BM/U1 Topic 4 Organizational Market Environment: Perspectives and Challenges
Marketing is the main department in an organization for generating revenues. For an organization to be successful, it has to have a strong marketing department. Among the roles of the marketing function in an organization are to create and maintain market share, promote a company’s image, and aid in new product development through consumer insight. For it to carry out its roles competently, an organization has to understand its marketing environment completely.
Marketing environment is divided into two: Micro environment and Macro environment.
Micro environment refers to the factors close to an organization which have an impact on marketing activities. These forces are:
1. The company itself: this refers to the inter-relationship between the marketing department and other functions in an organization. All the departments should work as a whole in order to achieve organizational goals.
For instance, the top management sets overall firm objectives and all the other departments come up with their tactical and operational goals geared towards the attainment of the overall strategic firm objectives.
The relationship between marketing and the other departments, such as production, accounting and finance, research and development, and human resources, will have an impact on marketing activities.
2. Suppliers: these are the individuals and organizations that supply an organization with resources. A good supplier is one who delivers the right quality, at the right time and at the right price. Building good relationship with the supplier the market share of a company since an organization will be able to deliver value to its customers. The marketing department’s input is needed in collecting consumer information about products so as to know which raw materials to order.
3. Market intermediaries: refers to the individuals and firms that help an organization reach out to its customers. They include retailers, distributors, wholesalers, agents, marketing consultancy services, and dealers. They play a central role in determining how well a company’s product does in the market. Close monitoring has to be done on them so as to ensure that a company’s image is not dented or a company’s products de-marketed. Fostering strong relationships with these intermediaries is essential in marketing.
4. Public: This category refers to other general stakeholders who have an impact on marketing activities. They include the customers, and internal public such as the firm’s employees. When doing marketing, one has to recognize the impact that these public have on a firm’s promotion activities. These are the people who spread word about a company’s products or activities, which may build or destroy an organization. As a marketer therefore, one has to monitor closely the attitude of the public, both internal and external, to an organization, and if there is any action that needs to be taken, it has to be taken very fast because word of mouth spreads very fast.
5. Competitors: these are the other firms that a company is competing with. As a marketer, you always have to be ahead, or at least at par, with your competitor so as to outdo them in the market and win consumer loyalty. Monitoring a competitor’s activities has the reward of keeping a market share and winning your customers loyalty.
A look at the macro environment forces now. These factors include the following:
1. Demographic factors: this refers to the statistics associated with the human population and how it changes. It includes factors such as age, income distribution, literacy levels, population size and growth rate, among others.
Marketing deals with people and therefore understanding demographic statistics is paramount to a marketer. They assist a firm in making decisions such as which market to serve, what products to produce, how much to charge, and the mode of promotion to use. Marketing activities are therefore hugely affected by demographic factors since the marketer deals with human customers.
2. Political-legal factors: refers to the political stability of a country, political party activities, laws and regulations, and consumer rights movement groups in a country.
A firm has to be updated on all legal matters so as to run without any hitches. Laws such as those concerning quality of products have to be strictly adhered to in order to succeed in marketing.
3. Technological factors: A marketer has to be updated on new technological advancements. This assists in reaching out to more customers and serving the customer much better. Technology is very dynamic and its only a market who is as much dynamic who will succeed in their activities.
4. Social-cultural forces: refers to issues such as cultural beliefs, practices, attitudes and norms. They define what the consumer buys through his/her tastes and preferences. Marketing involves understanding these values and conducting promotion activities which do not contradict cultural values of the consumers.
5. Economic Factors: this involves a set of macro economic forces prevailing in a country such as inflation levels, business cycles, levels of employment, stage of development, among others. They define the purchasing power of a customer and therefore as a marketer, one has to understand the fundamentals of the economy on a macro level when designing the strategy to use.
6. Environmental factors: protection of the environment is emerging as a major priority to the whole world at large. The evolution of “green programs” is revolutionizing the corporate world. In promoting an organization, a marketer who is aware of the importance of protecting the environment will try to show how the firm is protecting the environment.
Companies are coming up with Eco-friendly products because they have realized that consumers are buying those products which do not deteriorate the environment. Non-biodegradable products are therefore being phased out. A marketer therefore has to show how environmental friendly their product is and convince the customer that it is of the required quality.