MARKETING ENVIRONMENT: A company’s marketing environment consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers. The marketing environment is made up of a: Internal Environment: An internal environment is a set of elements that define the atmosphere within the Company’s Structure. It describes the way activities and relationships are carried out inside the business, normally within co-workers. It usually refers to the 5M of the company: Men, Machinery, Material, Method, Money. External Environment: Group of factors or condition that are outside the organization but affect the company in some extent. In business this terms commonly applies to out of control dimensions such as PESTEL. Micro-Environment/Task Environment: Suppliers: Suppliers are firms and individuals that provide the resources needed by the company and its competitors to produce goods and services. An important link to Value delivery system. Marketing Intermediaries: are firms that help the company to promote, sell, and distribute its goods to final buyers. Resellers: are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers who buy and resell merchandise. Physical distribution firms: help the company to stock and move goods from their points of origin to their destinations i.e. Warehouse. Marketing service agencies: (such as marketing research firms, advertising agencies, media firms, etc.) help the company target and promote its products. Financial intermediaries: (such as banks, credit companies, insurance companies, etc.) help finance transactions and insure against risks. Customers: since each market has its own special characteristics. Continued… Consumer markets (individuals and households that buy goods and services for personal consumption). Business markets (buy goods and services for further processing or for use in their production process). Reseller markets (buy goods and services in order to resell them at a profit). Government markets (agencies that buy goods and services in order to produce public services or transfer them to those that need them). International markets (buyers of all types in foreign countries). Competitors: Every company faces a wide range of competitors. A company must secure a strategic advantage over competitors by positioning their offerings to be successful in the marketplace. No single competitive strategy is best for all companies. Publics: A public is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. Financial publics--influence the company’s ability to obtain funds. Media publics--carry news, features, and editorial opinion. Government publics --take developments into account. Citizen-action publics--a company’s decisions are often questioned by consumer organizations. Local publics--includes neighborhood residents and community organizations. Company Company Consumer Markets International Markets Government Markets Business Markets Reseller Markets General publics--a company must be concerned about the general public’s attitude toward its products and services. Internal publics--workers, managers, volunteers, and the board of directors. The Company’s environment: Macro The company and all of the other actors operate in a larger macro environment of forces that shape opportunities and pose threats to the company. There are six major forces (outlined below) in the company’s Continued… macro environment as detailed below: Demographic Environment: Demography is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other statistics. The Economic Environment: The term economic environment refers to all the external economic factors that influence buying habits of consumers and businesses and therefore affect the performance of a company. Macro factors include: Employment/unemployment, Income, Inflation, Interest rates, Tax rates, Currency exchange rate, Saving rates Consumer confidence levels: how optimistic people are about the economy and their ability to find jobs Recessions: a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters. Micro factors include: The size of the available market; Demand for the company’s products or services; Competition; Availability and quality of suppliers; The reliability of the company’s distribution chain (i.e., how it gets products to customers) Natural Environment: The natural environment involves natural resources that are needed as inputs by marketers or that are affected by marketing activities. Some trend analysis labeled the specific areas of concern: Shortage of raw material Increased pollution Government intervention Environmental sustainable strategies Technological Environment: The technological environment includes forces that create new technologies, creating new product and market opportunities. Political Environment: The political environment includes laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society. Some political trends includes: Continued… Protect companies from each other; Protect consumer from unfair business; Protect interest of society; Doing the right thing; Ethics and; social responsibility; Privacy concerns Pressure groups: An interest group that works within the legal framework to influence organization to behave in a particular way. Cultural Environment: The cultural environment is made up of institutions and other forces that affect society’s basic values, perceptions, preferences, and behaviors. Certain cultural characteristics can affect marketing decision-making. Additional points: Labor Market (Task Environment): the people available for hire by the organization. Organization-Environment Relationship Environmental Uncertainty: Organization must manage environmental uncertainty to be effective. Uncertainty means that manager know what goal they wish to achieve, but information about alternatives and future events is incomplete. To basic strategies to cope up with high environmental uncertainties are: Adapting to the Environment: If the organization faces increased uncertainty with respect to external environment: manager can use several strategies to adapt to these changes including: Boundary spanning roles: interact with individuals and groups outside the organization to obtain valuable information to help the innovation process. It allows a company to gain more innovation information from other businesses. Role assumed by people and organization that link and coordinate with key elements in organization. Forecasting and planning: it is an effort to spot trends that enable managers to predict future events. Forecasting techniques range from quantitative e economic models of environmental business to newspaper clipping services. Continued… Flexible Structure: An organization’s structure should enable it to respond effectively to shifts in the environment. Organic Structure: is an organized structure that is free flowing, has few rules and regulation, encourages employee teamwork and decentralizes decision making to employees doing Jobs. Mechanistic Structure: is characterized by rigidly defined tasks, many rules and regulation, little teamwork and centralized decision making. Mergers: are major factors in an organization’s external environment adaption. A merger is always a way to reduce uncertainty. A mergers occurs two or more organizations combine to become one. Join Venture: involves a strategic alliance or programme by two or more organizations. This typically occurs when the project is too complex, expensive or uncertain for one firm to do alone. Influencing the Environment: strategy to reach out and change those elements causing problems. Techniques organization use to adapt to and influence the external environment are: Advertising: it has become a very successful way to manage demand for an organization’s product or services. Organization spends large amounts of money to influence consumer’s taste. Public relations: is similar to advertising, except that its goal is to influence public opinion about organization itself. Political Activity: represent organizational attempts to influence government legislation and regulation. Trade Association: most organizations join with others having similar interest; the result is trade association. In this way they work together to influence the environment. Internal Environment and Culture The internal environment: within which manager’s work includes corporate culture, production technology, organizational structure and physical facilities. Of these, corporate culture has surfaced as Continued… extremely important to competitive advantage. The internal culture must fit the needs of the external environment and organizational strategy. When this fit occurs, committed employees create high performance organization that is hard to beat. Culture: can be defined as set of key values, beliefs, understandings and norms shared by members of organization. The concept of culture helps managers to understand the hidden, complex aspect of organizational lfe. Culture is pattern of shared values and assumptions about how things are done within organization. This pattern is learnt by members as they cope with external and internal problems, and is taught to new members as the correct way to perceive, think and feel. Culture can be analyzed at three level. 1. Visible: Artifacts, such as dress, official layout, symbols, slogans and ceremonies. 2. Invisible: Expressed values 3. Invisible: understanding assumptions and deep belief. Symbol: An object, act or event that conveys meaning to others. Stories: A narrative based on true events that is repeater frequently and shared by organizational employee. Heroes: A figure who exemplifies the deeds, character and attributes of strong corporate culture. Slogans: A phrase that succinctly express a key corporate value. It can be discerned in written public statements. Ceremony: Managers holds ceremonies to provide dramatic examples of organization values. Environment and Culture Adaptive corporate culture: Visibly: Managers pay close attention to al their constituents, especially customers, and initiate change when needed to serve their legitimate interest, and it entails taking some risk. Expressed values: Managers care deeply about customers, stockholders and employees. They also strongly value people and processed that can create useful change. leadership Un-adaptive Culture: Visibly: Managers tend to behave somewhat insularly, politically and bureaucratically. As a result they do not change their strategies quicky to take advantage of changes in their business environment. Expressed values: Managers care mainly about themselves, their immediate work group/products association. They value the orderly & risk-reducing process than leadership initiatives. Types of Culture: Sporting team culture: emerges in an environment with high-risk decision making and quick feedback. Club Culture: is characterized by loyalty, commitment, & fitting into the group. This stable, secure environment value ages, experiences & rewards seniority. Academy culture: hires young recruits interested in a long-term association & a slow, steady climb up Fortress Culture: offers little Job security for professional growth, while company restructures and downsizes to fit the new environment. Shaping culture for 21st Century: Symbolic leaders influence culture by use of artifacts i.e. public statement, ceremonies, heroes, symbols & slogans. Manager must be symbolic and learn how to influence cultural assumptions. Changing culture is not easy but through manager’s words and actions symbolic leader can portray. Shaping CC for innovative response QC. Focuses on QD represent high bottom line performance results & pay no culture. attention to the org. values QA pays little QB are highly or no attention focused on strong to either values culture but does or business not tie values to results and is organizational likely to survive Goals/results. Cultural Leadership: Managers shape cultural norms and values to build high performance culture by cultural leadership i.e. manager must over communicate to ensure that employees understand new culture values, and they signal these values in action as well as words.
