NEB Class 12 Marketing Note
Chapter Four: Marketing Environment l Easy and Effective Note
Marketing environment is the totality of forces that affect the marketing decisions and the attainment of marketing goals. It includes micro and macro environmental factors. The factors which are control of the various marketing plans, policies and strategies are directly or indirectly influenced by various factors and forces called marketing environment. The company are micro environment and factors which are under control of the company are macro environmental factors. The company suppliers, marketing intermediaries, customers, competitors, and public are the factors of micro environment and demographic, economic, natural, technological, political, and cultural are the factors of macro environment. Marketing environment provides opportunities threats to the company.
Features of Marketing Environment:
Firms operate in dynamic environment. Factors of the market such as population of market, income level, culture, government rules and regulation, technology etc. are always changing .Firms have to change with the changing marketing environment to survive in the long-run.
2 Opportunity and threat
Marketing environment provides opportunities and threats to the firm. The internal and external environmental factors like demographic economic, natural, political factors etc provides opportunities and threats to the firm.
Marketing environment is complex. It is very difficult to predict accurately. It provides confusions and uncertainty to the marketers in their business.
4.Internal and external
Marketing environment consists of internal and external factors. The company. suppliers, marketing intermediaries, customers competitors, etc. are the factors of internal environment and demographic, economic, natural, technological, political-legal, and socio-cultural environment are factors of external environment..
- Long- term impact:
Change in environment forces gives long term positive and negative impact on marketing. Economic, political, legal, socio- cultural, technological etc. have the long term impact.
Component of Marketing Environment
Internal environment includes the components:
i. Objectives of the firm:
The objectives of a business firm provide guidelines to conduct The marketing activities. The objectives of the firm may be profit maximization or sales maximization. If the firm has the objective to maximize profit it may not conduct after sales service program to minimize the cost.
ii. Policies of the firm:
Marketing activities should be conducted according to the policies, rules and regulations formulated by top level management of the firm. If the firm has made policy to give discount and commission, the sales manager should adopt the same policy for selling goods in the market.
iii. Resources of the firm:
The availability of means and resources of the firm directly affects the formulation and implementation of marketing activities. Thus, a marketing manager must consider financial position, availability of qualified and efficient staffs, regular supply of raw materials, production facilities, research and development capacity, goodwill of the firm etc. before launching new product or advertising campaign.
The roles and functions of marketing manager are determined by organizational structure of the firm. He can neither ignore them nor can change the structure in short-term. So, he should work within the environmental framework determined by the organizational structure of the firm.
v. Organizational Culture:
It is an important part of internal environment of marketing. Value, norms and behaviour of different people in an organization reflect the organizational culture.The organisational culture also affects the marketing activities of the firm. So, a marketing manager should consider it.
An external environment is related with environmental factors of outside the firm. It consists of the micro and macro environment.
The microenvironment means to those forces of a business firm which is related with immediate area of operation. It affects its performance and decision making. Micro environmental components are closely related to a particular company and are included as part of the firm’s total marketing system. The major components of the microenvironment of marketing are explained as follows:
- The Company:- To design marketing plans, marketing management team use other company group into account. All the interrelated groups make the internal environment. Top management sets the company’s missions, objectives, broad strategies and policies and marketing manager makes decisions within the strategies and plan made by top management. They must closely work with other company departments.
- Customers: The company needs to study the five types of customer markets closely. Consumer markets are mixture of individual and household that buy goods and services for daily consumption. Similarly, reseller markets, government markets and international markets conduct their marketing activities. Each market type has special characteristics that call for the careful study by the seller.
3.Competitors: The marketing concept states that to be successful, a company must provide greater customer value and satisfaction on than its competitors do. A company must keep its consumers satisfy so that it can resell goods and services to them since there are numbers of competitors in the market.
4.Suppliers:- Suppliers firm plays an important role to link the company’s overall customer value delivery system. They give the resources to produce goods and services for a company. Supplier’s problems can seriously affect in marketing. The suppliers should be treated as partners. Good relationship with suppliers is a key component of success of marketers.
5) Marketing Intermediaries: Marketing intermediaries help the company to promote, sell, and distribute its goods to final consumer. Examples of marketing intermediaries are resellers, physical distribution firms, marketing Service agencies and financial intermediaries.
6) Publics :- Publics are also important for the company’s marketing environment. Public is a group that takes an actual interest in an organization’s ability to achieve Its goals. 7 types of publics are:
a) financial publics b) media publics c) government publics d) civil-action publics e)local publics f) general public h) internal public,
Macro Environment refers to the all external and uncontrollable force that influences an organization. Macroenvironment is wider environment. The major components of macroenvironment are as follow:
- Demographic environment:
Demography represents the statistical study of human population and its distribution characteristics. It is an important task for the marketing executives to explore the changing pattern of demography in the country since the population is the primary target market of the marketing organization. The primary demographic elements are as follow:
i) Total population & its growth: It is a key demographic macro environmental component to a marketing firm. Greater the population size, bigger the market for products and services. Moreover marketers are in a better position to succeed. If the rate of population growth goes on increasing, the demand for products also goes on cumulating.
ii) Structure of population distribution: Structure of population distribution refers to the makeup or composition of a population. Population Structure has a major influence on marketing to activities. It is thus important to study the structure of population distribution of a market.
iii) Migration: Migration of people also affects marketing activities. People may migrate to cities, the terai and other places from remote village, hills or himalayas areas. When people migrate, they also take their consumption behaviour with them.
- Economic environment:
The economic environment is a significant macro environment component that affects both the marketing firm and consumers. The key elements of economic environment are described briefly.
1.Income distribution and customer’s income: Income distribution and the earning customer is one of the key element of economic environment that impact the marketing decision. Income distribution defines the market of a particular product and services.
2) Economic health – Economic health elements donate business cycle of a particular country. In this condition, the economic situation is be healthy with rising income.
Inflation rate has a negative impact on consumer’s purchasing power. When the inflation rate increases, it depreciates the value of money. Due to which the price of products and services raise.
4) Credit availability: Availability or Unavailability of credit also directly affects marketing activities. If credit facility is available, the quantity of sales increases and vice versa.
Natural Environment is the totality of natural resources. They are essential as input for marketers. The primary elements of natural environment are-
1.Availability of natural resources. Production of goods and services requires several resources such as raw materials, water, energy like oil and electricity etc. non availability of resources may disturb the production work.
2) Topography – Topography plays an important role in distribution of products. If the infrastructure and means of transport are abundantly available distribution work becomes cheap.
3.Climate: Climate also affects the need of customers and marketing mix. In the area where the weather is hot, the demand for cotton clothes and cold drink is high.
The political and legal factor is one of the most important macro environment factor. While formulating a marketing plan and program, a marketer must be able to analyse all the political and legal factors of the country.
i) Government rules and regulations: Government laws, rules and regulations are concerned with the legal environment of the country in which firms operate. There are several laws and regulations like consumer law, completion law, labour act, health and safety act etc. A marketer must concern the government rules and regulations while preparation of marketing plans, policies and strategies.
ii) Government policies: Trade policy, industrial policy, privatization policy environment policy, foreign investment policy etc. affect marketing activities. One of the main reason for lack of foreign investment in Nepal is a unstable business policy of the government of Nepal.
iii) Government agencies-Government agencies are government bodies that perform their work remaining under government control. Such agencies provide licence, fix quotes, provide loan and relief to the industries.
Socio Cultural Environment
Society is a group of people having distinct values, beliefs, knowledge, habits etc. The historical components of human existence is culture. A marketer must concern the socio- cultural environment while preparation of marketing plans, policies and strategies.
- Social forces: A Social forces include belief, value and norms, life style, behaviour habit etc. These factors directly affect marketing behaviour. So, a marketing manager should carefully study and analyse social environment while making marketing mix or making plans, programs and strategies.
- Cultural value: Cultural value of society reflects the religious structure of society, role of men and women, existence of subcultures, etc. There may be several subcultural and ethnic groups whose consumption pattern may vary from one another. Due to this diverse nature of cultural value the society, a marketer had to treat them differently
Impact of Marketing Environment on Firm’s Marketing Activities
Impact of marketing environment on firm’s marketing activities can be explained as follows:
- Economic environment: Economic environment of the country deeply affects marketing activities or the firm. Economic system, national income monetary and fiscal policy, employment opportunities, inflation rate. availability of loan, interest rate, etc. are included in economic environment. Thus, a marketer should be able to study and carefully analyse economic environment of the country
- Political legal environment Political situation, government’s attitude, industry and commercial policy, foreign policy, legal provision, etc. also affect all marketing activities of the firm. Thus, a marketer should consider and pay attention towards these elements.
iii. Socio-cultural environment: Socio-cultural environment means traditional, religion, belief, custom, norms and attitudes, habit, behaviour. Life style etc. Such socio-cultural factors are different from people to people and society to society. These socio-cultural factors have significant effect on determination of marketing mix and programs. Thus, marketing programs should be formulated according to changes of socio-cultural environment
- Demographic environment Demography is the study of human population in terms of size, density, location, age, gender, occupation, etc. It is a major interest to marketers because it is related with people and people make up market. Thus, a marketer should carefully consider and be able to study and analyse the demographic elements to make effective plans, policies, etc. of the firm
- Technological environment: Technological changes like computer, internet, e-commerce, etc. also affect marketing activities. Technology brings changes in the lifestyle of people by changing their consumption attitude and belief. Thus, a firm should conduct development and research programs for technological changes.
- Natural environment: Natural environment also affects marketing research activities of any business firm. Thus, a marketer should be aware of the consequences of limited availability of natural resources and pay attention towards finding alternative solution to the problems.
Prepared By: Lecturer Hom Nath Paudyal (MBS TU)