The study and understanding of Marketing Environment are important based on the fact that the environment is changing and there is uncertainty. Some of these environmental factors are uncontrollable. However, successful organisations know the vital importance of constantly monitoring and adapting to the changing environment. Therefore, it is the responsibility of the organisation to link the resources to the requirements of customers.
The Elements of Marketing Environment
Different authors have classified the marketing environment differently. Basically, marketing environment can be classified in two categories which are the Micro-environment and the Macro environment (Kotler et al., 2013).
The Micro-Environment
Micro-environment refers to the company’s immediate environment, that is, those environmental factors that are in its proximity. They include the company’s own capabilities to produce and serve the consumer needs, the dealers and distributors, the competitors, suppliers, marketing intermediaries, public, customers etc.
The Impacts of Micro-Environment
Customers: The customers (B2B or B2C, local or international, etc.) and their reasons for buying the product will play a large role in how an organisation can approach the marketing of its products and services.
Suppliers: Suppliers can control the success of the business when they hold power. The supplier holds the power when they are the only or the largest supplier of their goods, when the switching cost of supplier is high, when the buyer is not vital to the supplier’s business and when the supplier’s product is a core part of the buyer’s finished product and/or business.
The competition: Those who sell the same or similar products and services as your organisation is your market competition, and the way they sell needs to be taken into consideration. Their pricing system and product differentiation can also impact your organisation/business. However, your organisation can take advantage of these factors to reap better results and get ahead of the competitors.
Intermediaries: If the product your organisation produces is taken to market by 3rd party resellers or market intermediaries such as retailers, wholesalers, etc., then your organisation’s marketing success will be impacted by those 3rd party resellers.
The general public: Your organisation has a duty to satisfy the public. Any actions of your organisation must be considered from the angle of the general public and how they are affected. The public has the power to help you reach your goals and they can also prevent you from achieving them.
The Macro Environment
The macro environment consists of larger societal forces that affect not only the organisation, but also its competitors and other elements in the micro-environment. This includes demographic, economic, natural, technological, political and cultural forces.
The Impacts of Macro Environment
The Demography: The study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics comes under the demographic environment. The demographic environment itself is affected by changes in the mix of age groups in the population.
The Economic: The economic environment is important to marketers because it affects the amount of money people have to spend on products and services. One of the components of the economic environment is the distribution of income. Economies around the world not only vary in their absolute or total level of wealth but also in how their wealth is spread within the population.
The Natural: Natural resources needed as inputs by marketers or that are affected by marketing activities. This is important to marketers because the source of many raw materials and fluctuation in supply can affect the prices paid for purchases.
Technological: Technological developments offer marketers both opportunities and threats. Although firms can offer customers a wider array of advanced products, changes in technology also mean that there may be more than one technical solution to a customer’s needs. Increased technological development accelerates the speed of obsolescence.
Culture: People’s opinions and tastes are shaped by the society in which they live. It should be noted that societies are not made up of homogeneous populations (people of same kind or nature). They contain sub-cultures, which are beliefs and values shared by smaller groups of people. Such groups may arise out of a common race, religion, social activity or hobby.
Political and Legal: Marketers are influenced by the regulatory environment. This has implications for their obligations to customers and the wider public. Customers are increasingly able to seek redress for faulty products, and those who live near manufacturing plants are able to claim compensation for pollution. The political environment around the world has recently favoured the privatization of public companies.
This video covers a detailed discussion on the major differences between Micro Environment and Macro Environment in Business, office, and Manufacturing organizations.
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