Introduction To Marketing And Its Environment PdfBy Noeleaunarous In and pdf 18.01.2021 at 01:20 6 min read
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- Market environment
- Principles of Marketing
- Marketing Environment
- Marketing Environment: Definition, Micro & Macro, and Environmental Scanning
Marketing activities are influenced by several factors inside and outside a business firm. These factors or forces influencing marketing decision-making are collectively called marketing environment. It comprises all those forces which have an impact on market and marketing efforts of the enterprise.
The firm must be aware of what is going on in its marketing environment and appreciate how change in its environment can lead to changing patterns of demand for its products. It also needs to assess marketing opportunities and threats present in the surroundings.
An environment can be defined as everything which surrounds and impinges on a system. Systems of many kinds have environments with which they interact. Marketing can be seen as a system which must respond to environmental change. Just as the human body may have problems, it fails to adjust to environmental change.
Marketing activities do not take place in a vacuum, isolated from all external forces. In fact all marketing operations are conducted in a highly complex, dynamic and changing environment. The marketing environment offers both opportunities and threats.
Successful companies know the vital importance of constantly watching and adapting to the changing environment. More than any other groups in the company, marketers must be the trend trackers and opportunity seekers. Although every manager in an organisation needs to observe the outside environment, marketers have two special aptitudes. They have disciplined methods — marketing intelligence and marketing research — for collection of information about the marketing environment.
They also spend time in the customer and competitor environment. By conducting systematic environmental scanning, marketers are able to revise and adapt marketing strategies to meet new challenges and opportunities in the market place.
Marketing as a function is basically all about matching the offerings of the organisation to the outside world, in particular, the market-place. Not surprisingly, many functions within marketing, such as selling, product development and market research, concern themselves with issues, problems and opportunities outside the organisation, and focus on responding to outside events and circumstances. Environment scanning is a constant, important activity of successful companies.
This process includes gathering, filtering and analyzing information related to the marketing environment. It also includes monitoring the changes taking place in the environment and forecasting future status of each factor. Such analysis helps to spot opportunities and threats in the environment, and pinpoints the ones that are specifically relevant to the company. As we know that marketing research and marketing intelligence system are the methods used by companies for environment scanning and gathering vital information about changes.
Successful companies know the vital importance of constantly scanning and adapting to the changing environment. The environment continues to change at a rapid pace. Environmental analysis attempts to give an extensive insight as to the current market conditions as well as of impact of external factors that are uncontrollable by the marketers.
These variables play an important role in convincing potential customers regarding changes in market trends, market conditions etc. The firm has to come up with alternative programmes and strategies in line with environmental realities. This is possible only with proper environment analysis. It helps strategic response by highlighting opportunities, the pursuit of which will help the firm to attain its objectives.
It helps to assess the attractiveness and probability position of these opportunities, and helps to prepare a shortlist of those which are relevant to the firm and which can be pursued by it.
Spotting the opportunities and threats is the central purpose here. It is in the environment that the firm finds its opportunities; it is in the environment that it finds the treats it has to encounter, and, it is by tapping the opportunities present and countering the threats embedded therein that the firm achieves its growth objective.
The starting point is thus to spot the opportunities and threats. A marketing oriented company looks outside its premises to take advantage of the emerging opportunities, and to monitor and minimize the potential threats face by it in its businesses. The micro-environment of the company consists of various forces in its immediate environment that affect its ability to operate effectively in its chosen markets.
In designing marketing plans, marketing management takes other company groups into account — Finance, Research and Development, Purchasing, Manufacturing, Accounting, Top Management etc.
Marketing manager must also work closely with other company departments. Finance in concerned with funds and using funds to carry out the marketing plans. Purchasing Department is concerned with supplies of materials whereas manufacturing is responsible for producing the desired quality and quantity of products. Accounts department has to measure revenues and costs to help marketing know-how.
Together, all of these departments have impact on the marketing plans and action. Environmental forces are dynamic and any change in them brings uncertainties, threats and opportunities for the marketers.
Changes in the environmental forces can be monitored through environmental scanning, that is, observation of secondary sources such as business, trade and Government, and environmental analysis, that is, interpretation of the information gathered through environmental scanning. Marketers try to predict what may happen in the future with the help of tools like marketing research and marketing information or marketing intelligence system, and continue to modify their marketing efforts and build future marketing strategies.
The company should think about the consumer and work in harmony to provide customer value and satisfaction. Suppliers provide the resources needed by the company to product its goods and services. Supplier developments can seriously affect marketing. Marketing managers must watch supply availability — supply shortages or delays, labour strikes and other events can cost sales in the short run and damage customer satisfaction in the long run. Marketing Managers also monitor the price trends of their key inputs.
Buyers and sellers are increasingly co-operating in their dealings with each other, rather than bargaining each transaction in a confrontational manner in order to make supply chain management most effective and value-added products are sold to the target markets.
Intermediaries or distribution channel members often provide a valuable link between an organisation and its customers. Large-scale manufacturing firms usually find it difficult to deal with each one of their final customers individually in the target markets.
So they chose intermediaries to sell their products. Marketing intermediaries include resellers, physical distribution firms, marketing service agencies, and financial intermediaries. They help the company to promote, sell, and distribute its goods to final buyers. Resellers are distribution channel firms that help the company to find customers for goods.
These include whole-sellers and retailers who buy and resell merchandise. Selecting and working with resellers is not easy. These organisations frequently have enough power to dictate terms or even shut the manufacturer out of large markets.
Firms help the company to stock and move goods from their points of origin to their destinations. Working with warehouse and transportation firms, a company must determine the best ways to store and ship goods, and safety marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets.
When the company decides to use one of these agencies, it must choose carefully because those firms vary in creativity, quality, service and price. Financial intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods. Most firms and customers depend on financial intermediaries to finance their transactions.
Consumer markets consists of individuals and households that they buy goods and services for personal consumption. Business markets buy goods and services for further processing or for use in their production process, whereas reseller markets buy goods and services to resell at a profit.
Government markets are made up of government agencies that buy goods and services to produce public services or transfer the goods and services to others who need them. Finally, international markets consist of the buyers in other countries, including consumers, producers, resellers and governments. Each market type has special characteristics that call for careful study by the seller. No single competitive marketing strategy is best for all companies. Each firm should consider its own size and industry position compared to those of its competitors.
These competitors have to be identified, monitored and outmanouvered to gain and maintain customer loyalty. Industry and competition constitute a major component of the micro-environment. Competitive advantage also depends on understanding the status, strength and weakness of competitors in the market.
Large firms with dominant positions in an industry can use certain strategies that smaller firms cannot afford. But being large is not enough. There are winning strategies for large firms, but there are also losing ones. And small firms can develop strategies that give them better rate of return than large firms enjoy.
General public do take interest in the business undertaking. The company has a duty to satisfy the people at large along with competitors and the consumers. Public relations is certainly a broad marketing operation which must be fully taken care of Goodwill, favourable reactions, donations and hidden potential fixture buyers are a few of the responses which a company expects from the public.
The macro-environment consists of broader forces that not only affect the company and the industry, but also other factors in the micro-environment. Demography is the study of population characteristics that are used to describe consumers. Demographics tell marketers who are the current and potential customers, where are they, how many are likely to buy and what the market is selling.
Demography is the study of human populations in terms of size, density, location, age, sex, race, occupation and other statistics. Marketers are keenly interested in studying the demography ethnic mix, educational level and standard of living of different cities, regions and nations because changes in demographic characteristics have a bearing on the way people live, spend their money and consume. For example, one of the demographic characteristic is the size of family.
With the number of small families increasing in India, the demand for smaller houses and household items has increased significantly. Similarly, the number of children in a family has reduced significantly over the years.
So, per child spending in a family has increased significantly. Since human population consists of different kinds of people with different tastes and preferences, they cannot be satisfied with any one of the products. Moreover they need to be divided in homogeneous groups with similar wants and demands.
For this we need to understand the demographic variables which are traditionally used by marketers, to segment the markets. Income determines purchasing power and status. Higher the income, higher is the purchasing power. It is the pattern of living expressed through their activities, interests and opinion.
Principles of Marketing
A few of them are governable while others are unmanageable. Macro and micro environment comprise the structure of the marketing environment. The overall Marketing environment is the snowballing form of the aspects that encapsulate inside themselves the capability of a firm to bond with the customers and also, the strength of the product as a driver of development to the firm. The macro-environment consisting of wider societal authorities, and the micro-environment which incorporates the influences related to a company, together form the general marketing environment of a company. Micro -factors inside the firm Macro -factors linked to economic, social, cultural aspects, etc. Micro-environment elements are close to the firm and incorporate the suppliers, showcasing delegates, consumer markets, public, competition, and marketing intermediaries. The Macro environment is the uncontrollable factor of the company.
The five forces model of analysis was developed by Michael Porter to analyze the competitive environment in which a product or company works. The threat of entry: competitors can enter from any industry, channel, function, form or marketing activity. How best can the company take care of the threat of new entrants? Endorsements are a form of advertising that uses famous personalities or celebrities who command a high degree of recognition, trust, respect or awareness amongst the people. Such people advertise for a product lending their names or images to promote a product or service.
Marketing Environment. ▫ Marketing Environment- consists of the actors Intermediaries. Forces Affecting a. Company's Ability to. Serve Its. Customers.
Some of these factors are controllable while some are uncontrollable and require business operations to change accordingly. These factors are further elaborated:. The detailed description of Macro factors is given below:. Therefore, marketing environment plays a crucial role in the operations of a business and must be reviewed on a regular basis to avoid any difficulty.
There are several factors which affect a firm. Few of these factors can be controlled by the firm but not all. In order to deal with these factors, firm must understand their market environment so that positive and negative factors would be managed accordingly. The firm can control these factors.
Marketing strategy is the comprehensive plan formulated particularly for achieving the marketing objectives of the organization. It provides a blueprint for attaining these marketing objectives. It is the building block of a marketing plan. It is designed after detailed marketing research. Choosing the target market: By target market we mean to whom the organization wants to sell its products.
Marketing Environment: Definition, Micro & Macro, and Environmental Scanning
By and large, managers can control the four Ps of the marketing mix: they can decide which products to offer, what prices to charge for them, how to distribute them, and how to reach target audiences. Unfortunately, there are other forces at work in the marketing world—forces over which marketers have much less control. These factors—and changes in them—present both threats and opportunities that require shifts in marketing plans. To spot trends and other signals that conditions may be in flux, marketers must continually monitor the environment in which their companies operate.