Module-2
Marketing Environment (Micro & Macro)
Macro Environment:
It consists of demographics and economic conditions, sociocultural factors, political and
legal systems, technological developments, etc.
Demographic Environment
Demographic environment refers to the environment concerned and
with the nature and characteristics of the population, under which, the
business operates.
 It consists of factors relating to population, such as, size, growth rate,
age distribution, religious composition and literacy levels and aspects
like composition of workforce, household patterns, regional
characteristics, population shifts etc.
The points to be considered here are:
What demographic trends will affect the market size of the industry?
What demographic trends represent opportunities or threats?
Economic Environment
Economic environment determines the strength and size of
the market. It refers to the impact of monetary and fiscal
policies and other economic factors.
 It includes national and per capita income, current income,
prices, savings, and circulation of money, debt and credit
availability, consumption patterns, general economic
conditions, types of economic system etc.
The important point to consider is to find out the effect of
economic prospects and inflation on the operations of the
firms.
Technological Environment
The application of science in order to facilitate and make life easier and more
convenient is called as technology. Changes in technology can affect the marketing of a
business as products become obsolete and new products has to be changing
requirements of order to meet the changing requirements of the customer.
Technology has literally transformed the way people think, work and relax.
Technology has changed the way people communicate with the advent of Internet
and telecommunication system, and, with the revolution in communication has come
new ways of doing business.
The following factors are to be considered for the technological environment: The
pull of technological change, Opportunities arising out of technological innovation,
Risk and uncertainty of technological development, Role of R&D in a country and the
government’s R&D budget.
Political and Legal Environment
A set of rules and principles which govern the functioning of any society and which is
enforceable by the higher authority is termed as law.
 The political environment of a country also affects the marketing of a firm since the
political ideology shapes the policies of a country.
Political changes and changes in the style of functioning of the government affect
the firms performance.
Firms prefer to operate in a country where there is a sound legal system.
Marketers must have a good working knowledge of the major laws protecting
consumers, competitions and organizations. Laws like MRTP, Consumer Protection Act,
Intellectual Property Right, FEMA, Labour Laws etc., can considerably affect business
operations. . All these acts
affect the production and distribution of goods and services of a firm
Social and Cultural Environment
The beliefs, values and norms of a society determine how individuals and organizations relate
to each other. The core beliefs of a particular society tend to be persistent.
 It is difficult for marketers to change these core values, which have a major bearing on
marketing operations in as much as they set the stage for marketing activity and consumer
response.
Culture may be defined as the set of beliefs, values and attitudes shared by contemporaries
and passed on from generation to generation. It includes the following: Culture – Indian; Sub
culture-Rajasthani, Maharashtra, etc.
Social environment refers to the interaction of various members of the firm with the
society.
It involves all those faces that are present in the society which will affect the marketing of the
business in some way or the other. They include Family, Peer groups, Reference groups, Social
class, Role and status in society and Religion.
Microenvironment:
It consists of suppliers, consumers, marketing intermediaries, etc. These are specific to
the said business or firm and it affects its working on a short term basis.
Controllable Environment
It includes two variables:
Business Mix :
This refers to all the components and elements of business which can be combined in
order to make an enterprise run. It includes the 5 M’s – Man, Machine, Method,
Material and Money.
Marketing Mix:
Marketing mix may be defined as a set of those key inputs or variables which are
necessary for the marketing of the firm. They include the 4 P’s, namely, Product, Price,
Place, and Promotion. In the service industry, there are 3 additional P’s, namely, a)
Physical Evidence b) Process c) People.
McCarthy’s Classification (4Ps) Lauterborn’s Classification (4Cs)
1. Product--Customer Benefit
2. Promotion--Communication.
3. Place (distribution)—Customer
Convenience.
4. Price--Customer Cost.
Semi controllable marketing environment:
It refers to that environment which is partially within the control of the organization. It
includes:
Suppliers:
They are providers of raw material or finished goods for manufacturing or trading of
business. They have a direct impact on the marketing of business products. For
example, SURAJ diamond in Surat.
Marketing intermediaries:
They are those individuals and agencies who help in the promotion distribution and
marketing of goods and services to customers. Intermediaries exert a considerable
influence on the marketing environment. They can also be considered as the major
determining force in business. In many cases the consumers are not aware of the
manufacturer and buy the product from renowned intermediaries. They are divided
into:
a) Physical distribution intermediaries
b) Channel intermediaries
c) Financial intermediaries
d) Marketing service intermediaries.
Customer
According to Peter Drucker, the aim of business is to create and retain the customer. Hence, the
consumer occupies the central position in the marketing environment. The marketer has to
closely monitor and analyze changes in consumer tastes and preferences and cater to (if not try
and anticipate) their buying habits. What constitutes the consumer value system? What benefits
is the consumer looking for? Who are the consumers? What are their buying patterns?
Competitors
Competition shapes business. A study of the competitive scenario is essential for the marketer,
particularly, threats from competition. Who are the competitors? What are their present
strategies and business objectives? Who are the most aggressive and powerful competitors?
Those competitors who are the immediate vicinity of business can be controlled to a limited
extent and, therefore, quality as semi controllable environment.
Public
Public may be defined as all those individuals and group of individuals who are directly or
indirectly interested and impacted by the market operation of a firm. Public constitute a major
force in the micro environment and marketers have to very carefully study their opinion, values,
beliefs and attitudes in order to design a proper marketing strategy for goods carefully tailored
to meet the needs of the target consumer segment. They include Financial public, Media public,
Citizen Action public, Government public, Local public, General public, etc.