Dynamic nature of the environment

A firm’s aim is to survive and grow. Marketing helps achieve this through marketing activities, for example the process of market segmentation leads to the identification of a suitable target market. This identification means firms can manipulate a series of controllable factors- price, place, promotion and product, otherwise known as the marketing mix to produce a positive response in their target market. However a firm must also take into account the marketing environment; these are factors outside the firm’s control. These can influence a firm’s relationship with their target market; ignoring them can have disastrous consequences.

This essay will discuss the marketing environment as a whole, and will look in detail at certain aspects and examples to gain a picture of how the marketing environment affects a firm’s ability and desire to place consumers at the heart of their marketing activities.

The marketing environment consists of factors that a company has no or very little control over. It consists of the microenviroment and the macroenviroment. The microenviroment is factors close to the firm which can effect how well the firm satisfies the consumers’ needs. These include the company, suppliers, marketing intermediaries, customers, competitors and publics. Suppliers play an important role in customer satisfaction. The company needs these supplies to provide them will the materials necessary to produce the final product. Any problem in this transaction such as supply shortages, unreliable suppliers and labour strikes can severely harm the firm’s aim of consumer satisfaction, not to mention profitability.

Marketing managers need to keep a close eye on the microenviroment so they can respond or take advantage of any developments. For example if competitors lowered prices of similar goods or promoted a unique selling point, then the firm involved would need to respond appropriately by possibly rethinking the promotion section of the marketing mix to avoid negative and potentially damaging consequences.

The macroenviroment is factors that affect the whole microenvironment, they are: political, legal, demographic, technological, economic, natural and cultural forces. These forces are permanently changing and present opportunities and threats and effect companies’ marketing plans. For example: technology is permanently advancing; when you buy a new computer it is out of date by the time you have walked out of the shop. New laws are constantly being introduced and old ones updated. An example is the new 24 hour licensing laws to be introduced in November this year. We have seen over the years ever changing tastes/trends in clothes such as flares, short skirts, long skirts, cordials, denim, shell suit etc.

Fashion retailers must stay in tune with changing tastes in order to satisfy the key marketing concept of consumer satisfaction, and inevitably to survive and grow. Marks and Spencer is an example of a company that failed to take into account changes in consumer tastes, and subsequently failed to adapt their marketing mix to suit their target market. As a result Marks and Spencer went from being one of the largest clothes retailers to fighting off bankruptcy in 2000. A firm cannot expect to be successful if they neglect the needs of their consumer. This presents the point that consumers should be made the focal point of marketing decisions.

Firms acknowledge that they cannot satisfy all the needs of all the consumers so they split the market up into segments of similar characteristics (market segmentation), then target one or more of the most profitable segments and develop a marketing mix. This is done through market research e.g. questionnaires, benchmarking etc. The marketing mix is developed with consumers in mind with the aim of satisfying their needs and desires. For instance when producing a product market research may raise issues such as what colour, what size, the price and where best to distribute. It would not be wise to distribute a product in areas where there is a high amount of old age pensioners if your target market is teenagers. Marketing activities do not take place in a vacuum, and in developing the marketing mix the marketing environment must be taken into account.

There may be legal/morale restrictions on advertising, for example cigarette companies are governed by huge restrictions on advertising their product, so they must find legal and morale ways of gaining consumer awareness. Also certain products have to pass health and safety standards, especially children’s toys. In order to do this the design may have to be changed slightly, possibly moving away from the aim of consumer satisfaction. This suggests that it may be difficult and sometimes impossible to maintain the aim of consumer satisfaction, as there may be external factors prohibiting it. However it is the consumer who will inevitably decide the fate of a company, so a firm would do well to conduct its marketing activities as best it can with the consumer central and maintain a close and watchful eye on the dynamic nature of the macroenviroment and microenviroment.

The marketing strategy should be tailored around the firm’s target market; if this were not the case marketing would be then less successful. Each aspect of the marketing mix would need to be formulated with the target market (consumer) in mind. For example the design of the product would need to be such that it would satisfy the consumer’s needs. If it did not consumers would see no need to have it and buy a competitor’s product. The price of the product has to be set appropriately so that the target market will/can buy it. If the price is too high consumers may seek out alternatives which are cheaper. If the price is too low, the product might be viewed as cheap, as in the case of Laura Ashley who by increasing prices increased sales; thus views regarding Laura Ashley goods had changed.

Firms need to consider the best places of distribution in order to make it as easy as possible for the target market to purchase their product e.g. internet, supermarkets and areas of high population of the target market. It would not generally be shrewd to attempt to distribute a Saint George’s cross product in a predominantly Welsh area. Also promotion would need to be in areas where the greatest percentage of the target market would view it, thereby increasing product awareness. For example if a firm’s target market is 19- 26 year old males then it would be best to advertise in areas where this age group will see it most, for instance bars and magazines such as Loaded and FHM.

In order for firms to complete their marketing mix they will conduct market research by means such as surveys, time series analysis, market testing and the correlation method. Firms may use one or a variety of techniques to establish a good understanding of their target market. Better understanding of their consumers will lead to greater chances of success for their product(s).

When firms implement their marketing plans both the consumer and the marketing environment are of significant importance. It is true that firms should formulate their marketing plan to suit their target market. This is because the firm wants as much of the target market as possible to purchase their product. So therefore it makes sense to make consumers central to marketing activities. However if a firm fails to taking into account the external environment, then regardless of how well the marketing mix has been completed, the company could find it self failing. It is a fine balance for firms to ensure that the marketing plan is made with the consumer central while taking into account the marketing environment. The market environment and the consumer do not go hand in hand. The marketing environment can have a big impact on the marketing plan as it may conflict with the construction of the marketing mix, and subsequently means that decisions will have to be made with the consumer less central.

For example if a company’s supplier were to go bankrupt, a new supplier would need to be found if this new supplier could not provide the same colour as before, the design of the product would have to be altered. This decision would not have been made with the consumer central; it would have been a matter of no choice. However the firm may choose to alter their promotion section of the marketing mix in an attempt to alter the consumer’s perception about the colour. This example shows how the marketing environment can influence the marketing mix and how firms might respond to this change in their marketing mix with the consumer in mind.

It is clear that firms need to keep consumers central to all marketing activities, yet need to be aware of any changes in the marketing environment. Any changes in the marketing environment need to be responded to with the consumer central. The ever changing environment must be accepted by firms who wish to survive and grow and react in a way to these changes that best suite the target market.

References:

Brassington, K & Pettitt S. Principles of marketing (2nd Edition) FT/Prentice Hall 2000.Dibb, S., et al, Marketing (second European Edition), Houghton Hifflin 1994

Kotler, P., Armstrong, B., Saunders, Y. and Wong, V. Principles of Marketing: Fourth European Edition, Pearson/Prentice Hall 2005.