What are the factors constituting Marketing Environment

May 27, 2021 - 23:59
Jan 23, 2023 - 14:36
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Factors Constituting Marketing Environment
1. Demographic Factors: Demographic factors are related to population. Marketer must study these factors due to the fact that the market is made of people, and people constitute the population. Demographic study provides customer profile that is basic need for market segmentation as well as selecting target market. Therefore, demographic variables have direct and notable impact on firm’s operations. A marketer must analyze demographic factors to get idea about number and type of people to be served as customers.
Demographic variables include:
i. Total population and population growth rate
ii. Age groups and gender distribution
iii. Geographical (area-wise) concentration of population
iv. Proportion of rural v/s urban population
v. Literacy rate and level of education
vi. Population mobility (geographical shift) or migration rate
vii. Family system and household pattern
viii. Occupation-based classification of population.
2. Ecological Factors:
These factors primarily concern with ecological (natural) environment. They are closely related to protection of ecological environment and pollutions – air, water, noise, and land pollutions. At present, the global-level efforts are made to protect environment.
Such efforts can lay down certain restrictions in terms of use of natural resources, cost of raw material, quality of products, production process and technology, disposal of wastes, pollution control measures, and so on. These factors affect to the several aspects of production, distribution, and disposal of products. A firm must understand that people want better quality products at low price, but not at a cost of quality of life.
Analysis of ecological environment involves:
i. Availability and use of natural resources
ii. Pollution and pollution control measures
iii. Contemporary legal provisions
iv. Ecological awareness and use of eco-friendly products
v. Contribution of corporate world for protection of environment
vi. Working of national and international agencies/organisations for protection of environment
vii. World-wide efforts for protection of environment.
3. Economic Factors:
Economic environment consists of economic forces that affect company’s costs, revenues, and profits on one hand, and customers’ purchasing powers and willingness to spend on the other hand.
Economic forces include a large number of variables, such as:
i. Economic growth rate
ii. Interest rates
iii. Inflation rate
iv. Functioning of stock markets and commodity markets
v. Industrial and agricultural policies
vi. Fiscal and monetary policies
vii. Export-import policies
viii. Liberalization, globalization and privatization processes
ix. Government’s long-term planning and investment in infrastructural facilities
x. Quality and availability of basic facilities/services like transportation, banking, warehousing, insurance, communication, etc.
4. Socio-cultural Factors:
Social and cultural factors affect consumers’ tastes and preferences. People buy or favour those products which suit or complement their social and cultural norms, values, traditions, and habits. Knowing these factors of the target market, a manager can effectively design product- mix and promotional programme.
Social-cultural environment is ever-changing and requires the manager to undergo adjustment and readjustment in his marketing mix to balance between what consumers want and what company offers. Ignoring or underestimating this environment can harm severely the company’s interest.
Socio-cultural variables are:
i. Cultural norms, values, beliefs, and rituals
ii. Castes, creeds, and racial aspects
iii. Social traditions, customs, habits, and superstitions
iv. Family and reference groups
v. Age and life-cycle stage
vi. Role of women
vii. Social classes
viii. Religious events and festivals.
5. Political and Legal Factors:
A firm has to operate within the present political system and legal framework. Political factors affect economic policies. Every marketing decision is subject to be affected by political and legal factors. Governments have formulated a series of legislations to regulate business operations to restrict unfair trade practices and protect consumer and social interests. These laws may create new opportunities or challenges for businessmen. A manager must know business philosophy and approach of the current governments, and legal provisions that he has to observe while dealing with other parties.
Some of political and legal factors are:
i. Political philosophy
ii. Political and legal reforms
iii. Government approach to different sectors
iv. Political stability
v. Acts or legal provisions relating to business operations and recent amendments
vi. Working of judiciary and administrative machineries.
6. International Environment:
The world had become a global village. Most countries have permitted free trade (with little restrictions). A marketer has to deal with and satisfy cosmopolitan customers. Liberalization, globalization, and privatization promoted multinational companies that carry their operations in many countries. A businessman is required to follow global business theory – act locally, but think globally. Every firm, whether large or small, is, directly or indirectly, influenced by international economic and political forces.
These variables include:
i. Working of international agencies and organisations (World Bank, UNO, etc.)
ii. Functioning of MNCs – Multinational Companies
iii. Export-import policies of different nations
iv. Availability of global aids and assistance
v. Global peace v/s conflict
vi. Liberalization, privatization, and globalization pace
vii. International agreements among countries
viii. Political stability in the dominant countries
ix. International business norms and values.
7. Technological Factors:
Technological factors affect the firm’s production process, product quality, cost effectiveness, and, hence, competitive ability. A wise manager must know the latest technology in the relevant field. Technology has released wonders in fields of business transactions, communication, entertainment, medical science, agriculture, and manufacturing systems.
At the same time, it has released horrors in fields of hydrogen bombs, horrible chemical weapons, crime styles, deterioration of ecological environment, and so forth. Every new technology is a force for creative destruction. New technology compels old one to exit. New technology brings superior products having more capacity to satisfy consumer needs.
Following technological factors are important:
i. Suitability and availability of technology
ii. Pace of technological change
iii. Replacement costs
iv. Opportunities for innovation
v. Research and development (R & D) budget
vi. Government role in developing and/or importing new technology
vii. Regulations affecting technological change/reforms
viii. Technological transfer among nations.


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Neha Pathak Experienced Graphic Designer with a demonstrated history of working in the motion pictures and film industry. Skilled in Marketing Management, Microsoft office, montaging, Customer Relationship Management (CRM), and Administration. Strong arts and design professional with a Master of Business Administration - MBA focused in Human Resources Management/Personnel Administration and Marketing. Can perform administrative, marketing, accounting, graphic designing, video editing, digital marketing work.