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To understand marketing develop and implement effective marketing strategies, marketers must understand the environmental context in which marketing Operates. Today’s marketers must be skillful in managing relationships with their customers and external partners. To do this effectively, marketers must understand the major environmental factors that surround all these relationships. A company s marketing environment consists of the actors and forces outside marketing that affect the marketing ability to develop and maintain successful relationships with its target customers.
The marketing environment offers OTOH opportunities and threats. Successful companies know the importance of constantly watching and adapting to changing environment. Too many company’s, unfortunately fail to think of change as an opportunity. They ignore or resist critical changes until its too late . The environment continues to change at a very rapid pace and therefore marketers must be trend trackers and opportunity seekers. By carefully and systematically studying the environment, marketers can devise and adapt marketing strategies to meet new Market place challenges and opportunities.
The Marketing environment A company’s marketing environment consists of a macro environment and a micro environment. Micro environment consists of the actors close to the company that affect the ability to serve its customers. The company has control over the actors in the micro environment. The macro environment is made up of the forces in the larger environment that the company does not have control over. The micro environment Marketing manager’s job is to build relationships with the customers by creating customer value and satisfaction. Marketing managers cannot do this alone.
Their success will require building relationships with the actors in the acre environment ii the other company departments, suppliers, marketing intermediaries, customers, competitors and the various publics. I. Company depth. – Top management, finance, research and development, procurement, Human resource, Administration etc. All these departments must work together to provide superior customer value and satisfaction. Ii. Suppliers An important link in the company’s value overall customer value delivery system. They supply the resources needed by the company to produce goods.
Supplier problems can affect marketing ii availability, quality, promptness in livery, prices, labor strikes etc. Iii. Marketing intermediaries – Firms that help the company to promote , sell and distribute its goods to the final buyers. They include – physical distribution firms( warehouses and transportation firms marketing service agencies ( research firms, advertising agencies, and marketing consulting firms) and financial intermediaries (banks, insurance companies, investment firms). Doffs marketers recognize the importance of working with intermediaries as partners rather than simply channels. V. Customers – companies need to study their markets in order to e able to deliver real value and satisfaction. Each type of market (consumer, business, reseller, gobos and international) has special characteristics that call for careful study by the company. V. Competitors – Marketing concept states that to be successful, a company must provide greater value and satisfaction than its competitors. Marketers must gain strategic advantage by positioning their market offerings strongly against competitor’s offerings in the mind of consumers. Vi.
Publics -?? Any group that has an actual or potential interest in or impact on an organizations ability to achieve its objectives. Organizations publics are financial (banks, investment firms, insurance firms), media publics, gobo publics, citizen action groups, local community, general publics, internal publics. Macro environment This consists of the larger macro environment with forces that shape opportunities and pose threats to the company. The forces include; I. Demography – this is the study of human population in terms of size, density, geographical distribution, age, gender, race and occupation.
The demographic environment is of considerable interest to marketers because it involves people and people make up markets. Some important demographic heartsickness and trends a. Population size and growth trends -?? In any geographic market, population size and growth trends can be used to gauge its broad potential for a wide range of goods and services. A growing population means growing human needs to satisfy, offering marketers an indication of demand for certain goods and services. Depending on the purchasing power, it may also mean growing market opportunities. B.
Changing age structure of a population – National population varies in their age mix. Some countries have young population and rapid growth while others have old populations and very low growth I. Japan, Germany. Milk, diapers, school supplies, toys and baby wear would be more important products in Kenya while Japan population would consume many adult products – medical, housing, homes for the aged, holiday products etc. For marketers, the most populous age groups shape the marketing environment. C. Changing family structure – The traditional family structure consisting of husband, wife and children has been changing.
Many non family households are increasing – People marrying late, families getting few children, increase in number of single parents, childless couples. This means that marketers must increasingly consider the special needs of these non traditional households, because they are growing more rapidly than the traditional households. Each group has a distinctive needs and buying habits. People in the separated, single, widowed and divorced (SAD) group need smaller apartments, inexpensive and smaller appliances, furniture, furnishings and foods packaged in smaller sizes.
The number of working women including working mothers has increased the demand for child daycare services, convenience foods, and formal wear for career women, cleaning and catering services, beauty parlous and many other opportunities. Marketers of goods ranging from cars, insurance, travel and financial services are increasingly directing their advertising to working women. D. Geographic shifts of population – The next few decades will see the emergence of a world where citizens in the affluent, developed countries have few children while their counter parts in the less wealthy countries have many.
This condition fall increase pressure of international migration. As these countries population grow older, there will be many more openings for foreign jobs where domestic talent is scarce and there will be need for to increase the population of economically active people Because of increase in demand for health care, pension and welfare provisions, many European countries including the Nordic countries and Britain are likely to have to accept high levels of international immigration. E. Rising number of educated people – The number of educated, more white collar and professional population is rising steadily across the world.
More people are accessing college and university level education. This will increase demand for quality products, information materials, and convenience products. This means that marketers must be innovative and very creative . F. Increasing diversity – Countries vary in their ethnic and racial make up. Marketers are facing increasingly diverse markets, both at home and abroad as their operations become more international in scope. The diversity is not only ethnic but also religion, sex (gay/lesbian) physical diversity (disabilities). Ii.
Economic environment – consists of factors hat affect consumer purchasing power and spending patterns. Nations vary greatly in their levels and distribution of income. Marketers need to pay close attention to major trends and consumer spending patterns both across and within their world arrest. A. Income distribution and changes in purchasing power – In the global economy, marketers need to pay attention to the shifting income distribution and average income in countries around the world, particularly countries where affluence levels are rising.
Income distribution in most countries is highly skewed. At the top are upper class consumers whose spending patterns are not affected by current economic events and who are the major market for luxury goods. There is a comfortable middle class that is careful about their spending but can still afford a good life sometime. They operate on budgets (loans & mortgages) and try hard to save and therefore not a good market for luxuries. Finally, the underclass lives from hand to mouth and count their pennies when making even the most basic purchases.
Over the past three decades, the rich have grown richer the middle class has significantly and the poor have become poorer. The distribution of income has created a tiered market and marketers must carefully assess the market that want to target. B. Changing consumer spending patterns – Changes in major economic variables such as income, cost of living, interest rates and paving and borrowing patterns have a large impact in the market place. Companies watch these variables by rising economic forecasting. Businesses don’t have to be wiped out by an economic downturn or caught short in boom.
With adequate warning, they take advantage of changes in the economic environment. Iii. Natural Environment – Involves the natural resources that are needed as inputs by marketers or that are affected by the marketing activities. Environmental concerns have grown steadily during the past decades. Protection of the natural environment will remain a crucial worldwide issue facing businesses and the publics. Marketers should be aware of the trends in the natural environment a. Increased Pollution -?? In many cities of the world, air and water pollution have reached dangerous levels.
World concerns continue to mount the depletion of the earths ozone layer and resulting “green house effect” a dangerous warning of the earth. And many of us fear that we will soon be buried in our own rubbish. Industries have largely been blamed for damaging the quality of natural environment. Consider the disposal of chemicals (affluent) wastes, dangerous levels of mercury in the rivers and lakes, quantity of chemical pollutants in the oil and food supply and the littering Of the environment with biodegradable bottles, plastics and other packaging materials.
Smart companies are responding to the public environmental concerns with more ecologically sensitive goods, recyclable or biodegradable packaging, improved pollution controls and more energy efficient operations. B. Shortages of raw materials Air and water may seem to be infinite resources but we have witness a gradual reduction over a period of time. Air pollution chokes many of the world’s cities and water shortage is a very big problem in many parts of the world. Renewable resources I. Forests and food are also a major problem. Non renewable resources such as oil, coal and various minerals pose serious problems.
Firms making products that require these scarce resources face large cost increases eve if the materials do remain available. They may not find it easy to pass these costs to the consumers. Marketers need to use research and development to develop new sources and materials. C. Increased cost of energy – oil, a non renewable resource has created a serious problem for the future economic growth. Most economies of the world depend heavily on oil and until economical energy cost rates can be plopped, oil will continue to dominate the world political and economic picture.
Many companies are searching for practical ways to harness solar, nuclear, wind and other forms of energy . Others are directing their research and development efforts to produce high energy efficient technologies to meet customer needs. Lee Michelin trees -??low resistance trees that offer 5% reduction in fuel consumption, energy server bulbs. D. Government intervention in natural resource management – Governments in different countries vary in their concern and efforts to promote a clean environment.
Some countries have adopted policies that have stronger, positive impact on environmental sustainability than others. German chivalrously pursues environmental quality while many poor countries do little about air pollution largely because lack needed funds or political will. The general hope is that companies around the world will accept more social responsibilities and those less expensive devices can be found to control and reduce pollution. Smart companies are developing environmentally sustainable strategies and practices in an effort to create a world economy that the planet can support indefinitely.
They are responding to consumers demands with the economically safer products recyclable biodegradable packaging, better pollution controls and more energy efficient operations. Iv. Technological environment – Consists of forces that create new technologies, creating new products and market opportunities. Technologies are perhaps the most dramatic force now shaping the world. It has released such wonders as anti biotic, organ transplants, laptops, internet, etc. It has also released such horrors as nuclear missiles, chemical weapons, assault rifles, and such mixed blessings as auto mobile, television, credit cards etc.
Technological environment is changing rapidly. Marketers should watch the following trends in technology: a. Fast pace of technological change – Many of today’s common products were not available several years ago. Television, automobiles, airplanes, airplanes, radios or electric light, automatic dishwashers air conditioners, robotics etc. Technological lifestyles are becoming shorter ii. Mechanical typewriter dominated market for a very long time – 25 years. Subsequent ones have had a very shorter period. Electrical ones – 5 years. Computer software lasts 1 year .
Diskette – CD – Flash disk. Firms must track technological trends and determine whether or not these changes will affect their products continued ability to satisfy consumer needs. Businesses must continuously monitor their technological environment to avoid missing new product and market opportunities. B. High research and development budgets -?? Technology and innovation require heavy investments in research and development. High R & D spending is a feature in many industries including pharmaceutical, automobile, computers, entertainment, electronics etc.
The sourcing cost of R & D increases the difficulty even for big companies to master a wide of technologies. To overcome this barrier, firms collaborate with others to develop new products and technologies, they may license inventions developed by the firms or even acquire smaller , innovative firms that may not have sufficient financial resources to develop and commercialism new technologies. C. Concentration on minor improvements – As a result of high cost of developing and introducing new technologies, many companies are making minor product improvements – tinkering, instead of gambling on substantial innovations.
The high cost and risks of centralization failure make firm take this cautious approach to their R & D investment. Most companies are content to put their money into copying competitors products, making minor feature and style improvements or offering simple extensions of current brands. D. Increased regulation – As products and technology become more complex, the public needs at know that they are safe. Thus gobo agencies investigate and ban unsafe products. Kenya bureau of standards sets safety standards for consumer products and penalize companies that fail to meet them.
The drugs and poisons board enforces regulations for testing and administering drugs new drugs. Such regulations have resulted in much higher research costs and in longer times between new products ideas and introduction. Marketers should be aware of these regulations when applying new technologies and developing new products. Marketers need to understand the changing technological environment and how new technologies can serve customers and human needs. V. Political environment – Consists of laws, gobos agencies and pressure groups that influence and limit various organizations and individuals in a given society.
Marketing decisions are strongly affected by developments in the political environment. A. Legislation regulating business – Gobos develop public policy to guide commerce – sets of laws regulations that guide businesses for the goods of the society as whole. Almost every marketing activity is subject to subjects to a wide range of regulations and laws. – Increasing legislation – Legislation affecting business has increased steadily over the years. Countries have developed many laws covering such issues as competition, environment, product safety, truth in advertising, packaging labeling and other important areas. E Cigarettes labeling and advertising Tobacco Act (2007) -require that cigarettes packages notation the following statement. ‘Warning – Cigarette smoking is dangerous to your health”. – Business legislation is enacted to: I. Protect companies from each other – unfair competition ii. Protect consumers from unfair business practices. Some firms if left alone would make shoddy products, invade consumer privacy, tell lies in their advertising and deceive customers through their packaging and pricing. Iii. Protect interest of the society against unstrained business behavior. Refillable business activity does not always create a better quality Of life. Regulations arise to ensure that firms value responsibility for the activities ) Growth of public interest groups – The number and power of public interest groups have increased during the past two decades. Consumerism – a powerful force that has its roots from the US has spilled to the other countries. Other consumer interest groups, private and governmental operate in many countries I. E groups seeking to protect the environment – ENEMA , CRADLE, COOT, KEPT,NUT, EUNICE.
C Increased emphasis on ethics and socially responsible actions – Written regulations cannot possibly cover all the potential marketing abuses and existing laws and regulations are often difficult to enforce. Beyond Ritter laws and regulations business is also governed by social codes and rules of professional ethics. Socially responsible behavior – Enlighten companies encourage their managers to look beyond what regulatory system allows and simply “do the right thing” . These socially responsible firms actively seek out ways to protect the long run interests of their consumers and environment.
Business scandals and increased concerns about the environment have created fresh interest in the issues of ethics and social responsibility. More companies are now developing policies guidelines and other responses to complex social responsibility. Cause related marketing in order to exercise their social responsibility, and build more positive images many companies are now linking themselves to worthwhile causes. Many products seems to be tied to some cause I. E buy a product and support Cause related marketing has become a primary form of corporate giving.
It lets companies “do well by doing good “linking purchases of the company’s products or services with fundraising for worthwhile causes or charitable organizations. Many are backed by large budgets and full complement of marketing activities. Vi. Cultural environment – Consists of institutions and there forces that affect society basic values, perceptions, preferences and behavior . People grow up in a particular society that shapes their basic values and believes. They absorb a world view that defines their relationships with others.
Marketers must be aware of the cultural influences and how they vary across societies within the markets served by the firm. A. Persistence of cultural values -?? People in a given society hold many beliefs and values which have a high degree of persistence. I. E most f us believe in going to school, working , getting married and having children etc. These beliefs shape more pacific attitudes and behaviors found in everyday life. Core beliefs and values are passed from parents to children and are reinforced by schools, religious groups , business and government. B.
Shifts in secondary cultural values – Although core values are fairly persistent, cultural swings do take place I. E the impact of popular music groups, movie personalities and other celebrities on young people’s hair styles and dressing norms. Marketers want to predict cultural shifts in order to spot new trends with appropriate products and communication appeals. The major cultural values of a society re expressed in peoples views of themselves and others as well as in their views of organizations, society, nature and universe Peoples view of themselves – people vary in their emphasis on serving themselves versus serving others.
Some people seek personal pleasure and fun. Others seek self realization through religion , careers etc. People use products, brands and services as a means of self expressions and they buy products and services that match their views of themselves. Marketers can target their products and services based on such self views. Peoples views of others – surveys show hat people are becoming involved In charity, volunteer work and social service activities. These trends suggest greater demand for social support products and services that improve direct communication between people I. Health clubs, family holidays and games. Peoples view of organizations people vary in their attitude towards corporations, got agencies, trade unions, universities and other organizations. In recent years, there has been a decrease in confidence in and loyalty towards businesses and political organizations and institutions. High profile scandals surrounding once admired company’s I. Ways of company downsizing have bred cynicism and distrust. Many people today see work not as a source of satisfaction but as a necessary chore to earn money to enjoy non work hours.
Organizations need to find new ways to win consumer confidence and employee confidence. More companies are linking themselves to worthwhile causes to build more positive public images. Peoples view of society – people vary in attitude towards their society – from patriots who defend it to reformers who want to change it and the malcontents who want to leave it. People’s orientation to their society influences their consumption patterns, levels of savings and attitude towards saving the market place. In developing nations, consumers aspire to achieve high living standards and lifestyles of people in more advanced western countries.
They display of conspicuous consumption and fondness for expensive western brands the common label for achievement and westernizes are highly acceptable behavior. Consumer patriotism is not an issue, since locally made goods are often viewed as inferior and less desirable than foreign imported brands. Consumers predisposition towards western brands suggest a greater demand for goods marketed by companies f western origin hence creating new marketing opportunities for these firms. By contrast, in the western developed countries, the last two decades saw an increase in consumer patriotism.
European consumers reckon that sticking to locally produced goods would save and prospectors. .Poppies view of nature – people vary in their attitudes towards the natural world. Some feel ruled by it, others feel in harmony with it and still others seek to master it. People have recognized that nature is finite and fragile and that it can be destroyed or spoiled by human activities. Love of nature is leading to more naming, hiking boating, fishing and other outdoor activities. Business has responded by offering more products and services catering to these interests.
Tour operators are offering more tours to wilderness areas and retailer are offering more of the fitness gear and apparel. Food producers have found markets for natural products like cereal, organically farmed produced and healthy a variety of healthy foods. In the US, 63 Million people belong to the ALOHAS – Lifestyle of Health and Sustainability. These are consumers who seek out everything from natural, organic and nutritional products to fuel efficient ears and alternative medicine. People’s views of the universe -People vary in their beliefs about the origin of the universe and their place in it.
Practice of religion is common in many countries and recently, there has been a renewed interest, perhaps as part of a broad search for a new inner purpose. People are seeking more permanent values and a more certain grasp of right and wrong. This trend reflects a new spiritualism which is affecting consumers in everything from the television shows they watch and books they read, to the products and services they buy. Since consumers don’t pack their beliefs and aloes on bench outside the marketplace, they bring this awareness to the brands they buy.