Internal Marketing Environment - Essay Example

Marketing Environment Introduction A business cannot operate in vacuum. Every business decision is made within the context characteristics, competition, distributors and suppliers behaviours as well as within the purview of social and legislative framework. People associated with business contribute to personal welfare and that of the society as a whole. From a marketer’s viewpoint, management of the process of exchange between customers and a firm is of highest priority; however, business cannot neglect the varying influence of external and internal factors surrounding the customers and the firm. While some of these factors are easily controllable by the firm, others are difficult or impossible to change and as a result, need to be accommodated in the business decision making. According to Kotler (1999, p. 10), “A company’s marketing environment consists of the internal factors & forces, which affect the company’s ability to develop & maintain successful transactions & relationships with the company’s target customers.” A business’s marketing environment consists of various internal and external factors. These factors are sub-divided into various micro and macro factors. Internal marketing Environment A business’s internal marketing environment consists of factors such as, machine, workers and employees, equipments, capital and internal operations that guide the internal marketing decisions. Internal marketing environment comprise forces that affect an organization’s ability to cater to the consumers. These factors may include sales representatives, marketing managers, marketing plans, marketing budget, inventory, procedures or logistics (Ferrell and Hartline, 2010). It also includes departments, which are often ignored during the decision making process. For instance, besides the marketing, finance and human resource, the management should also consider other departments such as, research and development, accounting department and personal department, before making any business decisions (Homburg, Workman and Jensen, 2000). A discussion on the various marketing environment factors will help in better evaluation of their influence on marketing decisions undertaken by a business. External marketing environment External marketing environment factors are further subdivided into macro and micro environment factors. Micro-environmental factors consist of suppliers, marketing intermediaries, consumers and competitors. Suppliers are individuals delivering important resources for producing services and goods. Supplier policies significantly affect marketing decisions of the managers and hence, are important for the management to maintain long-term and cordial relationship with suppliers. Marketing intermediaries are individuals assisting the manufacturer in facilitating products flow (Ferrell and Hartline, 2010). Some of the important intermediaries are agents, retailers, dealers and wholesalers. These are middle men providing crucial information about the primary market to the manufacturers. Unsatisfied middlemen may neglect the company’s products and push that of the competitors. Consumers are individuals who are centrally located in any business’s marketing decision. Each consumer segment is unique and the management should rightly identify their needs and demands in order to create a positive marketing environment. Lastly, in order to establish a positive working environment, one must realize and evaluate the competitors and their steps (Pettigrew, Whittington and Thomas, 2006). Macro-environment factors are forces that are not under the company’s control. These include political and legal environment, demographic environment, economic environment, technological environment and social and cultural environment. 1. Political and Legal Environment: Local and state political bodies and the federal government have the right to set restrictions and rules on any type of business conduct. The main objective of these regulations is protection of businesses as well as consumers. Although businesses favour some of the critical regulations like, patent laws, they try to bypass other regulations such as, advertisement restrictions. For example, the tobacco industry is banned in radio and television advertisements and the associated companies have learned to function regardless of that. A recent ban that has been highly criticized by companies is the rule wherein trans-fat content need to be labelled on the packages. 2. Demographic Environment: Demography is the study of human population and distribution. In this marketing environment, the population, age composition and distribution is analysed while formulating marketing strategies. 3. Economic Environment: Economic environment influences purchasing behaviour of the customers. For instance, overall purchasing power of the developed countries is greater compared to that of the developing nations. As a result, sale of items such as, luxury vehicles and those related to real estate, will be higher in the former. 4. Technological Environment: Technological factors have been creating substantial impact on overall marketing environment of the firms. For instance, technological advancements have led to evolution of customer lifestyles. At the same time, problems such as, acute power shortage, have aggravated due to increased electricity usage (Nwankwo, 2000). 5. Social and Cultural Environment: The cultural and social factors related to customers hugely affect their purchase decisions. For instance, marketers targeting family will have to look into the perceptions of all important family members before creating any advertisement or branding strategy (Ferrell and Hartline, 2010). Some of the major social factors influencing consumer purchase decisions are education, family, society, language and religion. The above evaluation indicates that it is extremely crucial to analyze these internal and external marketing environment factors, before making any marketing related decision such as, organizing, planning or controlling. This evaluation can be critical in determining success or failure of the market decisions taken by an organization. A critical examination of the marketing activities implemented by numerous organizations supports the above notion. Several firms have appeared to achieve success by way of focussing on their internal and external marketing environment as well as responding in an intelligent manner (Ferrell and Hartline, 2010). For instance, Johnson and Johnson strategically started its baby products after World War II, which marked the initiation of baby boom period in the U.S. After the end of its successful marketing era, the company started making some strategic and unique changes in the product portfolio. For example, the company promoted certain baby products to adults such as, soaps, shampoos and powders. Furthermore, Johnson and Johnson started to expand its market beyond the United States and realized that the baby boom products were popular among and marketable to other nations. Apart from the above, the company also launched non-baby products both in the US and outside (Williams and Cutis, 2012). This is an ideal example of a firm responding intelligently to the marketing environment. Another important fact that emphasizes on the importance of marketing environment is the fate of initial fortune 500 companies such as, Eastman Kodak. Eastman Kodak was once one of the most profitable and growing businesses over the globe (The Economist, 2012). Nevertheless, with change in the external marketing environment such as, development of mobile cameras and other substitutes and inability to adjust with the changing needs among consumers, the overall popularity and demand for Kodak products declined drastically. Changes in the external and internal marketing environments are inevitable and continuous, which implies that organizations must monitor the same as well as adjust their marketing decisions accordingly. Organizations can examine and track the above changes through environmental analysis and environmental scanning. Environment scanning is a method, where data is gathered with respect to marketing environment components. In general, primary data sources such as, personal observation and secondary data sources such as, government publications, business and trade, affect the scanning process. Effective marketing research and development can greatly enhance the scanning process by way of gathering data from critical sources. Internet can also be efficiently and effectively used during the process of environment scanning. Environmental analysis, on the other hand, can be defined as the process of interpreting and assessing data that has been gathered through environmental scanning (Nwankwo, 2000). Gathered data is assessed on the basis of criteria such as, source, accuracy, relevance, comprehensiveness and credibility. Data interpretation is an important step during environmental analysis as it helps the managers to understand present situation and expected future changes in the marketing environment. Environmental analysis also helps in identifying the present or future threats and opportunities in business. For instance, marketers employ SWOT (strength, weakness, opportunities and threats) analysis for understanding and evaluating internal and external factors influencing the marketing decisions. Two of the above-mentioned examples have discussed reactive strategies implemented by organizations. Nonetheless, organizations can also implement proactive approaches whereby they can shape or influence the marketing environment by incorporating aggressive and strategies marketing practices. For instance, the fast food retail chains established in Egypt have successfully changed the eating habits of Egyptians. In general, Egyptian consumers prefer preparing their own meals at home as opposed to eating out, ordering or availing take away. This transformation was made by continuous advertisements and comparing the benefits of eating out with the task of preparing meals at home (Nwankwo, 2000). Understanding of the marketing environment can have a positive or negative impact on an organisation’s approach to the marketing mix. Marketing mix consists of policies and strategies adopted by the product manufacturers for attaining success in marketing. Marketing mix constitutes multiple variables such as, product variables, price variables, distribution variables and promotion variables. As marketing mix is a controllable marketing environmental factor, it is considered as critical for overall success or failure of any marketing decision. Marketers choose product variables so as to fit into the current market trend or develop new product variables so as to rightly identify demands of the target market. For instance, companies such as, Nestle and Unilever who market products worldwide, have different packaging as well as names for similar products (Marieke, 2004). Promotional variables differ greatly depending on the marketing environment. For instance, although promotional strategies in the developing nations are majorly mass advertisements, consumers from the developed nations give more preference to customised and personalised promotional tactics (LeCren and Ozanne, 2011). Similarly, price variables are heavily affected by the marketing environment of a company such as, internal budget, consumer’s buying power and purchase patterns therein. For example, sale of luxury vehicles is more in the economically developed nations such as, the UK and France, compared to developing nations such as, India and Indonesia. Companies such as, Bentley, BMW and Mercedes, have separate product and pricing strategy in different marketing environments. In countries such as, India, Indonesia and China, the above company generally launches the lower-end vehicles. At the same time, high-end and luxury segments are sold in higher quantity in economically developed regions such as, Europe (Banerjee, 2001). Conclusion From the above analysis, it can be concluded that marketing environment is an important factor in making any business decision. An ideal marketing environment, as described in the current paper, does not exist and in reality, companies face various internal and external environment challenges. Even so, the companies can adopt both reactive and proactive approaches while adapting to changes and making important decisions. A majority of the big companies with strong capital base have the power and resources to implement proactive strategies in order to cope with future changes in the marketing environment. Then again, smaller companies with limited resources need to face the challenges and adapt accordingly. Reference List Banerjee, B., 2001. Corporate environmental strategies and actions. Management Decision, 39(1), pp.36 – 44. Ferrell, O. C., and Hartline, M. D., 2010. Marketing strategy. 5th ed. Connecticut: Cengage Learning. Homburg, C., Workman, J. P. and Jensen, O., 2000. Fundamental Changes in Marketing Organization: The Movement toward a Customer-Focused Organizational Structure. Journal of the Academy of Marketing Science, 28(4), 459–478. Kotler, P., 1999. Principles of Marketing. London: Pearson Education. LeCren, N. and Ozanne, L. K., 2011. Consequences of corporate environmental marketing strategies in New Zealand organisations. Marketing Intelligence & Planning, 29(2), pp.156. Marieke, D., 2004. Consumer behaviour and culture: Consequences for global marketing and advertising. Thousand Oaks, CA: Sage Publications. Nwankwo, S., 2000. Assessing the marketing environment in sub-Saharan Africa: opportunities and threats analysis. Marketing Intelligence & Planning, 18(3), pp.144 – 153. Pettigrew, A. M., Whittington, R. and Thomas, H., 2006. Handbook of strategy and management. California: SAGE. The Economist, 2012. Kodak files for bankruptcy protection. [online] Available at: [Accessed 13 July 2014]. Williams, J., and Cutis, T., 2012. Marketing management in practice. London: Routledge. Read More