Lesson Note

Subject: Marketing

Topic: Marketing Environment

Class: SS1

Lesson Objective: by the end of the lesson, the learners should be able to:

1. Define marketing Environment;

2. Mention and explain the two types of marketing environment;

3. Identify the factors affecting marketing environment.

Lesson Summary / Discussion

MARKETING ENVIRONMENT

The marketing environment is a term that is used to collectively identify all the elements that have some impact on the actual performance of a market. This includes events and factors that occur within the context of the market itself and also any elements that are based outside the
market. The idea behind defining the
market environment is to understand what forces are exerting some amount of influence in the marketplace and The marketing environment is a term that is used to collectively identify all the elements that have some impact on the actual performance of a market. This includes events and factors that occur within the context of the market itself and also any elements that are based outside the market. The idea behind defining the market environment is to understand what forces are exerting some amount of influence in the marketplace and understand why and how a market reacts to those forces in certain ways.

The environments in which you will have to market your new product are a major factor in determining your strategy. In a real-life marketing plan you would spend a solid amount of time researching these environments.

The marketing environment is everything an organisation must take into consideration when developing and presenting a new product.

FACTORS AFFECTING
MARKETING ENVIRONMENT

Marketing environment is made up of all the factors and forces that influence marketing. These forces can be internal like departments (other than marketing such as finance department and human resource department) or external like
competitors, suppliers, economic or
political situation. To understand them better, marketing personals divide them in two categories namely macro environment and micro-environment.

1. Micro-environment: The micro
environment refers to the forces that are close to the company and affect its ability to serve its customers. The factors are:

a. Suppliers: The suppliers to a firm
can also alter its competitive position and marketing capabilities. These are raw material suppliers, energy suppliers, suppliers of labour and capital.

The bargaining power of the supplier gets maximized in the following situations:

  • The seller firm is a monopoly or an oligopoly firm.
  • The supplier is not obliged to contend with other substitute products for sale to the buyer group.
  • The buyer is not an important customer.
  • The suppliers product is an important input to the buyer’s business and finished product.
  • The supplier poses a real threat of forward integration.

b. Market Intermediaries: Every
producer has to have a number of
intermediaries for promoting, selling and distributing the goods and service to ultimate consumers. These intermediaries may be individual or business firms. These intermediaries are middleman (wholesalers, retailers, agents, etc.), distributing agency market service agencies and financial institutions.

c. Customers: The customers may be
classified as:

  • Ultimate customers: These customers may be individual and householders.
  • Industrial customers: T’hese customers are organisations which buy goods and services for producing other goods and services for the purpose of earning profits or fulfilling other objectives.
  • Resellers: They are the intermediaries who purchase goods with the view to resell them at a profit. They can be wholesalers, retailers, distributors, etc.
  • Government and other non- profit customers: These customers purchase goods and services and make them available to those for whom they are produced, for their consumption in most of the cases.
  • International customers: These customers are individual and organizations of other countries who buy goods and services either for consumption or for industrial use. Such buyers may be producers, resellers, consumers, and governments.
  • Competitors: Competitors are those who sell the goods and services of the same and similar description in the same market. Apart from competition on price, there is likely to be product differentiation. Therefore, it is necessary to build an efficient system of marketing. This will bring confidence and better results.

d. Public: It is duty of the company to
satisfy the people at large along with its competitors and the consumers. It is necessary for future growth. The actions of the company do influence the other groups forming the general public for the company. A public is defined as ‘any group that has an actual or potential interest in or impact on a company’s ability to achieve its objective. Public relations are certainly abroad marketing operation which must be fully taken care of.

2. Macro-environment: The macro
marketing environment takes into account all factors that can influence an organisation, but are outside of their control. These are: political, economic, socio-cultural and technological.

  • The political environment: These include all laws, government agencies and lobbying groups that influence or restrict individuals or organisations. It is important for marketers to be aware of these restrictions as they can be complex. Some products are regulated by both state and federal laws. There are even restrictions for some products as to who the target market may be, for example, cigarettes should not be marketed to younger children. There are also many restrictions on subliminal messages and monopolies. As laws and regulations change often, this is a very important aspect for a marketer to monitor.
  • b. The economic environment: Consists of all factors-such as salary levels, credit trends and pricing patterns that affect consumer spending habits and purchasing power. This refers to the purchasing power of potential customers and the ways in which people spend their money. The four stages of the economy cycle thorough prosperity, recession, depression and recovery. Consumers spend more during the prosperity stage than in the depression stage, which is when the lowest amount of consumer spending takes place. Your marketing campaign, product offerings, and pricing must be taken into account for the current economic cycle to be successful.
  • c. The socio-cultural environment: Includes institutions and other forces that affect the basic values, behaviours, and preferences of the society-all of which have an effect on consumer marketing decisions.
  • d. The technological environment: Is perhaps one of the fastest changing factors in the macro environment. This includes all developments from antibiotics and surgery to nuclear missiles and chemical weapons to automobiles and credit cards. As these markets develop it can create new markets and new uses for products. It also requires a company to stay ahead of others and update their own technology as it becomes outdated. They must be informed of trends so they can be part of the up coming events rather than becoming outdated and suffering the consequences financially.

Done studying? See previous lessons in Marketing

Lesson Evaluation / Test

  1. Define Marketing Environment.
  2. Mention and explain the factors affecting marketing environment.

Questions answered correctly? Kudos🥰🥰🥰

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