Components of the Marketing Environment

The marketing environment can be divided into the micro-enviornment and the macro-environment. The competitive forces identified by Michael Porter in his seminal works "Competitive Strategy" (1980) and "Competitive Advantage" (1985) offer an instructive framework to study the components of the micro-envioronment and the factors that determine the competitive structure of the industry.

Porter five micro-enviornment forces include: 1) intensity of the industry competition, 2) bargaining power of suppliers, 3) bargaining power of buyers, 4) threat of new entrants, and 5) threat of substitute products.

Macro-enviornmental factors include PEST=Political, Economical, Societal, Technological, as well as legal and regulatory.

Both micro- and macro-environmental factors can change slowly or suddenly (disruptively) and have significant consequences for companies. The ability of companies to change fast or lead change (Kotter) is nowadays a significant competitive advantage.

[1] Doyle, "Marketing Management & Strategy"
[2] Chong, "International Marketing Study Guide -- U.London (External)"
[3] Drucker, "Innovation and Entrepreneurship"
[4] Porter, "Competitive Strategy" (1980)
[5] Porter, "Competitive Advantage" (1985)
[6] Kottler, "Leading Change"