Analyzing The Marketing Environment

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/