Marketing Environmental Variables and their Effects | Marketing Management

In this article we will discuss about the marketing environmental variables and their effect on marketing decisions.

The marketing environ­mental variables include all those factors which are external to a firm and which affect the decision-making process. According to Philip Kotler, marketing environment is constantly spinning out new opportunities and new threats, and the firms find their markets collapsing.

Philip Kotler goes on to state further that a company’ s marketing executives must cons­tantly monitor the changing marketing scene and observe the changing envi­ronment through marketing research and first-hand knowledge. “By creating early warning systems, the marketers will be able to alter the marketing strategies to meet new challenges and opportunities in the environment.”

The marketing environment includes non-controllable variables in respo­nse to which the firms formulate their marketing strategies.

Specifically, “a company’s marketing environment consists of the factors in the company’s immediate environment that affect its ability to serve its markets. The macro-environment consists of the larger societal forces that affect all of the factors in the company’s micro-environment-the demographic, economic, physical, technological, political, legal, and socio-cultural farces”.

(a) Micro-Environment Variables:

The variables in the compa­ny’s micro-environment include:

(1) Supplier,

(2) Marketing intermediates,

(3) Customers,

(4) Competitors, and

(5) Public.

The company’s top management, the managers of research and development, purchasing, manufacturing, and finance all interact and the marketing mana­ger must know how to get co-operation from all these because he has to prepare a marketing plan for the existing products and new products.

The micro-environment variables are now discussed below in brief:

1. Suppliers:

In a broad sense, they supply the resources to a company. So, they must be operating efficiently if the marketing manager has to succeed. Any shortage of supply or price hike or strike affects the market­ing function. The firm, thus, should avoid dependence on any single supp­lier.

2. Marketing Intermediates:

They are the middlemen who create place utility, time utility and quantity utility. They also include physical distribution firms, transport companies, marketing consulting firms, marketing services agencies and assist the company in targeting and promoting the right products to the right markets. Banks and insurance companies as the financial intermediaries also assist in selling goods.

3. Customers:

They refer to consumer markets, industrial markets, reseller markets, government markets, and international markets. Each market has its own characteristics.

4. Competitors:

They have great influence over the firm. Their activi­ties and programmes are needed to be studied very carefully for the purpose of the determination of marketing position of a firm.

5. Public:

This refers to public relations, government policies, the press, the legislators and the general public. The marketing decisions of a firm are considerably influenced by these farces and elements.

The study and analysis of the micro-environment and its variables are, therefore, very important for an appreciation of the marketing concept.

(b) Macro-Environment Variables:

In contrast to micro-envi­ronment discussed in the proceeding paragraphs, macro-environment variables include:

1. Demographic environment

2. Economic environment

3. Physical environment

4. Technical environment

5. Political environment

6. Socio-cultural environment and so on.

1. Demographic environment:

It includes such factors as population growth, change in age-group, marriages, family sizes, movement of people from big cities to rural or suburban areas, white collar population, lite­racy, etc.

2. Economic environment:

It refers to gross national product (GNP), per capita income, disposable income, discretionary income, distribution of income, inflation, savings, liquid assets, changes in consumer expendi­ture, etc.

3. Physical environment:

It includes pollution and environmentalism, wastage of natural resources, etc.

4. Technological environment:

It emphasises the accelerated pace of technological changes, the outlay on research and development, new products, high R & D budgets, unlimited innovation opportunities, etc.

5. Political/legal environment:

It includes the relationship between the State and business units, regulation of monopoly, protection of consumer interests, licensing policy, commercial and industrial policies, and so on.

6. Socio-cultural environment:

It includes social and cultural changes like late marriages, postponing having children later in life, education, health care, and so on.

Effect of Marketing Environmental Variables on Marketing Decisions:

Philip Kotler has stated that an interaction between the marketing environment and the company marketing system is very important as it affects the marketing strategies. Therefore, the marketer must study marketing environment systematically and continu­ally. This would help the marketer to understand the buying behaviour of the ‘target market’ for his products.

Leading scholars have laid emphasis on the systems approach to environ­ment study. Because the various institutions, groups of people and media, technological innovation and socio-cultural factors influence marketing- oriented decision-making. No one single factor or variable is enough to influence marketing decisions. The variables explained in the foregoing paragraphs counteract and interact often simultaneously.

In a competitive environment, the marketer must study the effect of competition from other industries besides his own industry. For example, aluminium competes with steel, and plastic industry with steel industry. Motor cycle industry competes with automobile industry and so on.

Kotler and Stanton advocate that the marketing manager must adept systems approach which seeks to harmonise and integrate all the variables effectively and to achieve ‘synergy’ i.e. the total results must be much higher than total inputs.

In nutshell, all the variables of macro-arid microenvironment intersect and interact continually and no one single variable alone influences the marketing decision variables. Thus, the impact of competition and technolo­gical changes within and without must be given special attention because their impact is much greater than what is ordinarily understood.