Nowadays, the world without marketing is unimaginable for us, whether it is a purely productive, commercial, cultural or non-profit organisation. If a company wants to compete effectively, it must bear in mind what is happening within and outside of organisation and that is called marketing environment. Keller (1) concurs that a marketing system of company needs to operate within the contexts of its environmental forces. So, what is exactly the marketing environment and why is understanding marketing environment important to marketers? The marketing environment includes external and internal factors that surround business, in a positive or negative way, to an enterprise it affects and influences its reactions and behaviour. This essay will examine the importance of why marketers should understand the marketing environment of a firm, by using companies cases or well-known analysis as STEEPLE or Porter's five forces.
1. Keller, K. L. (2016). Unlocking the Power of Integrated Marketing Communications: How Integrated Is Your IMC Program?. Journal Of Advertising, 45(3), 286–301
Think about the nature of marketing as a circle that is divided into three sectors: macro, micro and internal which is in the middle of that circle. The macro environment is the external environment of a company, which consists of factors that can determine possible opportunities and risks of the organization. The very factors of the organization's marketing environment are not able to influence, but they can be tracked and adapted to their marketing strategy. The literature appears to suggest, the marketing macro environment has six main forces: sociocultural, technological, Political, Economic, Ethical, Political and Legal and Ecological, thus making the acronym STEEPLE.
We can take an example of Economic, in this factor businesses want to know how are the consumers doing in the economy because the majority of the growth in the economy is derived from consumers spending. If costumers aren't spending money it will affect the health of the economy. If consumers wages have been declining or inflation is continuing to rise that could potentially affect consumers purchasing power. According to the latest recession in 2008 – 2009, where people did start to concentrate on saving, try to eliminate debt, because they were concerned and fearful for what the future was going to hold.
KOTLER, Philip a Gary ARMSTRONG. Marketing. Op. cit., s. 171.
Simply because a business can't control those things doesn't mean that they need to be necessarily to it. So, by understanding what happens in the external environment companies can put themselves in a position where they can adapt to changes. That is where this type of analysis provides such a huge benefit for a business. We can anticipate potential changes avoid to treats and transform them to an opportunity.
Businesses have very limited control usually only things that they can directly effect. Things like production, hiring and capital.
In many countries, there is a change in the ethnic structure of the population. Each population group has its own specific requirements and shopping habits. Several food, clothing and furniture companies have focused their products and promoted to one or more groups.
Micro environment refers to the factors close to an organization which have an impact on marketing activities. Those factors are for example competitors, customers and the industry. If we talk about competitors we can use the example of Morrison's and their advertisement against their contestants. We see Morison's throughout their marketing ads constantly undercutting their market competitor such as Asda and Tesco (link).
Business have to be aware of what competitor is doing. During past years we've seen a number of different companies, do into e-commerce Amazon and Walmart. There are two different perspective on this case. This case shows as that Amazon is the dominant player when it goes to e-commerce and the other case shows us that Walmart is trying to do better compete by
Uber and Lyft which provides similar car service. Also in this environment where you have them offering almost identical services and coming about with those services in similar time. In large part that's because of this competitive environment. If one of them offering this specific service it would put the other into disadvantage. Especially considering it's a relatively new market.
We can summarise that understanding marketing environment is important to marketers.
When it comes to competition…
Knowledge is the most basic marketing tool. The more we have an overview of markets and customers, the better and easier we can satisfy them. Changes in the market should not be surprising for the business. The company should be able to react flexibly to each change.
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