No business exists and operates in a vacuum, but rather as an integral part of the environment in which it is located. Efficient and effective marketing strategy is a function of the marketing manager’s ability to understand the environment in which the business operates.

The marketing environment consists of a set of factors or forces that operate or influence the performance of a company in the chosen target market.

Jain (1981:69) defined the marketing environment to include all those factors that can affect the organization directly or indirectly in any perceptible way. Marketing environment factors affect the organization by way of input, and organizations also affect the environment by way of output. The relationship between the organization and the marketing environment is often referred to as “inseparable.” The organization and its environment are constantly in a state of “give and take” or homeostasis.

The marketing environment consists of those forces or elements that impact the ability of the company to operate effectively in the chosen target market.

The marketing environment is divided into two main components. The elements are,

Internal Environment: The internal environment deals with controllable variables. The controllable variables are classified into two groups, they are; the strategy variables and the non-tradable variables. External Environment: The external environment deals with uncontrollable variables. These variables are called uncontrollable because the marketing manager cannot directly control any of the elements. The marketing manager is left with the option of adapting to the environment by early observation, analysis, and forecasting of these environmental factors. The external environment can be further divided into two components, the micro environment and the macro environment.

Microenvironment:

Items that fall under the microenvironment consist of forces or factors in the firm’s immediate environment that affect the firm’s ability to perform effectively in the marketplace. These forces are suppliers, distributors, customers, and competitors. Let’s analyze each of the variables in detail.

Providers:

Suppliers are business customers who provide goods and services to other business organizations for resale or for the production of other goods. The behavior of certain forces in suppliers can affect the performance of the buying organization positively or negatively. The critical factors here are the number of suppliers and the volume of suppliers in the industry. An audit of suppliers will allow us to appreciate their strength and bargaining power, which suppliers hold over the industry as a whole. Responses to the issues at hand have the potential to affect the ability of companies in the industry to effectively deliver goods and/or services that meet needs. The current trend is for buyers to try to persuade the supplier to provide exactly what the companies want. This process is known as “reverse marketing.”

Customers:

Customers are those who buy goods and/or services produced by the company. In a buying chain, different people play important roles before a buying decision is made. The various influences must be understood. The customer may be the consumer of the products in which he is the user. The critical factor here is that the needs and wants of consumers are not static. They are changing rapidly. Changes in consumer preferences create opportunities and threats in the marketplace. The changes required the organization of a separate strategy to adapt to the windows of opportunities or survive the threats of the market. Good knowledge of consumer behavior will facilitate the design and production of goods and services that customers need and want, rather than those that they are capable of producing.

Competitor:

A competitor is a company that operates in the same industry or market with another company. The consideration here is that Company A produces a substitute for Company B (industry approach) or Company A and Company B seeks to satisfy the same customer need (market approach).