Aman Pathak

1. SUBJECT: Principles of Marketing
Prof.Harpreet Kalra
Assistant Professor
Department of Management Studies
Prof,Harpreet Kalra kalrah90@gmail.com BHMS 7th sem. POM
1
Amritsar College of Engineering & Technology, Amritsar, Punjab, INDIA
NAAC - A grade, NBA accredited courses(2009-12, 2016-18), UGC Autonomous College

2. Marketing Environment
Marketing Environment is the combination of external and internal
factors and forces which affect the company’s ability to establish a
relationship and serve its customers.
The marketing environment of a business consists of an internal and
an external environment.
 The internal environment is company-specific and includes owners,
workers, machines, materials etc.
 The external environment is further divided into two components:
micro & macro.
 The micro or the task environment is also specific to the business but
is external. It consists of factors engaged in producing, distributing,
and promoting the offering.
 The macro or the broad environment includes larger societal forces
which affect society as a whole. It is made up of six components:
demographic, economic, physical, technological, political-legal, and
social-cultural environment.

3. “A company’s marketing environment
consists of the actors and forces outside of
marketing that affect marketing
management ability to build and maintain
successful relationships with target
customers”. – Philip Kotler

4. Components of Marketing Environment
The marketing environment is made up of the internal and external environment of the
business. While the internal environment can be controlled, the business has less or no
control over the external environment.
Internal Environment
The internal environment of the business includes all the forces and factors inside the
organisation which affect its marketing operations. These components can be grouped
under the Five Ms of the business, which are:
 Men: The people of the organisation including both skilled and unskilled workers.
 Minutes: Time taken for the processes of the business to complete.
 Machinery: Equipment required by the business to facilitate or complete the processes.
 Materials: The factors of production or supplies required by the business to complete
the processes or production.
 Money: Money is the financial resource used to purchase machinery, materials, , and
pay the employees.
The internal environment is under the control of the marketer and can be changed with
the changing external environment. Nevertheless, the internal marketing environment is
as important for the business as the external marketing environment. This environment
includes the sales department, the marketing department, the manufacturing unit, the
human resource department, etc.

5. External Environment
The external environment constitutes factors and forces which are external to the
business and on which the marketer has little or no control. The external environment is
of two types:
Micro marketing environment
Macro marketing environment
Micro Environment
The micro-component of the external environment is also known as the task
environment. It comprises of external forces and factors that are directly related to the
business. These include suppliers, market intermediaries, customers, partners,
competitors and the public
•Suppliers include all the parties which provide resources needed by the organisation.
•Market intermediaries include parties involved in distributing the product or service
of the organisation.
•Partners are all the separate entities like advertising agencies, market
research organisations, banking and insurance companies, transportation companies,
brokers, etc. which conduct business with the organisation.
•Customers comprise of the target group of the organisation.
•Competitors are the players in the same market who targets similar customers as that
of the organisation.
•Public is made up of any other group that has an actual or potential interest or affects
the company’s ability to serve its customers.

6. Macro Environment
The macro component of the marketing environment is also known as the broad
environment. It constitutes the external factors and forces which affect the industry
as a whole but don’t have a direct effect on the business. The macro-environment
can be divided into 6 parts.
Demographic Environment
Economic Environment
Technological
Environment
Political-Legal
Environment
Physical
Environment
Social-
Cultural
Environment

7. Demographic Environment
The demographic force of the macro-environment is related to the study of the human
population with respect to their location, size, density, race, sex, occupation, age & other
factors. The marketer of the organization has a keen interest in this actor of the macro-
environment because it relates to the people, which are the foundation of any market.
The trends of demographic force are changing at a constant rate. Below are few
examples of such change.
01- The rate of increase in population is growing in a speedy manner that will ultimately
badly affect the supply of food & servicing ability for the population. The poor countries
are the victims that would suffer most. The enhancing market of china is getting the
attention of marketers around the world.
02- The changing age structure is another important trend of the population. The reasons
for this increase in the age structure of the population are the increasing life expectancy
and the downfall in the birth rate. After World War 2, the baby boomers have contributed
much to the increasing age of the population. The age group of people is divided into
many sub-divisions by the organization. The most important one is a middle-age group
that would become senior citizens in the future. Other groups include the generation X &
the echo boomers.

8. The overall population of the world is educating well with the new needs &
demands for the products & services. The white-collar workers are increasing in
number and certain products like books & education services are more demanding
by educating the group.
Also, computer-related technical skills would become essential in the coming
years. The racial & ethnic diversity in the population is one of the big trends that
also enhances. The organizations should concentrate on this diversity element of
the population & utilize it in their best interests. Disabled people also form a
potential future market.

9. Economic Environment
The economic factor of the macro-environment includes those that influence the
purchasing power of customers along with their spending patterns. Certain
important trends of the economic environment in the USA are as follows.
01- Personal consumption becomes the reason for the recession in the country that
affects personal & corporate actions. Now customers become more careful
shoppers.
02- The customers are aware of the rise in the real income & so they adopt the
strategy of value marketing.
03- The distribution of income in the country is in skewed shape which means
unequal distribution. The majority of the customers are showing the spending
patterns in the basic areas of food, transportation & housing. Moreover, the unfair
distribution of income results in the formation of two kinds of classes of the
people who are affluent and less affluent.
The marketers of organizations should develop & implement such strategies that
benefit them from changing economic trends. So they should carefully monitor
the altering trends of the economic system in order to prevent their organizations
from the side effects of the changing trends.

10. Natural Environment
The natural force of the macro environment consists of the natural resources
that are required by the organizations as inputs or that are influenced by the
marketing activities. The trends of the natural environment are becoming quite
important since few years like:
01- The industrial expansion has seriously affected the raw materials by
creating their shortage. Moreover, certain non renewable inputs are depleting
due to their improper usage like oil, coal, etc.
02- The environment of the world is badly affected by the improper production
procedures of the organization. The organizations are adopting an
environmentally friendly trend by which they have produced safe,
biodegradable, or recyclable products.
03- Now, the government is also affecting the operations of the organizations in
the area of natural environment damage. Certain policies & regulations are
implemented throughout the world and the marketers should focus on these
changing trends that are related to energy & material problems.
The organizations are promoting the green environment by developing &
implementing environment-friendly strategies.

11. Technological Environment
The technological aspect of the macro-environment includes the actors that are
responsible for the creation of new technologies, new products & new market
opportunities. For this purpose following are the important trends of the technological
area.
01- The technology is changing at a speedy rate and the new products are emerging that
replace the previous ones.
02- A large number of opportunities are emerging in the expanding fields like the space
shuttle, health care, robotics & biogenetic industries, etc.
03- The technical & commercial challenges emerged for the organization to develop
affordable products. Also, mew regulations are implementing from the government
about product safety & individual privacy that must also be considered by the
organizations.
.

12. Political Environment
Those actors and forces that relate to the government agencies, laws & other
pressure groups that affect the organizations or individual persons in a specific
society. For this purpose, the following are some important trends.
01- Public policy is implemented by the government that guides the organizations
to produce products that are beneficial for society.
02- Regulations are implemented that protect one organization from another.
03- Customers are protected from unfair business practices by certain laws of the
government.
04- There are also certain policies of the government that protect the interests of
the society from the unfair business behavior of the organizations

13. Cultural Environment
Those actors & forces that affect the basic values, preferences, perceptions &
behaviors of the society are included in the cultural factor of the macro
environment. There are certain cultural characteristics that influence the decision of
marketers. Some of the characteristics are as follows.
01- There are certain basic beliefs & perceptions that remain constant throughout
several generations of society.
02- There are certain secondary beliefs that can be altered through the effective
strategies developed by the marketing department of the organization. These
secondary concepts should be identified by the marketer in order to get an
advantage through these concepts.
03- The personal views of the people are also helpful for getting an advantage for
the organization by the marketers. Also, the views of people about others are helpful
for making effective strategies of the organization.
04- Moreover, the views of people about the organizations, society, nature &
universe are important considerable features of the cultural aspects that should be
concentrated by the marketers for the development of their strategies.

14. Importance of Marketing Environment
Every business, no matter how big or small, operates within the marketing
environment. Its present and future existence, profits, image, and positioning depend
on its internal and external environment. The business environment is one of the most
dynamic aspects of the business. In order to operate and stay in the market for long,
one has to understand and analyze the marketing environment and its components
properly.
 Essential for planning- An understanding of the external and internal environment is
essential for planning for the future. A marketer needs to be fully aware of the current
scenario, dynamism, and future predictions of the marketing environment if he wants
his plans to succeed.
 Understanding Customers- Thorough knowledge of the marketing environment
helps marketers acknowledge and predict what the customer actually wants. In-depth
analysis of the marketing environment reduces (and even removes) the noise between
the marketer and customers and helps the marketer to understand consumer
behaviour better.

15. • Tapping Trends- Breaking into new markets and capitalizing on new trends
requires a lot of insight about the marketing environment. The marketer needs to
research about every aspect of the environment to create a foolproof plan.
•Threats and Opportunities-Sound knowledge of the market environment often
gives a first-mover advantage to the marketer as he makes sure that his business is
safe from future threats and taps the future opportunities.
•Understanding the Competitors- Every niche has different players fighting for
the same spot. A better understanding of the marketing environment allows the
marketer to understand more about the competitions and about what advantages do
the competitors have over his business and vice versa.

16. Features Of Marketing Environment
The marketing environment surrounding a business possesses the following five
features:
 Specific and general forces: The marketing environment is made up of both specific
and general forces. Specific forces such as customers and investors directly affect the
business’s working, while general forces like social, legal, technological, or political
factors indirectly affect the business’s working.
 Complex: The marketing environment is a complex interaction of several elements,
factors, conditions, and forces that affect the business’s ability to establish a
relationship and serve its customers.
 Dynamic: The environment surrounding a business is very dynamic as its constituents
do not remain stable and change over time. Moreover, while marketers can control
some of the marketing environment elements, several elements are out of the
marketer’s control.
 Uncertain: Forces that rule the marketing environment are highly uncertain, and it
becomes tough for a marketer to predict market forces to develop marketing startegies
and plans.
 Relative: Marketing environments are also relative in nature. A specific product might
have a good demand in the USA but not in India because of the different marketing
environments in the two countries.