The marketing environment
The marketing environment consists of the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. It consists both of the micro and macro environment.
The microenvironment consists of the actors close to the company that affect its ability to serve its customers, such as: the company itself and its subdivisions and suppliers that provide the resources the firm needs to produce its products.
But also of marketing intermediaries, which are firms that help the company to promote, sell and distribute its goods to final buyers. Resellers are distribution channel firms. Physical distribution firms help the company stock goods, while marketing service agencies are marketing research firms. Financial intermediaries include banks and credit companies.
Other factors are competitors that operate in the same markets as the firm and the public: any group that has an actual or potential interest in or impact on an organisation’s ability to achieve its objectives. These can be financial publics, media publics, government publics, local publics, general public and internal publics.
Finally, customers are the most important actors. Consumers markets consist of individuals that buy goods for personal consumption. Business markets buy goods for usage in production processes, while reseller markets buy to resell at a profit. Government markets consist of buyers who use the product for public service, and international markets consist of all these types of markets across the border.
The macroenvironment consists of the larger societal forces that affect the microenvironment and consists of multiple factors. Demography: the study of human populations in terms of size, density, location, age, gender, face, occupational and other statistics. Changes in demographics result in changes in markets. There are some important demographic trends in today’s world, such as the world population growth and the changing age structure of the world population, where some parts of the world are aging and others have younger populations.
In the developed world, there are often generational differences to be found. Baby boomers are the 78 million people born during the years following the Second World War and lasting until 1964. Generation X are the 45 million people born between 1965 and 1976 in the “birth death” following the baby boom. Generation Y or the Millennials are the 83 million children of the baby boomers born between 1977 and 2000. They are characterized by a high comfort in technology.
Changes can also be found in the family structure. The traditional western household (husband, wife and children) is no longer typical. People marry later and divorce more. There is an increased number of working women and youngsters tend to stay at home longer. The workforce is also aging, because people need to work beyond the previous retirement age. There are also geographic shifts, such as migration. These movements in population lead to opportunities for marketing niche products and services. There are also migration movements within countries, namely from the rural to urban areas, also called urbanisation.
The economic environment consists of economic factors that affect consumer purchasing power and spending patterns. Countries vary in characteristics, some can be considered industrial economies, while others can be subsistence economies, consuming most of their own output. In between are developing economies that offer marketing opportunities. The BRIC (Brazil, Russia, India, China) countries are a leading group of fast expanding nations.
There are also changes in customer spending patterns, such as the recent recessions, which can lead to lifestyle changes. Marketers should also pay attention to income distribution and income levels.
The natural environment involves natural resources that are needed as inputs by marketers or that are affected by marketing activities. Changes in this environment involve an increase in shortage of raw materials, increased pollution and increased governmental intervention. Environmental sustainability involves developing strategies and practices that create a world economy that the planet can support indefinitely.
The technological environment consists of forces that create new technologies, creating new product and market opportunities. It can provide great opportunities, but also comes with certain dangers.
The political environment consists of laws, government agencies and pressure groups that influence and limit various organisation and individuals in a given society. Current trends in our world today are increasing legislation affecting businesses globally and thus an increase in governmental influence over businesses. There is also an increase in emphasis on ethics and operating socially responsible. Cause-related marketing refers to companies linking themselves to meaningful causes, to improve company image.
The cultural environment involves instructions and other forces that affect society’s basic values, perceptions, preference and behaviour. Cultural factors influence how people think and consume. Core beliefs are fundamental and passed on by parents and reinforced by the environment. Secondary beliefs are more open to change. People can vary in their views of themselves, of others, of organisation, but also in their views of society, nature and the universe.
In conclusion, firms should be pro-active rather than observing in respect to the marketing environment.