Marketing Environment – Internal & External Environment

A company’s marketing environment consists of all the factors and forces outside marketing that affect management’s ability to develop and maintain successful transactions with its target customers – Kotler and Armstrong

Marketing Environment involves forces that directly or indirectly influence an organisation’s capability to market its product successfully.

Factors affecting Marketing Environment

Internal Marketing Environment or Controllable Factors

Internal Environment is generally audited by applying 5 Ms i.e.

• Men
• Money
• Machinery
• Markets
• Materials

The internal marketing environment consists of all factors that are internal to the organisation like:

• Company`s mission, vision and business objectives
• Company Culture
• Company image and Goodwill
• Marketing Strategy
• Technical Capacity
• Managerial Skills and Abilities
• Structure and Processes
• Finance and Sales force
• Production and Research
• Internal Processes and Procedures
• Allocation of responsibilities
• Resource availability
• Attitude of stakeholders
• Organisation culture
• Human Resources – HR department, Operations department, Accounting and Finance departments, Research and Design

External Marketing Environment or Uncontrollable Factors

The External Environment must be monitored continuously to review the marketing strategy accordingly. It consists of micro and macro environment.

Micro Environment – It refers to the company’s internal and immediate environmental

Macro Environment – It refers to the societal forces such as political, legal, cultural, natural and economic forces present in the environment.

Micro Environment – It involves all forces which directly affect the organisation.

• Public – Any group with potential interest in organisational working
• Financiers – Founders, Stakeholders, Investors, Partners, Banks
• Market intermediaries – Suppliers and Wholesalers
• Customers – Individual, industrial, re-seller, retail
• Suppliers – Government, Non-profit, International
• Competitors – Number of firms, Size of market, Nature of product, Market entry and exit barriers, Differential advantage

Macro Environment – It involves all forces which affect indirectly like:

Demographic factors

• Age, sex, location
• Income
• Education
• Occupation
• Population
• Growth rate
• Birth ratio etc.

Political factors

• Government procedures and policies
• Government rules and regulations
• Monetary and Fiscal policy
• Import-Export Policies
• Central and State Regulations
• Monopoly and Restrictive Trade Practices
• Quota and Taxes

Economic factors

• Economic system
• Economic stability
• Nature of trade cycles
• Gross domestic product
• Growth in real income
• Income distribution pattern
• Purchasing power

Culture and Sub-culture

• Values, beliefs and attitudes
• Traditions, norms
• Friends, family, reference group, peers

Technological Factors

• Technical Know-how
• Availability of technology

Environmental/Natural Factors

• Climate
• Availability of raw material
• Topography of land
• Natural and ecological resources