The thorough analysis of the marketing environment is essential for the organization in order to make identification of the opportunities & threats to the organization. The ability of the management to prepare & maintain profitable relationships with the target customers is affected by the factors & forces that are present in the marketing environment of the organization. The forces & factors of the Marketing Environment vary on the basis of certain industries & organizations.
Types of Marketing Environment
Marketing Environment can be classified into two categories, which are as below:-
- Micro Environmental Components
- Macro Environmental Components
Micro environmental components are related specifically to the organization, whereas macro environmental components are broader in nature & affect the entire industry of the region or country. Moreover the macro environmental factors cannot be eliminated through the efforts of the marketing department. So the marketing manager should be proactive in accessing & anticipating the changes of the marketing environment.
The marketing managers in the organization should be vigilant in facing the threats and opportunities of the marketing environment while collecting & processing the data from the marketing environment. The effective organizations do not only focus their customers, but also the forces of the marketing environment. The marketing department & other management area of the organization consistently consider the dynamic aspect of the marketing environment so that they can better adapt to the emerging change, develop certain long run strategies, maintain the ability to satisfy the current & future needs of the customers and develop the ability to effectively face the intense global competition.
The changing trends of the marketing environment are proactively analyzed by the management of successful organization so that the appropriate marketing mix can be developed for the changing needs & demands. The changes occurring in the marketing environment are not easy to predict because they are emerging quickly. These changes are better monitor & pointed out by using the marketing intelligence system & marketing research by the organization. The new marketing opportunities & challenges are effectively handled by the marketing management by developing & implementing new strategies after performing systematic environmental scanning.
Micro Environment and its Components
There are five components associated with the micro environment of an organization. These components are as follows.
- The Organization Itself
- Marketing Intermediaries
Let’s discuss each of the above components below.
- The Organization Itself:
The organization itself is the first micro environmental component which focuses on the role of the organization that it performs in the micro environment. The mission statement & long term goals or objectives of the organization are firstly developed by the top management of the organization. After which the tactical strategies, short term goals & policies are prepared by the middle level management, which are followed by the functional goals. The top management of the organization has confined the area in which marketing manager takes his decisions. The marketing manager works in collaboration with other departments of the Business Organization because most of the activities of the entire organization are interrelated with each other. Also the broader organizational goals are common for all the departments of the organization like purchasing department, Research and Development department, production department etc. The main focus of all the departments must be the customer oriented behavior that ensures the delivery of superior value to customers and this is made possible through the efforts of the marketing department.
Suppliers are the second micro environments component, which are those organizations that deliver the required resources to all the competing organizations for the production of goods or services. The delivery of superior value to the customers is made possible through the useful linkage of the suppliers. The availability of the supplies is permanently watched by the organization to ensure the smooth working of its operations. The prices of the key inputs are also analyzed by the management of the organization because it directly affects the costs of the organization which is resultantly influence the price of its final products. So any increase in the price of inputs is carefully analyzed.
- Marketing Intermediaries:
The organizations that assist in promoting, selling & distribution of products to final customers of specific organization are called marketing intermediaries and are considered the utmost factors the micro environments. Marketing intermediaries include the following.
The organizations act as distribution channels in searching of customers for a particular organization and also helping in making sales for it. They may take the form of the wholesaler or retailer that performs the function of purchasing & reselling of products from certain manufacturing organizations. The costs of the organization are reduced with the utilization of the services of resellers, but it can cause problems in the smooth working of the entire system.
- Physical Distribution Firms:
These are the firms that are helpful in distribution of goods from the manufacturing area to the selling points. The warehouse is a common example of such physical distribution firms.
- Marketing Service Agencies:
The targeting & promotion of the products of an organization is done effectively with the help of marketing service agencies.
- Financial Intermediaries:
The finance is provided with the help of financial intermediaries like banks etc, which insure the risks of the organization.
The customer market must be closely studied by the organization because there are more than one customer markets with their own unique features.
- Consumer Market:
It consists of household customers that purchase the goods or services of the organization for final consumption.
- Business Market:
These included other organizations that buy the goods or services for the utilization in their production processes.
- Reseller Market:
It consists of firms that buy the goods in order to resell them for profit.
- Government Market:
It consists of agencies that purchase goods or services for the production & distribution of public services.
- International Market:
It includes buyer belonging to foreign countries.
Every organization faces the competition with certain competitors. So the competing organization should develop such effective strategies that can influentially position its products in the competing market. There is no single strategy which can be effective for all organizations. This micro environment component has great importance and analyzed deeply.
The last component of micro environment is a public, which include a group of individuals that can influence the ability of the organization to accomplish it objectives. So the organization should develop an effective marketing plan for both the public as well as customers. Publics can take the following forms.
Financial Public: It can affect the ability of organization to obtain funds.
Media Public: It carries an editorial opinion, features & news.
Government Public: It considers the developmental aspect.
Citizen Public: It includes consumer organizations that can question the decisions of the organization.
Local Public: It includes community organizations & neighborhood residents.
General Public: It simply includes the general public.
Internal Public: It includes employees, managers and board of directors of an organization.
Macro Environment and Its Types
The organization along with its other forces carries its functions in the larger area of the macro environment. There are certain factors and forces of macro environment that are responsible for the provision of opportunities & threats to the organization. Six types of forces are present in the macro environment of the organization, which are as below.
Now, each one is discussed below in detail.
The demographic force of macro environment is related to the study of human population with respect to their location, size, density, race, sex, occupation, age & other factors. The marketer of the organization has a keen interest in this actor of macro environment because it relates to the people, which are the foundation of any market. The trends of demographic force are changing at a constant rate. Below are few examples of such change.
01- The rate of increase in population is growing in a speedy manner that will ultimately badly affect the supply of food & servicing ability for the population. The poor countries are the victims that would suffer most. The enhancing market of china is getting attention of marketers around the world.
02- The changing age structure is another important trend of the population. The reasons for this increase in the age structure of the population are the increasing life expectancy and the downfall in the birth rate. After World War 2, the baby boomers have contributed much in the increasing age of the population. The age group of people is divided into many sub-divisions by the organization. The most important one is a middle age group which would become senior citizens in the future. Other groups include the generation X & the echo boomers.
The overall population of the world is educating well with the new needs & demands for the products & services. The white collar workers are increasing in number and certain products like books & education services are more demanding by educating group. Also computer related technical skills would become essential in the coming years. The racial & ethnic diversity in the population is one of the big trends that also enhances. The organizations should concentrate this diversity element of the population & utilize it in their best interests. The disabled people also form the potential future market.
The economic factor of the macro environment includes those that influence the purchasing power of customers along with their spending patterns. Certain important trends of the economic environment in the USA are as follows.
01- The personal consumption becomes the reason for the recession in the country that affects the personal & corporate actions. Now customers become more careful shoppers.
02- The customers are aware of the rise in the real income & so they adopt the strategy of value marketing.
03- The distribution of income in the country is in skewed shape which means unequal distribution. The majority of the customers is showing the spending patterns in the e basic areas of food, transportation & housing. Moreover the unfair distribution of income is resulted in the formation of two kinds of classes of the people which are affluent and less affluent.
The marketers of the organizations should develop & implement such strategies that benefit them from the changing economic trends. So they should carefully monitor the altering trends of the economic system in order to prevent their organizations from the side effects of the changing trends.
The natural force of the macro environment consists of the natural resources that are required by the organizations as inputs or that is influenced by the marketing activities. The trends of the natural environment are becoming quite important since few years like
01- The industrial expansion has seriously affected the raw materials by creating their shortage. Moreover, certain nonrenewable inputs are depleting due to their improper usage like oil, coal etc.
02- The environment of the world is badly affected by the improper production procedures of the organization. The organizations are adopting the environmental friendly trend by which they have produced safe, biodegradable or recyclable products.
03- Now, the government is also affecting the operations of the organizations in the area of natural environment damage. Certain policies & regulations are implemented throughout the world and the marketers should focus these changing trends that are related to the energy & material problems.
The organizations are promoting the green environment by developing & implementing the environment friendly strategies.
The technological aspect of the macro environment includes the actors that are responsible for the creation of new technologies, new products & new market opportunities. For this purpose following are the important trends of the technological area.
01- The technology is changing at a speedy rate and the new products are emerging that replace the previous ones.
02- A large number of opportunities are emerging in the expanding fields like, space shuttle, health care, robotics & biogenetic industries etc.
03- The technical & commercial challenges emerged for the organization to develop affordable products. Also mew regulations are implementing from the government about the product safety & individual privacy that must also be considered by the organizations.
Those actors and forces that relate to the government agencies, laws & other pressure groups that affect the organizations or individual persons in a specific society. For this purpose following are some of important trends.
01- Public policy is implemented by the government that guides the organizations to produce products that are beneficial for the society.
02- Regulations are implemented that protect one organization from another.
03- Customers are protected from unfair business practices by certain laws of the government.
04- There are also certain policies of the government that protect the interests of the society from the unfair business behavior of the organizations.
Those actors & forces that affect the basic values, preferences, perceptions & behaviors of the society are included in the cultural factor of the macro environment. There are certain cultural characteristics that influence the decision of the marketers. Some of the characteristics are as follows.
01- There are certain basic beliefs & perceptions that remain constant throughout several generations of the society.
02- There are certain secondary beliefs that can be altered through the effective strategies developed by the marketing department of the organization. These secondary concepts should be identified by the marketer in order to get advantage through these concepts.
03- The personal views of the people are also helpful for getting an advantage for the organization by the marketers. Also the views of people about others are helpful for making effective strategies of the organization.
04- Moreover, the views of people about the organizations, society, nature & universe are important considerable features of the cultural aspects that should be concentrated by the marketers for development of their strategies.