Marketing Environment PDF

MEANING OF MARKETING ENVIRONMENT MARKETING ENVIRONMENT IS THE COMBINATION OF EXTERNAL AND INTERNAL FACTORS AND FORCES THAT AFFECT A COMPANY'S MARKETING ACTIVITIES. THESE FACTORS AFFECT THE DIFFERENT REALMS OF BUSINESS. THE MARKETING ENVIRONMENT DRIVES ALL THE MAJOR MARKETING DECISIONS OF...

MEANING OF MARKETING ENVIRONMENT MARKETING ENVIRONMENT IS THE COMBINATION OF EXTERNAL AND INTERNAL FACTORS AND FORCES THAT AFFECT A COMPANY'S MARKETING ACTIVITIES. THESE FACTORS AFFECT THE DIFFERENT REALMS OF BUSINESS. THE MARKETING ENVIRONMENT DRIVES ALL THE MAJOR MARKETING DECISIONS OF A BUSINESS AND IS DIFFERENT FOR EACH ORGANIZATION MICRO ENVIRONMENT A MICRO MARKETING ENVIRONMENT, AS MENTIONED PREVIOUSLY, IS AN ENVIRONMENT THAT DIRECTLY IMPACTS YOUR ORGANIZATION. IT'S LINKED TO A PARTICULAR AREA OF YOUR BUSINESS BUT CAN SPREAD TO ALL BUSINESS PROCESSES. THEY CAN INFLUENCE YOUR DAILY PROCEEDINGS AND OVERALL COMPANY PERFORMANCE. THEIR EFFECTS AREN'T LONG-LASTING.  CUSTOMERS: CUSTOMERS ARE AT THE HEART OF THE MICROENVIRONMENT. UNDERSTANDING THEIR NEEDS, PREFERENCES, AND BUYING BEHAVIOR IS ESSENTIAL FOR A COMPANY’S SUCCESS. FACTORS TO CONSIDER INCLUDE CUSTOMER DEMOGRAPHICS, PURCHASING POWER, MOTIVATIONS, AND DECISION-MAKING PROCESSES. SUPPLIERS: THEY PROVIDE THE NECESSARY RESOURCES, MATERIALS, AND COMPONENTS FOR A COMPANY’S OPERATIONS. ESTABLISHING STRONG RELATIONSHIPS WITH RELIABLE SUPPLIERS IS IMPORTANT TO ENSURE THE TIMELY AVAILABILITY OF QUALITY INPUTS. FACTORS TO CONSIDER INCLUDE SUPPLIER RELIABILITY, PRICING, FLEXIBILITY, AND TECHNOLOGICAL CAPABILITIES.  INTERMEDIARIES ARE ORGANIZATIONS THAT FACILITATE THE DISTRIBUTION OF PRODUCTS OR SERVICES FROM THE COMPANY TO THE END CUSTOMERS. THESE CAN INCLUDE WHOLESALERS, RETAILERS, DISTRIBUTORS, AND LOGISTICS PROVIDERS. UNDERSTANDING THE RELATIONSHIPS AND DYNAMICS WITH INTERMEDIARIES IS CRUCIAL FOR EFFICIENT AND EFFECTIVE DISTRIBUTION. COMPETITORS ARE OTHER COMPANIES OPERATING IN THE SAME INDUSTRY, OFFERING SIMILAR PRODUCTS OR SERVICES. ANALYZING COMPETITOR STRENGTHS, WEAKNESSES, STRATEGIES, AND MARKET POSITIONS HELPS A COMPANY DIFFERENTIATE ITSELF AND GAIN A COMPETITIVE ADVANTAGE. FACTORS TO CONSIDER INCLUDE PRODUCT DIFFERENTIATION, MARKET SHARE, PRICING STRATEGIES, AND MARKETING TACTICS.  THE COMPANY’S OPERATIONS AND PERFORMANCE. THIS INCLUDES THE MEDIA, GOVERNMENT AGENCIES, LOCAL COMMUNITIES, AND SPECIAL INTEREST GROUPS. MANAGING RELATIONSHIPS AND ADDRESSING DIFFERENT PUBLIC CONCERNS IS IMPORTANT FOR MAINTAINING A POSITIVE REPUTATION AND MINIMIZING NEGATIVE IMPACTS. FINANCIAL INSTITUTIONS SUCH AS BANKS AND INVESTORS PLAY A CRUCIAL ROLE IN PROVIDING CAPITAL AND FINANCIAL RESOURCES TO BUSINESSES. ESTABLISHING GOOD RELATIONSHIPS WITH FINANCIAL INSTITUTIONS IS IMPORTANT FOR OBTAINING FUNDING, MANAGING CASH FLOW, AND SUPPORTING BUSINESS GROWTH EMPLOYEES ARE AN INTEGRAL PART OF THE MICROENVIRONMENT. THEIR SKILLS, KNOWLEDGE, MOTIVATION, AND COMMITMENT DIRECTLY IMPACT A COMPANY’S PERFORMANCE. EFFECTIVE HUMAN RESOURCE MANAGEMENT PRACTICES ARE ESSENTIAL TO ATTRACT, RETAIN, AND DEVELOP TALENTED EMPLOYEES. Conclusion of micro environment UNDERSTANDING AND MANAGING THE MICRO ENVIRONMENT IS CRUCIAL FOR ORGANIZATIONS TO THRIVE IN THEIR SPECIFIC INDUSTRY OR MARKET. BUSINESS OWNERS MUST CONSIDER FACTORS SUCH AS COMPETITORS, SHAREHOLDERS, DISTRIBUTORS, CUSTOMERS, SUPPLIERS, ETC. EXAMINING HOW THEY AFFECT A BUSINESS’S DAY-TO-DAY OPERATIONS, MARKET POSITIONING, AND CUSTOMER RELATIONSHIPS IS IMPORTANT TO STAY COMPETITIVE IN A DYNAMIC BUSINESS ENVIRONMENT.  MACRO ENVIRONMENT DEMOGRAPHIC: MONITORS POPULATION IN TERMS OF AGE, SEX, RACE, OCCUPATION, LOCATION AND OTHER STATISTICS. ECONOMIC: FACTORS THAT AFFECT CONSUMER BUYING POWER AND PATTERNS. NATURAL: NATURAL RESOURCES NEEDED AS INPUTS BY MARKETERS OR THAT ARE AFFECTED BY MARKETING ACTIVITIES. POLITICAL: GOVERNMENT POLICIES AND REGULATIONS CAN SIGNIFICANTLY INFLUENCE THE MACRO ENVIRONMENT. SOME EXAMPLES ARE POLITICAL STABILITY, TAX POLICIES, TRADE AGREEMENTS, AND LABOUR LAWS. CULTURAL: SOCIO-CULTURAL FACTORS ENCOMPASS SOCIETAL VALUES, BELIEFS, ATTITUDES, AND LIFESTYLE TRENDS. THESE FACTORS INFLUENCE CONSUMER BEHAVIOUR AND DEMAND PATTERNS. TECHNOLOGICAL: TECHNOLOGICAL ADVANCEMENTS SHAPE THE MACRO ENVIRONMENT BY REVOLUTIONIZING INDUSTRIES, CREATING NEW OPPORTUNITIES, AND DISRUPTING EXISTING BUSINESS MODELS. ETOP  IMPORTANCE OF ETOP DETERMINING OPPORTUNITIES- OPPORTUNITIES MEAN THE POSITIVE OR FAVOURABLE EXTERNAL FORCES THAT ARE LIKELY TO HELP A FIRM INCREASE ITS BUSINESS. THE CHANGES IN THE EXTERNAL ENVIRONMENT INDICATE BUSINESS OPPORTUNITIES AND HELP THE FIRM IN DESIGNING STRATEGIES TO CAPITALIZE ON THEM. IDENTIFICATION OF THREATS: THREATS REFER TO THE NEGATIVE OR UNFAVOURABLE EXTERNAL FACTORS THAT CREATE HURDLES FOR A FIRM. ENVIRONMENTAL SCANNING HELPS TO IDENTIFY POSSIBLE THREATS IN FUTURE AND GIVE WARNING SIGNALS TO THE FIRMS. FOR INSTANCE, AN INDIAN FIRM FINDS THAT AN MNC IS ENTERING THE INDIAN MARKET WITH NEW SUBSTITUTES. THIS SHOULD WORK AS A WARNING SIGNAL FOR THE INDIAN FIRM. SENSITIZATION OF MANAGEMENT TO COPE WITH RAPID CHANGES: THE KNOWLEDGE OF ENVIRONMENTAL CHANGES SENSITIZES THE MANAGEMENT TO MAKE STRATEGY TO COPE WITH THE EMERGING PROBLEMS. A KEEN WATCH ON THE TRENDS IN THE ENVIRONMENT WOULD HELP TO SENSITISE THE FIRM'S MANAGEMENT TO THE CHANGING TECHNOLOGY, COMPETITION, GOVERNMENT POLICIES AND CHANGING NEEDS OF THE CUSTOMERS.  FORMULATION OF STRATEGIES AND POLICIES: ENVIRONMENTAL ANALYSIS HELPS IN IDENTIFYING THREATS AND OPPORTUNITIES IN THE MARKET. THEY CAN SERVE AS THE BASIS OF FORMULATION OF STRATEGIES TO COUNTER THREATS AND CAPITALIZE ON OPPORTUNITIES IN THE MARKET. IMAGE BUILDING: IF A FIRM IS SENSITIVE TO THE EXTERNAL ENVIRONMENT, IT WILL COME OUT WITH NEW PRODUCTS AND SERVICES TO MEET THE REQUIREMENTS OF THE CUSTOMERS. THIS WOULD BUILD THE IMAGE OR REPUTATION OF THE FIRM IN THE EYES OF THE CUSTOMERS AND THE GENERAL PUBLIC. BECAUSE OF SENSITIVITY TO INDIAN CONSUMER'S REQUIREMENTS, LG WAS ABLE TO ENHANCE ITS BRAND IMAGE IN THE INDIAN MARKET IN A SHORT SPAN OF TIME. IDENTIFYING FIRM’S STRENGTH AND WEAKNESS: BUSINESS ENVIRONMENT HELPS TO IDENTIFY THE INDIVIDUAL STRENGTHS AND WEAKNESSES IN VIEW OF THE TECHNOLOGICAL AND GLOBAL DEVELOPMENTS. IT ACTIVATES MANAGEMENT TO MOVE ACCORDINGLY. BASIS OF STRATEGY: STRATEGISTS CAN GATHER QUALITATIVE INFORMATION REGARDING BUSINESS ENVIRONMENT AND UTILIZE IT IN FORMULATING EFFECTIVE PLANS. FOR EXAMPLE: ITC HOTELS FORESAW BRIGHT OPPORTUNITIES IN THE TRAVEL AND TOURISM INDUSTRY AND STARTED BUILDING HOTELS IN INDIA AND ABROAD. FACTORS TO CONSIDER IN ETOP NATURE OF TARGET CUSTOMERS- IDENTIFYING THE SIZE OF FAMILY, JOB PROFILE, PURCHASING POWER AND BUYING MOTIVE OF THE CUSTOMER ETC. FOR EXAMPLE BEFORE INTRODUCING TATA NANO TO THE AUTOMOBILE MARKET THESE FACTORS WERE ENSURED BY THE COMPANY. THE MARKET TRENDS- OBSERVING THE POSITION OF COMPANY'S PREVIOUS PRODUCTS AND SERVICES IN THE MARKET, WHETHER DEMAND IS LIKELY TO REMAIN STATIC, DECREASE OR INCREASE. ECONOMIC, SOCIAL AND POLITICAL TRENDS- SCANNING THE ECONOMIC, SOCIAL AND POLITICAL TRENDS AFFECTING PRODUCTION NAMELY MONETARY POLICY, SOCIAL CHANGES, ANTI-POLLUTION OR ENERGY CONSERVATION LAWS TECHNOLOGY TRENDS- ANTICIPATION OF TECHNOLOGICAL CHANGES, I.E. WHETHER NEW PRODUCT MAY BECOME POPULAR OR WHAT TYPE OF TECHNOLOGY ADVANCEMENTS ARE ABOUT TO TAKE PLACE. COMPETITION IN THE MARKET- ANALYZING THE UPCOMING OR EXISTING COMPETITORS AND WHAT ARE THEIR STRENGTHS AND WEAKNESSES.