Marketing Environment Questions and Answers [With PDF]

No business works in isolation. A heavy rainstorm, a new competitor, a change in the law or a rise in fuel prices can all change how well a product sells. These outside forces make up the marketing environment. This chapter explains the micro and macro environment, how each element affects marketing, and how SWOT analysis helps a firm respond. Here are 25 important questions with clear answers and tables, ready for exams, vivas and interviews.

This is Chapter 2 of our Marketing course. It follows Introduction to Marketing and comes before Functions of Marketing.

Meaning and Types of Environment

Q1. What is the environment?

The environment is everything that surrounds a person or organization and influences how it lives and works. It includes natural elements (climate, rivers, forests) and human-made elements (education, culture, technology, law, the economy and politics).

Q2. What is the marketing environment?

The marketing environment is the set of actors and forces outside the marketing department that affect the company’s ability to build and keep successful relationships with its target customers. It includes buyers, suppliers, competitors, and the social, economic, technological and political conditions of a country.

Q3. What is the relationship between the environment and the marketing environment?

The marketing environment is a part of the overall environment. The natural environment (climate, land, rivers) and the social, cultural, economic and political environment shape the conditions in which a business operates, so the marketing environment is closely linked to and influenced by the overall environment.

Q4. Why is it important to study the marketing environment?

• To recognize and anticipate trends.
• To identify opportunities and threats early.
• To support long-term planning.
• To keep up with competitors.
• To adapt to change quickly.
• To gather useful information for decisions.
• To understand the firm’s own strengths and weaknesses.
• To set guidelines and policies.
• To foresee problems.
• To understand the link between marketing and society.

Q5. What are the types of marketing environment?

Q6. What is the micro-environment?

The micro-environment includes the actors close to the company that directly affect its ability to serve its customers: the company itself, suppliers, intermediaries, customers, competitors and publics.

Q7. Is the micro-environment controllable?

Partly. The company controls its own departments and policies. It can influence suppliers, intermediaries and customers through contracts, incentives and good service, and it can try to improve its public image. It cannot fully control competitors. So the micro-environment is more controllable or influenceable than the macro-environment, but not completely controllable.

Q8. What is the macro-environment?

The larger societal forces that affect the whole micro-environment: demographic, economic, natural, technological, political-legal and cultural forces. They create both opportunities and threats for every company.

Q9. Why are the macro-environment forces uncontrollable?

Because they are too large for any single firm to change. A marketer cannot alter the climate, inflation, population trends or the law. Firms may influence some of them collectively, for example through industry bodies, but they must mostly adapt to them.

Q10. What is the difference between the micro and macro environment?

Q11. How does the environment affect marketing?

The environment affects every marketing function: research, pricing, promotion, storage, transport and selling. Marketing in a hilly region differs from marketing in a desert or a plain, and marketing in a developed economy differs from marketing in a developing one, because customers, infrastructure and income are different.

The Micro-Environment

Q12. How does the company influence marketing?

Top management sets the company’s mission, objectives and strategy, and the marketing department must work within them. Marketing also depends on the other departments: purchasing arranges materials, production makes the goods, R&D improves and creates products, finance provides funds, and accounting measures costs and profit. The efficiency of these departments working together decides how well marketing succeeds.

Q13. How do suppliers influence marketing?

Suppliers provide the materials and services the company needs. Delays, price rises or poor quality from suppliers disrupt production and harm customer service and the company’s reputation. Companies therefore choose reliable suppliers and often use more than one.

Q14. How do intermediaries influence marketing?

Intermediaries, such as wholesalers, retailers, distributors and agents, take products to the final customer. Their efficiency, cost and quality of service strongly affect sales, so firms must select and motivate them carefully.

Q15. How do competitors influence marketing?

Competitors offer similar products to the same customers and compete through quality, price, advertising and promotion. A firm must identify its competitors, study their strengths and weaknesses, and shape its own strategy in response.

Q16. What are publics, and how do they influence marketing?

A public is any group that has an actual or potential interest in, or impact on, a company’s ability to achieve its objectives. Their attitude can help or hinder the firm, so companies build good relations with them.

Q17. How do customers influence marketing?

Customers have different needs and buying behaviour, so the firm must adapt its marketing to each customer market:

• Consumer market: buys for personal or family use.
• Business market: buys to use in producing other goods.
• Reseller market: buys to resell at a profit.
• Government market: buys to provide public services.
• International market: foreign consumers, producers, resellers and governments.

The Macro-Environment

Q18. How does the demographic environment influence marketing?

Demography is the study of the population. People are the market, so the size, density, age, gender, income, education, occupation and location of the population shape demand. Trends marketers watch:

• Changes in the age structure of the population
• Changes in family patterns and lifestyle
• Movement of people between regions, such as moving to cities
• Rising levels of education and changing occupations
• Growing diversity

Q19. How does the economic environment influence marketing?

The economic environment affects consumers’ buying power and spending patterns. Marketers watch changes in income, inflation, interest rates, savings, credit availability and the business cycle. When incomes rise, people buy more and better goods. In a recession, they cut spending and look for value.

Q20. How does the natural environment influence marketing?

The natural environment covers the physical resources and climate that firms use or that are affected by them. Consumer concern for the environment has grown with pollution and climate change. Marketers watch three trends:

• Shortage of raw materials
• Increasing levels of pollution
• Government intervention in resource use and environmental protection

Q21. How does the technological environment influence marketing?

New technology creates new products, markets and opportunities, and it also makes old products obsolete. Examples include online shopping, mobile payments and automation. Marketers must watch technological change closely, because firms that fall behind lose customers quickly.

Q22. How does the political and legal environment influence marketing?

It consists of laws, government agencies and pressure groups that influence or limit organizations. It includes government stability, policies, taxes, regulations on advertising, pricing and product safety, and the law and order situation. Marketers must know the laws of their industry and act ethically and with social responsibility.

Q23. How does the cultural environment influence marketing?

Culture is the set of values, beliefs, customs and tastes shared by a society. It strongly affects what people buy, how they buy and what they find acceptable. A product that sells well in one culture can fail in another, so marketers adapt their products, packaging, language and advertising to the culture of each market.

Responding to the Environment

Q24. What is SWOT analysis?

SWOT analysis is a tool that compares a firm’s internal Strengths and Weaknesses with the external Opportunities and Threats of its environment.

Q25. What is environmental scanning?

Environmental scanning is the continuous process of collecting and studying information about trends and events in the marketing environment, so that a firm can spot opportunities and threats early and adjust its marketing plans.

Quick Revision Points

• Micro-environment: company, suppliers, intermediaries, customers, competitors, publics. It affects marketing directly.
• Macro-environment: demographic, economic, natural, technological, political-legal, cultural. It affects marketing indirectly and is uncontrollable.
• Laws belong to the political-legal environment. Population size, age and income belong to the demographic environment.
• SWOT: Strengths and Weaknesses are internal. Opportunities and Threats are external.

Test yourself with the chapter quiz below, then continue to Functions of Marketing.