Marketing Environment: What Is a Marketing Environment?

A marketing environment describes the environmental factors influencing how strongly a brand can build connections with current and potential customers. Also known as a business environment, this environmental analysis plays into companies’ research and development as they look to carve out their piece of the market share to understand better how a marketing campaign may perform based on internal and external forces. Understanding the marketing environment is vital for a company’s marketing team and stakeholders as it will dictate the needs of a demographic environment and how marketing operations and advertising agencies can rise to meet those needs, build their brand, and expand into new markets.

Studying how internal and external factors influence marketing activities is beneficial in helping brands how to better position new products and reach a target market.

• Forward innovation. As the cultural environment shifts, marketing plans must evolve with it. This means innovation—finding new strategies that employ new technologies—is essential in honing marketing efforts. Studying the business environment lets companies stay abreast with trends to add new tools to their marketing mix.
• Stand out from competitors. Studying a marketing environment does not only mean researching customer patterns; it also includes the larger economic environment, encompassing competitor behavior. Knowing how competitors act in the marketplace—and how your brand can improve on their methods or distinguish yourself from them—can influence marketing decisions and afford companies greater leverage in playing to consumers’ purchasing power.
• Understand consumer behavior. Market research and understanding consumer spending patterns allow marketers and retailers to better refine their decision-making to target customers.

An internal marketing environment refers to the internal factors within a company that marketers use to create, advertise, and deliver products or services. These are the factors marketing management can control, such as research and development, branding, communications, digital marketing strategies, and other efforts that stem from within a company.

The external marketing environment refers to the elements outside an organization that may influence business operations, consumer trends, and relations. There are two categories of external marketing—a microenvironment and a macroenvironment:

• Micro marketing environment: A micro marketing environment comprises the customer market, encompassing consumers, competitors, and partners (resellers, distributors, and other marketing intermediaries). How these three relate to each other on a B2B (business-to-business) and B2C (business-to-consumer) level will shape the economic factors that define a market.
• Macro marketing environment: A macro marketing environment speaks to the more significant factors influencing the microenvironment. These may include governmental, cultural, and technological factors and the physical environment shaping how a company produces goods and reaches consumers. The availability of raw materials and natural resources can impact production. Technological innovation and the legal environment come into play here: Government agencies’ acts may lead to more significant environmental changes that dictate how brands communicate or advertise to consumers. Some larger pieces of this natural environment may also include current interest rates (affecting broader populations) or demography that paint a larger picture of society and determine how larger groups may behave.

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