Understanding Marketing Environment

Marketing Environment refers to the forces or variables of the outer and inner environment of a firm that affects the marketing management’s ability to build and maintain the successful relationships with the customer. The marketing environment framework consists of macro environment and micro environment.
Microenvironment variables are close to the firm and include the suppliers, marketing intermediaries, customer markets, competition & publics. Microenvironment also refers to the internal environment of the company and affects not only marketing but also all the departments such as management, finance, research and development, Human resources, purchasing, operations and accounting.
Macro-environment deals with the Demographic, economic, Technological, Natural, socio-cultural and politico-legal environment of the markets.
The following graphic shows the environmental framework.

1. Customers: Customers are the core of the marketing environment. There are different types of customers such as end consumers, business customers, government customers, international customers and retailer customers.
2. Suppliers: A slightest delay in receiving the supplies may result in dissatisfaction of the customers. The marketers have to watch the supply availability and other trends related to the suppliers
3. Marketing intermediaries: The resellers, physical distribution firms, marketing services agencies, and financial intermediaries all make marketing intermediaries. They help in promotion of the company and sales and distribution of the company’s products. Stores and warehouses are the physical distribution firms that store and transport the company’s product from its origin to its destination. Other intermediaries are marketing services agencies, which are responsible for conducting marketing research, advertising, and consulting. Financial intermediaries are institutions such as banks, credit companies and insurance companies.
4. Publics: Publics is any group that has interest or impact on firm’s ability to meet its goals. This includes the financial publics, media publics, government publics, local publics such as NGO and citizen action organizations. While the financial publics can hinder a company’s ability to obtain funds affecting the level of credit a company, the media publics can publish articles of interest regarding the company and editorials that may influence customers’ opinions. Similarly, government publics is capable of affecting the company by passing legislation and laws that put restrictions on the company’s actions and citizen-action publics (eg. environmental groups and minority groups ) can question the actions of a company and put them in the public spotlight.
5. Competitors: Competitors are the companies with similar offerings for goods and services. To remain competitive a company must consider who their biggest competitors are while considering its own size and position in the industry. The company should develop a strategic advantage over their competitors.
6. Politico-legal factors: Political factors include how and to what degree a government intervenes in the economy. This includes monetary and tax policies of the government, labour laws, environmental laws, various trade restrictions, tariffs. Political stability is one of the main factors. This also includes the merit goods and demerit goods as per the provisions of the local government. Legal factors deal with the discrimination law, consumer law, antitrust law, employment law, and health and safety law.
7. Economic factors: Economic factors are general economic growth, interest rates, exchange rates , balance of payments, monetary policies, inflation rate etc. These factors play a very important role in business operations. These factors have the capability to alter the cost of operations, cost of capital and returns ultimately. There is a major impact of the exchange rates on exports and imports of the country.
8. Social factors: Social factors are the social and cultural aspects, which include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety.They, have a major impact on demand of a firm’s products and services.
9. Technological factors: Technological factors include the research and development, automation, expansion of internet and other communication technologies, technology incentives and technological barriers. They affect the efficiency of the production. Outsourcing decisions mainly depend upon technological environments.
10. Natural Environment Factors: These factors include the weather, climate, and climate change, availability of water, availability of raw products etc.

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