“Marketing Environment can be defined as the internal or external
factors that affects the marketing strategies of a particular organization or
goods and services.”
It basically refers to factors and forces that affect a firm’s ability to build
and maintain successful relationships with customers.
There are three levels of Marketing Environment, which are as follows :
Micro Environment- small forces within a company that affect its ability
to serve its customers.
Meso Environment- the industry in which a company operates and the
Macro Environment- larger societal forces that affect the micro
WORLDWIDE POPULATION GROWTH:
The world population is growing at an explosive
rate. It is expected to exceed 7.9 billion by the year
2025. Moreover, population growth is higher in
countries which can least afford it. A growing
population does not mean growing markets, unless
these markets have sufficient purchasing power.
Nonetheless, companies that carefully analyze their
markets can find major opportunities.
POPULATION AGE MIX:
National population vary in their age mix. Some
have a very young population while some have high
density of old population. A company will market its
products specifically to the greater population in a
specific country. For example, marketers will target
youth segments where the population is young.
Population mix can also be on the basis of literacy.
In an economy, developed or developing, the
income of people are unevenly distributed. Some fall
in the low level income category, while some in the
high level income category. Generally, in a
developing nation, the population with a low level
income is much higher than the high level.
Therefore, marketers carefully analyze under which
income criteria does their target segment fall and
hence, undertake their marketing strategies.
Economic Marketing Environment refers to the
purchasing power of potential customers and the
ways in which people spend their money.
SOCIAL - CULTURAL ENVIRONMENT
Society shapes the beliefs, values, and
norms that largely define consumer tastes
and preferences. People absorb, almost
unconsciously, a world view that defines
their relationships to themselves, to
others, to organizations, to society, to
nature, and to the universe. The diversity in
the world is not only restricted to
topography but also in the
languages, cultures as well as religious
beliefs. In this era of
globalization, organizations cater to the
culture of each country where it functions
The deterioration of the natural
environment is a major global problem.
There is great concern regarding “green
house gases”, depletion of the ozone layer,
global warming and shortages of water. It
impacts the marketing in a large way as
consumers often appear conflicted about
product decisions that affect the natural
“Corporate Environmentalism” can be
defined as the recognition of the
importance of environmental issues facing
the firm and the integration of those issues
into the firm’s strategic plans.
One of the most dramatic forces shaping
people’s lives is technology. Through the
years technology has released such
wonders like penicillin, open-heart
surgery, submachine gun, etc. It also
released mixed blessing such as cell
phones and video games.
Every new technology is a force for
creative destruction. The number of major
new technologies discovered affects the
economy’s growth rate. Marketers should
monitor the regular trends in technology.
The political and legal environment consists
of laws, government agencies, and pressure
groups that influence and limit various
organizations and individuals. Sometimes
these laws also create new opportunities for
Two major trends in the political environment
Increase in business legislation
Growth of special interest groups
The Demographic Environment
The World population is showing explosive growth (totaled 6.1
billion in2001 and will exceed 7.9 billion by the year 2025).
Growth rate : Developed Nations - 0.6%
Developing Nations - 2%
Young population is more in Developing Nations and in South
Asia. So, marketers caters more to the youth segment.
Literacy rate is growing at a high rate. Hence the consumers are
now more aware with new products and services.
As per World Bank, GDP of South Asia is estimated at
1.1Trillion (2.3%of world’s GDP)
Growing at 8.6%per annum.
But Per Capita GDP is low.
Income level is rising but still large number of population is
under low level category.
Most of the countries are now turning into free economy by
Socio Cultural Environment
Companies engaging in activities in different
countries also take care of the cultures, beliefs and
values of each country.
Separate Marketing strategies are planned for
For example McDonalds change its menu and
removed Beef to preserve the Indian culture.
• In western Europe, “green” parties have vigorously
pressed for public action to reduce industrial
• In the United States, Sierra club and Friends or the
Earth carry these concerns into political and social
• The Soap Industry increased its products’
Accelerating pace of change.
Unlimited opportunities for innovation.
Varying R&D Budgets.
Increased regulation of technological change.
Increase in Business Legislation.
Less govt. intervention.
Growth of Special interest Groups.
Characteristics of 21st Century
knowledge and information based society
High mobility of population from rural to urban areas.
Reliance on innovation and creativity
Conscious society-customer aware of his rights and
Emergence of trade blocked.
Rapid technological changes.
World as a global economic village.
The entire world is a boundary less global village
due to it telecom and transport revolution.
Customers needs, wants, desires, values and ethics
are changing day by day.
Customers want more options and alternatives.
There is a shift from sellers market to buyers
Organisations have to look for their competitive
edges and develop on their strengths and explore
Organisations have to offer value added focused
services to attract customers.
India's Strengths-marketing Prospective
• Huge resources both human and natural.
• Inflation under check.
• Stability of government irrespective of ideology.
• Capable of providing food to many nations.
• Matured democracy.
• Global it hub.
Population growth unchecked.
Complicated procedures and systems.
Unexpected high level of unethical practices.
R&D base is very low.
27% population below poverty line.
What is PESTELAnalysis?
PEST stands for the analysis of the external factors which is
beneficial when conducting research before beginning a new
project or to help conduct market research. It is a tool for
analyzing organization’s macro environment .
The origin of this framework is difficult to establish however
some data is available which refers to the ETPS environment by
Francis J. Aguilar. Later it was reorganized as STEP by Arnold
Later in 1980s several authors included variations from
taxonomy classifications and thus formed PEST or PESTLE
Government terms and change
Funding, grants and initiatives
Wars and conflict
• Home economy situation and trends.
• Overseas economies and trends.
• General taxation.
• Taxation specific to product/services.
• Seasonal/weather issues.
• Market and trade cycles.
• Industry-specific factors .
• Market routes and trends.
• Customer/end-user drivers.
Consumer attitudes and opinions.
Law changes affecting social factors.
Brand, company, technology image.
Consumer buying patterns .
Fashion and role models .
• Competing technology development.
• Technological advancements.
• Research and development funding.
• Associated/dependent technologies .
• Replacement technology /solutions.
• Maturity of technology.
• Information and communications.
• Environmental legislation.
• Public awareness of environmental issues.
• Political agenda on the environment.
• Consumer buying patterns.
• CSR awareness and expectations.
European/ International legislation
Regulatory bodies and processes.
Retail consists of the sale of goods or merchandise from a fixed
location, such as a department store, boutique or kiosk, or by mail, in
small or individual lots for direct consumption by the purchaser.
Retailing may include subordinated services, such as delivery.
Purchasers may be individuals or businesses. In commerce, a
"retailer" buys goods or products in large quantities from
manufacturers or importers, either directly or through a
wholesaler, and then sells smaller quantities to the end-user. Retail
establishments are often called shops or stores. Retailers are at the end
of the supply chain. Manufacturing marketers see the process of
retailing as a necessary part of their overall distribution strategy. The
term "retailer" is also applied where a service provider services the
needs of a large number of individuals, such as a public utility, like
PESTELANALYSIS OF RETAIL INDUSTRY
Environmental regulations and protection.
Interest rates & monetary policies.
Contract enforcement law.
Government organization / attitude.
Interest rates & monetary policies
Stage of the business cycle
Demographics, Population growth
rates, Age distribution
Labor / social mobility
Work/career and leisure attitudes
Fashion, hypes & Living conditions
Health consciousness &
welfare, feelings on safety
Government research spending
Industry focus on technological effort
New inventions and development
Rate of technology transfer
Life cycle and speed of technological
Energy use and costs
Changes in Information Technology
Changes in Internet
Changes in Mobile Technology
Consumer buying behavior.
Socio cultural effect on purchasing.
Retail industry sourcing and overseas
Corporate Social Responsibility.
M & A expansion and consolidation.
Liberalization of economy for a country refers to set it
free it from direct or physical controls imposed by the
Economic reforms were based on the assumption that
market forces could guide the economy in a more effective
manner than government control.
Examples of one of other undeveloped countries like
Korea, Thailand, Singapore, etc. that had achieved rapid
economic development as a result of liberalization were kept
A Balance of Payments crisis in 1991 which pushed the
country to near bankruptcy.
The Rupee devalued and economic reforms were enforced
India central bank had refused new credit and foreign
exchange reserves had reduced to the point that India
could hardly finance three weeks’ worth of imports.
CAUSES OF INDIAN LIBERALIZATION
Elimination of industrial licensing and registration.
Liberalizing the MRTP act.
Freedom for expansion and production.
Increase in the investment limit of the small industries.
Freedom to import capital goods.
Freedom to import technology.
Free determination of interest rates.
ACTIONS TAKEN DURING LIBERALIZATION
Gigantic Annual growth in GDP.
A rate of growth that will double average income in a
Rapid Growth in all manufacturing as well as service
Exports of information technology enabled services
ECONOMIC IMPACT OF LIBERALIZATION
Increase in rate of economic growth.
Increase in competitiveness of industrial sector.
Reduction in poverty and inequality.
Fall in fiscal deficit.
Control on prices.
Decline in deficit of BOP.
Increase in Efficiency.
POSITIVE IMPACT OF LIBERALIZATION
Less importance to agriculture.
Pressure by IMF and World Bank.
More depending on Foreign Debt.
Dependence on Foreign technology.
Undue importance to Privatization.
Problem of Unemployment.
NEGATIVE IMPACT OF LIBERALIZATION
Indian economy had experienced major policy changes
in early 1990s.
The new economic reform, popularly known as,
Liberalization, Privatization and Globalization (LPG
model) aimed at making the Indian economy as fastest
growing economy and globally competitive.
The series of reforms undertaken with respect to
industrial sector, trade as well as financial sector aimed
at making the economy more efficient.
The rate of growth of the GDP of India has been on the
increase from 5.6 % during 1980-90 to 7 % in the 1993-
The cumulative FDI inflows from 1991 to September
2006 were Rs.1, 81,566 crores (US $ 43.29 Bn).
In respect of market capitalization, India is in the fourth
position with $ 894 Bn after the US ($ 17,000 Bn)
The foreign exchange reserves of India have enlarged.
Highway, Ahmedabad –
Infinity Benchmark, 10th
Floor, Plot G1,
Block EP & GP,
Sector V, Salt-Lake,
Kolkata – 700091.
Goldline Business Centre
Next to Chincholi Fire
(West), Mumbai – 400 064.