1. Marketing Environment
Unit 2

2. Marketing Environment
“ A company marketing environment consists of the actors and forces that affect the company’s ability to develop and maintain successful transactions and relationship with its target customers.” – Philip Kotler
It is thus important for marketer to understand marketing environment so that
They are able to maximize the most out of their positive factors.
They are able to manage and minimize the impact of negative factors.

3. Features of Marketing Environment
Changeable in nature: Forces in marketing environment are changeable in nature; they go on changing over time; such as habit of people, their needs and wants, technology, demographic character of the people, politics, rules and regulations, competition, etc.
Create constraints and threats: Marketing environment is dynamic in nature and may create constraints and threat to the management over time.
Relevant to the marketing decision-making: Marketing environment is potentially relevant to the marketing decision making; a marketer needs to consider each and every component of marketing environment while making a rational decision.
Strong source of opportunities: A marketer identifies business opportunities from among the marketing environmental forces.

4. Some Trends in Marketing Environment
The booming global economy
The increasing power of Dollar
The increasing pressure of open economy and globalization
The increasing competition in the world market
The increasing trend of privatization
The increasing political unrest in the world
The increasing cultural divisions
Breakdown of cold war and shift of political power to few countries
Increasing role of women in society and politics
Economic miracle of East Asian countries
Development and adoption of new technologies
Massive development in information technology

5. Classification of Marketing Environment
External Environment
Micro Environment
Macro Environment
Internal Environment

6. Internal Environment/Task Environment
Internal marketing environment refers to collection of factors within the firms itself. Internal factors include those forces, which can be controlled or manipulated by the management whenever required. The major components are:
Production facilities
Financial capabilities
Human resources
Research and development capability
Company image
Objective, policy, and structure of the organization

7. External Environment
An external environment consists of environmental forces that are outside the firm. It consists of micro and macro environment. Both of these micro and macro environments are uncontrollable in nature and have considerable effect on any organizational system.

8. A. Micro environment
The micro environment comprises of those elements of the environment which remain close to the company and affect the ability to serve its customers. It can not be controlled by the organization but organization has greater influence on it. It consists of:
Suppliers
Marketing intermediaries
Customers
Competitors
Publics

9. B. Macro Environment
Macro environment refers to all the external and uncontrollable forces that influence an organization. They are the forces that shape opportunities and pose threat to the organization. For a company to sustain and succeed in ever changing marketing environment, it is important to understand the dynamics of macro environment.

10. External Environment is not controllable
External Marketing Environment
Demographics
Social
Change
Economic
Conditions
Political &
Legal Factors
Technology
Competition
Environmental
Scanning
Target Market
Product
Distribution
Promotion
Price
External Environment is not controllable
Ever-Changing
Marketplace
Physical / Natural

11. The macro-environment
is the assessment of the external forces that act upon the firm and its customers, that create threats & opportunities
Production facilities
Financial capabilities
Human resources
Research & development
Company image
Objectives, Policy, Structure of organization

12. Economic Environment
Level of income
Economic policy of the government
Rate of inflation
Level of employment
Demographic Environment
Total population and its growth
Structure of population distribution

13. Socio Cultural Environment
Demographics of society: The people of different places, gender, education background, marital status etc.
Cultural value of society: the religious structure of society, role of men and women, existence of sub-cultures, etc.
Socio-economic characteristics of society: reflects the level of income of the society or family, distribution of income in society, level of employment and unemployment, saving capacity of society or family etc.
Ageing of population: increase in the age of population
Consumerism: is the social movement in favor of or against the goods and services offered by a marketer or a company

14. Technological environment: Technological environment consists of all the factors and forces related to change or development in IT, machines and equipments, management information system, automation, processes etc.
Political and legal environment
Type of government and permanency of government
Government laws, rules and regulations
Health and safety legislation
Power and influence of government agencies
Increasing pressure groups
Political climate

15. 6. Natural Environment
Availability of natural resources
Unstable cost of energy
Increased levels of environment pollution
Increased global warming
Government intervention in natural resource management
Competitive Environment
Competitive factors: Nature and degree of market competition that are –
Monopoly market
Competitive market
Monopolistic market
Oligopoly market
Threats of new entrants

16. Reactive and Proactive Marketing
From the view point of company investment in customer-relationship building, there are five stages of marketing, namely – basic marketing, reactive marketing, accountable marketing, proactive marketing and partnership marketing.
Proactive marketing involves the implementation of prepared strategies, whereas reactive marketing involves tactics employed when opportunities arise. A major difference is that with proactive marketing you have a marketing plan; with reactive marketing, you don’t.

17. Features of Proactive Marketing
The indicators of business involved in proactive marketing involve-
Creating a written marketing plan, based on homework, analysis and research.
It is viewed and treated as a manageable business process.
Is not done based on fads or desperation, but only with time-honored methods.
Referrals are regularly generated through incentive programs, social media and other means.
‘Spray and Pray’ blasts of bulk mail, coupons and s are never used.
Profits are increasing. Moreover, the owners are happy and in control of their lives.

18. Features of Reactive Marketing
The indicators of business involved in reactive marketing involve-
No written marketing strategy and or plan.
Referrals occur whenever the customer decides to call.
Marketing is inconsistent and weak.
When marketing is done, it is usually a, “lets try this latest fad”.
The attitude towards marketing is exasperation, and resentment.

19. Marketing Environment in Nepal
Economic Environment: Nepal is an agrarian country. Contribution of agriculture sector to the country’s real GDP and employment is high. Farming is still labor-intensive.
In terms of income, Nepal has per capita income of about US $ 700 which is quite low. Income distribution is unbalance in Nepal.
Country has adopted free market economy by introducing Privatization Act Foreign goods and traders have dominant role in the country’s economy. More specifically, Nepal’s foreign trade and internal trade are heavily dominated by a single neighboring country India.

20. Demographic Environment: Nepal has approximately 27 million population having equal status of male and female. About 90% population lives in rural areas.
The process of urbanization is increasing rapidly. Since all the marketing opportunities have been concentrated in urban area, migration rate from hills to Terai and city areas has been increasing.
Nepal has multi-religion groups, including Hinduism, Buddhism, Muslim, and Christianity dominated by Hindus.
Cultural forces are very powerful; people spend more money during festivals like Dashain, Tihar, Chhath etc.

21. Political-legal Environment: Frequent changes in government and national policies and laws have posed a great challenge not only to production and business sectors but also to the foreign investment and tourism sector.
- Effective rules and regulations regarding marketing activities are lacking in Nepal. Though Consumer Protection Act was introduced in 1997, its implications are still far reaching the country.

22. Technological Environment: Nepal is a labor-abundant country and it is comparatively cheap. Industrial development has not taken proper direction in Nepal, so the use of appropriate technology still shy.
Modern and appropriate technology has been gradually emerging.
Transfer of advanced technology into the country is taking place from multinational and international companies.
New innovations are probably non-existent in Nepal.

23. Natural Environment: Topographically, Nepal is classified into three regions – the northern Himalayan range, the middle mountain region and the southern plain terai.
The climate varies sharply with altitude resulting varied resources for varied plantations.
Nepal is poor in other natural resources except water so there are tremendous opportunities for marketing of hydropower.
Scenic beauties are world famous and are the attractions for tourism industry.

24. Competitive Environment: The size of Nepalese market is small so the domestic industries lack cost and value effectiveness. As a result, their competitive power is weak compared to foreign competitors.
Most of the industries have to depend upon imported raw materials resulting cost-inefficiency.
Nepalese market is basically seller-oriented and the bargaining power of the people is weak.
Market competition exist in certain products like instant noodles, alcohol and beer.