Macro Environment: Includes all factors that can influence an organisation but that are

out of their direct control. It consists of larger societal forces that affect the companies’
micro environment. It is continuously changing and the company needs to be flexible to
adapt.

Demographic environment: Demography means the study of human population in

terms of size, growth rate, gender, age distribution, race, occupation, literacy levels and
other statistics.

Economic Environment: The marketing managers need to keep track of the economic
environment, as it affects the buying power and spending patterns of consumers. While
studying the economic environment three economic areas that are of greatest concern to
most marketers are the distribution of income, inflation and recession.

Natural Environment: The inputs needed by the businesses to carry out their production
and various activities are available in nature. The natural resources, ecology, climate etc.
in the country, constitutes the natural environment. Business depends on the natural
resources for raw materials, so the firms need to keep track of the availability of raw
materials and if there is going to be any shortage in the future.

Ecology: Firms are also concerned with ecology. In modern times, all societies are very
much concerned about ecology, especially about issues like environmental pollution,
protection of wild life and ocean wealth. And, governments are becoming active
bargainers in environmental regulations and to what extent these factors will affect their
business prospects.

Climate: This is another aspect of the natural environment that is of interest to a

business firm. Firms with products whose demand depends on climate, and firms
depending on climate –dependent raw materials will be particularly concerned with this
factor.

Micro Environment
These are the internal forces close to the company and have a direct impact on the
organization strategy. It influences the organization directly. It describes the relationship
between the firms and the driving forces that control their relationship.

The Company: constitutes the internal environment of the organisation, which consists
of men, money, materials and machinery. If marketing has to function well it has to
coordinate the activities with all the other members / departments involved in the
organization as they have a great impact on its functioning.
 

Suppliers: Suppliers form a very important link between the company and customers
and their value delivery network. They have their own bargaining power in the industry;
they influence the costs of raw materials and other inputs to a firm, and hence the profits
a firm can take home.

It is in this context that the trade –off between integrating vs outsourcing of supplies
assumes importance for a firm because this has implications on the cost as well as
quality fronts.

Suppliers also keep introducing frequent changes in their products, processes and
business practices.

Sometimes, suppliers suddenly become direct competitors to a firm, by themselves

becoming end products manufacturers.

Marketing Intermediaries: Also constitute an important component of the value delivery

network of the company. It consists of the sources that are involved in promoting, selling
and distributing its goods to the final buyers. Marketing intermediaries include – resellers,
physical distributors, marketing service agencies and financial intermediaries.

Customers: We have already seen that a successful business strategy involves

designing products and marketing programmes that incorporate attributes which provide
value to consumers. Only by studying, demand and customer-related factors can firm
carry out their business/ marketing planning effectively. Next, the marketer needs to
study various types of customer markets.
They are Consumer markets, which comprises of individuals who purchase goods/
services for personal consumption.

Business markets, buy for further processing. Reseller market buys to resell at a profit.
Government markets buy the goods and services to provide it to the people who need it.

Competitors: To be successful, apart from meeting the needs and wants of the target
markets the marketer needs to provide the products better than its competitors. They
have to answer the question what benefit can the organisation offer which is better that
their competitors? So they need to constantly keep track of competitor’s strategies and
change as and when required.

Public: These are various groups of individuals who have actual or potential interest in
the working of the organisation and somehow affect its working. The various publics
include financial public, which influences the company’s ability to obtain funds that is if
the company does not maintain good relations with the banks or other financial
institutions it may face the problems in the long run.

10 Megatrends Shaping the Consumer Landscape:

„ Aging boomers

„ Delayed retirement

„ Changing nature of work

„ Greater educational attainment

„ Labor shortages

„ Increased immigration

„ Rising Hispanic influence

„ Shifting birth trends

„ Widening geographic differences

„ Changing age structure

Population and Demographics
„ Size „ Household
„ Growth rate patterns
„ Age distribution „ Regional
„ Ethnic mix characteristics
„ Educational „ Movement
levels

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Economic Environment

$ Purchasing Power
$ Income Distribution
$ Savings Rate
$ Debt
$ Credit Availability

3-11

Social-Cultural Environment
„ Views of themselves
„ Views of others
„ Views of organizations
„ Views of society
„ Views of nature
„ Views of the universe

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Natural Environment
„ Shortage of raw materials
„ Increased energy costs
„ Anti-pollution pressures
„ Governmental protections

3-14

Technological Environment
„ Pace of change
„ Opportunities for innovation
„ Varying R&D budgets
„ Increased regulation of change

3-15