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Chapter Three

The Marketing Environment –

Micro Environment

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The Marketing Environment

The marketing environment includes the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers

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The Marketing Environment

Microenvironment consists of the actors close to the company that affect its ability to serve its customers -- the company, suppliers, marketing intermediaries, customer markets, competitors, and publics

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The Company’s Microenvironment

• Top management

• Finance

• R&D

• Purchasing

• Operations

• Accounting

The Company

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The Company’s Microenvironment

• Provide the resources to produce goods and services

• Treated as partners to provide customer value

Suppliers

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The Company’s Microenvironment

• Help the company to promote, sell and distribute its products to final buyers

Marketing Intermediaries

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The Company’s MicroenvironmentTypes of Marketing Intermediaries

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•Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers.

•Physical distribution firms help the company to stock and move goods from their points of origin to their destinations.

•Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets.

•Financial intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods.

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The Company’s Microenvironment

• Firms must gain strategic advantage by positioning their offerings against competitors’ offerings

Competitors

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The Company’s Microenvironment

• Consumer markets

• Business markets

• Reseller markets

• Government markets

• International markets

Customer

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•Consumer markets: individuals and households that buy goods and services for personal consumption.

•Business markets: buy goods and services for further processing or for use in their production process.

•Reseller markets: buy goods and services to resell at a profit.

•Government markets: made up of government agencies that buy goods and services to produce public services.

International markets: buyers in other countries, including consumers, producers, resellers, and governments.

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The Company’s Microenvironment

• Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives– Financial publics– Media publics– Government publics– Citizen-action publics– Local publics– General public– Internal publics

Publics

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• Financial publics influence the company’s ability to obtain funds.

• Media publics carry news, features, and editorial opinion.

• Government publics. Management must take government developments into account.

• Citizen-action publics. A company’s marketing decisions may be questioned by consumer organizations, environmental groups, etc.

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• Local publics include neighborhood residents and community organizations.

• General public. The general public’s image of the company affects its buying.

• Internal publics include workers, managers, volunteers, and the board of directors.

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Market structures

• Monopoly.

• Oligopoly.

• Monopolistic competition.

• Perfect competition.

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Market structures (1 of 4)

Monopoly:

• Where one supplier has sole control over a market and there is no competition.

• Where there is a captive market with no alternative source of supply.

• A strong positive image, good customer service, and fair pricing are essential.

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Market structures (2 of 4)

Oligopoly:

• Where a small number of companies account for a large share of the market.

• Where a certain amount of interdependence exists between the key players.

• Oligopolists spend time watching each other.

• example: telecommunication, gas / fuel, water/electrical

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Market structures (3 of 4)

Monopolistic competition:

• Many competitors in market.

• Each has differentiated products (ie. the products are substitutes, but are not exactly alike).

• examples include the markets for restaurants, cereal, clothing, shoes and service industries in large cities

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Market structures (4 of 4)

Perfect competition:

• Involves many small producers all supplying identical products that can be substituted for each other.

• Producers do not influence or determine price.

• There are no barriers to market entry or exit.

• Buyers and sellers have complete information about what is happening.

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SWOT analysis

• Internal strengths and weaknesses of the organisation and compare these with the external opportunities and threats.

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Scanning business environment

• SWOT analysis– SWOT analysis is a tool for auditing an

organisation and its environment– It is the first stage of planning and helps markets

to focus on key issues– SWOT stands for strengths, weaknesses,

opportunities, and threats.

– Strengths and weaknesses are internal factors.– Opportunities and threats are external factors.

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Swot analysis

Internal

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Swot analysis• The internal analysis is a comprehensive evaluation of the internal

environment’s potential strengths and weaknesses.

– Company culture– Company image– Organisational structure– Key staff– Access to natural resources– Position on the experiences curve– Operational efficiency– Operational capacity– Brand awareness– Market share– Financial resources– Exclusive contracts– Patents and trade secrets

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Swot analysis

• For example:– Strength could be..

• Your specialist marketing expertise• A new, innovative product or services• Location of your business• Quality processes• Any other aspect of your business that adds

value to your product or services.

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Swot analysis

• For example:– weaknesses could be..

• Lack of marketing expertise• Undifferentiated products or services (in

relations to your competitors)• Location of your business• Poor quality goods and services• Damaged reputation

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Swot analysis

External

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Swot analysis

• An opportunity is the chance to introduce a new product or service that can generate superior returns.

• Opportunities can arise when changes occur in the external environment.

• Many of these changes can be perceived as threats to the market position of existing products.

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Swot analysis• Changes in the external environment may be related

to:– Customers– Competitors– Market trends– Suppliers– Partners– Social changes– New technology– Economic environment– Political and regulatory environment

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Swot analysis

• For example:– Opportunities could be:

• A developing market such as the internet.• Mergers, joint ventures or strategic alliances• Moving into new market segments that offer

improved profits• A new international market• A market vacated by an ineffective competitor

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Swot analysis

• For example:– Threats could be:

• A new competitor in your home market• Price wars with competitors• A competitor has a new, innovative product or

service• Competitors have superior access to channels of

distribution• Taxation is introduced on your product or

services