Marketing Environment

Companies must be aware of the marketing environment as it can have a significant impact on their decision-making. If they fail to pay attention to what is going on around them, they could face downfall or even go out of business.

There is always the potential for new revenue if the company is aware of the marketing environment and the opportunities it presents. The marketing environment is made up of all the forces and actors that have an impact on a company’s ability to succeed. Ensure that customers receive quality products and services.

The macroenvironment is a collection of large forces that have an impact on not only to the company but other players in the microenvironment. The focus has been on four forces historically: political/legal, economic, socio/cultural, and technological. This is why the term “PEST analyses” was used to describe macro environmental analysis.

The micro environment is the group of actors that influence the firm’s ability to compete in its chosen markets. Customers, suppliers, distributors, and competitors are the key players. The company’s macro- and micro environments influence the nature of the opportunities and risks they face.

Micro Marketing Environmental Factors

Marketing success is about building relationships with other departments of the company, suppliers, marketing intermediaries, and competitors.

Company

Marketing management considers other departments when designing marketing plans. These include top management, finance, research and development (R&D), purchasing, operations, and accounting.

These interrelated groups make up the internal environment. The company’s top management decides its mission, goals, strategies, and policies. These plans and strategies are used by marketing managers to make decisions.

Employers

The key component of any business’s success is its employees. Training and motivation sessions are key to the quality of employees. Training & Development are essential to instill marketing skills in individuals.

Market Intermediaries

Market intermediaries are intermediary parties who help businesses distribute their products on the market. Market intermediaries can be wholesalers, retailers, or distributors. They are essential to the business because they represent the company’s products in the marketplace.

Customers

Customers purchase the products of the company for consumption purpose. Customer satisfaction is the main objective of any organization. To satisfy customers, the organization conducts research and develops products to meet their needs.

Competitors

Marketing theory states that a company must offer more customer value and satisfaction to its customers in order to succeed. Marketers must adapt to the needs and wants of their target customers. Marketers must also position their products strongly in comparison to the offerings of competitors.

There is no single strategy that works best for all businesses. Every firm must consider its industry and size in relation to its competitors. Some strategies can be used by large firms that have a dominant position in an industry.

However, being large isn’t enough. There are winning strategies that work for large companies, but do not work in same way for small industry. Even a small firms can develop strategies that offer higher rates of return than larger firms.

Public

The public is any person who is not the intended audience for the organization. Public opinion is crucial to the success of any business. It can either build or destroy a company’s image in the marketplace.

The public can influence the buying decisions of their target audience. The internet has made it easier to control the public, especially since they are able to freely share their opinions about your products or services online.

Macro Marketing Environmental Factors

The company and all other actors work in a larger macro environment that shapes opportunities and poses threats to the company. Even the largest companies can be vulnerable to macro environmental changes.

Some of these forces cannot be predicted and are not controllable. Some of these forces cannot be predicted or managed with skillful management. Companies that can adapt environmental changes wil be successful.

Legal and Political Environment

You can argue that marketing environmental change is a result of changes at different levels of government. This can have an effect on domestic and international conditions. Common political issues in difficult economic times are government spending levels, immigration concerns, and protecting domestic industry.

A Keynesian economic strategy will allow a political party to spend public money in difficult times on schools, roads, public buildings, and other public infrastructure.

It is possible to argue that such priorities and associated government spending will have an impact on demand for all things related to the construction industry. This includes architects, interior designers, builders, suppliers, importers, and manufacturers of building materials, and equipment.

Such a regulatory environment might not change quickly. Marketers must be aware of the current status quo’s policy interpretations and be alert to changes in the system.

It is difficult to separate legal and political change. Each political group has its own priorities, and legal change can reflect them. The electorate’s perceived or expressed values can lead to legal change.

For example, the UK has increased legal restrictions regarding the marketing of cigarettes. This has resulted in punitive pricing (tax increases), sales restraints, virtually no advertising, strict restrictions on point-of-purchase, warnings on packaging, and expansion of no-smoking areas.

Economic Environment

The economy is a system that processes material and energy inputs and converts them into finished goods and services for distribution. All business organizations are involved in the economy and have an interest in guiding their policies.

Performance-focused organizations often incorporate economic data analysis in their business plans and marketing programs. This information is often collected as part of a formal Marketing Information System, (MKIS).

Marketers need to pay more attention to income distribution than income levels. The rich have become more wealthy over the last several decades while the middle class has declined and the poor have remained poor.

22% of country’s adjusted gross national income is earned by the top 5% and top 20% rich earn 51% of total national income. The bottom 40% of American earners receive only 11 percent of total income.

Markets are affected by changes in key economic variables such as income, cost-of-living, interest rates, savings, borrowing, and other factors. These variables can be monitored by companies using economic forecasting.

Companies don’t have to go under the hammer due to an economic downturn or be caught up in a boom. They can benefit from marketing changes in the economy if they pay enough attention to econmic variables.

Social and Cultural Environment

Social change often includes significant shifts in cultural and conusmer values. The increasing demand of consumers for organic and natural products is a clear indicator. Reuse and recycle trends are also growing among educated customers.

These factors are not statistically predictable and change slowly. They have a significant impact on the demand of products and services. They are also the building blocks of a society’s lifestyle and provide the conditions in which consumers can fulfill their social and commercial roles.

These factors will have an obvious impact on the companies and services that are available in certain markets. For example, the demand for baby clothes and cots, nursery products, and maternity services will directly correlate with statistics about birth rates.

The birth rate will have a time lag and influence on the demand for nursery facilities and primary education, toys, playthings, pediatric medicine, and preschool clothes.

Similar to the above, an aging population, which is a common phenomenon within developed countries, results in increased demand for age-related products such as sheltered accommodation and mobility aids.

Understand that culture can vary within and among societies. Cultural norms could differ between countries, regions, culture groups, or subcultures.

Culture can be defined as the core beliefs and values of a society. These beliefs are expressed in the family, friends, social rituals, social order, and in the institutions. These long-standing aspects of culture are subject to change slowly due to the effects of education, family history, political development, religion, aesthetic developments, and media.

Sometimes, secondary beliefs and values can show societywide changes over time. This causes a gradual shift in society’s general orientation. An increase in leisure and work attitudes, a greater interest in self-development, choice, and voluntary sector participation, as well as an increase in ecological concern and consumerism.

Technological Environment

Technological developments are always changing. There is an association between technology, attitudes, and values. Many technologies, including digital, biometrics and voice recognition, applications, touch-screen, and cloud technology, are easily accepted and use in day to day life.

Technology is the cornerstone of economic advancement, a key source of competitive advantage in the commercial marketplace, and an integral part of modern consumers’ everyday lives. Today’s most significant technological breakthrough is the technological revolution in sourcing information.

The world’s most forward-thinking organizations know that technology can have a profound impact on business and marketing.

Technology is a misleading term. It covers technologies that range from obscure improvements or techniques to fundamental breakthroughs in engineering and science. Technology is an important driver of change everywhere, it cannot be denied.

This is illustrated by looking at the dramatic changes that have occurred in the past twenty years, which have been within the lifespan of an average student, through innovations in information technology (IT), material science, biotechnology, fiber optics, aerospace, and materials science.

Although these areas have had their own paths and sometimes failed, the combined efforts have produced major changes and new challenges in marketing environment. They also have raised the stakes for commercial success and failure.