Meaning of Marketing Environment
|The whole situation of forces and elements that affect marketing is called marketing environment. Marketing environment remains dynamic. Marketing runs within the same environment. Environment gives different threats to marketing and, at the same time, also provides different opportunities. Business organizations should be able to predict the|
According to Philip Kotler and Gray Armstrong, “A company’s marketing environment consists of the actors and forces outside marketing that affect marketing management ability to develop and maintain successful relationship with its target customers.”
Scope of Marketing Environment
2. Marketing organizations
3. Internal and external elements
4. Marketing mix element
Micro and Macro Environmental Forces
|Micro and Macro Environmental Elements|
1. Micro Environmental Forces
|Internal Environmental Elements of Company|
|Elements of Marketing Intermediary or Marketing Intermediaries|
|Types of Customer Markets|
|Types of Public Communities|
- Financial public: Financial public affect fund receiving capacity of a company. This includes banks, investment houses, stockholders etc.
- Media public: Media public work for the advertisement and publicity of goods or services. This includes newspapers, magazines, radios, televisions, etc.
- Citizen action public: Each decision of a company affects civil society. If any decision is made against their interests, reaction comes promptly. So, a proper decision should be taken keeping regular contact with civil society through company’s public relation department. This includes consumers’ association, environment protection group, minority group, etc.
- Local public: All the companies have local public. Local public include neighboring residents, community organizations, etc. Big companies appoint a public relation officer to keep relation with the public for taking proper decision.
- General public: The general public also affect a company. So, the company should take proper decision by understanding the public views and trend of the general public towards its products.
- Internal public: Labors, other employees, manager, volunteers, management committee etc. are the internal public. A proper step should be taken by the company to motivate the internal public. The internal public work with interest on the one and dispatch good message to external environment.
- Government public: The government public also affect company and its products. So, the company should take advice from its legal advisor on several issues including safe goods, truth in advertisement etc.
2. Macro Environment Forces
|Demographic Environmental Elements|
- Population size: Population size affects marketing activities. In the countries like China and India where the size of population in huge, the size of market also is huge. And in the countries where the population is small, market size also becomes small. The multinational companies and foreign investors are not attracted to Nepal because Nepal’s market is small. In some developed countries birth rate is very low; the child related markets have been adversely affected.
- Population growth: The growth rate of world population is increasing. Due to the increasing rate of population, food supply has become insufficient, mines have been finished/exhausted, and environment has been polluted. As a result, quality of life style changes. The people have to face difficulty to use goods or services. Now, population growth rate is much higher in underdeveloped countries than in the developed countries. The rate of population growth in the underdeveloped countries of the world is 2% (that is 76% of the world population) whereas the population growth rate in the developed countries is only 0.6%. According to the demographic reports of 2002, Nepal’s population is 23.2 million and the growth rate is 2.1%. In some developed countries, the population growth rate is 0% or is negative or running to minus side. Both very high growth rate and negative rate or minus rate of population growth are challenges to the countries.
- Age mix: Age mix directly affects marketing activities. So, while marketing plans, programs and strategies, age mix also should be considered. Age affects working power and purchasing behavior. To have adequate working power and to have large number of people with the ability to purchases of goods or services are the positive aspects for marketing. 42% people of the total population in Nepal are below 14 years. But in the developed countries 14% of people are above 65 years.
- Urbanization: People provide new opportunities to marketing. When the people migrate to urban area (city areas) from rural areas (villages), they adopt city life style and begin to demand for goods or services suitable to the urban life style.
- Migration: Migration of people also affects marketing activities. People may migrate to cities, Terai and other places from remote villages, hills or Himalayan areas. When the people migrate from one place to another, market also migrates with them.
|Economic Environmental Elements|
- Income distribution: Income distribution is one of the effective elements under economic environment. Per capital income in different countries of the world is not equal. In the developed countries like America, Japan, Britain etc. the per capita income is very high but it is very low in the developing countries like Nepal, Bangladesh, Bhutan, Afghanistan etc. So, the purchasing power of the people of the rich and developed countries is high but the purchasing power of the people of poor countries is low. In the lack of socialist economic system or equal income distribution system, purchasing power of the people differs in the same country. A section of people have high purchasing power whereas others have low.
- Purchasing power of consumers: Purchasing power of consumers directly affects marketing. The purchasing power of the consumers is influenced by their level of income, economic system of their country, inflation, spending style etc. Availability or unavailability of facility in credit also affects purchasing power.
- Economic health: Economic health element denotes business cycle. In prosperous condition, economic situation becomes healthy or income increases. But just opposite to this, economic health deteriorates in economic depression, income decreases. The recovery situation of business cycle leads business organizations towards prosperity. Such fluctuation in business cycle affects the whole market system.
- Inflation rate: Inflation decreases consumers’ purchasing power by increasing price of goods or services. Nepal’s inflation rate is high. When inflation rate becomes high, saving decreases and depression comes in investment.
- Credit availability: Availability or unavailability of credit also directly affects marketing activities. If credit facility is available, quantity of sale increases; if it is not available, the quantity of sale decreases. Credit cards, debit card, hire purchase programs and other plans increase sale quantity. Nepal’s finance companies have made plans to provide TVs, motorcycles, buses, cars etc. on installment basis, due to which sale quantity goods has increased.
- Exchange rate: Exchange rate plays an important role in international markets. If exchange rate declines, it adversely affects the global market. The decline in exchange rate in Japan and Indonesia in 1998 had adversely affected the global market.
- Consumer’s income: Consumers’ income also affects marketing activities. The consumers’ income directly affects their purchasing. If the income of the consumers’ is high, purchasing power also becomes high, and if income is low, their purchasing power is also becomes low. Unemployment rate, wage rate, interest rate and tax rate affect consumers’ income.
- Regional economic group: The regional economic groups provide protection and facilities to their member country. The major regional groups are ASIAN, EU, SAFTA, SAARC, LAFTA etc.
|Natural Environmental Elements|
- Natural resources: Raw materials, mines, land, climate, forest etc. are natural resources. These elements play an important role in marketing activities.
- Topography: Topography plays an important role in transport and distribution. If the roads are easy and means of transport can be taken from place to place, goods can be transported at lower cost; just the opposite if the roads are difficult and means of transport cannot be taken everywhere, the cost of goods becomes high in such places. So, the topography affects cost of goods.
- Climate: Climate also affects the needs of customers and marketing mix. In the place where the climate is hot, demand of cotton clothes and cold drinks becomes high. In the places where the climate is cold, demand of woolen clothes and hot drinks becomes high. Similarly, demand of umbrella increases in rainy season and in the winter season demand of thick and warm clothes becomes high. So, climate also directly affects sales of goods and marketing activities.
|Political-legal Environmental Elements|
- Laws: Preventing dishonest business activities, protecting consumers, protecting business organization from unhealthy competition, protecting the interest of society etc. are the major purposes of law. So, arrangements of legal provisions are made in every country to regularize standardization, quality of goods, import, export, patent right, trademark, copyright, dealing of foreign currency etc. Such legal provisions affect marketing activities. The Consumer Protection Act 1997 of Nepal has protected consumers’ interest. But, as the fragile implementation of the business Laws and Acts made to regularize copyright, patent right and trademark in Nepal, the inventors and organizations cannot feel security.
- Government policies: Trade policy, industrial policy, privatization policy, environment policy, foreign investment policy, tax policy, foreign currency exchange policy, currency supply policy etc. affect marketing activities. Government policies should be suitable to business organizations and they also should be stable. If the policies of government related to business are changed along with political change in a country, business world has to face a great threat. One of the main reasons for not showing interest by foreigners to invest in Nepal is the unstable business policy of the government.
- Government agencies: Government agencies are government bodies. So, they perform their works remaining under government control. Such agencies provide license, fix quotas, provide loan, pledge as guarantor, and provide relief to industries. The activities of government agencies are conducted at national, regional and local levels. Such activities of government bodies directly affect the business activities.
- Pressure groups:
Marketing activities are also affected by pressure groups. Consumers’ associations raise voices for their own interest; environment groups raise voice for environment protection, feminist for women rights, business organizations raise voices for the interest for business
- Social environment: Social environment includes belief, value and norms, lifestyle, behavior, habit etc. These factors also directly affect marketing (in buying goods or services). So, a marketing manager should carefully study and analyze social environment while making marketing mix or making plans, programs and strategies.
- Cultural environment: Cultural environment directly affects human behavior and wants. General look of the people at themselves, business organization, society and the world etc. is their cultural value or norms. Feasts and festivals, castes and races, languages and religions etc. are included in cultural environment. It affects their daily life, living their wants and needs etc. So, a marketing manager should make marketing mix or plans, programs and strategies by studying and analyzing these factors.
|Technological Environmental Elements|
- Level of technology: Appropriate technology should be used to produce goods or services as desired or wanted by the customers. The wants and desires of rural consumers differ from urban consumers. Similarly, the wants, needs or desires of the consumers of developed countries differ from the consumers of underdeveloped countries. So, appropriate technology should be used to satisfy the wants and desires of different types of consumers.
- Technological change: Technology is a dynamic power. It is developing with speedy pace. As it affects marketing mix, a marketing manager should adopt the changing speed of technology to take opportunity of new innovation.
- Research and development budget: Research and development budget plays an important role in marketing. So, each business organization should make arrangement of sufficient budget for research and development (R&D).