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Macro Micro Environments

I have chosen Marketing Environment as my topic for the assignment. This assignment is about how Marketing environment works and what their effects are.

Definition of Marketing

A general definition of marketing is “the act or process of buying and selling in a market”.

According to John Saunders and Veronica Wong “A social and managerial process by which individuals and group obtain what they need and want through creating and exchanging products and value with others. (Philip Kotler 1999)

American marketing association define marketing as, the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create (Ref: http://www.websitemarketingplan.com/Arts/MktgChange.htm)

The all-embracing function that link to business with the customer needs and want in order to get the right product to the right place at the right time. . (Ref http://www.tutor2u.net/business/marketing/what_is_marketing.asp)

Adrian Palmer in his book defines marketing as “The management process which identifies, anticipates a supplies customer requirements efficiently and profitably”. (Adrian Palmer 2004).

This diagram will summarises the key elements of marketing an their relationships :( Ref: http://www.tutor2u.net/business/marketing/what_is_marketing.asp)

Introduction about marketing environments

A company marketing environment consists of the actor and forces outside marketing that affect marketing management’s ability to develop and maintain successful transaction with its target customer. The marketing environment offers both opportunities and threats. (Philip kotler 1999).

The marketing environment surrounds and impacts upon the organization. There are three key perspectives on the marketing environment, namely the 'macro-environment,' the 'micro-environment' and the 'internal environment'.

(Ref: http://marketingteacher.com/Lessons/lesson_marketing_environment.htm)

The environments in which you will have to market your new product are a major factor in determining your strategy. In a real-life Marketing Plan you would spend a solid amount of time researching these environments. For the purpose of your Marketing Plan, do enough informal and secondary research to have a good idea of what will affect your product launch.  (Ref: http://www.atkinson.yorku.ca/~lripley/imUenviron.htm)

Basically first we have to realise that what Marketing environment is? The marketing environment can be defined as everything that surrounds an organization’s marketing function and can impinge on it .Basically Marketing environment is based upon Macro and Micro environment. The effect which we get immediately or you can say directly those things comes in Micro environment such as birth rate may seems inconsequential now, but could have a direct effect on a firm’s Micro environment, expreesed through demand for its product. The forces which are going to be occur in future these types of changes are called Macro-Environment or you can say that Macro environment consists of larger societal forces that could effect the Micro environment it can be demographic, economical, culture and technology. Basically the whole marking environment revolves around Macro and Micro Environment.

Marketing environment is based on Micro-Environment and Macro-Environment.

Micro Environments

The Micro environment consists of the forces close to the company that affect its ability to serve its customer-the company, supplies ,marketing, channel firms, customer markets, competitors and publics.(Kotler/ Armstrong 1999)

This environment influences the organization directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small, but this can be misleading. In this context, micro describes the relationship between firms and the driving forces that control this relationship. It is a more local relationship, and the firm may exercise a degree of influence.

(Ref: http://marketingteacher.com/Lessons/lesson_marketing_environment.htm)

The Company

In designing marketing plans, marketing management should take other company groups, such as top management, finance, research and development(R and D), purchasing, manufacturing and accounting, into consideration .All these interrelate groups form the internal environments. Top managements set the company’s mission, objectives boar strategies and policies. (Philip kotler 1999)

The Marketing Concept tells us that in an ideal world, the whole company will work together to profitably meet the needs of the consumer. As the Marketing Manager for a new product, you have to deal with things over which you have some direct control - the product itself, its price, its promotion, and where it is sold (distribution/place). It also means that you cannot just work within the walls of the Marketing Department; you have to get out and talk to the rest of the company, break down the artificial barriers that keep a company from working as a team. This will include all other functional areas of the company that touch on any issues of analysis, planning, implementation and control, and this means pretty much everyone.

(Ref: http://www.atkinson.yorku.ca/~lripley/imUenviron.htm)

The Marketing Concept tells us that in an ideal world, the whole company will work together to profitably meet the needs of the consumer. As the Marketing Manager for a new product, you have to deal with things over which you have some direct control - the product itself, its price, its promotion, and where it is sold (distribution/place). It also means that you cannot just work within the walls of the Marketing Department; you have to get out and talk to the rest of the company, break down the artificial barriers that keep a company from working as a team. This will include all other functional areas of the company that touch on any issues of analysis, planning, implementation and control, and this means pretty much everyone.

(Ref: http://www.atkinson.yorku.ca/~lripley/imUenviron.htm)

Suppliers

Suppliers are an important link in the company’s overall customer “value delivery system”. They provide the resources needed by the company to produce its goods and services.

Supplier developments can seriously affect marketing. Marketing managers must watch supply availability-supply shortage or delays, labour strikes and other events can cost sales in the short run and damage customer satisfaction in the long run. Marketing managers must also monitor the price trends of their key input. Rising supply costs may force price increase that can harm the company’s sales volume. (Philip kotler 1999)

Increase in raw material prices will have a knock on affect on the marketing mix strategy of an organisation. Prices may be forced up as a result. Closer supplier relationships are one way of ensuring competitive and quality products for an organisation . (Ref :( http://learnmarketing.net/microenvironment.htm)

These provide an organisation with goods services are transformed by the organisation into value-added products for customer. For companies operating in highly competitive markets where differentiation between products is minimal, obtaining supplies at the best possible price may be vital in order to be able to pass on cost saving in the form of lower prices charged to customer. Where reliability of delivery to customer is crucial, unreliable suppliers may thwart a manufacture’s marketing efforts. (Adrian palmer 2004)

Taking into account the needs of suppliers entails combination of shrewd business sense and good ethical practice. (Adrian Palmer 2004).

Marketing Intermediaries

We always say that all four of Marketing's P's are equally important, but Place (channels of distribution) is perhaps most crucial. (Ref: http://www.atkinson.yorku.ca/~lripley/imUenviron.htm)~

Price

We've all bought something that was more than we wanted to pay for it, but we wanted it and so we bought it (paying $8.50 to park in Parking Structure II when you already pay a hefty fee for a yearly parking pass, but in another area of campus)

Product

We've all bought something that wasn't quite right but we had to have it and so we took what was there (your new car has everything you want but not automatic windows and you decide to get it anyway)

Promotion

The sad thing here is that advertising research shows that often we remember products BETTER when we hate their ads, and when we go to the store, we may forget that we hate the ad but we remember the product enough to buy it

Place

But no one has ever bought something that wasn't there to buy; we're not talking here about ordering something that has run out of stock, or buying on the Internet where you don't see a physical product, but rather of a situation where the good simply wasn't available to be bought

Marketing intermediaries are firms that help the company to promote, sell and distribute its goods to final buyers. They include resellers, physical distribution firms, marketing services agencies and financial intermediaries. (Veronica Wong 1999)

Resellers

They are the distribution channel firms that help the company find customer or make sales to them. These include wholesalers and retailers which buy and resell merchandise. (Philip kotler 1999)

Companies must not ignore the wholesalers, retailers and agent who may be curial interfaces between themselves and their final consumers. Large-scale manufacturing firms usually find it difficult to deal with each one of their final consumers individually, so they choose instead to sell their product through intermediaries. In some business sectors access to effective intermediaries can be curial for marketing success. For-example, food manufactures who don’t get shelf space in the major supermarkets may fin it difficult to achieve large-volume sales. (Adrian palmer 2004).

Customers

Simple and easy definition of customer “Organisations survive on the basis of meeting the needs, wants and providing benefits for their customers. Failure to do so will result in a failed business strategy” Ref :( http://learnmarketing.net/microenvironment.htm)

We can define customer into following categories:-

Consumer - individuals and households that buy goods and services for their own personal consumption.

Business - also known as Industrial markets or B2B markets, they buy goods and services for further processing or for use in their own production process.

Reseller - buy goods and services for repackaging and selling at a profit.

Government - buy goods and services to produce public services or transfer them to needy constituents. The number-one user of advertising in Canada is the government

International - buyers in other countries.

(Ref: http://www.atkinson.yorku.ca/~lripley/imUenviron.htm)

These are a crucial part of an organization’s micro-enviroment. For a commercial organization, no customer means no business. An organisation about the changing requirement of its customer and should keep in touch with these changing needs by using an appropriate information gathering system. In an ideal world, an organization should know its customer so well that it is able to predict what they will require next, rather than wait until it is possibly too late and then follow.

In each of these cases most people might agree that, objectively, buyers are being persuaded to make a choice against their own long-term self-interst. But on what moral grounds, can society say that consumer’s choices in this situation are wrong? According to some individual’s sense of priorities, an expensive in-car music system may indeed be considered to offer a higher level of personal benefit than an airbag. (Ref: Adrian Palmer 2004)

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Competitors

The name of the game in marketing is differentiation. What benefit can the organisation offer which is better then their competitors? Can they sustain this differentiation over a period of time from their competitors? Competitor analysis and monitoring is crucial if an organisation is to maintain its position within the market. (Ref: http://learnmarketing.net/microenvironment.htm)

The marketing concept states that, to be successful, a company must provide greater customer value and satisfaction than its competitor’s do. Thus, markets must do more than simply adapt to the needs of target consumers. They must also gain strategic advantage by positioning their offering strongly against competitors `s offering in the minds of consumer’s. (Philip kotler 1999)

THERE IS ALMOST* ALWAYS COMPETITION If you are producing something that has never been made before, for which you can find no direct competition, then your competition is just at a broader level. You can NEVER say that you have NO competition. In one class, a group came up with an idea for a device for a car that did not exist at the time (it now does - a computer assisted map device to tell you where you are). They thought they had no competition until they realized that a car buyer would have to choose between their expensive product and say, an upgraded stereo system, leather bucket seats, tinted windows.... there is ALWAYS a competitor for your potential customer's money. What you choose to consider your direct competition makes all the difference in what your marketing strategy will be . Ref :( http://www.atkinson.yorku.ca/~lripley/imUenviron.htm)

Government:-

The demands of government agencies often take precedence over the needs of a company’s customer. Goverment has a number of roles to play as stakeholder in commercial organisations:

Macro Environment:-

The simple and understandable definition of Macro environment “The macro environments are for the most part uncontrollable by the company. Things happen and the company must be prepared to react. (Ref: http://www.atkinson.yorku.ca/~lripley/imUenviron.htm)

Now we are going to define some aspect of Macro environment:-

Political:-

Political factors can have a direct impact on the way business operates. Decisions made by government affect our every day lives and can come in the form of policy or legislation.  The government’s introduction of a statutory minimum wage affects all businesses, as do consumer and health and safety laws and so on. The current increase in global petrol prices is having a profound impact on major economies, it is estimated that £200bn has been added to the global fuel bill since the price increases started (BBC news 19/9/00).

The political decision as to whether the UK signs up to the Single European Currency are again having an impact on UK businesses.  Firms like Nissan who have recently invested in the UK have signalled that they will withdraw their business from the UK if the government fails to sign up (Ref: - http://learnmarketing.net/environment.htm).

Economical:-

All businesses are affected by economical factors nationally and globally. Interest rate policy and fiscal policy will have to be set accordingly. Within the UK the climate of the economy dictates how consumer may behave within society. Whether an economy is in a boom, recession or recovery will also affect consumer confidence and behaviour.

An economy which is booming is characterised by certain variables. Unemployment is low, job confidence is high, and because of this confidence spending by consumers is also high. This has an impact on most businesses. Organisations have to be able to keep up with the increased demand if they are to increase turnover. An economy which is in a recession is characterised by high unemployment, and low confidence. Because of high unemployment spending is low; confidence about job security is also low. Businesses face a tough time, consumers will not spend because of low disposable income. Many businesses start cutting back on costs i.e. Labour, introduce shorter weeks and cut back on advertising to save money. (Kotler, 1999)

Case: In the early 1990’s when the UK economy was in a slump, and businesses were folding repeatedly, a security company called ‘Dreadlocks security’ to combat falling sales embarked on strategy of cutting back on labour costs, and doubling advertising expenditure. The companies’ theory was that not their entire target segment was affected by the recession and he had to fight for the customers that still had the income to spend on security products.

Economies globally also have an impact on UK businesses, cheaper labour abroad affects the competitiveness of UK products nationally and globally.  An increase in interest rates in the USA will affect the share price of UK stocks or adverse weather conditions in India may affect the price of tea.

A truly global player has to be aware of economic conditions across all borders and ensure they employ strategies and tactics that their protects their business. (Ref: - http://learnmarketing.net/environment.htm)

Social & Cultural Environment:

I think Society & cultural Environment is the most important aspect of marketing because if you are launching any product in any country. First you have to look at how things work in that country, what their tradition & culture are. So, culture plays an important role in increasing yours profit graph and in achieving your goals.

The “Social & cultural environment” is made of institution and other forces that affects society’s basic values, perception, prefences, and behaviours. People grow up in a particular society that shape their basic beliefs and values. They absorb a world view that defines their relationship with others. (Ref: Armstrong & kotler 2005)

Institution and other forces that affect society basic values, perception, preferences and behaviour come in “society and cultural environment”. (Ref: Kotler & Armstrong, 1999)

As I have already told that culture is an important aspect in marketing so by this case study it is clear that how culture effects marketing.

Case study: - Mecca Cola (No more stupid drink-drink with commitment)

“The launch of culturally distinctive product such as Mecca-Cola challenge marketing plans which are based on assumption of cultural convergence.” Rival Coca Cola has spent many years becoming a market leader in many of the market that it serves. In some developing countries, Coke has acquired significance as a representation of a western-life style. However, in 2002 the rival Mecca-Cola launches its slogan “No more stupid drink-drink with commitment”, and challenge some of the cultural values that underlie Coke’s success. Mecca Cola promises to put back profits into the communities that it serves (Ref: Adrian Palmer, 2004)

If we compare Coke and Mecca-Cola in some Muslim countries like “Pakistan”. We can easily figure out that Mecca-Cola has overcome Coke although Coke is one of the leading companies but the thing that matter is culture. The main thing that Mecca-Cola did was that they focused on culture. They knew that they can’t compete Coke internationally but they knew that they can compete in Muslim countries with the help of the culture. So they did this thing and they captured the market.

The demographic environment:

Demography is the study of human population in term of size, density, location, age, gender, race, occupation and other statistics. The demographic environment is of considerable interest to marketers because it involves people, and people make up markets. (Ref: Kotler & Armstrong, 1999)

The study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. (Ref: Armstrong & kotler, 2005)

Here we discuss the most important demographic characteristics and trends in the largest world markets.

Population size and Growth Trend:-

Population growth trend because they can offer marketers an indication of demand for certain goods and services. A “Baby Boom` would suggest growing demand for infant foods, nursery appliances, maternity services, baby clothing, toys and so forth, in the short to medium term, with rising demands for family-size accommodation, larger cars, schools and educational services over the longer term. Difference in population growth patterns between country markets may also suggest different international marketing opportunities for firms.

The changing family:-

The notion of an ideal family-dad, mum and two kids- has already been losing some of its lustre. People are marrying later and having fewer children. The specific figures may vary among countries, but the general trend is toward fewer married couples with children. In fact, couples with no children under 18 now make up a high proportion of all families. These are worrying trends too for wealthy Asian countries like Singapore, Japan and Hong Kong. (Ref: Kotler & Armstrong, 1999)

Increasing Diversity:

The ethnic composition of the UK population has become increasingly diverse. The Office for National Statistics has estimated that almost 60% of the 4.3 million population increase expected to occur between 2000 and 2025 will be accounted for by inward migration. Ethnic diversity has created new opportunities to cater for ethnic prefences in fields as diverse as food, travel and music. (Ref:-Adrian Palmer, 2004)

Conclusion:

In this assignment I have tried to figure out what marketing environment is and does marketing environment really affect the company strategy. Basically Marketing environment is divided into Micro-environment and Macro-environment. Micro-environment influences may demand urgent attention, but Macro-environment influences can have a more profound long-term effect on an organization’s marketing. Marketing environment gives us lot of opportunities as well as we have got lots of threat. It’s true that marketing has got both option but I think that every organization has got a lot to do with marketing environment because every giant and vital companies knows the vital importance of their marketing research and intelligence to watch and adopt the changing marketing environment. The question is what happens to those companies who don’t realise the importance of marketing environment? It’s so simple you can see IBM and General Motors they ignored the environmental changes and now they are in crises. Actually marketing environment takes place with a board system of economic, social and technology relationships. In marketing environment a firm creates its value through interaction with other individuals and organization to make up marketing environment. You can’t divide marketing environment into distinct areas .A good firms seeks to understand the complex linkage between different parts of marketing environment. Marketing environment is acting as a pillar for the organisation and if somebody neglect the importance of marketing environment it quite hard for that organisation to sustain in market. So in my assignment I have tried to analyse that on what ground marketing environment is based and what effect it has got on an organization.

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