Analysis of Marketing Environment

Marketing is the management process that identifies, anticipates and satisfies the consumer requirements and needs. It is a process by which organizations create value for consumers and build a strong customer relationship in order to gain value from customers as a result.

A companys marketing environment consist of the factors and forces which affect marketing management’s ability to build and sustain successful relationship with customers. Since the environment continues to change rapidly, companies must constantly watch and adapt to the changing environment. They do this by collecting information through market intelligence and market research. In addition, they spent time in the customer’s and competitor’s environment. By carefully studying the environment, marketers can, marketers can adopt their strategies to meet new workplaces, challenges and opportunities.

Marketing Intelligence

This is the use of Information that is publicly available for example, advertisements and annual report so as to gather information.

Marketing research

This means going specifically to the field and conduct a research.

There two types of market environments which include the Micro environment and Macro Environment. The micro environment consists of factors close to the organization that influence its ability to serve customers. This includes; the company itself, owners, suppliers and creditors, marketing intermediaries and customer markets.

Company itself

When designing marketing plans, marketing management takes into account other company groups for instance the top management. Also sets the company’s mission, broad strategies, objectives, and policies that guide marketing managers to make decisions.

Also included here are management structures, leadership styles used and organizational culture e.g. adoptive to change. These affect the competitiveness of the company and its ability to provide superior customer value and satisfaction.

Resources

Intangible resources may include; location suitability, public image or reputation and research and development. Tangible resources may include; financial and equipment, employee skills and management employee attitude.

Suppliers

Suppliers provide the resources required by the organization to provide its goods and services. Therefore, they are important link in the organization’s overall customer value delivery scheme. Marketing management should watch availability of supply. Labor strikes, supply shortages or delays, and other events that could cost sales and damage customers’ satisfaction at last.

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Marketing intermediaries

These are organizations that help the company sell, promote, and distribute its merchandise to final consumers. They include physical financial intermediaries, distribution firms, resellers, and marketing service agents. The business must associate effectively with marketing intermediaries in order to maximize the performance of the whole system.

Customers

The company needs to study the type of customer markets and their characteristics closely. Legal customers are a major strength to the company .a company can create loyalty through customer relationship management.

Competitors

Competitors must first identify who their competitors are. They must then access their objectives, strategies, weakness and strengths. Through this they can achieve strategic advantage by placing their offering strongly against their competitors.

Public

Public is a group which has actual/potential interest or effect on an organization’s ability to realize its objectives. They include; newspapers, local public, community organizations, employees and the general public.

Macro Environment

These are the sources of opportunities and threats. They include; political, economical, social cultural, technology and ecological factors.

Political or legal factors.

The effects of these factors come about due to laws and regulations of a particular country, political suitability which boosts the investor confidence and tax rates. They directly affect the marketing strategies being implemented.

Economic factors

This is the level of economic growth of a particular country. The indicators of economic growth may include; unemployment levels, level of production in a country, personal income levels and infrastructure. Economic growth of a country will affect the price, product variety hat is people may want a variety of products since they can afford and improved infrastructure.

Inflation is also another type of economic factor. Inflation may lead to increase of general levels of prices of products over a specified period of time. This is due to particular events which increase cost of production and strong consumer demand coursing shortages.

Interest rate which is the cost of borrowing money is another economic factor affecting the market. This also affects the prices of products due to increased production prices.

Social cultural factors

Social cultural factors include; social institutions, believes, lifestyle, values, standard of living, demographics (population, age, income, education levels) and changing consumer preferences.

Social classes may affect products’ prices and also product varieties. Population also may affect the kind of product in terms of the kind of people i.e. the youth, the children and the old age who have different need, wants and preferences. It may also affect the ‘place’. Certain products for instance, are taken to places frequented by the youths.

Technology

The effects of technology can be seen in production, marketing and personal research. Companies must remain at par when it comes to technology or else they may become obsolete. Specific effects of technology may be seen in; quality products, lower cost of production and promotion, ecommerce and product development (innovation).

Because of technology processes have been made easier for instance online booking and marketing

Ecological Factors

Ecological factors have in recent years made a big impact on decision making. Concern for preserving and protecting natural environment has led to legislations being formulated in this area. Social conscience and sound environmental management is highly rated in companies today. For example products to be packed in biodegradable packaging materials in order to avoid environmental pollution, putting in place production processes that do not have negative effects on the environment such as soil and water pollution.

Ecological factors also have an impact on price since the organization has to incur more costs to come up with the safe product, promotion to inform people that you have shown concern for the environment.

Responding to Marketing Environment

It has been observed that there are three different kinds of companies depending on how they respond to the environmental forces; companies that; make things happen, watch things happen and some wonder why certain things have happened.

A number of companies take reactive stance towards the environment by analyzing what already happened and design strategies that will help avoid threats and enjoy tax advantages of the opportunities provided. Others take proactive stance rather than simply watching and reacting, they take aggressive actions to effects of the public and other forces prevalent in their marketing environments.

Marketing environment scanning

It is essential for a business to scan and study their marketing environment by constantly monitoring the marketing environment. Marketing managers must collect, and analyze information about the market environment. Environment scanning is process of collecting information on marketing environment forces. Environmental analysis is the practice of assessing and interpreting the gathered information through environmental scanning. Environmental diagnosis is the process of decision making by accessing the impact of opportunities and threats.

Importance of marketing environment scanning

It is important to scan the market environment in order to understand the fundamentals of the environment. Also, environmental scanning helps to observe and understand changes occurring in the environment. Through the environmental scanning different market situations are analyzed. It also enables the organization to fit properly in the environment

To fit the organization properly into the environment in order that effective organization’s strategies can be developed. Any individual or organization venturing into any business must be aware of the business environment. Therefore, it is very essential for business to be designed and located in a way that its image is in distinct place in the market. It should thrive to give best quality, best value and service, and more advanced technology and provide lowest price in the market. When a business understands its market environment properly, it will possibly achieve success and become profitable in all operation.

SWOT analysis is the overall assessment of a company’s weaknesses, strengths, threats and opportunities. It involves monitoring the internal and external environments. It assumes that the organization will attain success by minimizing weaknesses and threats and maximizing its strengths and opportunities. It is essential for a company to indentify its opportunities and weaknesses as it will help in updating the management of the organization on the different developments in the internal and external environment that have occurred. In addition, it leads to improved performance of the organization. The company can also be in a position to structure its future and current positions.

A SWOT analysis is a process of examining and identifying strengths and opportunities, threats and weaknesses facing the organization. It gives insight into organization’s position in the competitive environment. According to Kottler (2002), the following should be used when carrying out SWOT analysis to establish how you rate against your competitor.

To determine your strength, consider your organization’s strong points, this must be both from your own and your customers don’t be modest but be reasonable, consider the distinct advantages that your organization offers; is there something you offer that cannot be imitative by a competitor; what is the customers’ opinion, are they satisfied with doing business with you. Also evaluate your company’s weakness form both your own and competitor’s perspective. When evaluating your weakness, consider the areas in the market that gives room for your organization to grow. Opportunities may come from technological changes and markets changes on both narrow and broad scale, government changes, procedures related to your industry, population and changes in customers’ lifestyle and changes in social patterns (Lydon , 2005).

Threats are most common in all businesses, in many cases they are out of control e.g. economic recession and change the market demographics.