The Importance of understanding “Situation”. The Marketing Environment

The Marketing Environment

An organisations performance in a marketplace depends on how it aligns and interacts with its environment or landscape.

We approach the subject from two viewpoints. The first takes the perspective of the marketing managers degree of influence. At the centre we look at the internal environment being the most controllable or subject to influence. At the extreme we look at the macro environment as being the one with the least possibility for control. The second view is that put by your text (Kotler). This sees the environments under the headings of Economic, Demographic, Ecoligical, Legal/Political, Cultural and Technological.

Whichever way it is characterised it shows the various interacting factors and forces that a firm operates in. They all are all factors that provide a frame of reference within which marketing decisions are made.

Marketing always takes place in some specific context – never in a vacuum.  The firm. Its markets, products and competitors are all integral parts of definite social-physical contexts or environments.  As functional parts of these environments, each has some small effect on the wider complex wholes.  Each part is shaped, constrained and, to some extent, ‘directed’ by the specific environment in which it exists.

The marketing concept is the first premise of a theory about environment.  It identifies that part of the environment of paramount importance to marketers.

The marketing mix is a tool for operating, to maximum effect, on and within complex marketing environments.

Five major environmental areas,encircle the marketing manager:

1. The internal environment – that of the manager’s firm;

2.            the external environment:

divided into four zones:

–  The task environment;

–  The competitive environment;

–  The public environment;

–  The macro environment.

The Internal Environment

This is the firm itself – the immediate operational area of the marketing manager.  It is the zone of “controllable variables” – its centre, those of the marketing mix – the set of product, pricing, distribution, and promotion strategies.

Although it is true to say that all internal variables are under corporate control, in reality, marketing managers do not exercise direct and effective control over all factors in their immediate operational area.  From the standpoint of marketing managers, the internal environment itself represents a sphere of constraints – a sphere in which control must be sought and influence developed.  Their efforts are usually circumscribed by:

– the overall organizational structure of their companies (e.g. They work in vertical command frameworks and on horizontal planes of coordination and cooperation);

– their organization’s stock of resources, physical and intangible – (funds, plant, equipment, technology, skills, information, etc.);

– their firm’s broad corporate objectives (e.g. Pursuit of high short- term profits or long-term growth, expansion of market share or development of new markets, integrated growth or diversification).

The External Environment

The Task Environment

This is inhabited by the agents/institutions directly involved in producing the firm’s products and getting them into the hands of its consumers.  Outside the firm itself there are:

– suppliers,

– marketing intermediaries and facilitators,

– market(s) (consumers).

The task environment

The Competitive Environment

We consider three kinds of competitors.

1. Direct or enterprise competitors

These are marketing in the firm’s chosen segment(s) with other brands of a closely similar product.

2. Product Form competitors

These are members of the same general industry as the firm – say, the apparel industry, food industry, transport industry – producing goods/services of the same general ‘form’.

3. Generic competitors

These are marketers of dissimilar product forms which could conceivably satisfy the same general needs or wants as those served by the firm’s products.

The Public Environment

Marketers are becoming increasingly aware of the need for ‘good PR’, the need to locate quickly, the effect of unfavorable public opinion/relations and the need to develop relations with various ‘publics’ which are favorable to the firm’s marketing operations.

“A public is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives.”  (Kotler, et al., )

Seven major publics can be identified:

– the general public;

– local publics – residents, community groups, officials, etc. In the neighborhood of the firm;

– employee publics;

– government publics;

– financial and supplier publics – sources of investment funds, e.g. Banks, finance houses, shareholders; suppliers and credit givers.

– media publics – the press, tv and radio stations, etc;

– citizen action publics – consumer associations, environmentalist and conservationist groups.

The Macro Environment

This is the broad social environment surrounding the other four zones.  It contains those variables least open to marketing management influence.  The three spheres are as follows:

1. Economic

2. Legal political

3. Cultural

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