By now you must have know that marketing organizations operate within an environment. The organization is affected by the environment and the organization also affects the environment. Since the success, survival and the growth of a marketing organization depends on the ability of the marketing manager to analyze, understand and be able to predict the functioning of the environment, it has become mandatory to analyse the environment to enable organizations to identify opportunities and threats, as well as the organization’s strengths and weaknesses. In this study session you will be exposed to how the marketing managers will analyze marketing environment; understand and predict the environment for the purpose of identifying opportunities as well as the threats inherent, and use this knowledge to expand the activities of the organization at a reasonable profit.
Concept of the Environment in Marketing
Environment is the surrounding that is affected and also affects marketing decisions process. Marketing generally is externally focused hence marketing decision makers must be able to identify factors or variables in the marketing environment so as to make decisions that will enhance the effectiveness and attainment of the marketing goals in particular and the organizational goals in general. Environment is therefore the surrounding that affect the organization.
Classification of the environment
Environment can be classified into three namely:
Internal Environment: The internal environments are those factors that are internal to the organization. They are often referred to as 5Ms which are Men, Money, Machinery, Materials and Markets. These 5Ms are critical to bringing rapid change to the larger environment. The internal environment is as important for managing change as the external. The quality and quantity of the 5Ms have important significance on the competitive ability of the organization.
The Micro Environment: The micro environment consists those factors, variables, actors and forces close to the organization or within the organization’s immediate environment that affect the organization’s ability to serve its markets. These variables include the organization’s suppliers, consumers and customers, market intermediaries, competitors, financial intermediaries and the public. Micro environment suggests local environment in which the organization has a level or degree of influence and control.
Marco Environment: The macro environment consists those factors or forces which are external to the company but affect the marketing plans of an organization. These factors are external and they cannot be controlled by the marketing decision makers in the organization as they are regarded as given and outside the control of the organizational managers. These factors can be either constraints or inducement, negative or positive to the ability of decision makers. The ability of the managers to understand, assess and predict their influence gives a competitive advantage to such organization.
• How is internal environment different from micro environment?
Internal environments are the factors that are internal to the organization and they include variables like Men, Money. Machinery, Materials and Markets. While micro environment on the other hand includes variables that are close or within the organization’s immediate environment that affect the organization’s ability to serve its markets. They include the organization’s suppliers, consumers and customers market intermediaries, competitors, financial intermediaries and the public.
Controllable Variables in marketing Environment
Controllable variables in marketing can be classified into two namely: Internal Environment variables and micro environment variables.
Internal environment variables
As discussed previously, internal environment consists the following: Men: Every organization has quality human resource to manage its activities. The quality and quantity, depending on the level of operation, determines the success of the organization. When appropriate training, enabling environment and acceptable motivational factors are made available, these factors will enable the organization to attract the right quality of people to maintain sensitive position in the organization. The employees are main assets of the organization. The qualities of their experience and commitments have either positive or negative impact on the organizational performance.
Money: Financial resources must be made available to execute various organization programmes. No matter how beautiful an idea may be, if the required funds are not made available as at when needed, it will lead to frustration and the organization will be incapable of achieving its goals.
Machinery: Every organization needs the appropriate machinery to compete favourably. The quality of machinery will determine the quality of output of goods and services. The right quality and quantity must be available for the human resources so as to be properly positioned to compete.
Material: In addition, materials to be used by the machines and the personnel must be available at the right time. The quality of material input will determine the quality of the output. Materials, here include raw materials, stationery and appropriate work environment
Markets: There must be a potential or actual market for the product of the organization. The product or service must be able to attract sufficient number of customers to make it economically sound for the organization to remain in business.
Moment: In addition to the 5Ms shown in the diagram above, the 6th M can be introduced which is moment and it refers to time that is involved in carrying out several marketing activities inside the organization, such activities include, marketing research, product planning and development, planning for the various variables of the marketing mix etc.
Micro environment variables
The Company: The Company itself constitutes an environment to itself in the sense that the structure and the policy of the organization will go a long way to determine its success. In designing marketing plans, the organization must ensure that all sections of the organization are incorporated into the marketing plans. The top management, finance, production, purchasing, labour union, Research and Development must work in harmony to ensure high level of customer service. All the component parts of the organization must think about customers’ satisfaction.
Suppliers: The suppliers provide the raw materials needed for the company’s products. Suppliers are important links between the organization and its customers particularly the quality of products made available in the market place. The suppliers also contribute to the overall operations through consistent and prompt delivery of quality raw materials and at reasonable prices for competitive advantage.
Marketing Intermediaries: These are the links between an organization and its numerous customers to facilitate the delivery of finished products promptly and at the right time. They do not only distribute, they also promote products locally. The marketing intermediaries include: retailers, wholesalers and agents. They often provide warehouse facilities and financial facilities when they pay in advance for required products. The marketing intermediaries are those channel partners distributors and marketing services organizations that help the company to promote, sell and distribute the company goods. Logistics companies also fall into this category. They facilitate the quick delivery of goods to the company’s customers.
Customers: The Company needs to understand the needs of its customers before they can be satisfied. It becomes necessary to identify different categories of customers e.g. (1)consumer buyers: those who buy for personal consumption, (2)industrial/business buyers: those who buy as input for further production, (3) retailer wholesaler: those who buy to resell at a profit, (4) government buyer: these groups are government agencies that buy goods and services in order to produce public goods and services and lastly (5) international markets: these are the groups of buyers from other countries or those who buy with the purpose of selling to foreign countries.
Trade unions: The relationship between the organization and the relevant trade unions need to be cordial so as to maintain industrial harmony. Constant frictions between the company and trade union can negatively affect the image of the company.
Competitors: No company is operating in isolation because the decision of the competitors affects the company activities and vice versa.
The public: The public constitutes any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objective. They include the following: financial public e.g. banks, investment houses and stockholders which influence the fund management of the company. Media public carries the news, information, features and editorial opinions. The public also includes government public, citizen – action public, local public, general public and internal public.