Definition: Marketing Environment refers to the various factors that guide and influence a company’s marketing practices with regard to product promotion. These factors are internal or external to the firm. The company’s marketing team has to remain well-informed about the competitors’ marketing activities. This is important to maintain success.
The company’s marketing environment comprises numerous actors and forces. They affect its marketing management’s ability to make new customers and retain the existing ones. It indicates a wide spectrum of threats and opportunities for the company.
Features of Marketing Environment
- Dynamic: We all know that nothing remains the same forever, and things change in the blink of an eye. The environment in which the company operates changes over time. There can be changes in trends, technology, laws, government policies and customer tastes.
- Relative: The marketing environment is relative in nature. Also, it is distinct for each organization. You might have observed that there are some products that get good responses in a particular country while they fail in another. Do you know why this happens? This is because there is a change in the marketing environment.
- Uncertain: The market is unpredictable, and so does the marketing environment. Even when the company closely and constantly keeps a watch on the market, it faces unexpected threats.
- Complex: Interaction among different forces operating in the marketing environment makes it complex.
Types of Marketing Environment
The marketing environment can be broadly classified into internal and external environments. Some of these factors are controllable, while some are uncontrollable. Further, they require business operations to change accordingly. The marketing environment is classified into internal and external environment
- Value System
- Vision and Mission
- Company’s Policies
- Labour Union
These are a part of the organization. Further, they affect the marketing decision and its relationship with the customers. These factors are under the control of the firm.
It is concerned with everything that takes place outside the firm. The external environment of the firm has two further divisions:
It includes all factors closely associated with the operations and influences its functioning.These factors are controllable to some extent.
- Customers: Every business revolves around fulfilling the customer’s needs and wants. Thus, each marketing strategy is customer oriented. It focuses on understanding the need of the customers and offering the best product that fulfils their needs.
- Employees: They are the lifeblood of a business. This is because they contribute significantly to its success. They are the ones who can make or break the company. Thus, Training & Development is crucial to impart marketing skills to an individual.
- Suppliers: They are the party from whom the firm purchases material. Using the material, the firm produces finished goods. Hence, they are very important for the organization. It is pertinent to identify the suppliers existing in the market and choose the best that fulfils the firm’s requirements.
- Channel partners: Retailers and distributors are important to the success of marketing operations. As they are in touch with customers, they can give suggestions about customers’ demand for a product and its services. Also, they are the ones who remain updated about the increase or decrease in sales.
- Competitors: We all know that competition leads to success. Keeping a close watch on competitors enables a company to design its marketing strategy accordingly.
- Shareholders: They are the owners of the company. Every firm has an objective of maximizing its shareholder’s wealth. Thus, marketing activities should be undertaken keeping in mind the returns to shareholders.
- Government: The Government departments make several policies, viz.
- Pricing policy
- Credit policy
- Education policy
- Housing policy, etc.
These policies do have an influence on marketing strategies. A company must keep track of these policies and make marketing programs accordingly. This is important to be in line with the prevailing laws and regulations.
- General public: The business has some social responsibility towards the society in which it is operating. Thus, all marketing activities should be designed to increase society’s welfare as a whole.
It includes all those factors that exist outside the organization. Hence, they can not be controlled. These factors majorly include Social, Economic, Technological Forces, and Political and Legal Influences. These are also called as PESTLE framework.
- Political and Legal Factors: With the change in political parties, several changes are seen in the market. They can be in terms of trade, taxes, duties, codes and practices, market regulations, etc. So the firm has to follow all these changes. Further, the violation of this could penalize its business operations.
- Economic Factors: Every business operates in the economy. Therefore, it is affected by the different phases it is undergoing. In the case of a recession, the marketing practices should be different from what is followed during the inflation period.
- Social Factors: Since a business operates in a society and so, it has some responsibility. It must follow marketing practices that do not harm the sentiments of people. Also, companies must invest in the welfare of the general people. They can do so by constructing public conveniences and parks, sponsoring education, etc.
- Technological Factors: Technology is everchanging. So, the firms have to keep themselves updated so customers’ needs can be met more precisely. The company can also integrate state-of-the-art technology in the production of goods. This will lead to a reduction in the cost
A word from Business Jargons
Therefore, the marketing environment plays a crucial role in the operations of a business. Further, the experts should watch the market closely to avoid challenges and difficulties. Firms must stay aware of the marketing environment in which it operates to overcome environmental factors.