Marketing Environment

Maxwell Ranasinghe
B.Sc. ( Business Administration) Hons. MAAT, Attorney at Law, CPM ( New Haven- USA) MSLIM

Marketing Environment
All businesses are not alone in the market place. There are many factors that influence businesses These factors are called the Marketing Environment

Elements of the Marketing Environment

External / Macro Operational/micro

Internal / organisational environment

Internal environment status

Staff Relationships Behavior in dealing with the environm ent

Resource Constraints

Internal Environment

Corporate Culture

Staff Relationships
Relationship among the staff affects the operations of the organisation Management should develop a conducive environment to develop staff relationships Employees should not convey a negative image of the organisation to external sources

 Staff members
The message that is conveyed by staff to others ( third parties) have a big impact rather than the paid advertisements of the organisation Members of the public consider staff members as the authoritative and they are far more likely to believe what staff members say

Therefore an organization must do its internal marketing well to inform the companys policies, and obtain the commitment and loyalty of the staff
Staff is paid salaries by the organisation and staff should act to safeguard the organisations interest for their own benefit too.

 Organizational Structure An organisation in general will have two structures

Formal Structure ( As per the organizational charts who is on the top of the hierarchy, what are the functional departments and who heads them and what they do and how many positions are under them, who is responsible for what and whom is under whom)

 Informal structure
It cannot be shown on an organisational structure formally but there are many informal structures in organisations Friendships, alliances among staff members who go in the bus or train together, who take lunch together, whose wives or family members are friends, who are from the same town or village etc. These relationships are very strong and it could influence for positive and negative aspects in an organisation

 Corporate culture
Culture is a set of shared values, rules, and perceptions in a given society. There are such cultures in organisations too This is called in a company the way we do things around here It has a powerful influence on the actions and behaviors of the members of the staff It is not an easy task to change the organizations culture if it is not conducive for an efficient operation

 Resource Constraints
All organisations operate within a limited amount of resources Men. Material, Money, Machines and Technology are the limiting resources Organisation should use systems where they could get the maximum out of the existing resources The effective and efficient way of adopting resources is the key to success.

Micro Environment
Micro environment is much closer to the marketer than the macro environment It directly deals with the operational environment It comprises of
Suppliers Intermediaries Competitors- Direct and Indirect Customers of a business/marketer Publics

Operational/ Micro Environment

Intermediaries

Suppliers

Micro Environment

Customers

Publics Competitors

Suppliers
Suppliers are called the Supply Chain They could be the suppliers of all the materials and utilities to the marketer to make its value proposition ( product) to the market machines and plants, raw materials, components, stationery, electricity, water, gas, other services, advertising agencies, consultancies, etc Company cannot survive without suppliers Marketers should study about the suppliers capacity, problems to have a good flow of supplies

Intermediaries
Marketing intermediaries- transport and logistics, warehousing, dealers, distributors, wholesale and retail network ( more than 160,000 retail shops for FMCGs) The capacity and the efficiency of the intermediaries are very important for a marketer to serve its customers eg. Walls case They not only distribute but also stock, advertise, provide credit, after sales services, break the bulk, provide information

Competitors
Marketer is not alone in the market. Every action of the marketer has a reaction from the competitors Knowing the competitors, their capacity, ability, future moves, structure and operational systems, objectives, strategies and tactics, will provide so much of ammunition to the marketer to face the challenges in the market place. Simply a SWOT Analysis of Competitors is needed

Michael Porters Five Force Model in analyzing competitors

Customers
Customers are the most important element in the micro environment They can be individuals or organizations A persons who makes the decision to buy the product is called the customer and the person who consumes the product is called the consumer When customer and the consumer are different the marketer have to consider the needs of both Many times customer and the consumer would be the same. Marketer should study the constantly changing needs of the customer and fine tune his value proposition accordingly to satisfy/delight the customer.

Publics
Publics is any group that has an actual or potential impact on an organisations ability to arrive at its objectives Financial Publics- share holders, banks and other finance companies Local Publics- Local groups and individuals Media Publics- newspapers, magazines, radio and TV Government Publics- all govt rules and regulations General Publics- General publics attitude towards companies operations and products

Macro (External) Environment

External environment is the elements in the periphery of the business. These elements are in the larger picture and the marketer has no control over them These elements are very important and have a tremendous influence on the operations of the marketer Marketer has to take all these factors in to consideration

A list of main External Environment factors (PESTEEL)

Political Economic Social and cultural Technological Ecological Ethical Legal

Political and Legal Environment

Ploitical Political stability War and Peace Internal conflicts and struggles Strikes and stoppage of work Globalisation and opening up of markets Political affiliation and support to governments

Economic Environment
General economic condition of the world and the country Income distribution Employment levels and its structure Prices and inflation Boom and recession Balance of trade surplus / deficit Exchange rate and fluctuation Stock market Banking and Credit Import and export duties Saving and investment

Social and Cultural Environment

Society consists of large group of people with shared customs and laws Culture consists of art, thought, and customs, religions, practices of a society at any given time Any society will have its own culture. May be unique or shared or mixed with other cultures. Peoples relationships and behavior will have a major influence of the societies beliefs, values and norms There could be different cultural groups within a society

 Some of the socio cultural factors can be listed as follows

Demographic factors- population structure- age, family size, ethnicity, income, Social Cultural behaviors- languages, religious beliefs, mythology, gender roles, gift giving habits, Social responsibility and ethics The impact of war Role of women in society Attitudes towards credit Concern about health

 The socio- cultural affect will influence peoples attitudes towards buying patterns, living patterns, dress codes, fashion, sports, savings, social behaviors, music, credit, marriage, and many areas of life styles. Marketers have to be aware of them to understand the customers and their behavior

Technological
Technology is changing always Marketers have to be vigilant about it and adapt to change There are so many innovations taking place in the world. Some innovations make products and processors improve dynamically and some times they even replaces the old products and make them obsolete

 What happened to typewriters, LP records, audio and video cassettes, analogue phones What happened to standard post with email and SMS What will happened to CDs Nano technology is knocking doors Genetic engineering Robots doing dangerous factory processors Development of many raw materials and machines Containerization and shipping

Ecological Environment
People have considered planet as a bundle of raw materials that could be used to satisfy the needs of the current generation That has made the exploitation of resources without any barriers As a result we have lost lot of resources and the bio diversity Main ecological issues are: Resource DepletionPollution Concerns- Health Related Concerns Therefore the marketers have to be very careful of the natural environment in their marketing activities such as production processors, usage, consumption and disposal Marketers should have an environment friendly attitude

Ethical Environment
Ethics are moral principles that define right or wrong behavior in marketing Laws are promulgated to safeguard most basic ethics However, there are many other ethics that marketers should adhere to although they are not in existence in the form of law Marketers should have their own self regulatory ethical standards if they are to become good corporate citizens of the society

 Some important ethical issues

Product issues : honest claims about effects of products, use non hazadous raw material and component, additives, declare what is used, indicate nutritious values ( specially food items) and side effects ( specially drugs) Pricing issues : price fixing among competitors, predatory pricing ( pricing below cost to win over competitors) hiding or not divulging the operational cost or price of consumables, charging very high prices

 Promotional issues ; deceptive or misleading advertising, bribery and commissions, unfair advertising, using sex excessively as a strategy in advertising Place issues: blocking distribution channels, extending payment of credit beyond the agreed terms, using underworld elements to obtain orders and block competition

Legal
Criminal and Civil laws will govern many facets of society Especially marketers have to obey and respect them Commercial laws, Company laws employment laws, health and safety laws, Intellectual Property laws, Environment laws, directly affect the marketers, Consumer Protection Laws, Other Religious and Civil Society conventions, rights groups and practices also affect the operation of businesses.

 Read more, discuss with your classmates and enhance your knowledge. This is a very important topic in marketing. Contact Maxwell on maxran1@yahoo.com If you need any help I want everybody to pass the exams with flying colours Good Luck