Marketing Aptitude Study Material – Marketing Environment

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Marketing environment refers to the factors and forces that affect a firm’s ability to build and maintain successful relationship with customers. Some of the factors are controllable, while some others are uncontrollable.It is the responsibility of the marketing manager to change the company’s policies along with the changing environment.

Nature of Marketing Environment

• Changes as per environment
• Communication
• Challenges
• Wide market

Characteristics of Marketing Environment

• Marketing environment plays a vital role while taking decisions related to marketing.
• Its limit is decided on the basis of geographical factors.
• There are some non-controllable variables included in marketing environment which effect the potentiality of a company
  and provide new direction to the market.
• New opportunities and risks always rise in the marketing environment which reinforces marketing experiments and research.
•  Consumers are divided in homogeneous sections for marketing of a product on the basis of marketing environment.

Components of Marketing Environment

There are following components of marketing environment.

Internal Environment
Forces and actions inside the firm that affect the marketing operation composed of internal stakeholders and the other functional areas within the business organisation are known as internal environment of marketing.

The internal environment includes

• The human resource department
• The operations department
• The accounting and finance department
• The research and development department

External Environment
The external environment is composed of

1. Micro environment
2. Macro environment

Both these types of marketing environment affect each other to some extent.

1. Micro Environment 

The micro environment refers to the forces that close to the company and affect its ability to serve its customers. It includes the company itself, its suppliers, marketing intermediaries, customer markets and public.

Factors affecting micro environment are

• Company The company aspect of micro environment refers to the internal environment of the company. This includes all departments like management, finance, research and development, purchasing operations and accounting. Each of these departments has an impact on marketing decisions.
• Marketing Intermediaries Marketing intermediaries refers to resellers, wholesaler physical distribution firms, marketing services agencies and financial intermediaries.
• Customers There are different type of customer markets like consumer markets, business markets, government markets, international markets and reseller markets. It is different from the reseller market. The reseller market includes business that purchases goods for resell which gives profit.
• Public The final aspect of the micro environment is public. They may be financial public, media public, government public, citizen action public, local public, general public.

2. Macro Environment

The macro environment refers to all forces that are part of the larger society and affect the micro environment. It includes concepts like demography, economy, natural forces, technology, politics and culture.

Factors affecting macro environment are

• Demographic Environment Demographic data help in preparing geographical marketing plans, household marketing plans, age and sexwise plans. It influences behaviour of consumers which, in turn, will have direct impact on market place.
  A marketer must communicate with consumers, anticipate problems, respond to complaints and make sure that the firm operates properly and smoothly.
• Social-Cultural Environment It includes culture, traditions, beliefs, values and life styles of the people.
  Social responsibility has crept into the marketing literature as an alternative to the market concept.
• Economic Environment The economic environment depends on current income, prices, savings, debt and credit availability, inflation rate, tax rates, etc.
• Political-Legal Environment The political and leggl environment consists of laws, government agencies and pressure groups that influetice various organisations and individuals.
  The other laws viz labour laws, corporate laws, constitutional laws,’ tax laws, pollution control act, industrial policy also have a great impact on markets.
• Technological Environment It includes technology selection, change in technology and governments approach in respect of technology.Major new technologies stimulate the economy’s growth rate.
• Natural Environment It involves the natural resources that are needed as inputs by marketers.In India, many NGOs have continuously fought against indiscriminate mining, use of harmful pesticides, deforestation, introduction of genetically modified foods, pollution of rivers and underground water.

Uncontrollable factors of marketing environment are policy of the firm, organisational structure, indirect environment.

PEST Analysis

PEST analysis describes a framework of macro environmental factors used in the environmental scanning component of strategic management.

• P — Political factors
• E — Economic factors
• S — Socio-Cultural factors
• T — Technological factors

It is a part of the external analysis, while conducting a strategic analysis or doing market research. It is useful strategic tool for understanding market growth or decline, business position, potential and direction for operations.

SWOT Analysis

The method of SWOT analysis is to take the information from an environmental analysis and separate it into internal issues (strengths and weakness) and external issues (opportunities and threats).

Strength:
It is the characteristic of the business or project that give it an advantage over others.

Weakness:
It is the characteristic that place the business or project at a disadvantage relative to others.

Opportunities:
It is an element that the project could exploit to its advantage.

Threats:
It is an element in the environment that could cause trouble for the business or project. Specifically, SWOT is a basic, straightforward model that assesses what an organisation can and cannot do as well as its potential opportunities and threats.

Tit-Bits

• In the banking environment, staff is the internal factor and consumer is the external factor.
  Occupation is an element of demographic environment.
• Labour policy is not a direct factor of the marketing environment.
• Good competition helps in imporoved customer service. *
• Marketing onportunities mean scope for marketing.
• Market space means scope available for selling.
• Market information means knowledge of related markets.

 

Check your Skills

1. Which is the component of marketing environment?

1. Legal environment
2. Political environment
3. Social and cultural environment
4. All of the above
5. None of the above

2. Nature of marketing environment includes

1. changes as per environment
2. communication
3. challenges
4. wide market
5. All of these

3. In the banking environment, which among the following is the internal factor?

1. Customer
2. Staff
3. Market
4. All of these
5. None of these

4. Consumer of a bank comes under which of the following environment?

1. External environment
2. Internal environment
3. Indirect environment
4. All of the above
5. None of the above

5. Which among the following is not a controllable factor of marketing environment?

1. Policy of the firm
2. Organisational structure
3. Indirect environment
4. All of the above
5. None of the above

6. Which of the following is not the part of macro environment?

1. Demographic
2. Political
3. Cultural
4. Suppliers
5. None of these

7. Which of the following represents the most important reason why firms monitor their demographic environment?

1. To explain historical trends
2. To predict political change
3. To predict the size of market segments
4. To predict business cycles
5. All of the above

8. Which of the following is not a part of an organisation’s micro environment?

1. Customers
2. Suppliers
3. Competitors
4. Government legislation
5. All of the above

9. Political environment of marketing includes

1. foreign policy
2. public welfare and social justice
3. democracy
4. All of the above
5. None of the above

10. Occupation is an element of

1. demographic environment
2. socio-cultural environment
3. economic environment
4. All of the above
5. None of the above

11. Which of the following is marketing interme-diaries?

1. Wholesaler
2. Advertisement
3. Government
4. All of these
5. None of these

12. In SWOT analysis, ‘S’ stands for

1. Strengths
2. Strategies
3. Smart card
4. All of these
5. None of these

13. ‘PEST’ analysis related with

1. micro environment
2. macro environment
3. Both T’ and ‘2’
4. All of these
5. None Of these

14. In ‘PEST analysis, ‘P’ represents

1. Political
2. Place
3. Promotion
4. All of these
5. None of these

15. Micro environment includes

1. market demand
2. consumer
3. competition
4. All of the above
5. None of the above

16. Macro environment includes

1. demography
2. econom
3. technology
4. All of these
5. None of these

17. Element of natural environment is

1. climate
2. ecology
3. natural resources
4. All of these
5. None of these

18. The marketing environment consists of

1. micro environment
2. macro environment
3. Both ‘1’ and ‘2’
4. internal environment
5. external environment

19. The elements of demographic environment is/are

1. population
2. age distribution
3. growth rate
4. literacy level
5. All of the above

20. The part of political environment is/are

1. social organisation
2. religious organisation
3. media
4. form of government
5. All of the above

21. Which of the following constitutes the socio-cultural environment?

1. Traditions
2. Climatic conditions
3. Government
4. Geographic conditions
5. None of the above

22. Which of the following is the vital component of macro environment?

1. Social environment
2. Natural environment
3. Economic environment
4. Religious environment
5. None of the above

23. Which of the following constitutes the natural environment?

1. Natural resources
2. Ecology
3. Climate
4. Geographical distribution
5. All of the above

24. Which of the following is tool for auditing an organisation and its environment?

1. SWOT analysis
2. PEST analysis
3. Forecasting
4. Both’ 1’ and ‘2’
5. None of these

25. Which of the following is an internal factor?

1. Strengths
2. Threats
3. Opportunities
4. All of these
5. None of these

26. The PEST factors include

1. political factors
2. economic factors
3. socio-cultural factors
4. technological factors
5. All of the above

27. Which of the following is not a part of an organisation’s micro environment?

1. Government legislation
2. Suppliers
3. Competitors
4. Customers
5. None of the above

28. Which of the following can be considered to be external to a company’s internal environment?

1. Finance
2. Production
3. Accounting
4. Marketing intermediaries
5. None of the above

29. For many marketers, political forces can be

1. easily ignore
2. easily influenced
3. easily recognised
4. beyond any control
5. None of the above

30. Micro environment refers to the forces that are close to the and affects its ability to serve its customers.

1. consumers
2. marketers
3. company
4. environment
5. None of these

31. Which of the following is not a controllable factor of the marketing environment?

1. Firm’s policy
2. Government factor
3. Marketing policy
4. All of the above
5. None of the above

31. Which of the following is not a controllable factor of the marketing environment?

1. Firm’s policy
2. Government factor
3. Marketing policy
4. All of the above
5. None of the above

32. Which of the following factor is not a direct factor of the marketing environment?

1. Labour policy
2. Selling policy
3. Marketing policy
4. AH of the above
5. None of the above

33. A method of comparing the internal capabilities of an organisation with the demands and challenges of its external environment is referred to as

1. SHOT analysis
2. SWOT analysis
3. stakeholder analysis
4. shareholder analysis
5. Both ‘3’ and ‘4’

34. Which of the following is an element of an organisation’s internal environment?

1. Competitors
2. Empolyees
3. Wholesalers
4. Retailers
5. Both ‘2’ and ‘3’

35. The Letter T in PEST stands for

1. Treats
2. Technological
3. Teacher
4. Table
5. All of the above

36. SWOT analysis does not contain this

1. strength
2. weakness
3. opportunity
4. talent
5. All of the above

37. Study of marketing means [BOB PO 2010]

1. study of economic, political, cultural and technical environment
2. study of the company’s markets potentials and competition
3. study of current developing trends
4. study of employee’s potential
5. study of sales person’s potential

38. SWOT analysis is the analysis of [BOB PO 2010]

1. strengths, weaknesses, occupation and threats
2. strengths, weaknesses, opportunities and threats
3. sales, weaknesses, occupation and threats
4. strengths, weaknesses, occupation and tests
5. None of the above ‘

39. Which of the following is least likely to be associated with a firm’s macro-environment?

1. Study of the changing birth rate
2. Analysis of household savings ratios
3. A new staff incentive scheme
4. Cultural convergence
5. None of the above

40. Situation analysis is useful for [PNB Clerk 2010]

1. SWOT analysis
2. analysis of sales person’s performances
3. analysis of capital markets
4. All of the above
5. None of the above

41. Good competition helps in [SBI Clerk 2012]

1. better technology
2. more market share
3. rise in profits
4. bigger branch network
5. improved customer service

42. Marketing opportunities mean [SBI Clerk 2012]

1. rope for marketing
2. proper and effective training
3. market planning
4. availability of sales outlets
5. market data

43. Market space means [SBI Clerk 2012]

1. place where goods are sold
2. trade fairs and melas
3. road shows
4. scope available for selling
5. competition

44. Market information means [SBI Clerk 2012, 08; PNB Clerk 2010]

1. knowledge level of DSAs
2. information about marketing staff
3. information regarding share market
4. knowledge of related markets
5. latest knowledge about technology progress

45. The internal marketing environment includes

1. the human resource department
2. the operations department
3. the accounting and finance department
4. the research and development department
5. All of the above

46. The objective of social marketing concept is

1. the large market with active target audience
2. realisation of maximum profits through service of society
3. customer satisfaction and welfare of customer
4. Both ‘2’ and ‘3’
5. None of the above

47. Marketing strategy means

1. new ideas to true more customers
2. new methods to retain the customers
3. new ways to contact the new customers
4. new marketing techniques
5. All of the above

 

48. Which of the followings are included in the business legislation of the legal environment?

1. Corporate affairs
2. Employee protection
3. Consumer protection
4. Sectoral protection
5. All of the above

Answer key