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M2 Lecture 2 THE MARKETING ENVIRONMENT |
1. Describe the Environmental Forces that affect the company’s ability to serve its customers
2. Explain how it affects a firm and discuss how companies can react to the marketing environment.
A company’s marketing environment consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers. The marketing environment offers both opportunities and threats. Successful marketers know the importance of constantly watching and adapting to the changing environment. By conducting systematic environmental scanning, marketers are able to revise and adapt marketing strategies to meet new challenges and opportunities in the marketplace.
The marketing environment is made up of a microenvironment and a macroenvironment.
The microenvironment consists of the forces close to the company that affect its ability to serve its customers – the company, suppliers, marketing channel, firms, customers markets, competitors, and publics.
(a) Company
In designing marketing plans, marketing management takes other company groups into account – groups such as top management, finance, research and development (R&D), purchasing, manufacturing, and accounting. All these interrelated groups from the internal environment.
(b) Suppliers
Suppliers provide the resources needed by the company to produce its goods and services. Supplier problems, such as delivery, price & quality etc., can seriously affect marketing. Marketing managers must watch supply availability – supply shortages or delays, labor strikes, and other events can cost sales in the short run and damage customer satisfaction in the long run. Marketing managers also monitor the price trends of their key inputs.
(C) Marketing intermediaries
Marketing intermediaries help the company to promote, sell, and distribute its goods to final buyers. They include resellers, physical distribution firms, marketing services agencies, and financial intermediaries. In its quest to create satisfying customer relationships, the company must do more than just optimizing its own performance. It must partner effectively with marketing intermediaries to optimize the performance of the entire marketing system.
(d) Customers
The company needs to study its customer markets closely. There are five types of customer markets
§ Consumer markets consist of individuals and households that buy goods and services for personal consumption.
§ Business markets buy goods and services for further processing or for use in their production process
§ Reseller markets buy goods and services to resell at a profit.
§ Government markets are made up of government agencies that buy goods and services to produce public services or transfer the goods and services to others who need them.
§ International markets consist of these buyers in other countries.
Each market type has special characteristics that call for careful study by the seller.
(e) Competitors
The marketing concept states that to be successful, a company must provide greater customer value and satisfaction than its competitors. Thus, marketers must do more than simply adapt to the needs of the target consumers. They also must gain strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of consumers.
Each firm should consider its own size and industry position compared to those of its competitors. Even small companies can develop strategies that give them better rates of return than large firms enjoy.
(f) Publics
A public is group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. The seven types of publics include financial publics, media publics, government publics, citizen-action publics, local publics, general public and internal publics.
A company can prepare marketing plans for these major publics as well as for the customer markets. Suppose the company wants a specific response from a particular public, such as goodwill, favorable word of mouth, or donations of time or money. The company would have to design an offer to this public that is attractive enough to produce the desired response.
MACROENVIRONMENT
The macroenvironment consists of the larger societal forces that affect the microenvironment – demographic, economic, natural, technological, political, and cultural forces.
(a) Demographic Environment
Demography is the study of human population in terms of size, density, location, age, gender, race, occupation, and other statistics. The demographic environment is of major interest to marketers because it involves people, and people make up markets.
(b) Economic Environment
It consists of factors that affect consumer purchasing power and spending patterns. Since markets require buying power as well as people, marketers must pay close attention to major trends and consumer spending patterns both across and within their world markets.
(c) Natural Environment
It involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Marketers should be aware of several trends in the natural environment. They are: shortages of raw materials, increased pollution, increased government intervention etc.
(d) Technological Environment
The technological environment changes rapidly. New technologies create new markets and opportunities. However, every new technology replaces an older technology. Companies that do not keep up with technological change will find their products outdated. And they will miss new product and market opportunities.
(e) Political Environment
It consists of laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society.
(f) Cultural Environment
It is made up of institutions and other forces that affect a 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 worldview that defines their relationships with others.