Effect of the Marketing Environment on Company Strategy
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I . INTRO
Economics today has a term of market environment which involves points and impacts permitting a business to create sucessful relationship with customers as well as to keep it lasting longer. The market enviroment can be categorized into two levels: micro and macro.
The first one refers to small impacts in the business with the affection of serving the company customers, whereas the second one has larger societial impacts on the mirco environment.
As a result, both of them differ from many points. The organizations, suppliers, customers market,and the intermediaries and competitors are concerned in the micro environment. On the contrary, the Macro environment involves such factors as Demographic, natural, technological, cultural, political, and economics effects. However, these can be altered by the variety of many kinds of companies.
All companies are affected by macro environmental factors which form chances and threats in the business environment. Such elements often leaving a mark on long – term strategic management, or even the goals of a firm as prior research and innovation, political stability changes or cultural framework are difinited as macro factors. An environmental analysis are used for look for the existing macro impacts and potential chances carefully by most strategic management modals. Moreover, a situation analysis assess the impacts related to internal factors, for the purpose of forming an separate firm’s restrictions and competitiveness.
In contrast, Micro economics has the environmental factors which is less popular than the Maro, only resulting in a particular sector of companies or industry. They can be listed as competition, suppliers, customer, and labour and competition. To understand the micro environment, the firms apply the “Porter’s Five Forces” sample as an industrial analysis. This makes management strategy more powerful to against alters in micro factors because those can have a strong impact on the entire industry.
2. External Environment analysis
2.1. Macro Environment
2.1.1. Political and Legislation
Developments in political and legal field greatly affect the marketing decisions. sound marketing decision cannot be taken without taking into account, the government agencies, political party in power and in opposition their ideologies, pressuregroups, and laws of the land. These variables create tremendous pressures on marketing management. Laws affect production capacity, capability, product design, pricing and promotion. Government in almost all the country intervenes in marketing process irrespective of their political ideologies.
The political environment consists of laws, government agencies, and pressure groups with the power to influence or limit the behavior of individuals and organizations in a given society. Changes within the political and legal arena can affect business. Therefore, it is important for marketers to understand public policy and legislation, and the implications presented for business and marketing.
Legislation can encourage or discourage competition, and it can ensure (or not) fair markets for goods and services. Political corruption can influence marketing success or failure. Over the years, legislation affecting business around the world has increased steadily. Companies must be aware of changes in the political and legal environment so that decision-making can respond to the current political climate, and so that the firm can make any needed adjustments in corporate marketing policy.
In addition to legislation, marketers must understand that many consumer groups are now watching the political and legal landscape as it relates to business, to ensure that business is government by social codes and rules of professional ethics. To demonstratetheirsocial responsibility and build more positive images, many companies are now linking themselves to worthwhile causes.
Legislation from the government can affect markets through the organizations and consumers. Some marketers simply adjust to these political forces. Others try to influence political decisions by supporting politicians that can positively affect them . Industrial Relations laws affecting agreements between organizations and employees.
Federal laws and regulation agencies affect marketing activities and decisions. Laws such as the Trade Practices Act and the Privacy Act set rules, which organizations must abide by or risk suffering penalties and / or punishment. These laws can be enforced by regulatory agencies who also assist in directing rules and regulations.
The economic environment consists of macro-level factors related to means of production and distribution that have an impact on the business of an organization.
Factors within the national and international economic environment can have a resounding effect on consumer purchasing power and spending patterns. Major U. S. economic trends include:
- Personal consumption and personal debt, both of which have risen
- Effects of credit trends and interest rates on buying
- Unemployment and recession forcing consumers to be more careful as shoppers
- Effects/expectations related to value marketing and value-conscious consumers
- Income distribution skewed positively toward the rich; prosperity not evenly distributed among classes
An important factor affecting the short- and long-term economic outlook in the U.S. is prolonged periods of unemployment. Unemployment can exert marked and far-reaching effects on any economy. When millions of people are unemployed, there is less money for spending that can lift the economy. When spending is down, sales taxes will be down as well, further handicapping the economic outlook. Unemployed people, also, tend to cut out buying items they simply want while cutting down on things they need to survive.
Consumers' spending less money leads to businesses having to cut prices, which lessens revenue, leading to more unemployment--at best, and to merchants going out of business--at worst. In addition, the unemployed may have to use or even drain retirement savings. When income tax revenue is down, the government may have to borrow money, or cut back on spending on needed programs. At the same time, more is being spent to pay unemployment benefits, and to provide food and medicaid assistance.
The social costs to individuals include erosion of work skills at the same time that society is being deprived of a lot of good talent. Uninsured individuals also face worsening physical health, leading to shortened life spans.
This concept has crept into marketing literature as an alternative to the marketing concept. The social forces attempt to make the marketing socially responsible. It means that the business firms should take a lead in eliminating socially harmful products and produce only what is beneficial to the society. These are numbers of pressure groups in the society who impose restrictions on the marketing process.
The socio-cultural environment is made up of institutions and other forces that affect a society’s basic values, attitudes, perceptions, preferences, and behaviors. People grow up in a particular society that shapes their basic beliefs and values, helping to establish beliefs and expectations related to how people should behave.
Marketers often segment consumer "target audiences" for products and services based on cultural values. The overriding beliefs and attitudes of a society can change over a period of time due to different environmental factors. Some of these factors might include such things as changing ethnic/racial "mix" of the population, more widespread acceptance and occurrence of single-parent families, and more consumers beginning to desire simpler, more meaningful lives.
Businesses must be able to identify important trends that are driven by the macro environment. They must understand the need to embrace widespread environmental changes and learn how to use them to their advantage.
At the same time, marketing management must know and understand macro-level environmental issues and concerns as well, to be able to use them to predict (with a great degree of accuracy) their possible immediate and long-term impact on consumers' buyer behavior.
The technological environment covers all stuff that used for producing goods and services.Technology shapes our destiny dramatically. It changes the communication way of consumers and marketers. New markets and chances are created by new technologies which also replace itself. Thus, it is true that many old industries are got rid of nowadays. Marketrs must pay special attentions on technologial trends to predict impacts/influences on consumers..
2.2. Micro Environment
Customers of an organization can be varied from one to various markets. Three first common type of market are consumer, business and reseller markets. The first one includes persons and households that consume goods and services personally. The second refers to those who buying good and services for further procession or for use in their production process. The last one is for the aim of profitable reselling. Besides, government market is the term used for illustrating the agencies the buy goods and services to produce public services or transfer those to needed others. Last but not least, those buyers who are consmers, producers, resellers, and governments in other contries also form an international market.
Suppliers mean someone providing the needed resources to a firm to produce products or services. They plays a critically important role in lasting firm’s life. Without suppliers, no value is created and delivered to customers.
Supply availability is the most noticable factor for marketing companies. Since the suppliers are partners in producing and transfering customer value, the firms have to put pricing trends under their consideration.
Those can range from material suppliers to energy suppliers or even suppliers of labour and capital. That means they can vary its competitive position and marketing capabilities. The association between suppliers and the firm may be a perfect example of a strong equation that depends on the industry condition and the the extent to their each other dependence. There are some cases in which the bargaining strength of the suppliers may increase critically. For instance, when the seller company is unique or it supplies important inputs , the choices of buyer company are restricted. Consequently, the seller business strength reachs maximum level.
2.2.3. Financial Institutions
The aftermath of the 2008 global financial crisis witnessed a surge on the discussion of financial stability issues. In some countries the focus of the debate is on the role of the shadow financial system, its relationship with banks, and the regulatory and supervisory failure to address the problem of regulatory arbitrage. In Europe, the main concerns lies on the lack of a European safety net, mainly due to the absence of a European lender of last resort. In emerging countries, however, the discussion is centered around the impact of the crisis on the volatility of capital flows and the architecture of the international financial system. Though some of the phenomena underlying the origins and depth of the financial crisis were either new or located in new instruments and markets, most of the issues that were raised during this episode can be traced back to the first financial crisis of the world. In the following lines, we develop the argument that even though financial stability concerns are as old as financial systems, and despite some of the main lessons of the recent crisis look pretty much alike the lessons of several financial episodes of the past (to which many jurisdictions have already reacted), there are good reasons to highten our concern with financial stability.
2.2.4. Government Agencies
Government agencies’ demands often exceed the needs of a firm’s customer. The government can play numerous roles as stakeholder such as receiving taxation revenue from commercial institutes, getting them to be responsible from the public sector, and achieving many economic and social goals.
Market combines a veriety of competitors. Most companies have to be run sucessfully to take a strategic advantage. Marketing planners are forced to decide the best way to powerfully site the firm’s products and services againts that of competitors. To do that the marketers need put the company’s size and standing into their consideration. What’s more, making differences and keeping them up is a core of any problems so the firm should analyze and check for its competitor carefully. Those are never enough for success. Besides, according to Philip Kotler, the company must create customer value and satisfaction greater than that of its competitors. Hence, markets’ role is more complicated instead of adapting the customers’ needs. The companies must make up their offerings to be greater in customers’ minds than its competiors can do. In the end, competition game never end. In fact, business organizations always compete in both direct and indirect ways.
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 realize 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 organization and if somebody neglect the importance of marketing environment it quite hard for that organization to sustain in market. So in my assignment I have tried to analyze that on what ground marketing environment is based and what effect it has got on an organization .
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