The document discusses the marketing environment, which consists of micro and macro environmental factors that affect marketing decisions. The microenvironment includes internal company factors as well as external factors close to the company like suppliers, marketing intermediaries, customer markets, competitors, and publics. The macroenvironment comprises larger societal forces beyond a company's control such as demographic, economic, natural, technological, political, and cultural forces. Understanding how these environmental factors influence opportunities and threats is important for effective marketing strategy.

1. OSHADI RUPASINGHE
BBA (SEUSL), PGDIP (SLIM)

2. Marketing Environment
 The actors and forces outside marketing that affect
marketing management’s ability to build and
maintain successful relationships with target
customers.
 Environment offers both opportunities and threats.
 Marketing intelligence and research used to collect
information about the environment.

4. Marketing Environment
 Includes:
- Micro-Environment:
 The actors close to the company that affect its ability to
serve its customers- (company, suppliers, marketing
intermediaries, customer markets, competitors, and
publics.)
- Macro-Environment:
 The larger societal forces that affect the
microenvironment-(demographic, economic, natural,
technological, political, and cultural forces.)
 Considered to be beyond the control of the organization.

5. Actors/forces in Microenvironment

6. The Micro environment
1. The Company
 Area inside a company
 Affect the marketing department’s planning strategies
 The marketing managers must work closely with other
company departments. Other departments have an
impact on the marketing department’s plans and actions.
 All departments must “think consumers” and work
together to provide superior customer value and
satisfaction.

7.  2. Suppliers
 Suppliers are other business organizations and individuals
who provide the organization with raw materials, parts,
components, supplies or services required to produce and
supply products to customers.
 Suppliers form an important link in the organizations
overall customer value delivery system.
 Supplier problems can seriously affect marketing.
 Marketing managers must watch supply availability supply
shortages or delays, labor strikes, and other events can cost
sales in the short run and damage customer satisfaction in
the long run.

8.  3. Marketing Intermediaries
 Firms that help the company to promote, sell, and distribute its goods to final
buyers.
 Some organizations supply directly to the retailer whilst others use a complex
“chain” including intermediaries such as :
- Resellers are the distribution channels which help firms build the wide web of
their products by selling and find buyers. These include wholesalers and retailers.
- Physical distribution firms are like the contract partners of companies which
help them in product distribution. This means that their mission is to stock and
move their products from warehouse to the seller destinations. Focusing
distribution is important to companies in order to determine the best way to store,
deliver products, and manage the risk of time and cost in distribution.
- Marketing service agencies are the parts which help firms target their customers
and promote their products to attract them. These include marketing research
firms, advertisement firms, media firms and marketing consulting firms.
- Financial intermediaries help companies in financial risk management in
business such as banks, credit companies, and insurance companies.

9.  4. Customers
 Customers buy the product of the organization for final consumption.
 The aim of the entire value delivery network is to serve target customers and create
strong relationships with them. Consumer markets, business markets, reseller
markets, government markets and international markets are the 5types of
customer markets covered.
I. Consumer markets are individuals or households who buy products for their
personal purpose of using such as satisfying their basic needs. The trade with them
is called B2C market.
II. Business markets consist of other companies which have plan of purchasing
products to use in their business like producing other kinds of products. The trade
with them is called B2B market.
III. Reseller markets are individuals or groups that buy products to resell and gain
profits from cost advantages offered by production firms.
IV. Government markets are government agencies that purchase products or services
to use them for governmental aims such as buying clothes for army or essential
groceries to aiding poor people.
V. International markets are like consumers, producers, reseller and governments
that are from other nations in the world. By using the benefits of exchange rate,
firms probably gain more profits in international trade than domestic one.

10.  5. Competition
 The marketing concept states that to be successful, an
organization must provide greater customer value and
satisfaction than its competitors.
 Marketers must gain strategic advantage by positioning
their offerings strongly against competitors’ offerings in
the minds of consumers.
 In every market, all firms have to face with the thread of
competition Therefore, to gain more market share than
competitors, companies have responsibility for providing
right and better value to satisfy their consumers’ demand.

11.  6. Publics
 Any group that has an actual or potential interest in or impact on an
organization’s ability to achieve its objectives.
 Publics are the especial groups because they have ability of causing negative
or positive effects on firms not by purchasing products, but by potential
impacts on organization.
 The organization's micro environment also includes various publics.
i. Financial publics - influence the company’s ability to obtain funds.
ii. Media publics - carry news, features, and editorial opinion.
iii. Government publics - Management must take government
developments into account.
iv. Citizen-action publics - A company’s marketing decisions may be
questioned by consumer organizations, environmental groups, etc.
v. Local publics - include neighborhood residents and community
organizations.
vi. General public - The general public’s image of the company affects its
buying.
vii. Internal publics - include workers, managers, volunteers, and the board
of directors.

12. The Macro environment
 The company and all of the other actors operate in a
large macro environment of forces that shape
opportunities and pose treats to the company.
 Macro environment involves a set of environmental
factors that is beyond the control of an organization.

14.  1. Demographic Environment
 Demographic environment is the scientific study of human
population in terms of elements, such as age, gender,
education, occupation, income, size, density location.
 Marketers track changing age and family structures ,
geographic population shifts , educational characteristics,
and population diversity.

15.  2. Economic Environment
 It involves the facts that influence spending patterns and purchasing
power.
 The factors economic environment is as follows:
a. Inflation: It influences the customers’ demand for different products. For
example, higher petrol prices lead to a fall in demand for cars.
b. Interest Rates: It determines the borrowing activities of the organization. For
example, increase in interest rates for loan may lead organizations to cut their
important activities.
c. Unemployment: It leads to a no income state, which affects the purchasing
power of an individual.
d. Customer Income: It regulates the buying behavior of a customer. The change
in the customer’s income leads to changed spending patterns for the products, such
as food and clothing.
e. Monetary and Fiscal Policy: It affects all the organizations. The monetary
policy stabilizes the economy by controlling the interest rates and money supply in
an economy; whereas, fiscal policy regulates the government spending in various
areas by collecting the revenue from the citizens by taxing their income.

16.  3. Natural Environment
 Natural resources that are needed as inputs by marketers or
that are affected by marketing activities. Sustainability
has become a buzzword.

17.  Following natural factors affect the marketing activities of an
organization:
 a. Natural Resources: It serves as raw material for manufacturing various
products. Every organization consumes natural resources for the production
of its products. Organizations are realizing the problem of depletion of
resources and trying best to use these resources judiciously.
 b. Weather: It leads to opportunities or threats for the organizations. For
example, in summer, demand for water coolers, air conditioners, cotton
clothes, and water increases while in winter, the demand for woolen clothes
and room heaters rises. The marketing environment is greatly influenced by
the weather conditions of a country.
 c. Pollution: It includes air, water, and noise pollution, which lead to
environmental degradation. Now-a-days, organizations tend to promote
environment friendly products through its marketing activities. For example,
the organizations promote the usage of cloth and paper bags instead of
plastic bags.

18.  4. Technological Environment
 Technology acts as a rapidly changing force, which creates new opportunities
for the marketers to acquire the market share.
 Marketers with the help of technology can create and deliver products
matching the life style of customers.
 Organizations that fail to track ongoing technological changes find it
difficult to survive in today’s competitive environment.

19.  Following are the technological trends that affect the
marketing environment:
 a. Pace of Technological Change: It leads to product
improvement at a rapid pace. If the pace of technological change
is very rapid then organizations need to modify their products as
and when required.
 b. Research and Development: It helps in increasing growth
opportunities for an organization. Many organizations have
developed a separate team for R&D to bring innovation in its
products.
 c. Increased Regulation: It refers to government guidelines to
ban unsafe products. Marketers should be aware of these
regulations to prevent their violation.

20.  5. Political Environment
 The political environment consists of laws, government
agencies, and pressure groups that influence and limit
various organizations and individuals in a given society.
 The political environment can be one of the less
predictable elements in an organization's marketing
environment.
 Marketers need to monitor the changing political
environment because political changes can profoundly
affect a firm’s marketing.

21.  6.Cultural Environment
 Institutions and other forces that affect society’s basic values,
perceptions, preferences, and behaviors.
 Living in different nations, people probably have different
perspectives of culture. This will shape the behavior, beliefs and
characteristics of consumers in marketplace. Understanding
customers’ culture helps companies catch the trends of their
marketing decisions.

22. Responding to the Marketing
Environment
 There are three kinds of approaches organizations can
follow while responding to marketing environment.
1. Proactive Force- Aggressive actions to affect forces in the
environment
2. Reactive Force- Watching and reacting to forces in the
environment
3. Uncontrollable- React and adapt to forces in the
environment