Marketing Environment Essay Example

Marketing Environment Essay | 2012/13| | Id: 1180654 Allan raisin | [Firms can do more than simply anticipating and responding to both macro and micro environment:-]| Market research is the function that links the consumer, customer, and public to the marketer through information | â€Å"Marketing environment includes all the forces that directly or indirectly influence marketing operations by affecting an organization acquisition of inputs/creation of outputs such as human, financial and natural resources and raw material, information, goods, services or ideas. Sometimes a distinction is more between macro and micro factors of environment† The Structure of the Marketing Environment The consumer occupies the core/central position of all business activities and hence occupies the Centre of the marketing environment. The organization with its resources and having a policy and structure surrounds the consumer with its particular market offering as do its competitors, suppliers and other intermediaries. This microenvironment of marketing is again affected by the macro environment, which consists of the government, technical, political, social, economic factors. This is graphically represented by below 1. The major external and uncontrollable factors that influence an organizations decision making, and affect its performance and strategies. These factors include the economic factors; demographics; legal, political, and social conditions; technological changes; and natural forces. 2. Specific examples of macro environment influences include competitors, changes in interest rates, changes in cultural tastes, disastrous weather, or government regulations. PESTLE Macro Environmental Analysis PESTLE We will write a custom essay sample on Marketing Environment specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Marketing Environment specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Marketing Environment specifically for you FOR ONLY $16.38 $13.9/page Hire Writer The PESTLE Analysis is a framework used to scan the organization’s external macro environment. The  letters stand for Political, Economic  Socio-cultural, Technological, Legal and Environmental. Some approaches will add in extra factors, such as International, or remove some to reduce it to PEST. However, these are all merely variations on a theme. The important principle is identifying the key  factors from the wider, uncontrollable external environment that might affect the organization. The PESTLE Factors We start with the Political forces. First of all, political factors refer to the stability of the political  environment and the attitudes of political parties or movements. This may manifest in government  influence on tax policies, or government involvement in trading agreements. Political factors are  inevitably entwined with Legal factors such as national employment laws, international trade  regulations and restrictions, monopolies and mergers’ rules, and consumer protection. The difference  between Political and Legal factors is that Political refers to attitudes and approaches, whereas Legal  factors are those which have become law and regulations. Legal needs to be complied with whereas  Political may represent influences, restrictions or opportunities, but they are not mandatory. Economic factors represent the wider economy so may include economic growth rates, levels of  employment and unemployment, costs of raw materials such as energy, petrol and steel, interest rates  and monetary policies, exchange rates and inflation rates. These may also vary from one country to  another. Socio-cultural factors represent the culture of the society that an organization operates within. They  may include demographics, age distribution, population growth rates, level of education, distribution of  wealth and social classes, living conditions and lifestyle. Technological factors refer to the rate of new inventions and development, changes in information and  mobile technology, changes in internet and e-commerce or even mobile commerce, and government  spending on research. There is often a tendency to focus Technological developments on digital and internet-related areas, but it should also include materials development and new methods of  manufacture, distribution and logistics. Environmental impacts can include issues such as limited natural resources, waste disposal and recycling  procedures. Additional Considerations A newer force which is gaining in importance is ethics. These can be defined by the set of moral  principles and values that govern the actions and decisions of an individual or group. Ethics and morals  serve as guidelines on how to act rightly and justly when individuals are faced with moral dilemmas. This force could include corporate social responsibility, fair trade, affiliation between corporations and  charities. A particular problem may exist with how ethical factors relates to legal forces as they may be  at different stages in development. Something may be ethical but not protected by law, whereas other activities may not be ethical, but are legal. A PESTLE analysis should feed into a SWOT analysis as it helps to determine the threats and  opportunities represented by macro-environment forces that the organization usually cannot control. On an international basis, it is best to perform the analysis on a country-by-country basis because  factors can differ greatly between countries (or even regions). Marketing Environment – Micro Marketing Environment – Micro The micro marketing environment consists of certain forces that are part of an organizations marketing process, but remain external to the organization. This micro marketing environment that surrounds organizations can be complex by nature; however the company has an element of control over how it operates within this environment. Marketing helps you to manage and make sense of this complexity. The illustration above summarizes the order of the immediate external marketing environment that businesses operate in. Current and Potential Customers Your customers are vital to the growth and sustainability of your company. In order to grow you must locate customers, understand their needs and then satisfy those needs both efficiently and profitably. Competitors Your competitors however have the same remit as you when it comes to sourcing and satisfying the needs of the customer. They will make it difficult to liaise with customer groups, as by definition they are largely pursuing the same sets of customers as you. As a marketer, you must therefore not only monitor what competitors are doing in the external marketing environment today, but to also anticipate their likely response to your campaigns and to predict what they will do tomorrow. Intermediaries (Distributors/Wholesalers/Retailers) Your business may require a network of wholesalers, distributors and/or retailer. These ‘intermediaries’ provide an invaluable service in getting your products to the customer. You must therefore think carefully about how best to distribute your goods and build relationships. This area can be fierce in competition as not everyone can get access to the channels of distribution that they want. Suppliers One other important area to consider in the external marketing environment is your suppliers. A key supplier can be an important part of your business and may even attribute to your competitive advantage. Losing important suppliers can interrupt production flow or your competitive edge and prevent you from getting your product to your customers. Choice of suppliers, negotiation of terms and relationship building all become important tasks of the marketer. The wider marketing environment, discussed in a separate knowledge sheet, covers all other influences that might provide opportunities or threats to the organization. These include technological development, legal constraints, the economic environment and sociocultural changes. This brief overview of the world in which companies operate in demonstrates that there are many relationships that matter. These need to be managed if the company is to conduct its business successfully. The main responsibility for managing these relationships lies within the marketing department. Using a SWOT SWOT is an important tool in auditing the external and internal environment of the organization. A SWOT Analysis should be more than a basic listing of strengths, weaknesses, opportunities and threats. Most organizations have the same, common-sense type of threats, such as competitors, technological changes, regulation and deregulation, or weaknesses such as high price, but these are all very general, hard to control elements meaning the utility can be quite limited. As Cranfield’s Professor Malcolm McDonald puts it, real SWOTs should be more concise and specific. STRENGTHS, WEAKNESSES, OPPORTUNITIES, AND THREATS Strengths, in the SWOT analysis, are a companys capabilities and resources that allow it to engage in activities to generate economic value and perhaps competitive advantage. A companys strengths may be in its ability to create unique products, to provide high-level customer service, or to have a presence in multiple retail markets. Strengths may also be things such as the companys culture, its staffing and training, or the quality of its managers. Whatever capability a company has can be regarded as strength. A companys weaknesses are a lack of resources or capabilities that can prevent it from generating economic value or gaining a competitive advantage if used to enact the companys strategy. There are many examples of organizational weaknesses. For example, a firm may have a large, bureaucratic structure that limits its ability to compete with smaller, more dynamic companies. Another weakness may occur if a company has higher labor costs than a competitor who can have similar productivity from a lower labor cost. The characteristics of an organization that can be strength, as listed above, can also be a weakness if the company does not do them well. Opportunities provide the organization with a chance to improve its performance and its competitive advantage. Some opportunities may be anticipated, others arise unexpectedly. Opportunities may arise when there are niches for new products or services, or when these products and services can be offered at different times and in different locations. For instance, the increased use of the Internet has provided numerous opportunities for companies to expand their product sales. Threats can be an individual, group, or organization outside the company that aims to reduce the level of the companys performance. Every company faces threats in its environment. Often the more successful companies have stronger threats, because there is a desire on the part of other companies to take some of that success for their own. Threats may come from new products or services from other companies that aim to take away a companys competitive advantage. Threats may also come from government regulation or even consumer groups. A strong company strategy that shows how to gain competitive advantage should address all four elements of the SWOT analysis. It should help the organization determine how to use its strengths to take advantage of opportunities and neutralize threats. Finally, a strong strategy should help an organization avoid or fix its weaknesses. If a company can develop a strategy that makes use of the information from SWOT analysis, it is more likely to have high levels of performance. Nearly every company can benefit from SWOT analysis. Larger organizations may have strategic-planning procedures in place that incorporate SWOT analysis, but smaller firms, particularly entrepreneurial firms may have to start the analysis from scratch. Additionally, depending on the size or the degree of diversification of the company, it may be necessary to conduct more than one SWOT analysis. If the company has a wide variety of products and services, particularly if it operates in different markets, one SWOT analysis will not capture all of the relevant strengths, weaknesses, opportunities, and threats that exist across the span of the companys operations. LIMITATIONS OF SWOT ANALYSIS One major problem with the SWOT analysis is that while it emphasizes the importance of the four elements associated with the organizational and environmental analysis, it does not address how the company can identify the elements for their own company. Many organizational executives may not be able to determine what these elements are, and the SWOT framework provides no guidance. For example, what if a strength identified by the company is not truly strength? While a company might believe its customer service is strong, they may be unaware of problems with employees or the capabilities of other companies to provide a higher level of customer service. Weaknesses are often easier to determine, but typically after it is too late to create a new strategy to offset them. A company may also have difficulty identifying opportunities. Depending on the organization, what may seem like an opportunity to some may appear to be a threat to others. Opportunities may be easy to overlook or may be identified long after they can be exploited. Similarly, a company may have difficulty anticipating possible threats in order to effectively avoid them. While the SWOT framework does not provide managers with the guidance to identify strengths, weaknesses, opportunities, and threats, it does tell managers what questions to ask during the strategy development process, even if it does not provide the answers. Managers know to ask and to determine a strategy that will take advantage of a companys strengths, minimize its weaknesses, exploit opportunities, or neutralize threats. Some experts argue that making strategic choices for the firm is less important than asking the right questions in choosing the strategy. A company may mistakenly solve a problem by providing the correct answer to the wrong question. USING SWOT ANALYSIS TO DEVELOP ORGANIZATIONAL STRATEGY SWOT analysis is just the first step in developing and implementing an effective organizational strategy. After a thorough SWOT analysis, the next step is to rank the strengths, weaknesses, opportunities, and threats and to document the criteria for ranking. The company must then determine its strategic fit given its internal capabilities and external environment in a two-by-two grid (see Figure 1). This fit, as determined in the grid, will indicate what strategic changes need to be made. The quadrants in this grid are as follows: * Quadrant 1 —internal strengths matched with external opportunities; * Quadrant 2 —internal weaknesses relative to external opportunities; * Quadrant 3 —internal strengths matched with external threats; and * Quadrant 4 —internal weaknesses relative to external threats. Quadrant 1 lists the strategies associated with a match between the companys strengths and its perceived external opportunities. It represents the best fit between the companys resources and the options available in the external market. A strategy from this quadrant would be to protect the companys strengths by shoring up resources and extending competitive advantage. If a strategy in this quadrant can additionally bolster weaknesses in other areas, such as in Quadrant 2, this would be advantageous. Quadrant 2 lists the strategies associated with a match between the companys weaknesses with external opportunities. Strategies in this quadrant would address the choice of either improving upon weaknesses to turn them into strengths, or allowing competitors to take advantage of opportunities in the marketplace. Quadrant 3 matches the companys strengths and external threats. Strategies in this quadrant may aim to transform external threats into opportunities by changing the companys competitive position through use of its resources or strengths. Another strategic option in this quadrant is for the company to maintain a defensive strategy to focus on more promising opportunities in other quadrants. Quadrant 4 matches a companys weaknesses and the threats in the environment. These are the worst possible scenarios for an organization. However, because of the competitive nature of the marketplace, any company is likely to have information in this quadrant. Strategies in this quadrant may involve using resources in other quadrants to exploit opportunities to the point that other threats are minimized. Additionally, some issues may be moved out of this quadrant by otherwise neutralizing the threat or by bolstering a perceived weakness. Once a strategy is decided on in each quadrant for the issues facing the company, these strategies require frequent monitoring and periodic updates. An organization is best served by proactively determining strategies to address issues before they become crises. An example of how a firm can develop strategies using these quadrants is as follows. Generic Corporation produces high-quality; high-priced specialty kitchen items in a catalog and in stores and is known for their excellent customer service. This strength has been able to offset its major weaknesses, which are having few stores and no current capabilities for Internet sales. Its major opportunities come from the explosion of Internet shopping, and its threats are other more high-profile competitors, operating primarily on the Internet, and the concerns of identity theft in Internet sales that many customers ha ve. Matching Generics strengths to its opportunities (Quadrant 1), the firm may choose to enhance its Internet site to allow online purchases, still providing its excellent 24-hour telephone customer service. Ideally, this strategy will offset the weakness of not having an Internet presence, which addresses the concerns of Quadrant 2. Additionally, by bolstering the strength of excellent customer service by applying it to the online shopping site, the company may be able to alleviate customer concerns about identity theft (Quadrant 3). A strategy for Quadrant 4, which matches the companys weaknesses and threats, is that Generic may consider selling its online business to a competitor. Certainly, the Quadrant 4 strategy is the least preferred, but a proactive strategy that plans for managing such a situation is favored over a crisis situation in which the company is forced to sell with no planning. A SWOT analysis is a first, but critical, step in developing an organizational strategy. By examining the companys internal capabilities—its strengths and weaknesses and its external environment—opportunities and threats, it helps to create strategies that can proactively contend with organizational challenges. The changing and uncertain marketing environment deeply affects the organization, instead of changing slowly and predictably, the environment can produce major surprises and shocks, how many managers at â€Å"Heinz† foresaw that the baby-boom numbers would fall so rapidly? How many were able to predict that the Internet will enable not only real-time personal communication but that will also provide a way for business process improvement and new industries would be formed. How many were able to predict that mobile phone SMS and MMS services would add significant value for the customers, some said ‘who would want to type text on the phone or even snap pictures , telephone are only for talking’ To conclude I would say that Marketing research is the function that links the consumer, customer, and public to the marketer through information – these information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the methods for collecting information, manages and implements the data collection process, analyzes, and communicates the findings and their implications. †

Free Essays on More Just Societies

More Just Societies Let’s take a trip back in time into the 1960’s. African Americans were facing very harsh discrimination against them by white Americans. African Americans faced many hardships and were mistreated very poorly. Even earlier in history look at Native Americans. The â€Å"White Men† came onto their land and territory and mistreated and basically took over their land. Well, times have changed a lot since those days, and Americans are trying to give back to the Native Americans and African Americans were given rights as individuals and are not treated like they are not human anymore. But humans as a society still have much to work on. The United States has much to work on within our own society. There is so much mistreatment such as racism, sexism, and even ageism. Individuals look at the color of one’s skin, their sex, and even their age before they even look at the person and already begin to judge that individual. So as a society we need to look past the persons outside and see the person for who they are and what they believe in. Society has been changing for the better because there was a time when one could not get a job just because of the color of their skin, of whether or not they were male or female. Society does still a little judging of one’s skin color and by their sex, but I believe society will never be able to completely look past certain things. As a society we just need to minimize how much we judge and look upon one another. There are a few possible ways to reduce discrimination within our society today. The most affective way to reduce discrimination is to make it illegal. This method is not too logical because there is no way to affectively enforce this. People need to just keep in mind what American stands for, which is â€Å"freedom†. There are methods currently in place trying to make the U.S. a more just society. One of these methods is to have quotas that companies o... Free Essays on More Just Societies Free Essays on More Just Societies More Just Societies Let’s take a trip back in time into the 1960’s. African Americans were facing very harsh discrimination against them by white Americans. African Americans faced many hardships and were mistreated very poorly. Even earlier in history look at Native Americans. The â€Å"White Men† came onto their land and territory and mistreated and basically took over their land. Well, times have changed a lot since those days, and Americans are trying to give back to the Native Americans and African Americans were given rights as individuals and are not treated like they are not human anymore. But humans as a society still have much to work on. The United States has much to work on within our own society. There is so much mistreatment such as racism, sexism, and even ageism. Individuals look at the color of one’s skin, their sex, and even their age before they even look at the person and already begin to judge that individual. So as a society we need to look past the persons outside and see the person for who they are and what they believe in. Society has been changing for the better because there was a time when one could not get a job just because of the color of their skin, of whether or not they were male or female. Society does still a little judging of one’s skin color and by their sex, but I believe society will never be able to completely look past certain things. As a society we just need to minimize how much we judge and look upon one another. There are a few possible ways to reduce discrimination within our society today. The most affective way to reduce discrimination is to make it illegal. This method is not too logical because there is no way to affectively enforce this. People need to just keep in mind what American stands for, which is â€Å"freedom†. There are methods currently in place trying to make the U.S. a more just society. One of these methods is to have quotas that companies o...