Elements of Marketing Environment
The marketing environment of the company can be divided into, external and internal environment.
External Environment
External environment of the company constitute both macro and micro environments. The external environment factors cannot be controlled by organization.
I. Macro Environment
The various macro environmental factors influencing the company’s marketing functions are,
1. Demographic Factors
Demographic factors are concerned with population characteristics like age, gender, size of the population, income, birth rates, death rates, marriage rates etc. All these factors influence the firm’s marketing activities. For example, if there is an increase in the population size, there will be an increase in the customers needs and this enhanced needs, increases in company’s sales.
2. Political and Legal Factors
One more category of factors influencing the company’s marketing functions/activities are political and legal factors. The legal factors influence company’s manufacturing capability, product pricing, product design and promotion decisions. Government agencies are making new laws to save consumers and society from unfair trade practices of the company and to encourage competition in the market.
3. Economic Factors
Market comprises of people who have money to spend and have desire to spend. The various economic factors which may have impact on the company’s marketing functions are – stages of business life cycle, inflation rate, interest rates, GNP (Gross National Product), per capita income, disposable income, consumer savings, income distribution etc.
4. Social and Cultural Factors
Social factors come out of the social responsibility of the company. Social responsibility concept states that a company operating in a society is socially responsible and should not produce products which are dangerous to the society. Few cultural values prevailing in the society also restricts company’s marketing activities.
5. Competition
Competition is a significant environmental factor that influences the company’s marketing plans, programs and strategies.
6. Technological Factors
Technological improvements change the way of living, consumption patterns and standard of living of the society. Both industries and consumers are benefited through technological developments.
II. Micro Environment
Micro environmental factors are those factors which are in close control of the company. The various micro environmental factors influencing company’s marketing functions are,
1. Suppliers
In order to produce goods and services, companies procure raw materials from suppliers. The suppliers who can supply raw materials at reasonable cost with sufficient quantity, and quality and who can offer credit and give warranties are selected. All these will have a significant influence on the company’s manufacturing activities and competitive advantage.
2. Customers
The company’s customers can be of five types. They are,
- Industrial consumers
- Final consumers
- Resellers
- International customers
- Government and Non-profit customers.
3. Marketing Intermediaries
Marketing intermediaries are the channel partners who help the company in making its products and services available to the target customers. Wholesalers, retailers, distributors, service agencies and financial institutions etc, come into the category of marketing intermediaries.
4. Competitors
Competitors are the companies which are involved in selling same or similar type of goods and services in the same market. In addition to price factor, product differentiation is also one factor based on which competitors compete in the market. In order to achieve success in the competitive environment, a company should keep track on its competitors marketing strategies, programmers and plans. The competitors marketing strategy could influence, the company’s marketing.
5. Public
The operations of the company will also have impact on the general public. Apart from competitors and customers, a company must also focus on satisfying the general public because they are also one of the factors influencing the company’s capability to achieve its objectives.
2. Internal Environment
The internal environment factors can be controlled by the organization. The company’s internal environment comprises of financial resources, human resource capabilities, research and development activities, company’s image, production facilities, location etc. All these act as factors which influence company ‘s marketing decisions.
Importance of Marketing Environment
The reasons why we need to analyze marketing environment are clear from the following points,
- Marketing environment is analyzed to estimate the future marketing environment.
- Marketing environment is analyzed to keep track on the environment changes and the outcomes of such changes.
- To identify the opportunities and threats posed by the marketing environment, marketing environment is analyzed.
- The marketing strategies, plans and programs of the company have to be designed by taking into consideration the opportunities and trends in the marketing environment. And for this clear analysis of marketing environment is very essential.
- Marketing environment is analyzed to determine the scope of each opportunity posed by the marketing environment and to select those opportunities which can positively influence company’s marketing operations.