Marketing environment refers to the external and internal factors that significantly affect a company’s marketing efforts and overall business operations. A thorough analysis of the marketing environment is essential for marketers to achieve their marketing goals properly. It provides valuable insights and information essential for marketers to develop effective marketing strategies, make informed decisions and achieve business success. Marketing environment mainly divided into two parts. They are Internal and External Environment.
Internal Environment
An organization’s internal environment refers to what is available within the organization’s capacity. Management style, organizational culture, ownership, strategy, employees, resources and all other things controlled by the organization are considered the internal environment. Those factors are considered strengths (S) and weaknesses (W) in SWOT analysis.
External Environment
The external environment is a major part of the business environment and includes factors and forces outside the organization. The main thing managers are supposed to do is understand the changes in the external environment and adapt the internal organizational environment along with them.it can be divided into two parts as Micro environment and Macro Environment.
Micro Environment
The micro environment refers to the external environmental factors that can directly influence the operations and decisions of the business. It includes entities that have a closer and more immediate relationship with the company. It is also known as task environment. Understanding and managing the micro environment is essential for businesses to create marketing strategies and maintain positive relationships with key stakeholders.
The success of any business depends on its customers. It means that the main source of income generation for the business is the customer. In order to successfully accomplish the goals of the business, it is essential for the business to identify its target audience. Marketers should get a clear understanding of their target audience’s preferences and behaviors.
These are other business entities and individuals who provide the resources/inputs the organization needs to produce and supply products to customers. Managing the supplier environment has become an important issue in the recent past. One way to reduce the bargaining power of suppliers is to build long-term relationships.
Intermediaries play a crucial role in facilitating the movement of products or services from the manufacturer to the end consumer. These intermediaries bridge the gap between producers and consumers. Intermediaries take many forms. Some of them are,
Retailers– Retailers sell products directly to the customers. They purchase products from manufactures or wholesalers and then make them available to individual customers.
Wholesalers– wholesalers are another type of intermediaries. They purchase products in bulk from manufactures and sell them to the retailers.
Distributers– Distributors act as middlemen, purchasing goods from producers and reselling them to merchants or other companies. They focus on overseeing logistics for supply chains and distribution, facilitating the quick movement of products on the market.
Agents– they do not get the ownership of the product but facilitate transaction between buyers and sellers.
The impact of competitors to organizational activities can be seen as a very sensitive factor due to tremendous changes take place in market conditions. The direct and indirect completion and its impacts to organization should be well understood and reactive actions are needed.
Macro Environment
The macro environment refers to the external factors and forces that can influence an organization, industry, or market as a whole. These factors are generally beyond the control of the organization but can significantly impact its operations, strategies, and overall success. The macro environment is often analyzed using frameworks like PESTEL analysis. It includes six environments. They are political, economic, social/demographic/cultural, Ecological and Legal environment.
The political environment can be introduced as one of the main external factors that influence business. Managerial decisions are strongly affected by developments in the political environment. This includes laws, governmental agencies, and pressure groups that impact organizations and individuals. Government policies and regulations relate to trade regulations, taxation policies and intellectual property laws etc. These policies can create opportunities or threats for business. Furthermore, political stability or instability affect for business operations positively or negatively.
The economic environment includes important data on both the market and the economy. These factors can impact an organization’s operations, performance, and decision-making processes. Organizations must be aware of and adapt to changes in the economic environment to ensure their sustainable success. This environment includes economic indicators, trends, policies, and events. For example, organizations extensively analyze indicators of the economy such as gross domestic product (GDP), inflation rates, unemployment rates, and interest rates. Through this study, an understanding of the entire economy and how those factors influence consumer behavior, demand for goods and services, and production costs can be gained.
It is important for managers to be aware of the changes in the social environment before implementing marketing strategies. The main demographic force that marketers monitor is population, because people make up markets. Marketers are keenly interested in the size and growth rate of populations in cities, regions, and nations, age distribution and ethnic mix, educational levels, household patterns, and regional characteristics.
With the introduction of new technologies to the world, businesses that have been maintained traditionally have now used new technologies in their business activities. The technological environment of an organization refers to the external factors and conditions related to technological advancements, innovations, and trends that impact the organization’s operations, processes, products, services, and overall competitiveness.
The ecological environment is another environmental factor that has a significant impact on businesses. This includes certain changes in the natural environment. That is, factors such as weather, climate changes, natural resources, and biodiversity belong to this environment. Depending on the nature of the business, these factors affect it in both positive and negative ways.
Legal factors can have a significant impact on businesses, both positive and negative. these factors may affect both external and internal environment of a company. For example, a company that operates in a country with a strong legal system may have more protection from liability and fraud. On the other hand, a company that operates in a country with weak legal enforcement may be more exposed to risks. Below are some of the laws that affect businesses. Intellectual property law, consumer protection law, environmental laws and employment laws etc.