WHAT IS MARKETING ENVIRONMENT ?
The marketing activities of
the business are affected by several internal and external factors. While some
of the factors are in the control of the business, most of these are not and the
business has to adapt itself to avoid being affected by changes in these
factors. These external and internal factors group together to form a marketing
environment in which the business operates. In order to build great customer
relationships and understand how to market a product, a company’s marketing
environment must be taken into consideration. The marketing environment of a
company is composed of factors and forces outside marketing that affect
marketing’s ability to have a successful relationship with customers.
Marketing
Environment is the combination of external and internal factors and forces
which affect the company’s ability to establish a relationship and serve its
customers.
INTERNAL ENVIRONMENT: The internal environment is forces
and actions inside firm that affects marketing operations and it includes owners, workers, machines, materials
etc. All the factors that internal to the organization are known as the
internal environment .They are generally audited by applying the Five M’s which
are Men, Money, Machinery , Markets and Materials . It includes
· The human resource department.
· The operations department.
· The accounting and finance department
.
· The research and development
department .
EXTERNAL ENVIRONMENT: The external environment includes the factor which are
not controlled by a firm but hey greatly influence the decision of the
marketers when developing marketing strategy .The
external factors can be further classified into micro and macro environment
MICRO ENVIRONMENT includes the factors
in the immediate environment. Also referred to as the task environment, the factors constituting
the micro
external marketing environment are somewhat under the control of a marketer.
These factors are usually directly
related to business, enabling the marketers to leverage them in the company’s
favor to some extent.
The microenvironment
is composed of six major actors. These are:
· The company.
· Suppliers
· Marketing intermediaries
· Competitors
· Public
· Customers
The purpose of the microenvironment is to
build better customer relationships by creating value and satisfaction
(Friesner). Microenvironment consists of the actors close to the
company that affect its ability to serve its customers – the company,
suppliers, marketing intermediaries, customer markets, competitors, and
public.
1.
THE COMPANY:
The first actor is
the company. It is important to maintain a close relationship with employees of
the company even if they participate in other departments. One goal is
that all employees in the different departments understand the mission and
overall objectives of the company. Top management, finance, research and
development, purchasing, operations, and accounting should all be in
synchronization. Each individual in the various departments should contribute
to the company by completing their individual assignments, but all must have
one focus: understanding customer needs and creating customer value.
2.
SUPPLIER:
The second actor is
the supplier or suppliers; those who provide Bayer with the materials they need
to produce the chemicals. To keep a healthy and strong relationship with
suppliers is very important, as they provide the necessary resources. It is
important to keep in close contact with suppliers in order to maintain adequate
supply numbers, consequently impacting the development of the company’s
products.
In order to manufacture products of
the highest standard, you have to acquire high-quality material from your
suppliers. Hence, suppliers are the jugular vein of any business. You simply
cannot deny their importance for the success of your business.
It is crucial to identify all the
relevant suppliers in your industry and to develop good relationships with
them.
Subsequently, you can do business with
any or all of them as long as they fulfill your firm’s requirements.
3.
MARKETING INTERMEDIATE :
Marketing intermediate includes
re-seller . The
success of companies marketing strategy also depends on re-seller if the
finished goods of a company is taken to market by market intermediaries or any
other third party. These forces include wholesaler, retailers etc. For example,
If the retail seller holds a reputable name in the market then their reputation
can impact the marketing of company’s product.
Marketing Intermediaries help the
company to promote, sell and distribute its products.
Just like suppliers, retailers and
distributors are essential for keeping your business afloat. As a matter of
fact, your marketing operations can only succeed if you have good
channel friends to
take care of your products.
They are in direct contact with your
customers. Therefore, they can give you valuable information and suggestions
about what your customers want from you.
4. COMPETITOR :
You have to keep abreast with the
latest developments and trends in the industry. One way of attaining this goal
is to keep a close eye on your competitors.
In fact, there are many benefits to
competitive analysis. For example, you will have a good look at their marketing
strategy and the methods they use to attract more customers .You can also
modify your strategy and incorporate some of the techniques your competitors
are using to a great effect. The marketing concept states that to be
successful, a company must provide greater customer value and satisfaction than
its competitors do. This, marketers must do more than simply adapt to the needs
of target consumers. They also must gain strategic advantage by positioning
their offers strongly against competitors’ offerings in the mind s of
customers. No single competitive marketing strategy is best for all companies.
5.
THE COSTUMER :
The aim of the entire value delivery
system is to serve target customers and create strong relationships with them.
Each market has special characteristics that call for careful study by the
seller. Customers are essential for every business to survive. You cannot possibly
sell your products and services if you have no loyal customer base.
The purpose of every business is to
fulfill the needs and demands of a specific section of society.
Customers of every business have their
own unique demands and requirements. Therefore, all the marketing strategies
are customers oriented in some way or another.
Marketers strive
to understand what their customers desire through these marketing campaigns. Based on their
findings, they come up with the best possible products to serve their
customers.
6.
PUBLIC :
All the businesses must also fulfill
their social responsibility towards the society in which they operate .You
should formulate marketing strategies which eventually result in the collective
benefit and welfare of the society which your business is part of. In order to have a good image and be positively
exposed by organizations, a company has to offer something to the public in
order to produce the desired response.
Public are any groups that have an
actual or potential interest in or impact on an organization’s ability to
achieve its objectives. They include:
· Financial public
· Media public
· Government public
· Citizen-action public , Local public ,The general public .
Macro-environment:
includes broad forces which shape the character of opportunities
and threats . It refers to those factors which are external to company’s
activities and do not concern the immediate environment.The Macro Environment consists of 6 different forces. These are: Demographic, Economic, Political, Ecological, Socio-Cultural, and Technological forces. This can easily be remembered: the DESTEP model, also called DEPEST model, helps to consider the different factors of the Macro Environment.
Demographic Forces:
Demographic forces relate to people. The name refers to the term Demography. The latter refers to the study of human populations. This includes size, density, age, gender, occupation and other statistics. The large and diverse demographics both offer opportunities but also challenges for businesses. Especially in times of rapid world population growth, and overall demographic changes, the study of people is crucial for marketers.Therefore, marketers should keep a close eye on demographics. This may include all kinds of characteristics of the population, such as size, growth, density, age- and gender structure, and so on. Some of the most important demographic trends that affect markets are:
World population growth
Changing age structure
Changing family structures
Geographic shifts in population
Economic forces :
The Economic forces relate to factors that affect consumer purchasing power and spending patterns. For instance, a company should never start exporting to a country before having examined how much people will be able to spend.
In case of the latter, marketers will definitely have a wider edge and be free of direct governmental interference in their business operations. Besides these, some other statistics like current GDP, GNP, PCI, the standard of living, purchase pattern and frequency of the target group will also enable the management in taking important decisions especially those relating to product prices.
Socio-Culture:
The social values and culture of an environment play a huge role in the functioning of the company. So when the social environment changes it can have a direct or indirect effect on the company.For example in recent time society has seen a shift, and people no longer retire at 60. They work five to ten years more after sixty. So this has had a huge impact on companies.It may so happen that a significant area of the targeted region is inhabited by tribal groups having their distinct culture and lifestyle. In such a case, the company heads must take the right approach to communicate to such an audience without hurting the sentiments of the unique clusters.
Technological Environment:
In the times we live in, technology is constantly changing it is important that the business can keep up with the changes. Technology does not only confine to computers and IT services. It includes products, manufacturing processes, techniques etc.The technological developments can be a huge advantage for a firm. But at the same time of the technology used by the firm becomes obsolete due to such developments, then it can also be a threat to the firm.
Political and Legal Factors:
The political environment of a country is the combination of three branches of the government – legislature, executive and the judiciary. The political environment of a country will mainly depend on the political beliefs and ideologies of the party in power at the state and central levels.
The legal environment refers to the rules, laws, regulations, and judgments etc. that affect the functioning of a business. And this will also include the taxation laws and the Budget for the given year. So stable legal and political government is really important if the business and the economy as a whole has to succeed.
Ecology and Physical Environment:
Another vital aspect of the macro environment is its physical setting. This includes the geographical location, the presence of ecology and biodiversity, temperature, weather and climate and predominant seasons. By having a concrete understanding of all these features, marketers will know where to sell what kind of products.For example, products like heaters and electric blankets will never be of any use to equatorial and tropical regions; although these are the highly populated zones in the world. Again, air conditioners or coolers will never appeal to the Western countries, living in the temperate zone. Therefore, before launching a product, successful companies study the environment and ecology of a place to know about the needs and demands of its inhabitants.
RESPONDING TO THE MARKETING ENVIRONMENT
Marketers should analyze the environment
forces and design strategies that will help the company avoid the threats and
take the advantage of the opportunities the environment provides.
There are kinds of
companies. One make things happen .Second
who watch things happen and third who wondered what happened..
There are two approaches
organizations can follow while responding to the environmental forces of
marketing forces. These are popularly known as reactive marketing and proactive
marketing:
1.
Reactive Marketing
The reactive marketing views marketing environmental forces as totally uncontrollable and difficult to predict. This is a passive approach, under which, the organization tries to adjust its marketing mix and program according to the changes in the environment. The adjustments take place only after changes occur in the environment. The organization analyses the environmental changes and finds suitable way to avoid the threat and utilize the new opportunities in the market. In essence, they wait for the environment to change and react only after the change takes place.
2.
Proactive Marketing
Organizations that adopt the environmental management perspective follows proactive marketing. Proactive marketing believes that although many of the environmental forces such as demography, economy, culture and natural factors are not controllable, the environmental forces such as politics, law and technology can be influenced by correct and calculated moves. Proactive marketing uses political, psychological, economic and public relations skills ti influence the environmental forces to the organization's benefits. The technique of political lobbying, financing political parties and elections, using publicity to shape public opinion and many others are used by organizations to bring the environmental forces to their favor.
Many companies view marketing
environment as an uncontrollable element to which they must react and
adapt.they analyze the environmental forces and design strategies that will
help the company avoid the threats and take advantage of opportunities the
environment provides
Other companies take a proactive stance
toward the marketing environment. Although difficult, but whenever possible
smart marketing managers should take a proactive rather than a reactive
approach to the marketing environment .Smart marketing manager will take proactive
approach rather than reactive
A proactive approach focuses
on eliminating problems before they have a chance to appear and a reactive
approach is based on responding to events after they have happened. The
difference between these two approaches is the perspective each one provides in
assessing actions and events.
These are some major
difference between reactive and proactive approach.
There is also one more approach which is
sometime considered .
It
is PREDICTIVE APPROACH . A predictive approach (in some cases referred to, as a
Plan Driven Approach) is an approach that plans upfront with maximum control of
what the expected implementation would be. Predictive marketing empowers
companies to gain more information about their existing customers in order to
identify patterns to predict future outcomes and trends.
Importance of Marketing
Environment:
Every business, no matter how big or
small, operates within the marketing environment. Its present and future
existence, profits, image, and positioning depend on its internal and external environment. The business
environment is one of the most dynamic aspects of the business. In order to
operate and stay in the market for long, one has to understand and analyze the
marketing environment and its components properly.
Conclusion:
Strategic marketers
must take into consideration the micro-economic factors and macro-economic
factors during decision-making process as these forces have a major effect on
the marketing campaigns success. Thus marketing environment forces can play a
vital role in the success of a business, its marketing strategies, marketing
campaigns and its branding. A marketing manager must consider
the internal and external marketing factors while formulating his marketing strategy .Marketing environment
plays a pivotal role in important business activities such as marketing and
product development .You must review it on a regular basis to keep your
marketing strategy relevant and profitable. Here we also conclude that proactive approach is better and can prevent further problems thus a marketer should use this approach
REFERENCE
·
“What
is marketing environment? “Retrieved from https://go4emd.weebly.com/uploads/4/2/9/7/42974365/mkt_202_ch_3.pdf
· “Internal
and external environment” retrieved from https://www.feedough.com/marketing-environment/and
https://www.cleverism.com/marketing-environment-explanation-components-and-importance/
· “The
company’s microenvironment” retrieved from https://www.cleverism.com/marketing-environment-explanation-components-and-importance/
and https://go4emd.weebly.com/uploads/4/2/9/7/42974365/mkt_202_ch_3.pdf
· “Classification
of the company’s microenvironment” retrieved from, https://go4emd.weebly.com/uploads/4/2/9/7/42974365/mkt_202_ch_3.pdf,
https://memberfiles.freewebs.com/14/19/97161914/documents/Chapter%203%20new%20marketing%20environment.pdf
and https://www.academia.edu/29188637/Chapter_3-slide_1_Analyzing_the_Marketing_Environment
· “Responding
to the marketing environment “ retrieved from
https://prezi.com/8xvcfkacdann/responding-to-the-marketing-enviroment/
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