The marketing environment consists of internal and external factors. The micro environment includes controllable factors like customers, competitors, and suppliers. The macro environment includes uncontrollable PEST factors - political, economic, social, and technological forces. The document outlines each of these factors in detail and how they must be considered in marketing strategy and planning. It emphasizes that understanding both the micro and macro environments is essential for organizations to effectively compete in the marketplace.

1. The Marketing Environment
The General Environment
The general marketing environment consists of all those factors influencing
the marketing organisation. The internal environment or proximate Micro
Environment includes all factors that are within the control of the
organisation. It is also important that an organisation studies its external or
Macro environment. The Macro environment includes (generally)
uncontrollable forces outside the organisation which may pose the most
important opportunities and threats.
The Micro Environment
Controllable/Measurable
• Company
• Customers
• Competitors
• Suppliers
• Middlemen
• Society
• Distribution
The Macro Environment
Non-Controllable/Non-Measurable
• Political
• Economic
• Social
• Technological
• Enviromental
• Legal
P.E.S.T.
Analysis
ExternalInternal

2. The Micro Environment
The term Micro Environment denotes those elements over when the
marketing firm has control or which it can use in order to gain information
that will help in its marketing operations. It is important to re-emphasise that
the objective of marketing philosophy is to make profits trough satisfying
customers. This is accomplished through the manipulation of the micro
environment variables over which the company has control in such a way
as to optimise the objective.
The main components of the proximate micro environment are
• Customers
• Competitors
• Suppliers
• Publics
• Distribution
Customers
A. Consumer Markets (Buying for personal use)
Consists of individuals buying goods or services for personal
consumption.
B. Business Markets
People Buying on behalf of the organisation.
Ex: Buying a new ice cream machine for gelateria.
C. Government Markets
These include departments that buy goods to provide public services.
Ex: Buying computers for government offices

3. D. Reseller Markets
These buy goods and services to sell them to other markets
Ex: C.Calleja
E. International Markets
Customers in the foreign market.
Ex: Buying from the Internet.
Any one from A, B, C, D are found in the international market.
Competition
Direct competition examples.
Go and Vodafone
Fitness and Special K
Muller and Danone
Algida and Motta
BOV and HSBC
Indirect Competition Examples
When you have something replacing another.
(Coca cola to water) (Gas to electricity)
Who are our Competitors?
What products and benefits are they offering?
These are the questions and answers that an organisation must ask and
find an answer in analysing the competitive environment the answers must
all be compared with what the organisation is going at a point in time that is
its offerings, special promotions visibly in the media etc...
It must be said that there are only few firms which do not have any
competition, like for example enemalta having said so any company must
also consider indirect competition when studying the competition
environment. Indirect competition is generally brought about by substitute

4. products. Only when management and org have clear understanding of the
factors and forces making up the competition environment can they hope to
compete efficiently.
Suppliers
Suppliers are business firms and individuals who provide goods and
services to other organisations. Nearly every organisation whether
engaged in manufacturing, whole selling or retailing is likely to have
suppliers. Large firms are likely to have many suppliers.
Purchasing is regarded a very important management function in an
organisation. The main reason for this is the firms must be able to purchase
goods and services are an acceptable price and quality. The organisation
must also ensure that its suppliers are capable of offering an aceptable
level of service on matters such as.
A. Delivery Date
B. Reliability
C. Price
D. Quality
E. Stock Availability
F. After Sales Service
G. Credit Facilities.
The buyer/supplier relationship is 1 of the economic interdependence, that
is, both parties need each other for their commercial well being and
profitability. Some companies tend to opt for multiple sourcing that is they
buy from different suppliers to avoid over dependence on the other hand
other organisations prefer to keep costs as low as possible with stock and
supplier being available when needed.
Distribution (Place)

5. The Distribution environment entails the link between the marketing
organization and the final consumer. Some organisations opt for a direct
marketing option. That is, the company sells directly to the end consumer.
Other organizations use some other forms of intermediate distribution
system this could include agents, whole sellers and retailers besides other
things.
Publics (Stake Holders)
Stakeholders are anyone who may have an interest in the company
Internal stakeholders are people working within the company
Connected  Bank (Loans), Shareholders, Insuriances
External  The general public.
A publics or stakeholder is any group of people or 1 person that has an
actual or potential interest on an organization’s ability to achieve its
objectives.
A. Financial Publics
Influence the company’s ability to obtain funds
B. Media Publics
Media Publics are those that carry news, features and editorial
opinions.
Ex: News papers, magazines, radios and TV stations.
C. Government Publics
Management must take government developments into account.
Marketers often consult to company’s lawyers on issues on products
safety, truth in advantages and other matters. Government is
generally concerned about companies because of tax collections.
D. Citizen Action Publics
Manufacturer Middle People Consumers

6. A company’s marketing decision may be questions by consumer
organizations, environmental groups, minority groups and others. A
company’s public relations market can help to stay in touch with
consumer citizen groups.
E. Local Publics
Every company has local publics such as neighbourhood residents
and community organizations. Large companies should ideally deal
with the community, attend meetings, answer any queries and
contribute to worthwhile causes.
The Macro Environment
The P.E.S.T. Analysis.

7. Political Environment
Marketing decisions are strongly
affected by developments in the
political environment. The political
environment has its own system or
framework, it regulates society
therefore it regulates the system. A
political environment will have the
following changes affecting a
business.
1. Policies and Laws
2. Inflation (Increase in prices)
3. Taxation (V.A.T, eco tax....)
4. Unemployment and employment levels

8. 5. Local Councils
6. Authorities
Marketing Management must be on the lookout for changes in government
policies and legislations which can change due to a change in government.
Changes in government and policies will affect a society as a whole and
may influence the operations of an organisation. Firms operating in
international markets must analyse international political develops to see
what effect it has in its international market.
Although generally the organisation has to adopt themselves to the political
environment they can also influence the political climate, this could be done
trough the following:
1. Federation of Industry
2. Chamber of Commerce
3. GRTU (General Retailers and Traders Union)
Such organisations discuss new policies with the government and work for
an agreement in the interest of the sector
• Change in employment law
• Discrimination Act
Economical Environment
Marketing organisations must understand the effects on the many
economic variables, these include:
1. The level of inflation
2. Interest Rates
3. Employment and Unemployment levels

9. These are of concern to the marketing firm because many times they have
a direct effect on costs, prices and demand. The level of domestic
unemployment affects the demand for the consumer wants fall then chance
is that the demand for industrial goods will decrease as well. The level of
inflation is also bound to effect cost, price and demand.
Inflation – When the product is a luxury product the likely hood of demand
will decrease, but when it is a necessity product the demand will be
constant as long as no cheaper replacements exists.
Social (Cultural) Environment
This is perhaps the most difficult element out of the pest analysis,
manifesting its self in changing tastes, purchasing behaviour and changing
patterns. The type of goods and services demanded by consumers is a
function of their social conditioning and their consequent attitudes and
believes
Core based values are those firmly established within a society and as
therefore difficult to changes they are transmitted trough family, church and
the institutions of society which acts as relatively fixed parameters within
which marketing firms are forced to operate. Secondary cultural values
however tend to be less strong and therefore more likely to undergo
change.
Some changes that have occurred in the lass 20 – 30 years:
1. Use of plastic money
2. Use of personal credit
3. Fast food
4. Health consciousness

10. 5. Broken families
6. Children outside marriages
7. Gay families
8. Working women
Within any particular culture one finds various sub-cultures having
distinguished characteristics. Members of these sub-cultures tend to have
common methods of behaviour such sub-cultural groups may include:
• Religious groups
• Cultural/Racial Groups
IKEA was not shy to support the gay community. In 1994 they were running
an advertisement in the US using 2 Gay man shopping for a dining room
table together.
Technological Environment
Technology is a major variable which has influenced the development of
man of the products we take for granted today like computers and T.V’s
Marketing firm’s themselves play a part in the technological process, many
having their own research department thus playing a part in innovating new
developments.
One example of how technology change has affected marketing activities is
in the development in the electronic point of sale (E.P.O.S). The laser
checkout reads barcodes on the product being purchased and stores
information that is used to analyse sales and re-order stock as well as
giving customers printed read out of the items purchased and the price
changes. Manufacturing of fast moving goods particularly packaged

11. grocery products have been forced to respond to these innovations by
incorporating the barcode on their products, labels and packaging. In this
way a change in the technological environment has affected the products
and services produce and the way the businesses carries out their
operations.