethnic groups need to grasp the cultural subtleties, beliefs, and customs of their target audience. Cultural sensitivity and adaptation of products and marketing tactics are vital in such circumstances.

6. Geographic Location: Geographic demographics examine elements such as urban vs. rural locations, regional variances, and worldwide marketplaces. Consumers in various areas may have differing requirements, tastes, and access to resources. Businesses must modify their strategies to fit the distinct characteristics and needs of different geographic markets.

Analyzing and tracking demographic trends and changes is vital for organizations to adjust their strategy, find new market possibilities, and successfully target client segments. This information helps firms build goods, services, and marketing campaigns that resonate with certain demographic groups, leading to higher customer satisfaction, market share, and profitability.

The social context of a country determines its value system, which affects the marketing of items. The social elements that impact the marketing environment include caste,

C. Social – Cultural Environment :

Criteria, conventions, cultural legacy, etc. In the Indian social context, the changes that took place are as follows:
a) Breakup of the joint family system; b) Women’s employment; c) Changes in the attitude towards physical health
d) An increase in attitudes towards education
The shift in the quality of life of the people also brought about various changes in the purchase of products and services. For example, people are choosing various vehicle items like motorcycles, cars, etc., and items like washing machines have also become extremely popular products these days.

The social environment has the following directions:
a) Change in people’s living styles; b) Increasing concern for social problems, c) Growth of consumerism
Marketing decisions are founded on the recognition of the demands and wants of the customers. These help in understanding lifestyles and behavioral patterns as they have grown in the culture in which the individuals have been groomed. Each civilization comprises sub-cultures, distinct groups with shared values derived from their specific life experiences or circumstances. There are some basic cultural values that are present in society, are well established and solid, and consequently change very rarely.

D. Political & Legal Environment:

The political and legal environment of business refers to the framework of laws, rules, government policies, and political considerations that impact corporate operations, practices, and decision-making. This environment establishes a set of norms and limits within which firms must function. Understanding the political and legal context is critical for organizations to maintain compliance, manage risks, and negotiate the intricacies of the business climate. Here are major features of the political and legal environment:

1. Government Regulations: Governments establish and execute regulations that control many elements of corporate operations. These rules can include issues such as product safety, environmental protection, labor standards, intellectual property rights, data privacy, advertising practices, and taxes. Businesses must be informed of applicable legislation and ensure compliance to avoid legal implications and reputational damage.

2. Legal System: The legal system, comprising the courts and judiciary, plays a critical role in settling disputes, enforcing contracts, safeguarding property rights, and preserving the rule of law. Businesses rely on a stable and fair legal system to guarantee legal protection and handle problems in a fair and efficient way.

3. Trade Policies and Tariffs: Governments develop trade policies and tariffs that govern international commerce. Changes in trade regulations, such as tariffs or trade agreements, can dramatically affect enterprises involved in global commerce. Understanding trade legislation and staying updated on trade talks and agreements is vital for firms involved in international operations.

4. Political Stability and Instability: The political stability of a country or area can impact corporate operations and investments. Stable political environments provide certainty and a good setting for commercial success. Conversely, political instability, including political upheaval, government changes, or policy alterations, can generate uncertainty and interrupt corporate activity.

5. Lobbying and Advocacy: Businesses typically engage in lobbying and advocacy activities to alter government laws and regulations in their favor. Lobbying can entail drafting legislation, lobbying for industry interests, or engaging in public policy dialogues. Understanding the political dynamics and participating in advocacy efforts may help firms safeguard their interests and impact the regulatory environment.

6. Corporate Governance: Corporate governance refers to the set of rules, policies, and processes by which a firm is directed and governed. It contains procedures that ensure accountability, transparency, and ethical behavior inside an organization. Governments typically set standards and legislation linked to corporate governance to safeguard stakeholders’ interests and encourage ethical company practices.

7. Intellectual Property Protection: Intellectual property rights, such as patents, trademarks, and copyrights, are crucial for stimulating innovation and preserving the value of intangible assets. Governments enforce intellectual property laws to defend the rights of creators and stimulate investment in research and development. Businesses rely on these legal safeguards to secure their ideas, brands, and creative works.

8. Consumer Protection: Governments implement consumer protection laws to guarantee fair commercial practices, combat fraudulent activity, and preserve customers’ rights. Businesses must comply with these rules to safeguard customers and retain faith in their products or services.

Understanding and negotiating the political and legal climate is vital for firms to operate within the confines of the law, manage risks, and maintain strong relationships with regulatory bodies. By being educated, participating in responsible practices, and adjusting to changes in the political and legal landscape, companies may avoid legal and regulatory risks, maintain compliance, and develop a solid platform for sustainable growth.

E. Technological Environment:

The technical environment of business refers to the external variables in technology that affect company operations. Changes in technology can impact how a firm will do business, and a corporation may have to radically adjust its operational strategy as a result of changes in the technical environment.

Some of the important components that make up the technological environment of business include:
1. New technologies: The introduction of new technologies might generate new possibilities for businesses, or it can disrupt current enterprises. For example, the emergence of the internet has offered new options for firms to reach clients and sell things online. However, technology has also impacted established enterprises, such as brick-and-mortar stores.

2. Technological improvements: Technological advances may increase the efficiency of enterprises, making them more productive and cost-effective. For example, the advent of new manufacturing technology has allowed enterprises to make things more efficiently.

3. Technological dispersion:The diffusion of technology refers to the spread of new technologies throughout an industry or society. The pace at which new technologies disperse may have a substantial influence on enterprises. For example, organizations that are hesitant to adopt new technology may find themselves at a competitive disadvantage.

4. Technological regulation: Governments typically control the use of new technology. This can be done to safeguard customers, assure the safety of products, or boost national security. For example, governments typically control the use of new medical technologies to ensure that they are safe and effective.

The technical environment of business is always evolving, and firms need to be able to adapt to these changes in order to survive and prosper. By knowing the technology environment, organizations may uncover new possibilities, increase their efficiency, and remain ahead of the competition.

Here are some instances of how the technology environment has influenced businesses in recent years:

a. The emergence of e-commerce has challenged conventional brick-and-mortar retailers. The development of social media has transformed the way businesses engage with customers.
b. The utilization of big data has helped firms better understand their customers and tailor their marketing efforts.
c. The advancement of artificial intelligence has the potential to automate many jobs that are now done by people.

These are just a few instances of how the technology world is transforming business. As technology continues to grow, organizations will need to be able to adapt in order to survive and prosper.

The environment of marketing is the sum total of internal and external aspects in which the organization operates. Other components of the environment are controlled, and others are uncontrollable. The marketing manager must get an extensive and up-to-date understanding of all these forces, as his marketing approach is impacted by them at every step. The four Ps, namely product, price, location, and promotion, are compelled to vary as per the changes in environmental factors.

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