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Marketing Environment : Chapter 3
SUMMARY: The business environment changes continuously and businesses need to adapt to it to sustain and prosper. Changes in the environment can be monitored through environmental scanning and environmental analysis. Firms perceive competition as an important component that affects their marketing activities. The number of firms in an industry affects the level of competition. The various types of competitive structures are monopoly, oligopoly, monopolistic, and pure competition.
The external environment can be divided into the microenvironment, which consists of suppliers, marketing intermediaries, and customers, and the macro-environment, which consists of the demographic, political, economic, socio-cultural, technological, natural, and legal environments.
Demographic variables help marketers analyze the market, because changes in demographic characteristics have a bearing on the way people live, spend their money and consume. Marketers can also divide customers in various groups on the basis of demographics such as infants, children, young adults, adults, women, senior citizens, singles, location, occupation and literacy and cultural diversity.
Government policies influence the marketing decisions and strategies of a firm. Government policies shape the economic conditions and trade relationships and are influenced by the political environment. Political environment consists of domestic and international politics. Customer buying trends reflect the general economic condition. Fluctuations in an economy generally follow a business cycle, which consists of growth, recession, depression and recovery. Socio-cultural forces refer to the attitudes, beliefs, norms, values, and lifestyles of individuals in a society. These forces can change the market dynamics and marketers can face both opportunities and threats from them. Technology had made significant impact on the consumer buying behavior and marketers. Marketers can offer better marketing mix to their customers with the help of technology. Technological developments have led to ecological imbalances. Many companies have now realized their responsibility towards maintaining the ecological balance. Natural environment consists of resources, weather and government intervention. The laws and regulations of a country have a major impact on the way a company conducts its business.
Marketing Environment - An overview
Types of Competitive StructuresMacro Environmental Factors
Demographic EnvironmentIndian Business Environment and MNCs in India
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There are two kinds of external marketing environments; micro and macro. These environments’ factors are beyond the control of marketers but they still influence the decisions made when creating a strategic marketing strategy.
Micro Environment Factors
- The suppliers: Suppliers can control the success of the business when they hold the power. The supplier holds the power when they are the only or the largest supplier of their goods; the buyer is not vital to the supplier’s business; the supplier’s product is a core part of the buyer’s finished product and/or business.
- The resellers: If the product the organisation produces is taken to market by 3rd party resellers or market intermediaries such as retailers, wholesalers, etc. then the marketing success is impacted by those 3rd party resellers. For example, if a retail seller is a reputable name then this reputation can be leveraged in the marketing of the product.
- The customers: Who the customers are (B2B or B2C, local or international, etc.) and their reasons for buying the product will play a large role in how you approach the marketing of your products and services to them.
- The competition: Those who sell same or similar products and services as your organisation are your market competition, and they way they sell needs to be taken into account. How does their price and product differentiation impact you? How can you leverage this to reap better results and get ahead of them?
- The general public: Your organisation has a duty to satisfy the public. Any actions of your company must be considered from the angle of the general public and how they are affected. The public have the power to help you reach your goals; just as they can also prevent you from achieving them.
Macro Environment Factors
- Demographic forces: Different market segments are typically impacted by common demographic forces, including country/region; age; ethnicity; education level; household lifestyle; cultural characteristics and movements.
- Economic factors: The economic environment can impact both the organisation’s production and the consumer’s decision making process.
- Natural/physical forces: The Earth’s renewal of its natural resources such as forests, agricultural products, marine products, etc must be taken into account. There are also the natural non-renewable resources such as oil, coal, minerals, etc that may also impact the organisation’s production.
- Technological factors: The skills and knowledge applied to the production, and the technology and materials needed for production of products and services can also impact the smooth running of the business and must be considered.
- Political and legal forces: Sound marketing decisions should always take into account political and/or legal developments relating to the organisation and its markets.
- Social and cultural forces: The impact the products and services your organisations brings to market have on society must be considered. Any elements of the production process or any products/services that are harmful to society should be eliminated to show your organisation is taking social responsibility. A recent example of this is the environment and how many sectors are being forced to review their products and services in order to become more environmentally friendly.
Micro and macro environments have a significant impact on the success of marketing campaigns, and therefore the factors of these environments should be considered in-depth during the decision making process of a strategic marketer. Considering these factors will improve the success of your organisation’s marketing campaign and the reputation of the brand in the long term.
If you are interested in learning more about micro and macro environments, and strategic marketing as a whole, then you may be interested in the CIM Diploma in Professional Marketing. The marketing course is ideal for individuals looking to build practical skills in operational marketing management and broaden their strategic perspective. For more information about the marketing diploma qualification and studying with Oxford College of Marketing, call Dave Charlton on (0)1865 515 255 or email firstname.lastname@example.org.