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Marketing and Organisation's Micro- and Macro-environment

Marketing Macro Organisation

Marketing and the organisation's micro- and macro-environments

1. The micro-environment

The term micro-environment denotes those elements over that your marketing organization has control or which it may use in order to get information that will better make it in its marketing functions. In other words, they are elements that can be manipulated, or used to glean information, in order to provide fuller satisfaction to the company's customers. The aim of marketing viewpoint is to make revenue through gratifying customers. This is achieved through the manipulation of the variables over which a company has control so as to optimise this target. The factors are what Neil Borden has termed 'the marketing blend' which is a combination of all the 'ingredients' in a 'recipe' that is designed to prove most attractive to customers. In cases like this the substances are individual elements that marketing can manipulate into the most appropriate blend. E Jerome McCarthy further dubbed the variables that the business can control to be able to attain its target market the 'four Ps'. Each of these is discussed at length in later chapters, but a short discussion now comes after upon each of these components of the marketing combine together with a conclusion of how they fit in to the overall idea of marketing.

1. 1 The 'four Ps' and the marketing mix

The 'four Ps' stands for:

  • Product
  • Price
  • Place and
  • Promotion

Product and price are obvious, but perhaps place and promotion need more explanation.

Place, it is thought, might better be termed 'positioning' since it comprises two distinct elements. The first component is stations of distribution that is the shops and methods by which a company's goods or services can be purchased. Thus a channel can be sure types of retail outlet or it could be salespeople selling a company's industrial products through say a route which comprises customers in the chemical substance industry. The other part of place identifies logistics that pertains to the physical warehousing and vehicles of goods from the maker to the end customer. Thus, location might be an improved descriptor as it identifies the positioning of goods or services from the distributor to the client. Actually, place has its individual 'blend' which is termed the 'syndication mix'.

Promotion also has its specific 'combination' that is named the 'promotional blend'. This includes advertising, reselling and sales advertising. In fact advertising is a misnomer, because in advertising agency circles the mention of promotion results in 'sales campaign'. Some freelance writers are actually separating selling from promotion and contacting it 'people' because it is too important an component of marketing to be lumped within promotion, although in reality it is still promotion (through person to person). This fifth P (people) are those who contact customers frequently with the aim of ultimately gaining orders and these folks include the salesforce. We are able to thus note that selling is an element part of overall marketing. You can find two more Ps for service marketing, but they are dealt with later.

1. 2 Models of marketing

Figure 1 attempts to sum up what is intended by marketing at a very simple level. Plus its one of the earliest models ever attemptedto explain this is of marketing.


Firm Customer


Figure 1 Simple diagrammatic representation of marketing

In Body 1 we see information coming from customers to the supplying company. This information is observed and goods or services are supplied to customers consistent with customer needs. The information flow represents an exchange of ideas whilst the operation flow symbolizes an exchange of meanings.

Figure 2 could very well be a more correct diagram of what's designed by marketing and one which we can begin to comprehend from what has already been said.

  • Marketing Sales
  • Research Forecasting
  • Buyer Behaviour
  • Supplier Customer
  • Product Price
  • Distribution
  • Promotion
  • Personal Segmentation retailing concentrating on & positioning
  • Channels Logistics
  • Advertising
  • Sales promotion

Figure 2 Style of the procedure of marketing

This more complex model better explains that which we are now beginning to understand about marketing. Underneath line presents the elements of the marketing combination over which a corporation has control. These elements are manipulated in such a way concerning best suit customers' needs and tastes and this signifies an operational flow where things need to be done in order to arrive at the optimum marketing mix. Remember that there are sub-mixes within the average person components of the marketing combine. This important thing also equates to the earlier idea of the four Ps, or alternatively the five Ps, as personal advertising has been segregated from campaign and becomes 'people'.

The top line represents an information stream from the market to the organization. Data is collected through discussions and interviews with customers on and informal and formal basis. A complete range of techniques is designed for this process which is collectively termed marketing research. A more advanced strategic model that incorporates marketing research is embodied in a marketing information system (MkIS) and this is handled in a later lecture. In addition, data is gathered from customers with regards to their likely future buys and this is known as sales forecasting. Another raft of techniques is available for the main topic of sales forecasting which is placed at the heart of marketing and business planning.

Thus we begin to see how marketing orientation works. Customers will be the starting place and sales forecasting and marketing research determine their likely requirements and preferences. This information is prepared internally within the company and products and promotional announcements are devised to match customers' needs, to allay their purchasing worries and to reinforce their prospects. Goods and services are provided as so when required in the quantities needed and when they are wanted - not later and not earlier. This latter point is reinforced, because modern marketing dictates that customers demand their goods as needed and this lies at the base of the latest notion of 'just-in-time' creation which relates to recycleables and components. This is protected later in the written text and it includes huge implications for modern marketing.

1. 3 The area of marketing alongside other components of business

Marketing is but one function within business. Probably it is the most critical function since it interprets customers' needs and requirements into products and services and do it again business without which a company cannot continue. Actually today's view of marketing sets customers at the heart and marketing as the interpretative function bordering the customer with other major functions of business around this as shown in Amount 3. The idea is that all functions of business should be intended for the satisfactions of customers' requirements and this has resulted in the new idea of customer care.

Figure 3 The place of marketing in the modern organisation

At a far more traditional level, marketing is often found alongside other major functions within business and Shape 4 illustrates this romantic relationship. This organisation graph will not, of course, refer to all business organisations and to a large extent it is the 'ideal' theoretical composition. Companies tend to evolve and develop in a non-textbook manner, and used many different organisation charts are available as a result of a myriad of illogicalities that defy modern management thinking. Such illogical functions may exist due to forceful personality of your head of team, whose section has assumed a posture of power within an organisation through his / her own private disposition, and there is no managerial justification for adding it in that position of ability in line management. A good example may be the material control division that might record direct to the managing director rather than being truly a sub-function within the purchasing section. Another example, quite commonly found, is a predicament in which a sales director are available in the range alongside a marketing director. In that situation, it might be a forceful sales director in a sales motivated organisation who will not assume the duty for marketing, but who is too powerful to put into a subordinate position under marketing. With this record at heart, a 'textbook' company chart might be as shown in amount 4 (next site):

  • Board of directors - (in charge of policy making)
  • Company Secretary
  • General Manager
  • Corporate Strategy
  • Production Marketing
  • Research & Development Purchasing
  • Finance
  • Human Tool Management
  • Management Services (Computing)

Figure 4 A Traditional Organisation Chart

In this organisation chart we can easily see the place of marketing alongside other major functions of series management.

At the most notable you have the board of directors who are responsible for giving the organisation its strategic course. Customers of the panel are not necessarily full-time employees of the company. Indeed, in many greater companies, they have a tendency to be from outside the organisation and the skills they lend to the plank can be on a number of requirements. Such people might, for occasion, be strategy experts, financial specialists, people who lend distinction to a company (e. g. someone with a name) and folks who are there because they're on the board of directors of other companies and may bring a cross fertilisation of ideas, financial linkages and potential inter-firm dealings.

The general director is the person who translates plan into tactics and is accountable for the day-to-day procedures of the company. In most companies the general manager is a member of the plank of directors and in such cases his or her subject would then be managing director.

The company secretary is responsible for legal and administrative concerns in addition to serving as the secretary to the board of directors. This person also ensures that board meetings happen at intervals stipulated in the business's articles of connection, and that insurance policies that are decided are implemented. Because of this, the role of company secretary is a lateral relationship and is not in the line of command line. This also pertains to the relatively new function of corporate and business strategy whose function may be completed by standard management, but is usually a separate, relatively small, function whose role it is to ensure that subdivisions in the company have a plan (e. g. a marketing plan) and that every of these strategies fits in to the overall corporate plan without there being any mismatches (e. g. marketing might plan to market more than the firm can produce).

The major brand functions are responsible for translating strategy into techniques in conditions of the organisation's every day operations which includes such issues as processing, training and recruitment, design and offering. As was mentioned in the first chapter, marketing is a relatively modern function and it encompasses the function of advertising (although as reviewed previously, in many organisations the two functions are sometimes separated). In many organisations, heads of these line functions are sometimes people of the plank of directors in which particular case they would then have 'director' behind their name (e. g. marketing director, financial director). In such instances their responsibilities would cover both proper matters (being truly a member of the panel of directors) and tactical matters (being a functional mind of office).

2 The proximate macro-environment

The term macro-environment denotes all pushes and agencies exterior to the marketing firm itself. A few of these forces and organizations will be nearer to the operation of the organization than others, e. g. a firm's suppliers, providers, distributors and other distributive intermediaries and competing companies. These 'closer' exterior constituents tend to be collectively known as the firm's proximate macro-environment to distinguish them from the wider external makes found, for example, in the legal, cultural, economic and technological sub-environments.

This involves people, organizations and makes within the firm's immediate exterior environment. Of particular importance to marketing businesses are the sub-environments of suppliers, opponents and distributors (intermediaries). These sub-environments can each have a significant effect after the marketing organization.

2. 1 The provider environment

This includes other business firms or people who provide the marketing organization with recycleables, product constituents, services or, in the case of retailing firms, most likely the finished goods themselves. Businesses, whether they be merchants or manufacturers, will most likely rely upon numerous suppliers. The buyer/distributor marriage is one of mutual monetary interdependence, both people relying on the other because of their commercial well-being. Although both get-togethers are seeking steadiness and security using their company relationship, factors in the provider environment are subject to change, such as commercial disputes that may affect delivery of materials to the buying company, or an abrupt increase in natural material prices which causes suppliers to improve their prices. Whatever the merchandise or service being purchased by the marketing organization, unexpected developments in the distributor environment can have an instantaneous and possibly serious influence on the firm's commercial procedures. Because of this, marketing management, through the marketing brains element of its marketing information system, should regularly monitor changes and potential changes in the provider environment and have contingency plans ready to deal with possibly adverse innovations.

2. 2 The distributive environment

Much reliance is located on marketing intermediaries such as wholesalers, factors, agencies and vendors to ensure that their products reach the ultimate consumer. Into a casual observer, it may seem that the traditional method of distribution in virtually any particular industry is relatively static. It is because changes in the distributive environment happen relatively gradually, and there is therefore a danger of marketing firms failing to appreciate the commercial significance of cumulative change. Existing stations may be declining in level of popularity as time passes, while new stations may be growing undetected by the marketing company. Nowhere has this 'creeping' change been more clear over recent years in the united kingdom and other areas of the world than in the retailing of fast paced consumer goods (fmcg). In the 1960s well over half of most fmcg retail trade was accounted for in the impartial sector plus a further large proportion to the Co-operative Societies. Nowadays, the sector represented by the bigger food multiples has well more than this proportion.

2. 3 The competitive environment

Management must be alert to the potential risk of others marketing similar and alternative product whether they are of domestic or foreign source. In some business there may be numerous world-wide manufacturers posing a potential competitive danger and in others there may only be a few. Whatever the sort, size and composition of the industry, it is vital that marketing management has a complete understanding of competitive causes. Companies need to establish exactly who their competition are and the huge benefits they are providing to the marketplace. Armed with this knowledge, the business will have a larger opportunity to compete effectively.

3 The wider macro-environment

Changes in the wider macro-environment might not be as near to the marketing firm's day-to-day operations, nonetheless they are just as important. The main factors making up these wider macro-environmental forces fall under four groups.

  • Political and legal factors
  • Economic factors
  • Social and ethnical factors
  • Technological factors

(Also known as the 'PEST' factors in the marketing analytical context, a useful aide-memoire, although in some texts it is sometimes referred to as 'STEP'). To the may also be added 'Competitive factors' and even though 'PEST' analysis relates to a specific company 'Competitive factors' tend to be subsumed under 'Economic factors'. Such a PEST evaluation means list all possible items that may have an impact on the organisation under review under each of the P. E. S. T. headings. Just lately, some text messages have added 'L' (standing for legal) and 'E' (standing for environmental) to the classification, making the acronym 'PESTLE'. A lot more recently, some writers have incorporated another 'E' (standing for ecological) with the new acronym 'STEEPLE'.

3. 1 The politics and legal environment

To many companies, local political considerations are likely to be of prime matter. However, firms involved in international operations are faced with the additional dimension of international politics developments. Many businesses export and may have joint projects or subsidiary companies in another country. In lots of countries, specifically those in the so-called 'Third World' or even more latterly termed 'Growing Nations', the home political and economic situation is usually less stable than in the UK. Marketing firms functioning in such volatile conditions evidently have to keep an eye on the local politics situation very carefully.

Many of the legal, economic and social improvements, inside our own contemporary society and in others, are the direct result of political decisions apply, for example the privatization of talk about business or the control of inflation.

In summary, whatever industry the marketing firm is involved with, changes in the politics and legal conditions at both home and international levels can affect the company and therefore needs to be fully grasped.

3. 2 The monetary environment

Economic factors are of matter to marketing firms because they're likely to influence, among other things, demand, costs, prices and profits. These economic factors are generally beyond your control of the average person organization, but their results on individual enterprises can be profound. Political and economical forces are often tightly related to. A much quoted example in this context is the 'oil crisis' induced by the Middle East Battle in 1973 which produced financial impact waves throughout the Girl, resulting in significantly increased crude oil prices. This, in turn increased energy costs as well as the expense of many oil-based raw materials such as plastics and synthetic fibres. This added significantly to a global monetary recession, and everything serves to show how dramatic monetary change can upset the traditional structures and balances on the planet business environment.

As can be seen, changes in world economical forces are probably highly significant to marketing organizations, particularly those employed in international marketing. However, an understanding of monetary changes and forces in the home market is also of vital importance as such forces contain the most immediate impact.

One such factor is a high level of unemployment, which diminishes the effective demand for many luxury consumer goods, adversely influencing the demand for the industrial machinery required to produce such goods. Other home economic variables will be the rate of inflation and the amount of domestic interest levels, which affect the potential return from new investments and can inhibit the adoption and diffusion of new systems. Furthermore to these more indirect factors, competitive firms can also present a danger to the marketing company so their activities should be carefully monitored.

It is therefore vital that marketing organizations continually screen the monetary environment at both domestic and world levels. Economic changes pose a set of opportunities and threats, and by understanding and carefully monitoring the financial environment, businesses should be in a position to protect against potential threats also to capitalize on opportunities.

3. 3 The socio-cultural environment

This could very well be the most challenging component of the macro-environment to evaluate, manifesting itself in changing preferences, purchasing behaviour and changing priorities. The type of goods and services demanded by consumers is a function of the social conditioning and their consequent attitudes and beliefs.

Core cultural principles are those strongly established in just a modern culture and are therefore difficult to improve. They may be perpetuated through family, the church, education and the institutions of world and act as relatively fixed variables within which marketing businesses are forced to use. Secondary cultural prices, however, tend to be less strong and for that reason more likely to endure change. Generally, public change is preceded by changes over time in a society's extra cultural values, including the change in sociable attitude towards credit. As just lately as the 1960s, personal credit, or work with purchase as may also be known, was generally frowned upon and folks having such agreements tended not to discuss it in public. Today, offering instant credit is becoming an integral part of marketing, with most of us regularly using bank cards and store accounts. Indeed, for many individuals it is the supply and conditions of credit offered that are major factors in deciding to purchase a specific product.

Marketing firms also have had to react to changes in attitude towards health, for example, in the food industry people are actually questioning the desirability of including artificial preservatives, colourings and other chemicals in the meals they eat. The decrease in the level of popularity of smoking is a vintage example of how changes in interpersonal attitudes have posed a significant threat to an industry, forcing tobacco manufacturers to diversify away of tobacco products and into new regions of growth.

Changes in behaviour towards working women have resulted in an increase in demand for convenience foods, 'one-stop' shopping and the common adoption of such time-saving devices as microwave cookers. Marketing organizations experienced to respond to these changes. In addition, changes in moral attitudes from the individualism of the 'permissive contemporary society' of the 1960s and early 1970s for this focus on health, monetary security and more stable relationships, are all contributory factors to a dynamically changing socio-cultural environment that must be considered by companies when planning the future.

3. 4 The technical environment

Technology is a major macro-environmental variable which includes inspired the development of several of the merchandise we neglect today, for example, tv set, calculators, video recorders and desk-top pcs. Marketing organizations themselves play a part in technological improvement, many having their own research division or sponsoring research through universities and other corporations, thus playing a component in innovating new advancements and new applications.

One exemplory case of how technological change has influenced marketing activities is in the development of electronic point of deal (EPOS) data catch at the retail level. The 'laser checkout' reads a bar code on the merchandise being purchased and stores information that is employed to analyse sales and re-order stock, as well as supplying customers a printed readout of what they have purchased and the purchase price charged. Manufacturers of fast-moving consumer goods, particularly packaged grocery products, have been forced to respond to these technological innovations by incorporating bar codes on their product brands or packaging. In this manner, an alteration in the technical environment has damaged the products and services that organizations produce and the way in which firms perform their business businesses.

4 Other macro-environmental factors

The macro-environmental factors talked about are not designed to be an exhaustive list, but simply to demonstrate the key regions of environmental change. Other sub-environments may make a difference to marketing management, for example, in some countries the spiritual environment may create an important way to obtain opportunities and threats for organizations. In the UK, demographic changes are believed important by a number of firms.

In general, the united kingdom society has been stable at approximately 56 million for a number of years, but the birth rate is falling, while people are living longer. Organizations that produce goods and services well suited for babies and small kids (e. g. Mothercare) have seen their traditional marketplaces continue to be static or decline marginally. Such companies have tended to diversify, offering products directed at older age ranges. A larger aged sector of the populace offers opportunities for firms to produce goods and services to gratify their particular needs. The over-55 age group is the present day marketer's current major opportunity. In all advanced economies including the Australia, UK and USA it is this age group that has the largest disposable income, and special products and services such as getaways and pension-related financial services are being advertised to this sector.

5 Summary

The company's micro-environment has been reviewed in conditions of variables over which they have control highly relevant to the marketing combination. This led to a information of marketing and its own various sub-divisions including information from the market-place in conditions of forecasting and marketing research. Marketing was then looked at alongside other business functions and its own place in series management was known. The business's proximate macro-environment was then reviewed under provider, distributive and competitive environment environments and lastly the wider macro-environment was evaluated under the headings: politics and legal, economical, socio-cultural and scientific environments. This can best be summed up by looking what has been covered in terms of a number of layers in the environment from customers, to marketing and resources of the business, to the organisation's proximate macro-environment and lastly to its wider macro-environment. This is illustrated in Figure 5.

Figure 5 An Organisation's various environments

The outer level consists of the wider macro-environmental Infestations factors.

The next covering concerns the proximate macro-environment factors cited under section 2. This also contains the organisation's 'publics' that is a pr term dealt with later, but which essentially means any band of those who are affected by or are touching the company in virtually any framework (e. g. those who supply financing or those who live near to the company's manufacturing facility).

The next level is the organisation's strategic marketing planning and control system.

The techniques that deliver the strategy are the four Ps and these are within the next layer.

The final inner circle is the most important and it is customers that all planning must start. The phrase to be a 'customer led' company is at the center of marketing orientation and indeed tactics of customer care help to concrete long-term customer interactions.

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