Explain the micro and macro environment of marketing system?

Marketing environment are divided into two parts-

Micro environment; The firm studies the position of the industry concerned, especially aspects such as the structure of the industry, the nature of the competition, the scope for invasion by substitute products etc. it also studies factors relating to the customer and factors relating to demand.
I. II. Macro environment: under macro environment, the firm studies the political, the demographic, the socio cultural and the economic environment. It also studies the legal environment and government policies.

Micro Environment: -

Market/demand: - Market/demand is the first category. The aspects to be studied here include. o Nature of the demand o Size of the demand, present and potential o Changes taking place in demand o Invasion of substitute products o Changes taking place in consumption pattern/buying habits A firm must monitor demand in the industry in all its details and gather vital clues on the nature of demand, size of demand, patterns of consumption, buying habits, invasion of substitute products, etc. All entrepreneurial decisions such as entry into the industry, expansions, disinvestments, etc., and decisions on marketing strategy will need information pertaining to demand. 2) Consumer: - A successful business strategy involves designing products and marketing programmes that incorporate attribute which provide value to consumers according to their perception. Only by studying, demand and consumer related factors can firms carry out their business/marketing planning effectively. Consumers taste and preferences keep fluctuating. And consumers brand loyalty too keeps changing. Changes in customer preferences, if left unmonitored, may sound the death knell of business. At the same time, if properly monitored, they often end up as attractive business opportunities. Only by keeping track of what the
1)

customers want can one grab the opportunities emerging in the environment. That is why we attach great importance to consumer analysis as part of environmental survey.
3) Industry and competition: knowledge about industry and competition is a fundamental

requirement for developing marketing strategy. Competition advantage building too depends on proper graps of the position of the industry and competition. 4) Government policies: government policies significantly affect the way business operates. Even in market economies, government policies are an important factor, though their restraining influence is relatively less. Governments play roles, which have a bearing on the functioning of the firms. 5) Supplier related factors: - suppliers form another important component of the proximate environment of a firm. Suppliers constitute one of the five forces shaping competition in an industry. They have their own bargaining power in the industry, they influence the cost of raw materials and other inputs to a firm, and hence the profits a firm can take home.

I. Macro environment: -

1) Demographic environment: - Demographics are a major element to be studied in environment

analysis. Several factors relating to population, such as size, growth rate, age distribution, religion composition and literacy levels, need to be studied. 2) Socio-cultural environment: -Culture, traditions, beliefs, values and life styles of the people in a given society constitute the socio cultural environment. These elements decide to a large extent, what people will consume and how they will buy. 3) Economic environment: -Factors to be covered under economic environment. o General economic conditions. o Economic conditions of different segments of the population, their disposable income, purchasing power, etc. o Rate of growth of the economy, rate of growth of each sector of the economy.
Agriculture. Industry. Consumer goods. Capital goods.

Services. Infrastructure. Imports. Exports.

o Income, prices and consumption expenditure (size and patterns). o Credit availability and interest rates. o Savings rate/capital formation. o Inflation rate. o Behavior of capital markets. o Foreign exchange reserves. o Exchange rates. o Tax rates. o Prices of important materials. o Energy scene (cost, availability, etc.) o Labour scene (cost, skill availability, etc.)

4) Political environment: -political environment has several aspects. Form of government adopted by the country is the first. Political stability as such is another, for, whatever be the form of government adopted, stability of government is an essential requisite of economic growth. Elements like social and religious organizations, media and pressure groups, and lobbies of various kinds are also part of the political environment. 5) Natural environment: -the analysis of the mega environment must also cover aspects like extent of endowment of natural resources in the country, ecology, climate etc. o Natural resources: business firms depend on natural resources. The extent to which the country/region under reference is endowed with this resource has an impact on the functioning of the firms. Raw materials is one major part of this resources, they are also concerned about energy, its availability as well as cost. o Ecology: all societies are very much concerned about ecology, especially about issues like environmental pollution, protection of wild life and ocean wealth. And government is becoming active bargainers in environmental issues. o Climate: firms with products whose demand depends on climate, and firms depending on climate-dependent raw materials will be particularly concerned with this factor. These firms have to study the climate in-depth and decide their production locations and marketing territories appropriately.

6) Technology environment: - technology leads practically all the forces that shape peoples lives. Technology affects not only its final products but also its raw materials. Processes and operations as well as its customer segments, And in the present times, rapid changes are taking place in the realm of technology. 7) Legal environment: -business legislation can be classified into the following broad categories, based on the area covered by them. o Corporate affairs o Consumer protection o Employee protection o Sectoral protection o Corporate protection (protecting companies from each other, preventing unfair competition) o Protection of society as a whole against unbridled business behavior. o Regulation on products, price and distribution.