Marketing Environment: Meaning and its components


Meaning of Marketing Environment

Marketing environment refers to an environment surrounding the business and impact its marketing activities. It comprises of various forces and factors that influence firm’s capability to develop and maintain better relationships with customers. Marketing environment is composed of internal factors and external factors which determine the market management skills of business organization. Internal factors are controllable factors that comes under the control of business. These factors are customers, employees, shareholders, retailers and distributers. Whereas, external factors are uncontrollable factors which do not fall under business control. Political, social, economic, legal and technological are some of the external factors. Marketing environment need to properly considered by every firm while deciding its strategies and market activities. Changes in such environment bring several threats as well as opportunities for business. These changes need to be timely predicted by managers for overcoming any negative impact posed by environmental factors. 

Components of Marketing Environment

Marketing environment is composed of three parts which are as given below: –

  1. Internal Environment
  2. Micro Environment
  3. Macro Environment

Internal Environment

Internal market environment is composed of all those factors which are internal to organization. These factors lie within the business organization and influence its market operations. Internal environment is controllable by business and need to be changed in accordance with changing external environment. Components of internal environment can be grouped under Five Ms of firm that are-

  • Men- It refers to both skilled and unskilled individuals working within the organization.
  • Minutes- It is the time involved in completing the process by business.
  • Materials- Materials is the factor of production and supplies that a business require to carry out its production activities. 
  • Machinery- These are all equipment’s that a business needs to complete their processes.  
  • Money- These are financial resources that are used by business in acquiring materials, machinery and paying wages or salaries to employees. 

Micro Environment

Micro environment is also termed as task environment which is external to business organization. It includes all those external forces and factors which are directly associated with business. They directly influence the overall functioning of business and are controllable only to some extent. Suppliers, customers, employees, shareholders, retailer and distributors, competitors, government and general public are factors included in micro environment.

These all factors are discussed in detail as given below: –

  • Customers- Customer refer to target group of organization. Every business makes effort to fulfills the needs and wants in best possible way of their customers. All strategies related to market operations are customer oriented that pays attention on better understanding of customer wants and offering them right product for providing full satisfaction. 
  • Employees- These are individuals working within the organization and contributes significantly to derive optimum results. Employees are main component of every organization whose work quality depends upon the training and motivating session provided to them. Training session plays a key role in imparting professionalism and enhancing marketing skills of employees. 
  • Suppliers- Suppliers comprises of all those parties that provide all required resources to business organization. They are crucial for all organization as all resources for making a finished product are provided by them. Firm should properly analyze the existing suppliers in market to choose best one that provide quality resources at better price.
  • Retailers and Distributers- These are the persons which enables business in channelizing its product to their customers. Retails and distributors determine the success of marketing operations of business. They work in close touch with customers can provide details regarding customer’s feedback and desire about products or services. 
  • Shareholders- Shareholders are the real owners of business who contribute their funds in it for making profits. Each organization set up an objective of maximizing its shareholder’s wealth. Therefore, all activities related to market should be decided considering the interest of shareholders.
  • Competitors- They are same market players who make efforts to attract similar audience as that of business organization. Every firm should keep an eye over the activities of their competitors, as it enables them in formulating all strategies as per the market trends.
  • Government- Government is one which regulate the working of business by issuing distinct laws and policies. Various policies such as credit policy, pricing policy, housing policy, education policy have impact on the marketing strategies. All firms need to comply with these polices completely and formulate their marketing programmes according to that.
  • Public- Public refers to a society that has some direct or hidden interest in business and affects its overall capability to attain its objectives. Every business should pay attention and serve interest of public at large in addition to its shareholders and customers. Organizations have some social responsibility toward the society in which they operate and all activities should be carried out considering the welfare of society as a whole. Media pubic, local public, citizen public, financial public, internal public, government public and internal are different types of public associated with a business. 

Macro Environment

Macro environment is composed of all such external forces and factors that influences the whole industry but not a specific form. These are totally uncontrollable and can’t be controlled by business organization. Macro marketing environment comprises of economic, social, technological, political and legal forces. 

  • Political and legal forces: Various market factors such as taxes, trade and duties, codes and practices and other market regulations keeps on changing as per the political parties. These factors need to be strictly followed by each business and violation may lead to high penalties. Therefore, every business should keep in mind the changing political factors before deciding their market activities.
  • Social factors: Marketing activities of business should be designed in such a way that it does not harm society. Every organization have some responsibility toward the society where they operate and should invest in public convenience projects for their welfare. Society plays a key role in determining the success of business organizations.
  • Economic factors: Business is affected by the state of economy as it influences purchasing power and spending patterns of customers. All marketing practices should be changes as per the undergoing economy state i.e. there should be different practices during inflation phase and different during recession phase.
  • Technological factors: Technological factors comprises of innovation, alternatives of technology, research and development in technology and distinct technological barriers that obstruct the smooth functioning. It is a very dynamic factor and pose opportunities as well as threats for business organizations. Firms need to be updated with technology used by them for serving the customer needs in efficient way.