Marketing environment can be defined as the composition of all the factors affecting the market, marketing system and functions related to marketing.
There are different layers of marketing environment. Each layer has special characteristics. Marketing environment has the following four layers −
An organizational environment consists of forces or institutions surrounding an organization that affect performance, operations and resources. It includes all of the key elements that exist outside of the company's boundaries and have the potential to affect a portion or all of the organization.
The market environment is a marketing term that refers to factors and forces that affect a company's behavior.
By the term company’s behavior, we mean the company’s ability to build and maintain successful relationships with customers, clients and all the people related to it.
The term macro means large. Macro refers to large factors or vital factors like social factors, for example, male-female ratio, social changes, new lifestyle, or arrival of new thought. Examples of economic factors are per capital income, balance of payment, balance of trade, inflation rate, and gross domestic product.
Other factors like geographical, cultural, political, demographical and legal factors such as competitions and technology are also included in this environment.
Examples − Geographical distribution, distance from market, age, sex, literacy etc., cultural differences, cultural change, arrival of a new tradition, government decision making, new plans, programs & policies, government support, political disturbances and so on.
Here the word itself describes the meaning − micro means small. So, micro environment is a composition of small factors, inside factors/nearer factors like customers, mediators like wholesaler, retailer, supplier, other stakeholders who demand something from the organization, i.e., shareholders, debenture holders, creditors, debtors, moneylenders, etc.
Micro environment also involves factors like working conditions, employees, purchase groups, local community and pressure groups.