Market environment and business environment are marketing terms that refer to factors and forces that affect a firm's ability to build and maintain successful customer relationships. The business environment has been defined as "the totality of physical and social factors that are taken directly into consideration in the decision-making behaviour of individuals in the organisation." The three levels of the environment are the internal micro environment – the internal elements of the organisation used to create, communicate and deliver market offerings; the external market environment – the external elements which affect the sourcing and distribution process of a product from the supplier to the final consumer; and the external macro environment – larger societal forces that affect the survival of the organisation, including the demographic environment, the political environment, the cultural environment, the natural environment, the technological environment, and the economic environment. The analysis of the macro marketing environment aims to better understand the environment, and thus adapt to the social environment to achieve the purpose of enterprise marketing.
Internal environment The internal environment "consists of those relevant physical and social factors within the boundaries of the organization or specific decision unit that are taken directly into consideration in the decision-making behavior of individuals in that system". This includes all departments such as management, finance, research and development, purchasing, business operations and accounting. Each of these departments influences marketing decisions. For example, research and development have input as to the features a product can perform and accounting approves the financial side of marketing plans and budgets for customer dissatisfaction. Marketing managers must watch supply availability and other trends dealing with suppliers to ensure that the product will be delivered to customers in the time frame required in order to maintain a strong customer relationship. These internal factors can be controlled by the organization to a certain extent. Internal environmental factors are in control of a business organization.
External environment The external environment includes the "relevant physical and social factors outside the boundaries of the organization or specific decision unit that are taken directly into consideration". The external environment can be further broken into micro and macro environments.
Micro environment The micro-environment consists of customers, partners, and competitors. The most important aspect of the micro-environment is the customer market. There are different types of customer markets including consumer markets, business markets, government markets, international markets, and reseller markets. The consumer market is made up of individuals who buy goods and services for their own personal use or use in their household. Business markets include those that buy goods and services for use in producing their own products to sell. This is different from the reseller market which includes non-business activities that purchase goods to resell as is for a profit. These are the same companies mentioned as market intermediaries. The government market consists of government agencies that buy goods to produce public services or transfer goods to others who need them. International markets include buyers in other countries and include customers from the previous categories. Partners include marketing intermediaries, financiers, and advertising agencies. Marketing intermediaries refer to resellers, physical distribution firms, marketing services agencies, and financial intermediaries. These are the people who help the company promote, sell, and distribute its products to final buyers. Resellers are those who hold and sell the company's product. They match the distribution to the customers and include places such as Wal-Mart, Target, and Best Buy. Physical distribution firms are places such as warehouses that store and transport the company's product from its origin to its destination. Marketing services agencies are companies that offer services such as conducting marketing research, advertising, and consulting. Financial intermediaries are institutions such as banks, credit companies and insurance companies. Competitors are also a factor in the micro-environment and include companies that offer similar goods and services. To remain competitive, a company must consider who its biggest competitors are while assessing its own size and position within the industry. The company should develop a strategic advantage over its competitors. The final aspect of the micro-environment is the public, which includes any group that has an interest in, or affects, the organization's ability to meet its goals. For example, the financial public can hinder a company's ability to obtain funds, affecting the level of credit available to the company. The media public includes newspapers and magazines that can publish articles of interest about the company, as well as editorials that may influence customers' opinions. The government public can affect the company by passing legislation and laws that place restrictions on its actions. The citizen-action public includes environmental groups and minority groups that can question a company's actions and bring them into the public spotlight. The local public, including neighborhood and community organizations, may also question a company's impact on the local area and its level of responsibility for its actions. The general public can affect the company because any change in public attitude, whether positive or negative, can cause sales to rise or fall, as the general public often forms the company's customer base. Finally, employees within the company also form part of the public, as they are involved in the organization and production of the company's products.
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