Theme 2 Marketing Environment PDF

Technical Articles – MGT301 Theme # 2: Marketing Environment In this theme, we will discuss the most important and essential topic i.e. Marketing environment. First of all, we have to understand what is "environment"? An environment is the surroundings of any living thing. Whatever around you is c...

Technical Articles – MGT301 Theme # 2: Marketing Environment In this theme, we will discuss the most important and essential topic i.e. Marketing environment. First of all, we have to understand what is "environment"? An environment is the surroundings of any living thing. Whatever around you is considered to be your environment. The environment is somewhat you are very used to with. It is actually everything around us. It comprises human actors, system's, physical, chemical, and other natural factors, etc. We can't change our environment abruptly. The environment is an extremely complex set of factors that define your behavior in every way and for every living thing. Our environment will influence us anyway and somehow we may also influence the environment. For example, a flower may grow when weather conditions are appropriate, or die if it is not. It couldn't survive with extreme variations in their environment. Now, what is the marketing environment? In marketing our main objective is to deliver the value to the customer and in return earns value. Marketing is not alone; as per Phillip Kotler it has its own environment and in this environment, it has its own actors and forces that affect a firm's ability to deliver value to the customer and create profitable customer relationships ". Here we can take an example of one of the actors of the marketing environment and that is supplier. For instance, if you are making a surgical instrument and for that you use stainless steel metal, now the quality of the surgical instrument depends on the metal which a supplier provides you, what if the quality of that metal is not up to the mark it will certainly affect the ability to serve your customers and ultimately the relationship between you and the customer will suffer. In simple words, a firm is surrounded by internal and external forces which have a great effect on a firm's ability to sustain long-lasting relations with their potential customers. There are two types of the marketing environments, one is microenvironment and the other one is macro environment. Let's discuss them one by one. What is Micro Environment? The microenvironment is defined as the secure or safe environment, under which the firm works. The microenvironment consists of the Organization itself, Suppliers, Intermediaries, Competitors, Customers and Public. These actors are very close to the organization as they all work together and this would build your value network as well as a value delivery system. These actors are makers and breakers of the organization, because if these actors will not work properly then your ultimate goal to serve the customers will not be fulfilled. Firstly, we’ll see the actors of microenvironment. 1. The Company: In designing organization's strategies and objectives, marketing executives will make close coordination with other departments, within the organization because; if they do not develop coordination within the organization they can't achieve their goals in an appropriate way. 2. Suppliers: They are the one who provide the resources for goods and services. For example, raw material, equipment etc. Business accomplishment depends on the suppliers as the supplier's good is the essential component of the end product of the buyer. It is famous sayings that treat your supplier as your partners to provide customer value. 3. Marketing Intermediaries: The role of intermediaries is to promote, sell and distribute the company's products to the end users. If these intermediaries are not cooperative or supportive companies won't be able to deliver their value. Marketing intermediaries usually consist of wholesalers, distributors, and retailers that make a relationship between the organization and the customers. 4. The Competitors, Rivals or Inspirers: Competitors are who aim at what we aim at. In business the presence of one or more competitors can cut down the prices of goods and services, just to gain the larger market share. Competitors are the inspirers as well and due to their inspiration, companies are becoming more efficient and determined in terms of goal setting. 5. Customers: The most important and beloved actors in microenvironment are our customers. They are the ones who buy goods for their own consumption. All the marketing activities are customer- centric. Customers are the king of business. They are important as companies need them and the success of their business depends on them. 6. Publics: Public is any group which has an actual or possible interest in the organization to achieve its goals such as financial publics, media publics, government public, local public, general public or internal publics etc. They are actually the stakeholders. They are not direct buyers or suppliers, but they have somehow direct or indirect interest in achieving the objectives. Generally, it is the responsibility of the organization to satisfy the general public. The company must take decisions while taking the point of view of the general public into consideration because they played an important role in decision making. Now we will discuss these publics one by one. 6.1 Financial Publics: Financial Publics are the organizations who work in financial sectors and influence the company's funding e.g. Banks, investment analysts, stockholders etc. These financial publics affect a company's ability to take loans. The financial experts of the companies will deal with these financial publics and very conscious to build a positive image of the company in front of the customers and other public. 6.2 Media Publics: We are living in the information age and the custodians of the information are media houses. Media gives mass exposure to the company's activity. It includes Print Media, television, newspaper and Social Media like Facebook, Twitter etc. The role of Media is that much strong that it can make or break the companies. They are considered to be the watchdogs for the companies which protect the public interest against any mismanagement and malpractice. To deal with media houses the public relation department of the organization plays a vital role and always has good media relations. So they would highlight the strengths and hides the faults of the company. 6.3 Government Publics: Government is the protector of the state's public interest. They provide services too. Their work is to regulate the businesses and carefully watch that while operating the business they should follow the safety standards and rules and regulations. 6.4 Citizen-Action Publics: There are many organizations (government or non-government) in our society who work for different groups or communities to protect their rights. They mostly work voluntarily. Sometimes these communities will be affected by the marketing activities of the companies. For protecting their rights this organization becomes activated. So to avoid any issue between these organizations and the company, Public relation department of the company intervene and takes care of what these groups are saying regarding the company. The key role of this public relation department is to make efforts to create a friendly relationship with them; otherwise, they will harm the name of the company. 6.5 Local Publics: Every organization is working in some locality or area. The neighborhood residents are the local publics. Some production plants are running in these localities. These plants sometimes directly or indirectly harm the premises. For example, air pollution or water contamination etc. To compensate for the damage of this locality, organizations offer some incentives like providing the jobs or creating some hospital facilities to the local publics. 6.7 General Publics: A general customer's perception or opinion portrays the general public. A good brand image or perception is very important for any organization's success. Different marketing activities will be undertaken to create a positive image of the company. This opinion or perception of the general public can be judged by the feedback which they shared through social media or other media. So this opinion of general publics is very important for the image building. 6.8 Internal Publics: The internal publics are the vital resources of the organization. They are actually the company's own employees, executives, suppliers or stakeholders. If a company wants to increase its goodwill, they should make their internal Publics happy and content. For that, they have to arrange meetings in which they educate and involve their internal publics and inform the employees about the new development of the company. After concluding microeconomics, we will come to the next environment which is the macro environment. What is Macro Environment? Macro environment refers to the broader environment; it has no concern with the immediate environment. The macro environment is the external forces which are not controllable and can affect the processes of all business setups. These forces have an indirect effect on the company's operation and working situation. Macro environment consists of six external forces i.e. demographic, economic, natural, technological, political and cultural. 1. Demographic Environment: Demographics are the study of population based on factors such as age, race gender, size, density, location, occupation etc." These demographics are very important to learn for the purpose of policy development and economic market research. Now the question arises why the population is so important? It is important because people needs and wants are the reasons for companies to exist. In simple words, people are the motivating factor for the growth of markets. Therefore, marketers should keep a close eye on demographics. But over time there is a change in demographics in terms of world population, age structure, family sizes etc. This change in demographics both offer opportunities as well as threats for the businesses. Mostly large companies conduct demographic research to decide how to market their product and how to grab the potential customers. This information helps the company to select how much investment is needed for the specific group. 2. Economic Environment: We have to see the factors that affect consumer purchasing power and spending patterns. We will take an example that, an organization could not start exporting their good to a country until they have examined how much people will be able to spend and what are their purchasing powers. To check the health of the economy and growth rate, we have many economic indicators, which are GDP volume and growth rate, Per capita income, Interest rate, inflation, Import Duty rate etc. 3. Natural Environment: The natural environment in the Macro Environment is very important as far as the natural resources are concerned. You may do business in whichever place, your business will come across the local environment and you will shape your business according to the environment you are encountered in. The most important changes in the natural environment are the increasing shortage of raw materials especially in terms of non-renewable resources like water, gas, and oil. Moreover, increased pollution is also one of the factors of a natural disaster. Due to the shortage of natural resources, the governments then intervene in these issues and make some environmental sustainable strategies. So being a business person or marketer one should keep a record of the trends in the natural environment. 4. Technological Environment: It is the most crucial force of the Macro Environment. In the last few decades, there is a drastic development in technology, and we are in favor of advanced technology because we are in favor of convenience and ease. New products and services are imaginable due to new technologies. This new technology has affected every phase of our lives. If we look back like few years before we‘ll see how we shop, to how we travel to how we linked ourselves. Technology also affected businesses around the world as technological transformation get both opportunities and threats for a business. Every novel technology swaps an older one, so if businesses would not adopt such technological changes these businesses will very quickly be obsoleted and outdated from the market. Thus marketers must keep an eye or watch very carefully about the dynamic changing trend of the technology and try to adapt it as soon as possible. A very relevant example here is the world-renowned Photocopy Company "Xerox” which is obsoleted, because they have not adopted the new technology and today only a few people know the name of that giant company. 5. Political and Legal Environment: Political factor is one of the external environmental factors which affect the business both positively or negatively. Businesses are strictly influenced and affected by changes in the political environment. That's why before entering a new market in a foreign country; the company must know each and everything about the legal and political environment of the host country. Companies should know how a country's political system affects the economy. They also need to evaluate how stress-free it is for the company to enter and exit, they may also assess the political risk and stability of the country. 6. Cultural Environment: Cultural factors play a major role in our society. Our lifestyle, values, and attitudes determine culture. "Culture is the integrated sum total of learned behavioral traits that are shared by members of society". Cultural factor is one of the most influencing factors as far as the business decisions are concerned. So for businesses it is very essential to consider cultural barriers while making their business strategies. For example, The McDonald's of Pakistan is much different from the McDonald's in India. This is because McDonald's is capable to adapt its food and business strategies according to each culture. It is also necessary for the businesses to respect the differences between cultures and obeys to the country's policy. The sum up of all the internal and external environment study is that, all organizations plan according to their environment, the only change is in their attitude and approach. Sometimes this approach is proactive, sometimes it is reactive and sometimes it is active. The old adage that prevention is better than cure is appropriate here. So I think it is better to be proactive rather than reactive or active. In simple words, the proactive approach emphases on reducing the problems before they will appear. Our marketers and businessmen should also be smart enough to cope up and adopt the proactive approaches to survive in the environment. ……………………………………………………………………………………………………… GENERALLY ASKED QUESTIONS Question 1: What is the major difference between micro and macro environment and what's its key role in field marketing? Answer: Micro environment is the close or nearest environment in which the firm operates. It affects the working of a particular business only to which they relate to. While, Macro environment mentions the overall or broader environment, that can affect the working of all business enterprises. It actually affects the functioning of all the business entities, operating in the economy. These environmental factors are beyond the control of marketers but they still influence the decisions made when creating a strategic marketing plan. Question 2: What do you understand by the term publics? Answer: A public refers to a group that has an actual or potential interest in or impact on a company’s ability to achieve its objectives. Financial publics, media publics, government publics, local publics, general publics or internal publics are some of the examples of Publics. It is the key responsibility of the company to satisfy the public at large including its customers and competitors. Also, creating good will among the public helps to get a favorable response for a company. Question 3: What do you mean by rivals in marketing term? Answer: In simple words Rivals are the competitors. In terms of marketing, Rival is a person who is competing for the same product or service as another. For example Surf Excel is in direct competition with Arial.