Meaning of the Marketing Environment: Why Scan the Environment? (Coursework Sample)

ANALYZING THE MARKETING ENVIRONMENT
Introduction
Excellent companies take an outside-in approach to their business operations.
These companies monitor the changing environment and continuously adapt their businesses to their best opportunities
Company managers are faced with the responsibility of identifying major changes in the environment.
In this chapter, the major forces in the company’s marketing environment are discussed.
Meaning of the Marketing Environment
A company’s marketing environment consists of factors that affect its ability to develop and maintain successful transactions and relationships with its target customers.
The factors and forces that affect a company’s ability to operate effectively in providing products and service to its customers.
Note: The process of analyzing the environment is also known as environmental scanning.
Why Scan the Environment?
Environmental scanning is important to a company for a number of reasons
To identify threats arising from the environment. A threat could be:
A new competitor in a firm’s market.
Price wars with competitors
A competitor who has a new, innovative product or service
Taxation introduced or increased on a firm’s products or services.
Identify opportunities arising from the environment and exploiting them to firm’s advantage. Opportunities could be:
A developing market such as the internet
Mergers, joint venture or strategic alliances
A new international market
A market vacated by an ineffective competitor.
To identify a firm’s weaknesses. These are the lack of or inaccuracy of the firm’s resources that should be converted into strengths. A weakness could be:
Lack of marketing expertise
Poor quality goods and services
Undifferentiated products and services
To identify a firm’s strengths. These are capabilities/ bundle of assets and skills that can be used to exploit opportunities, combat threats and overcome weakness. A strength could be:
Your specialist marketing expertise
Quality products
New innovative products or services.
To develop strategies that can enable a company to cope with the ever changing environment
Components of the marketing Environment
The marketing environment can be divided into two components namely:
The micro-environment
The macro-environment
The micro-Environment
This can be subdividing into two;
The internal environment
The external environment
The internal environment
This consists of those forces within the company, i.e. firm’s capabilities or bundle of assets and skills possessed by the company. They include:
Marketing programmes
Financial resources
Research and development
Purchasing
Manufacturing, etc
These reveal a firm’s strengths and weaknesses.
The external environment
These consist of the actors and forces in the company’s immediate environment that affects its ability to serve its markets. Such force include the company’s
Suppliers
Marketing intermediaries
Customers
Competition and
The publics
These comprise the core marketing system of the company in its efforts to meet its primary goal of profitability and customer’s satisfaction.
The Macro-Environment
This consists of the larger societal forces that affect a company’s micro-environment.
They include:-
The demographic environment
Economic environment
The physical environment
Technological environment
Political / legal environment
The socio-cultural forces/environment.
These force represent the uncontrollable marketing variables that the company must monitor and respond to
The Macro and the external Micro-Environment both pose threats and spin opportunities from the environment.
EXTERNAL MICRO-ENVIROMENTAL FACTORS
THE SUPPLIERS
These are business firms and individuals who provide resources needed by the company to produce goods and services.
Companies must
Develop specification
Search for suppliers
Qualify them and
Choose those who offer the best mix of
quality
delivery reliability
credit
warranties and
Low costs.
Developments in the suppliers’ environment can have a substantial impact on a company’s marketing operations.
Marketing managers need to watch
i) The price trends of their key inputs
ii) Supply availability i.e. continuity
Marketing managers should avoid over relying on one supplier.
MARKETING INTERMEDIARIES
These are firms that aid a company in promoting, selling and distribution of its goods and services to the final buyers. They include:
Middlemen
Physical distribution firms
Marketing service agencies
Financial intermediaries
Middlemen
They are business firms that help the company to sell its goods/services to the final buyers; for example
i) Merchant middlemen – wholesaler and retailers
ii) Agent middlemen – brokers, sales representatives
Physical distribution firms
These firms assist the company in stocking and moving goods from their original location to their destinations. For example
Warehousing firms
Transportation firms
Every company looks for the most effective modes of transportation balancing such consideration as
cost
delivery
speed and
safety
Marketing service agencies
Examples here include:-
marketing research firms
advertising agencies
media firms
marketing consulting firms
They assist the company in targeting and promoting its products to right market.
Financial intermediaries
These include
banks
credit companies
insurance companies
These intermediaries provide financial assistance or insure risk associated with buying and selling of products to companies or marketing organizations.
CUSTOMERS
These are the people that the company sells their goods to also known as the target market. Five types of customers markets exist, namely:-
Consumer markets – individuals and households that buy goods and service for personal consumption
Industrial markets – Organizations that buy goods and service needed for producing other products and services for the purpose of making profits and / or achieving other objectives
Reseller markets – Organizations that buy goods and service for the purpose of reselling them at a profit.
Government and non profits markets – they buy goods and service in order to provide public services or to transfer these goods and service to others who need them.
International markets – buyers found abroad including foreign customers, producers, resellers and governments.
Examples include:
Banks
Personal customers markets
Trust department markets
Business customers
Profit customers – high earner members e.g. estate agents and stock brokers
Importers and expositors.
NB
Each customer group exhibits specific characteristics that warrant careful study by the seller.
COMPETITORS
A company rarely stands alone in its efforts to service a given market. It is surrounded and affected by a host of competitors. The competitors have to be identified, monitored and outmaneuvered to capture and maintain customer loyalty.
PUBLICS
A public is a group that has actual or potential interest in or impact on a company’s ability to achieve its objectives
A public can facilitate or impede a company’s ability to achieve its goals. The wise company takes concrete steps to manage successful relations with its key publics.
Every company faces several important publics
Financial publics – financial institutions affect the company’s ability to obtain funds. Examples of financial instruction include banks, investments houses, stock broker firms and insurance companies.
Media publics – companies must activate the goodwill of media organizations, such as newspapers, magazines, radio and television stations in order to set more and better media coverage in the form of favorable news features and editorial comments
Government publics – companies need to take government developments into account in formulation of marketing plans
Citizen action public/ lobby groups / pressure groups – company’s market practices may be questioned by consumer organizations, environmental groups, minority groups, etc.
Local publics – every company faces local publics for example neighborhood residents and community organizations. Companies must deal with community issues, attend meetings, answer questions, and make contribution to worthwhile causes.
General public – A company needs to be concerned with the general public’s attitude toward its products and practices. The public image of the company affects its patronage.
Internal publics – a company’s internal publics include blue collar workers, while collar workers, managers etc. companies should spend time monitoring all its publics, understanding their needs and opinions and dealing with them constructively.

THE MACRO-ENVIRONMENT
The Demographic Environment-
This refers to the study of population. The environment is important in crafting marketing strategy. The variables to consider include: