This document discusses the marketing environment and its internal and external components. The micro environment includes suppliers, intermediaries, customers, competitors, and public. It directly influences the firm's marketing activities. The macro environment includes political, economic, social, technological, environmental, and demographic factors outside the firm's control but which impact its operations. A PEST analysis is used to analyze these macro factors. Understanding the marketing environment is important for planning, identifying opportunities/threats, and gaining a competitive advantage.

1. MARKETING ENVIRONMENT
1
Course: MBA-I
Subject: MARKETING MANAGEMENT - 1
Unit: II

2. MARKETING ENVIRONMENT
• The forces that directly and indirectly
influence an organization’s capability to
undertake its business.

3. COMPONENTS OF MARKETING
ENVIRONMENT
• Internal environment : Forces and actions inside the
firm that affect the marketing operation composed of
internal stake holders and the other functional areas
within the business organization.
• External environment
• Macro environment
• Micro environment

4. MICRO ENVIRONMENT
• The factors in the immediate environment .
Factors or elements in an organization's immediate area
of operations that affect its performance and decision-making freedom.
These factors include competitors, customers, distribution
channels, suppliers, and the general public.
MACRO ENVIRONMENT
1. The major external and uncontrollable
factors that influence an organization's decision making, and affect
its performance and strategies. These factors include the economic
factors; demographics; legal, political, and social conditions;
technological changes; and natural forces.
2. Specific examples of macro environment influences include competitors, changes
in interest rates, changes in cultural tastes, disastrous weather,
or government regulations.

5. WHY IS IT IMPORTANT?
• Macro and Micro marketing environment forces is
essential for planning.
• Helps a business to compete more effectively against
its rivals.
• Assists in the identification of opportunities and
threats.
• Enables an organization to take advantage of
emerging strategic opportunities.

7. THE INTERNAL ENVIRONMENTTHE INTERNAL ENVIRONMENT
All factors that are internal to the organization are knownAll factors that are internal to the organization are known
as the 'internal environment'.as the 'internal environment'.
They are generally audited by applying the 'Five Ms'They are generally audited by applying the 'Five Ms'
which arewhich are MMen,en, MMoney,oney, MMachinery,achinery, MMaterials andaterials and
MMarkets.arkets.
Process of managing internal change 'internal marketing.Process of managing internal change 'internal marketing.

8. THE INTERNAL ENVIRONMENT
It includes the following:
• The human resource department.
• The operations department.
• The accounting and finance department.
• The research and development department.

10. Micro environment
• The forces close to the company that affects
its ability to serve.
• All factors which impact directly on a firm and
its activities in relation to a particular market.
1. Suppliers
2. The market channel
3. Customers.
4. Competitors
5. Public

11. SUPPLIERS
•Suppliers are either individuals or business houses.
•.They provide resources needed by the company .
•.The developments in the suppliers environment have a
substantial impact on the marketing operations of the
company .
•.Companies can lower their supply costs and
increase product quality to gain competitive
advantage in the market.
•.supply shortages have to be fully monitored and plans
should be made to avoid it.

12. Market intermediates
• They are either business houses or
individuals .
• They help the company in promoting,
selling and distributing the goods to
customers.
• They are middlemen, distributing
agencies, market service agencies and
financial institutions.

13. Customers
• The target market of the company is usually of five
types:
1.Consumer market i.e. individual and householders
2.Industrial market i.e. organizations buying for producing
other and services.
3.Reseller market i.e. organizations buying goods and
services with a view to sell them to others.
4.Government and other non profit markets.i.e.those
buying goods and services in order to produce public
services.
5.International market i.e. individuals and organizations of
nations other then home land who buy for either
consumption or industrial use.

14. Competitors
• No company stands alone in serving and satisfying the
needs of a customer market. It faces competition.
• This helps the company in facing a host of competitors
with confidence .
• The company in order to come out successfully has to
adopt means which may help it to outmaneuver.
• The competitive environment consists of certain basic
things which every marketing manager has to take note
of.
• Philip Kotler ‘the best way for a company to grasp the
full range of its competition is to take view point of a
buyer.”

15. Public
• Public is defined as ‘any group that has an
actual or potential interest in or impact on a
company’s ability to achieve it’s objective.
• The actions of the company do affect the
interest of other groups i.e., those who form
general public for the company who must be
satisfied along with the consumers of the
company.
• According to Kotler ‘companies must put their
primary energy into effectively managing their
relationships with their customers.

17. Macro environment
Macro environment refers to those
factors which are external to
company’s activities and do not
concern the immediate environment.
It comprises general forces that affect all
business activities in market .

18. Factors affecting Macro
environment
1.POLITICAL FORCES
2.ECONOMIC FORCES
3.SOCIAL AND CULTURAL
FORCES
4.NATURAL FORCES
5.TECHNOLOGICAL FORCES
6.DEMOGRAPHIC FORCES

19. Political and Legal forces
• Includes laws, government agencies and
pressure groups that influence or limit
various organizations and individuals in a
given society.
– Increasing legislation.
– Changing government agency enforcement.
– More emphasis on ethics and socially
responsible actions.

20. Economic environment
• The economic environment consists of factors that affect
consumers purchasing and spending power.
• Under economic environment manager generally studies
1.trends of gross national product
2.patterns of real growth in income
3.variations in geographical income distribution.
4.borrowing pattern ,trends and governmental and legal
restrictions.
5.major economic variables

21. Social and cultural forces
• Socially responsible marketing is that
business firms should take the lead in
eliminating socially harmful products

22. DEMOGRAPHIC FORCES
• Demographic data helps in preparing
geographical marketing plans, household
marketing plans, age and sex wise plans.
• It influences behavior of consumers which
in turn will have direct impact on market
place.
• A marketer must communicate with
consumers anticipate problems ,respond
to complaints and make sure that the firm
operates properly.

23. Technological Environment
• Most dramatic force now shaping our
destiny.
• Changes rapidly.
• Creates new markets and opportunities
• Challenge is to make practical, affordable
products.
• Safety regulations result in higher
research costs and longer time between
conceptualization and introduction of
product.

24. Natural Forces
• Involves the natural resources that are
needed as inputs by marketers or that are
affected by marketing activities.

25. Natural Environment Trends
• Shortage of raw materials.
– Limited quantities of non-renewable resources.
• Increased pollution.
– Waste disposal, air/water pollutants.
• Increased government intervention.
– Kyoto and other initiatives.
• Environmentally sustainable strategies.
– G.R.E.E.N. movement.

26. Pest Analysis
• A scan of the external macro environment in
which the firm operates can be expressed as a
pest analysis.
• The acronym PEST (or sometimes rearranged
as “STEP”) is used to describe a framework for
the analysis of these macro environmental
factors.
• A PEST Analysis fits into an overall
environmental scan, which includes Political,
Economical, Social, and Technological
environment.

27. PURPOSE OF ANALYSING THE
MARKET
• To know where the environment is
heading
• which events and trends are favorable
• To assess the scope of various
opportunities
• To help secure the right fit between the
environment and the business unit

28. CONTROLLABILITY
• The organization has no control over the macro
environment. It can only respond to the changes
taking place.
• The organization has some degree of influence over
the micro environment but by no means complete
control.
• The organization controls its own internal environment
although this does not mean the marketing
department or marketing manager has control.

29. REFERENCES
• PHILIP KOTLER (BOOK- MARKETING
MANAGEMENT - CHAPTER-2)