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Marketing Environment

Marketing Environment

Environment term is derived from French Word: Environer, means to encircle or to surround i.e the surrounding forces or conditions in which we live, work etc.

According to Philip Kotler, Marketing environment refers to “External factors and forces that affects the company’s ability to develop and maintain successful transactions and relationships with companies target customers”

Marketing environmentis the combination of external and internal factors and forces which affect the company’s ability to establish a relationship and serve its customers.

Elements of marketing environment

The marketing environment is made up of the internal and external environment of business.

While the internal environment can be controlled, the business has very less or no control over the external environment.

Internal Environment

The internal environment of the business includes all the forces and factors inside the organization which affects its marketing operations.

These components can be grouped under the five Ms. of the business, which are







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 Environment

Macro Environment

Micro Environment/Partially Controllable factors

It Consists all those factors that influences marketing activities directly.The micro-components of external environment is known as task management.It comprises of external forces and factors that are directly related to the business. They are not fully controllable. They can be made favourable by systematic actions. If they are treated effectively, more opportunities can be exploited. Partially controllable factors mainly include close stakeholders with whom a companymust build, improve, and maintain healthy relations

These includes suppliers, market, intermediaries, customers, partners, competitors and the public.

Macro Environment/ Uncontrollable Factors

A firm has no control over these factors. These factors constitute macro marketing environment. For a firm the only option is to accept and respect these factors, and adopt and adjust with them. Management must respond favourably to such environment in order to exploit the emerging opportunities.

    1. Demographic Factors-: Demographic factors are related to population. Total population and growth rate
      • Age groups and gender distribution
      • Geographical (area-wise) concentration of population
      • Proportion of rural v/s urban population
      • Literacy rate and level of education
      • Population mobility (geographical shift) or migration rate
      • Family system and household pattern
      • Occupation based classification of population, etc.
    2. Ecological Factors-: These factors primarily concern with ecological (natural) environment. Availability and use of natural resources
      • Pollution and pollution control measures
      • Contemporary legal provisions
      • Ecological awareness and use of eco-friendly products. Contribution of corporate world for environment.
      • Working of national and international agencies/organizations for protection of environment. (International Union for conservation of nature, World wide fund of nature.)
      • World-wide efforts for protection of environment, etc
    3. Economic Factors-:Economic environment consists of economic forces that affect company’s costs, revenue and profits on one hand, and customers purchasing powers and willingness to spend on the other hand. Economic growth rate
      • Economic growth rate
      • Interest rates
      • Inflation rate
      • Global peace/conflict
      • Functioning of stock market and commodity markets
      • Industrial and agricultural policies
      • Fiscal and monitory policies
      • Export-import policies
      • Liberalization, globalization, and privatization processes
    4. Socio-cultural Factors-: Social and cultural factors affect consumers tastes and preferences.
      • Cultural norms, values, beliefs, and rituals
      • Castes, creeds and racial aspects
      • Social traditions, customs, habits, and superstitions
      • Family and reference groups
      • Role of women
      • Social classes
      • Religious events and festivals, etc
    5. Political and Legal Factors-: A firm has to operate within present political system and legal framework. Political factors affect economic policies. Every marketing decision is subject to be affected by political and legal factors.
      • Political and legal reforms
      • Government approach to different sectors
      • Political stability
      • Acts or legal provisions related to business operations and recent amendments
    6. International Environment-:The world had become a global village. Most countries have permitted free trade (with little restrictions).These variables include:
      • Working of international agencies and organizations (World Bank, UNO, etc.)
      • Functioning of MNCs-Multinational Companies
      • Export-Import policies of different nations
      • Availability of global aids and assistances Global peace v/s conflict
      • Liberalization, privatization, and globalization pace
      • International agreements among countries
      • Political stabilities in the dominant countries
    7. Technological Factors-: Technological factors affects the firm’s production process, product quality, cost effectiveness and hence, competitive ability
      • Pace of technological change
      • Replacement costs
      • Opportunities for innovation
      • Research and Development (R & D) budget
      • Government role in developing and/or importing new technology
      • Technological transfer among nations

Business has to respond to these changes in external environment through its strategy to become a successful organization even in unfavourable conditions.


Dr. Kumari Soni

Assistant Professor

Department of BBA