Week 3: The Marketing Environment

The Marketing Environment:

Those conditions and influences impingeing or potentially impingeing on marketing (Must be continually monitored in order for an organisation to plan ahead)

Another definition is individuals, organisations, and forces external to the marketing management function of an organisation that impinge on the marketing management's ability to develop and maintain successful exchanges with customers

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Micro Environment: all those other organisations and individuals that, directly or indirectly, affect the activities or the organisation

Stakeholders in the micro-environment

Competitors: an alternative provider of the offer sought by the market. Can be direct (similar product) or indirect (same need, different product)

Community: any local non-governmental organisations. They have the ability to mobilize public opinion towards a firm that can be either in favor or opposition

Shareholders: individuals who 'own' the company. Organisations have an obligation to maximise the return on the shareholders' investment

Suppliers: provide inputs tot he business (raw materials, equipment, resources). There is a need for a close relationship with suppliers, and increased collaboration can create a competitive advantage

Intermediaries: marketing intermediaries help an organisation to promote, sell and distribute its goods to final buyers. They include: re-sellers/distributors/retailers, physical distribution firms, marketing services agencies, financial intermediaries

Customers: can be actual or potential. Major customers groupings are consumer markets (B2C) or business markets (B2B)

Macro Environment: the larger, wider forces that have influence over companies and economies. An individual firm is usually unable to exert influence over their direction and nature (PESTN)

Political (Legal/Regulatory): laws, government agencies and pressure groups the influence and limit various organisations and individuals in a given society

Economic: factors that affect consumer buying power and spending patters. Includes inflation, interest rates, employment levels, income (disposable or discretionary)

Demographic: demography is the study of human population in terms of size, density, location, age, sex, race, occupation, and other statistics.

Cultural (social): institutions and other forces that affect society's basic values, perceptions, preferences, and behaviors.

People grow up in a particular society that shapes their basic beliefs and values. They absorb a world view that defines their relationships to themselves and others.

The following cultural characteristics can affect marketing decisions; persistence of cultural values, subcultures, shifts in secondary cultural values

Technological: forces that affect new technologies, creating new product and market opportunities. Includes new products, manufacturing possibilities, ways to communicate with customers, ways to distribute goods and services

Natural: natural resources that are needed as inputs by marketers or which are affected by marketing activities. Shortages of raw materials, increased cost of energy, increased pollution, government intervention in natural resource management

Internal Environment: Components of an organisation, such as the employees, physical tools, and communication methods, which affect corporate culture

Employees: source of company's success through building customer commitment, increasing customer willingness to pay, improving level of customer satisfaction. Successful employee relations creates a competitive advantage as employee job satisfaction is related to customer satisfaction

Monitoring and Responding to Change

Environmental scanning: an early warning system for the environmental forces which may impact a company's products and markets in the future. Scanners enable a company to act rather than react to opportunities and/or threats.

SWOT Analysis: a framework for assessing an organisation and its marketing environment

Internal; strengths and weaknesses

External; opportunities and threats