Showing posts with label Marketing Environment. Show all posts
Showing posts with label Marketing Environment. Show all posts

Marketing Environment in Nepal and Impact of Environment on Marketing Activities

Marketing Environment in Nepal            


Economic, political-legal, socio-cultural and technological factors are the major elements of marketing environment in Nepal. These elements directly and indirectly affect marketing activities. The environmental elements and sub elements of marketing are given in the following figure:

Environmental elements of marketing in Nepal


a) Political-legal Environment


Political and legal environment of Nepal is changing according to time. The changed political and legal environment can be explained in the following points:

i) Political parties

Politics of a country directly affects marketing. Multiparty democratic system came in Nepal as a result of the people’s movement in 2046 B.S. Political parties came upper-ground and some new political parties came into existence. Economic thought and policy of political parties directly affect the country’s economy. There are mainly three types of economic thoughts and policies of Nepal’s political parties. They are capitalist economic thought, socialist economic thought and mix economic thought.

CPN (UML), Nepali Congress, National Democratic Party, Nepal Sadbhavana Party, United People’s Front, Nepal Worker and Peasant Party etc. are the main political parties of Nepal. Nepali Congress appeared as the largest party in the general election in 2046 B.S. and CPN (UML) appeared as the largest party in the mid-term election held in 2051 B.S. Both of these parties have adopted mixed economic system as their economic policy.

ii) Administrative policy

Administrative policy is another important element of political-legal environment. As the administrative policy affects whole marketing activities of a country, marketing managers should be well-informed about administrative policy. His Majesty's government has adopted the policy to strengthen administrative organizations, make effective instruction and training programs, bring coordination among different organizations, make all levels participate through decentralization and delegation of authority, simplify decision making process, activate the role of administrative court, adopt special and rigid policy for corruption control, create high level manpower, regularize and strengthen monitoring system etc. Administration becomes strong, transparent and healthy through such policies.

iii) Legal provision

The other important element of political-legal environment is legal provision. Legal provisions directly affect marketing. Positive provisions positively affect marketing; negative provisions affect negatively. Arrangement of different Laws and Acts are made to regularize and control business and industry. Nepal government has made arrangement to exempt cottage industry from excise-duty and income tax, to exempt other production oriented industries such as cigarette, bidi, alcohol, beer, plastics, vegetable ghee, electric goods, fuel producing, agricultural and forest resources and mines industries, etc. from income tax for five years after they start production. HMG prepares necessary infrastructures for industries and business. Such provisions positively affect development of industry and business. Import and Export Act, Nepal Agency Act, Private Firm Registration Act, Partnership Act, Company Act, Patent Act, Design and Trademark Act, Nepal Mine Act, Nepal Hotel Management and Alcohol Sale Control Act, Bonus Act, Black Market and Other Social Crime Control and Punishment Act, Tourism Act, Customs Act, Income Tax Act, Property Tax Act, Sale Tax Act, Contract Act, Value Added Tax Act, Labor Act, Foreign Investment and Technology Act, Industrial Business Act etc. become subjects of concern for managers. So, they should be knowledgeable about such acts.

iv) Constitution

Constitution is the major element of political-legal environment. Economic policy of a country should be clearly defined by constitution. The Constitution of the Kingdom of Nepal, 2047 B.S. has clearly mentioned economic system and policy of the country. Such policies should be compulsorily abided by the managers. The following economic policies have been mentioned in Part 4 of the Constitution of the Kingdom of Nepal, 2047 B.S.:-
  • The state shall pursue a policy of raising the living standard of general public through the development of infrastructures such as education, health, housing and employment for all the regions by equitably distributing investment of economic resources for balanced development in the various geographical regions of the country.
  • The state shall pursue a policy of mobilizing the natural resources and heritage of the country in a manner which might be useful and beneficial to the interest of the nation.
  • The state shall create a condition for the economic progress of the majority of the people, who are dependent on agriculture, by introducing measures which will help in raising productivity in the agricultural sector and develop the agricultural sector on the principles of industrial growth by launching land reform program.
  • The state shall pursue a policy of increasing the participation of the labor forces, the chief socio-economic force of the country, in the management of enterprises by gradually securing employment opportunities to it ensuring the right to work and thus protecting its rights and interests.
  • The state shall pursue a policy of making female population participate, to a greater extent, in the task of national development of making specials for their education, health and employment.
  • The state shall, with a view to bringing prosperity in the country, pursue a policy of giving priority to the development of science and technology and shall also give due consideration to the development of local technology.
  • The state shall, for the purpose of national development, pursue a policy of taking necessary measures for the attraction of foreign capital and technology while at the same time promoting indigenous investment.
  • The state shall pursue a policy of creating conditions for the acceleration of the speed of the rural development, keeping in view the welfare of the majority of the rural population.
These policies both directly and indirectly affect marketing activities.

b) Economic Environment


Economic environment is the very important environment to affect marketing. If the economic environment is favorable, business organization can get sufficient opportunities, and if it is adverse, they have to face different challenges. Nepal’s economic environment has been gradually changing. HMG has been trying its best to make the economic environment favorable to the business organizations. Nepal’s present economic environment can be seen as follows:

i) Economic condition

Nepal is an agricultural country. About 80% of the total population is involved in agricultural occupation. So, Nepal’s economy is based on agriculture. According to the World Development Report, 1990 published by the World Bank, Nepal is included in the list of the poorest countries of the world in economic standard. Its per-capita annual income is only 230 American dollars. There is also great inequality in the distribution of national income. According to statistics published by the National Planning Commission, (2060/61) 30.8% of the Nepalese people are compelled to live below poverty line. Nepal has adopted mix economic system. In Nepal, there are socialist model cooperation conducted and controlled by the state and capitalist model companies conducted and controlled by private entrepreneurs.

Nepal’s economy has not become fully self-reliant. Large part of annual national budget depends on foreign assistance. Nepal gets foreign loan and aid. Nepal is a country lagged far behind in creating capital through saving collection and its effective mobilization. So, Nepal’s financial market is miserable. The Nepalese trend is such that they invest their money in home, land, gold etc. instead of investing in industry and business. A lot of effort is necessary to improve such miserable condition of economic condition of the country.

ii) Trade and transit policy

HMG has implemented Commercial Policy, 2049, to simplify and regularize foreign trade. The objectives of the Commercial Policy, 2049 are to increase the contribution of private sectors to the national economy through their increasing participation in internal and international trades by creating open and liberal economic environment, make sustainable development of trade to minimize trade imbalance, link this sector to other sectors by developing and expanding employment oriented trade, increase export trade making sustainable and competitive etc. Besides, proper export and import policy, arrangement of foreign exchange and internal trade policy also have been adopted.

Nepal has become the member of World Trade Organization (WTO). So, HMG has supported the policy that it should get unobstructed transit facility. Nepal has been using Kolkata port of India as its transit point. As this route is long and expensive for Nepal, several round talks were held with India to make an arrangement for using the nearest and shortest Phulbari Banglabanda route and finally an agreement was signed in June 1997. But practical problems have appeared in the use of this route.

iii) Industrial policy

Proper industrial policy should be adopted to industrialize the country. So, HMG has implemented Industrial Policy, 2049. This policy has aimed to hand over the state run industries gradually to private sectors and not to nationalize the private sector industries. The government’s policy is to invest in the sectors which are necessary for the national economy and wherein the private sectors are not attracted to invest. The government has forwarded the policy to make private sectors participate in the development of community and private forest, in hydro-electricity production and distribution, construction of road, ropeway, tunnel, bridge, hospital etc. and operate them.

The main objectives of the industrial policy 2049, are to minimize the pressure of unemployment on the agriculture sector by developing employment oriented industries, utilize local means and resources, give emphasis to export oriented, increase the contribution of these sectors to the national economy by rising industrial production and productivity, adopt proper policy of industrialization for balanced development of the country etc. HMG has made the policy to provide different services to the entrepreneurs and investors on the basis of the nature of industry and make proper arrangement of necessary infrastructures.

iv) Privatization policy

Nepal is the country of mixed economy. Due to failure to give reasonable return on investment and being unable to contribute to the per-capita income of the industry, the government has been gradually taking its hand off the state owned/public corporations since 1980s. The Sixth Plan has mentioned to involve private sector in the management. The Seventh Plan has mentioned to hand over all sectors, except urgent necessary and basic services, to the private sectors. The Industrial Policy, 2049 mentions to privatize all the sectors except those related to public utility, defense and other nationally important corporations. The privatization policy was brought to public in 2048 and Privatization Act was endorsed by the 5th session of the House of Representatives in 2050.

The privatization Policy has been implemented with the objective to lighten the financial and administrative burden on the government, to increase productivity by improving operating efficiency of the public corporations, to increase people’s participation in industries and business sectors, to provide capital to the government for alternative use, to heighten economic growth rate of the country etc. The government has adopted the policy not to nationalize private sector industries, and to invest itself in the sectors of public utility and basic, urgent and necessary as well as nationally important sectors and in the sectors and where the private sectors are not attracted to invest. So, the government has given priority to the free and liberal economic system.

v) Income distribution

Nepal is an undeveloped country. Per-capita income of the Nepalese people is only 230 American dollars. This income shows the purchasing power of the Nepalese people. Rich people are very rich and poor people are very poor in Nepal. Only very small number of people are rich here. Poverty is seen everywhere. So, income distribution is unequal in Nepal.

vi) Economic policy

Financial and monetary policies are included in economic policy. These policies also affect business organizations directly. So, such policies should be studied carefully. Tax and public expenditure policies come under financial policy. Such policies are made by HMG. The business organizations should abide by them compulsorily.

Nepal Rastra Bank is the only authority to make monetary policy in Nepal. Its policy directly affects demand and supply of currency, credit cost, level of average demand, etc. This affects business organizations and their activities directly due to the effect on interest rate and inflation rate.

c) Socio-cultural Environment


Socio-cultural environment includes population, pressure groups, reference groups, social classes, life style, attitude, belief, religion, education, language etc. Socio-cultural environment also affects marketing directly.

i) Population

According to 2058 B.S. census, Nepal’s population is 23,151,423. Among them 49.95 percent rate are male and 50.05 percent rate are female. The population growth rate is 2.25 percent in Nepal. Some 8 or 9 years ago, pressure of migration was on Terai, but nowadays it is growing on big cities including Kathmandu Valley.

ii) Pressure group

Pressure groups do different activities for the interest of themselves and society. Their activities affect business organizations. Consumer’s association, civil society, human right organization, woman organization, environment protection forum, child right forum etc. are pressure groups. Such groups are also working in Nepal. So, marketing is affected by them.

iii) Reference group

Reference groups bring change in consumers’ behavior. Cine-stars, characters, heroes, heroines, musicians, singers, political leaders, scientists etc. are reference groups. The consumers like to imitate them in using products. So, marketing is affected by reference groups.

iv) Social class

The Nepalese society can be classified in three classes as high class, middle class and lower class. Their interest, expense capacity, trend, behavior etc. become different according to class. This also affects marketing.

v) Life style

Social change brings change in the life style of people. People’s life style is expressed through their activities, behavior, speaking, etc. Such changes also affect marketing. The life style of Nepalese people is also changing.

vi) Attitude

The other important element of social and cultural environment is the attitude of the people towards time, occupation and change. A marketing manager should consider this element carefully as the people’s attitudes affect business organization. Education, language, belief etc. influence people’s attitudes in business organization. The trend of delay dallying, trust and honesty are rarely found. The trend of avoiding work and responsibility is found widespread. The Nepalese have not become able to adopt changes easily. The trend of accepting changes in technology and management has not developed yet. They give more importance to traditional views and practices. This also affects marketing.

vii) Beliefs

People’s belief is another element of socio-cultural environment. Education, religion, tradition, etc. influence people’s belief. The Nepalese people believe in fate. They think that success or failure depends on the will of God but not on human efforts. They take success or failure in any work as God’s will or the result of fate. They worship Gods or pray at temples to get success. They go to witch doctors to get cure from diseases. Now a little change has been found in such blind belief. It will take more time for the people to overcome such superstition.

viii) Religion

Religion is also another element of socio-cultural environment. According to the Constitution of the Kingdom of Nepal 2047, 80.62% Nepalese are Hindus. The second largest population after Hindus is Buddhists. 10.74% population are Buddhists in Nepal. Muslims, Jains, Christians, etc. people are also living in Nepal. Religious tolerance is found among the people following different religions. No sectarianism, fighting nor dispute over religions is found in Nepal. Hindus and Buddhists have developed religious relationship and friendship. Human welfare and prosperity is the conclusion of all religions in Nepal.

ix) Education

The other important element of socio-cultural environment is education. Education is the backbone of all round development. So, education should be given priority for the development of the country. Education provides different level man power necessary for the development of the country. Nepal is the backward country in education. Here only 53.75% people are literate. Among them male are 65.08% and females are 42.49%. Marketing is also affected by the level of education and awareness of the people.

x) Language

Language is the other important element of socio-cultural environment. Language is the powerful media of communication. It affects business organizations directly. It also plays important role in developing the country. In the ancient time, Sanskrit, Kirat, Newari languages were used as official languages in Nepal. In modern Nepal, Nepali language is used as official language as most of the Nepalese people understand and speak this language. The constitution of the Kingdom of Nepal, 2047, has given recognition to Newari, Maithaili, Gurung etc. languages as national languages. Foreign diplomatic missions, different organizations, NGOs, foreign trade and business organizations etc. use English language. Although Nepali language is used and spoken in most of the business organizations, records are kept in English. But financial statements to be sent to the concerned HMG offices are prepared in Nepali language.

d) Technological Environment


This is the age of new technology. Technological development positively affects industrial development. Technological development of Nepal can be mentioned in the following four points:

i) Level of technology

The level of technology is labor oriented and capital oriented. In labor oriented technology, man power is used and in capital oriented technology, advanced machineries are used. In Nepal, mostly labor oriented technology has been used; however, capital oriented technology is gradually replacing the labor oriented technology.

ii) Pace of technology

Technology is dynamic. Its changing pace is speedy. So, a manager should be able to adopt the changing pace of technological environment. Nepal also cannot remain aloof from it.

iii) Research & development – R&D

The other important element of technological environment is research & development. The business organizations are also affected by the fact how capable the country is in the development of science, technology and research sectors. The organizations themselves can also develop new technology by opening R & D section. But as Research & Development needs a lot of money, only business organizations may not do such works alone. So, the state should be involved in such works. Different organizations such as Technical Schools, Practical Science and Technology Research Center, Nepal Academy for Science and Technology, etc. are working in research and development sector. But, due to the lack of necessary means, resources and commitment, these organizations have not become successful in their objectives.

iv) Technology transfer

Nepal is a backward country in the development of science and technology. A country should be economically rich for development of science and technology. As Nepal is economically weak, there is no possibility for Nepal to develop science and technology by itself. So, it has adopted the policy of transfer of new technology. The examples of new technology transfer are CocaCola of Nepal Bottlers,  Goldstar Television, Tuborg and Sanmiguel Beer etc. Technology can be transferred in the following ways:
  • By directly importing new technology into the country,
  • By opening branch of multinational companies,
  • By handing over the management of industry and business to foreign firms or experts,
  • By sending indigenous manpower to foreign countries for study and training,
  • By inviting foreign technicians to industry or company etc.


2. Environmental Impact on Marketing Activities


Marketing performs different important activities to satisfy new needs and wants of consumers. Among them are purchasing, selling, transporting, labeling, standardization, grading, branding, advertising, packaging, sale promoting, risk bearing, financing, market research, warehousing etc.

Strong economic system, favorable economic policies, political stability, healthy competition, etc. provide opportunities to marketing but elements such as increase in instability, unhealthy competition, political instability, frequently changing economic policy, development in technology etc. become threats. So, the environment affects marketing in both ways, positively and negatively.

a) Positive impact


The environment like strong economic system, favorable economic policy, stable politics, healthy competition, etc. positively affect marketing activities. Marketing environment has positive impact on marketing activities as follows:
  1. Provides opportunities: Environment provides different opportunities to marketing. Favorable economic policies, stable politics, healthy competition, strong financial market etc. greatly help in expansion and development of marketing.
  2. Reduces uncertainty: Environment is dynamic. The changes in it increase uncertainty in marketing. However, such uncertainties can be minimized by scanning and regular monitoring. In other words, favorable economic policies, stable politics, healthy competition, strong financial market etc. help to lessen uncertainty in marketing.
  3. Helps to identify consumers’ needs: Consumers’ needs and wants may be many and different. Demands can be increased by identifying their wants and needs through environmental scanning.
  4. Helps in goal achievement: Organizational goal can be achieved by bringing improvement in performance after scanning, analyzing and studying the changes in environment. So, environment helps in goal achievement.
  5. Helps to identify the strength: Proper utilization of strong aspects should be utilized to achieve success in marketing. This needs careful analysis and scanning of dynamic environment.


b) Negative Impact


Uncertainty, unhealthy competition, unstable politics, frequent changes in economic policy, etc. in environments negatively affect marketing activities. They affect marketing by,
  1. Increase in uncertainty: Dynamic environment increases uncertainty. If the changing and dynamic environment cannot be correctly scanned and analyzed, it negatively affects marketing. Unstable politics, ever changing economic policy, unhealthy competition, etc. have increased uncertainty in Nepalese marketing.
  2. Gives threats: Environment does not always provide opportunity to marketing, it also gives threat. Unfavorable economic policies, unhealthy competition, weak financial market, unstable politics, corrupt practices etc. give threats to marketing.
  3. Difficult to goal achievement: Consumers’ demands should be increased by identifying and analyzing their wants and needs. If the environment becomes difficult, uncertainty increases and correct and sufficient information is not available, it becomes difficult to identify the needs and wants of the consumers. It makes goal achievement difficult.

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Meaning of Marketing Environment | Scope of Marketing Environment | Micro and Macro Environmental Forces

  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 environment and monitor regularly by scanning it to face environmental threats successfully and use opportunities fully.

Marketing environment consists of micro and macro environment. Companies, suppliers, marketing intermediaries, agents, customers, competition, people etc. are micro environmental elements. Demographic, economic, natural, political and legal, social – cultural, technological etc. are macro environmental elements. As all these elements affect marketing, a marketing manager should analyze such elements and take proper steps. The other managers also should observe and examine these macro environmental elements of marketing.

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.”

In conclusion, the whole situation of the environmental forces and elements forces that affect marketing activities is called marketing environment on the whole. Marketing manager should scan the marketing environment and identify the environmental elements clearly and make future plans and programs accordingly.


  Scope of Marketing Environment   


The actors and factors that directly and indirectly affect marketing on the whole is called marketing environment. The scope of marketing is vast. This can be expressed in the following points.

1. Customers


Customers is the important element of marketing. Marketing does not exist without customers. Customers buy goods or services. The behavior which the customers exhibit while buying goods or services is affected by environment. So, the customer is included within the scope of marketing environment. Customers may be individuals and organizations. Purchasing behavior of individuals and organizations becomes different, but marketing environment affects both of their purchasing behaviors.

2. Marketing Organizations


The organizations conducting marketing activities are called marketing organizations. Business organizations, service providing organizations and public organizations are included in marketing organization. So, these organizations come under the scope of marketing environment. The activities of these organizations are directly and indirectly affected by the environment.

3. Internal and External Elements


Both the internal and external elements of an organization also fall under scope of marketing environment. Companies, suppliers, intermediaries, customers, competitors, people etc. are internal elements whereas population, economic, natural, socio-culture etc. are external elements.

4. Marketing Mix Element


Product, price, place (distribution), and promotion are the elements of marketing mix. They are also included in the scope of marketing environment. Types of product, design, quality, branding, packaging, warranty, specialty etc. are the elements of product mix. Discount, terms and conditions of sale, method of payment etc. are the elements of price mix. Similarly, agents, whole sellers, retailers, warehousing, transportation etc. are the elements of place mix. Sale promotion, personal selling, publicity, advertisement etc. are the elements of promotion mix. All these elements are affected by marketing environment.


  Micro and Macro Environmental Forces  


Marketing environment can be classified into two types as micro and macro environments. It is made clearer by the following figure:

Micro and Macro Environmental Elements


1. Micro Environmental Forces


The micro environmental elements affect marketing activities remaining within or nearby a business company. The micro environment includes the company, suppliers, marketing intermediaries, customers, competitors and publics.

a) Company

A marketing manager should consider the top level management, finance, research and development, purchase, production, account etc. departments while making marketing plan. These all are interrelated aspects of internal environment. Mission, objective, goal and strategy of a company are determined by top level management. Marketing manager takes marketing decisions remaining under the plan made by the top level management. The marketing decisions taken by the marketing manager should be approved by the top level management before their implementation. In this way, the top level management and marketing management have relationship and each undertaking of the high level management always affect marketing.

The marketing manager also performs his/her activities remaining in contact with other departments. Financial department should arrange necessary budget and its use for the implementation of marketing plans, and research and development (R & D) department should design safe and attractive goods. Similarly, the purchasing department should search suppliers and receive quality materials whereas the production department should produce quality and marketable goods in necessary quantity. Account department keeps records of income and expenditure. All these activities affect marketing. So, the marketing department should perform its works with effective coordination among all the departments.

Internal Environmental Elements of Company

b) Suppliers:

The organization or person who provides necessary materials and resources to a company for production of goods or services is called supplier. As the supplier greatly affect marketing, it is taken as an important element of marketing environment. Supplier should be renowned and able to supply quality materials and resources in necessary quantity regularly. Besides this, terms and conditions of sale also should be simple. The cost of supply should be minimum. If the supply cost increase, the cost and goods of services also increase. As a result, sale gets adversely affected.

c) Marketing Intermediaries

The marketing intermediaries help in carrying company’s products to the consumers and market promotion. This includes sellers, physical distribution firms, marketing service agencies and financial intermediaries. The distribution channel which carries the services or goods produced by a firm to the consumers is called seller. Dealers, wholesalers and retailers are in the group of seller. The body which helps in delivering company’s products services to consumers is called physical distribution firm. It also helps in stock management. This includes transport action and warehousing. Marketing service agencies include research firms, advertisement agencies, media firms, marketing consultancies etc. They help in promoting and delivering products or services to right markets. Financial intermediaries include banks, credit companies, insurance companies, etc. They help business firms by bearing risk and providing necessary financial support.

Marketing intermediary is also an important element to affect marketing. So, a business firm should take right decision by analyzing the elements of marketing intermediaries.

Elements of Marketing Intermediary or Marketing Intermediaries

d) Customers

Customers are the other important element of micro environment. So, a business firm should study and analyze customer markets. There are five types of customer markets. They are consumer market, business market, reselling market, government markets and international market. Customer market includes individuals or members of families who buy goods or services for personal use. Materials are purchased in business markets to use in producing goods or reprocessing them. Similarly, in the reselling markets goods are purchased for reselling them to earn profits. Goods are purchased in government markets in order to provide public services. Producers, sellers and purchasers of different countries are involved in international markets. The features of all types of markets become different. So, their features should be carefully as well as specially studied and analyzed.

Types of Customer Markets

e) Competitors

Competition is the other elements of micro environment of marketing. A company should give maximum satisfaction to the consumers by providing quality goods or services compared to the competitors. Besides, the company should be able to remain in the heart of customers by maintaining more effective product positioning than the competitors. Same marketing strategy cannot be fit for all companies. So, each company should adopt suitable strategy according to or considering the size, nature, scope of activity, life cycle etc. of the company. Big companies can, sometimes, adopt such strategy using their power. But small companies cannot do so. But bigness of any country is not everything. Small companies also can achieve greater success by developing much more appropriate strategies than big companies can.

f) Public

Different public (communities of people) also included in the marketing environment of a company are financial public, media public, citizen action public, local public, general public, internal public and government public. This made clearer by the following figure:

Types of Public Communities
  1. Financial public: Financial public affect fund receiving capacity of a company. This includes banks, investment houses, stockholders etc.
  2. Media public: Media public work for the advertisement and publicity of goods or services. This includes newspapers, magazines, radios, televisions, etc.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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


Macro environment of marketing is also called external environment. External environment affects a business firms directly and indirectly from outside. This environment equally affects all the business firms. This includes demographic, economic, natural, technological, political legal, social and cultural elements or forces. These macro environmental elements do not remain under control of any firm. So, the business firm should itself make adoptable to the macro environment. The macro environmental elements may appear both as the threats and opportunities for the business firms. So, a marketing manager should make plans and programs only after scanning the macro environmental elements or forces.

a) Demographic Environment

Demographic environment is an important element of macro environment. This includes total population size, growth rate or population, age mix, migration, urbanization process etc. Future plans and programs should be made only after carefully studying and analyzing these elements.

Demographic Environmental Elements
  1. Population size: Population size affects marketing activities. In the countries like China and India where the size of population is 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

b) Economic Environment

The other main element of macro environment is economic environment. A marketing manager should make future plans, programs and strategies by studying and analyzing this element carefully. Income distribution, consumers’ purchasing power, economic health, inflation rate, availability of credit, exchange rate, regional group, consumers’ incomes and other elements are included in economic environment. As the economic environmental elements do not remain under the control of entrepreneurs or any business organization, marketing mix should be made fitting to this environment.

Economic Environmental Elements
  1. Income distribution: Income distribution is one of the effective elements under economic environment. Per capita 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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 of goods has increased.
  6. 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.
  7. 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 also becomes low. Unemployment rate, wage rate, interest rate and tax rate affect consumers’ income.
  8. 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.

c) Natural Environment

Natural environment is one of the main elements of macro environment. A marketing manager should wisely and carefully make marketing plan, programs and strategies. Natural resources, topography, climate etc. are elements of natural environment. Since the natural environment does not remain under control of business organization, marketing mix should be made in agreement with it.

Natural Environmental Elements
  1. Natural resources: Raw materials, mines, land, climate, forest etc. are natural resources. These elements play an important role in marketing activities.
  2. 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.
  3. 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.

d) Political-legal Environment

Political-legal environment is also another important element of macro environment of marketing. It directly affects the marketing activities. So, a marketing manager should study and analyze it carefully while making marketing strategies, plans and programs. Law, government policies, strategies, plans and programs. Law, government policies, government agencies, pressure groups etc. are included in political-legal environment. Since these elements do not remain under control of any organization, marketing mix should be made in agreement with them.

Political-legal Environmental Elements
  1. 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.
  2. 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.
  3. 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.
  4. 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 of business
    organizations. They give pressure to government or related bodies. Such pressure affects marketing activities.

e) Socio-cultural Environment

Socio-cultural environment is the other important element of macro environment. This environment includes tradition, social customs, belief, religion, human value and norms, language, attitude, living style, art, culture etc. These elements become different according to country, society, community. So, a marketing manager should carefully study and analyze these things while making marketing plans, programs, and strategies.

Socio-cultural Environment
  1. 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.
  2. Cultural environment: Cultural environment directly affects human behavior and wants. General looks of the people at themselves, business organization, society and the world etc. are 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.

f) Technological Environment

Technological environment is the other important element of macro environment. This includes level of technology, technology changes, research and development budget etc. These elements directly affect marketing plans, programs and strategies. So, a marketing manager should study and analyze these things carefully for marketing mix.

Technological Environmental Elements
  1. 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.
  2. 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.
  3. 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).

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