The Dynamic Environment
Since the business environment is constantly changing and customer preferences keep evolving, marketers are required to adapt rapidly.
Contrast the ever-evolving characteristics of a micro and macro marketing environments and how they apply to the proactivity, profitability and viability of a company
- The micro-environment includes the company itself, its suppliers, marketing intermediaries, customer markets, and competitors. It also includes consumers, collaborators, and centers of influence.
- The macro-environment includes concepts such as demography, economy, natural forces, technology, politics, and culture.
- Proactive attention to the environment allows marketers to prosper by efficiently marketing in areas with the greatest customer potential. It is important to place equal emphasis on both the macro and micro-environment and to react accordingly to changes within them.
- Reactive attention to the environment by marketers can lead to a disconnect with potential customers and can allow competitors to gain advantages that will win them a higher market share.
- demography: the study of human populations, and how they change
- marketing environment: The factors and forces that affect a firm’s ability to build and maintain successful relationships with customers.
- macro environment: Larger societal forces that affect the micro-environment.
- micro environment: Small forces that are close to the company that affect its ability to serve its customers.
The Dynamic Environment
A successful marketing campaign increases a company’s profits and helps it reach its strategic goals. However, there are challenges to marketing because the business environment is constantly changing. Customer preferences and attitudes keep evolving and require managers to adapt rapidly. Another challenge involves reaching different target markets with culturally relevant propositions. McDonald’s is said to be a good example of a company that can effectively reach a diverse audience.
Proactive attention to the environment allows marketers to prosper by efficiently marketing in areas with the greatest customer potential. It is important to place equal emphasis on both the macro and micro-environment and to react accordingly to changes within them. Reactive attention to the environment by marketers can lead to a disconnect with potential customers and can allow competitors to gain advantages that will win them a higher market share.
The Marketing Environment
Two key levels of the marketing environment are the micro-environment and the macro-environment.
The micro-environment includes the company itself, its suppliers, marketing intermediaries, customer markets, and competitors. It also includes consumers, collaborators, and centers of influence.
The company aspect of micro-environment refers to the internal environment of the company. Each internal department has an impact on marketing decisions. For example, Research and Development (R & D) has input on the features a product can have, and accounting approves the financial side of marketing plans and budgets.
The suppliers of a company are also a part of the micro-environment because even the slightest delay in receiving supplies can result in customer dissatisfaction. Examples of suppliers for such companies as automobile manufacturers would include providers of steel, aluminum, leather, and even audio system manufacturers.
Marketing intermediaries refer to the people that help the company promote, sell, and distribute its products to final buyers. Examples include wholesalers, and retailers such as Wal-Mart, Target, and Best Buy. Physical distribution firms are places that store and transport the company’s product from its origin to its destination. Examples include food distributors, such as Food Services of America.
Customer markets can include consumer markets, business markets, government markets, international markets, and reseller markets. The consumer market is made up of individuals who buy goods and services for their own personal use. Business markets include those that buy goods and services for use in producing their own products.
Competitors include companies with similar offerings for goods and services. To remain competitive, a company must consider who their biggest competitors are and simultaneously consider its own size and position in the industry. The company should aim to develop a strategic advantage over their competitors.
Collaborators are key marketing partners that lead to higher efficiency. Examples of collaborators include shipping providers, credit card processors, or online shopping cart providers. Centers of influence are also key to successful marketing relationships. These are well-established business people who are good networkers that can lead you to other successful marketing relationships.
The macro-environment includes concepts such as demography, economy, natural forces, technology, politics, and culture.
Demography refers to studying human populations in terms of size, density, location, age, gender, race, and occupation. This helps to divide the population into market segments which can be beneficial to a marketer in deciding how to tailor their marketing plan to attract that demographic.
The economic environment refers to the purchasing power of potential customers and the ways in which people spend their money. Within this area are subsistence economies and industrialized economies. Subsistence economies are based on agriculture and consume their own industrial output. Industrial economies have markets that are diverse and carry many different types of goods. Each is important to the marketer because each has a highly different spending pattern as well as a different distribution of wealth.
The natural environment includes the natural resources that a company uses as inputs. As raw materials become increasingly scarcer, the ability to create a company’s product gets much harder.
Technology includes all developments from antibiotics and surgery to nuclear missiles and chemical weapons to automobiles and credit cards. As these markets develop, it can create new markets and new uses for products. It also requires a company to stay ahead of others and update their own technology.
The political environment includes all the laws, government agencies, and groups that influence or limit organizations and individuals within a society. It is important for marketers to be aware of these restrictions as they can be complex and can change often. For example, regulations on packaging, such as the necessary inclusion of ingredients for food products or the limitation on product capability claims, must be understood by marketers to avoid negative public perception or sanctions.
The cultural environment consists of institutions and the basic values and beliefs of a group of people. The values can also be further categorized into core beliefs, which are passed on from generation to generation and are very difficult to change, and secondary beliefs, which tend to be easier to influence. As a marketer, it is important to know the difference between the two and to focus your marketing campaign to reflect the values of a target audience.