The market environment is a marketing term and refers to all of the forces outside of marketing that affect marketing

managements ability to build and maintain successful relationships with target customers. The market environment consists of both the macroenvironment and the microenvironment.

MICROENVIRONMENT
The microenvironment refers to the forces that are close to the company and affect its ability to serve its customers. It includes the company itself, its suppliers, marketing intermediaries, customer markets, competitors, and publics. The company aspect of microenvironment refers to the internal environment of the company. This includes all departments, such as management, finance, research and development, purchasing, operations and accounting. Each of these departments has an impact on marketing decisions. For example, research and development have input as to the features a product can perform and accounting approves the financial side of marketing plans and budgets. The suppliers of a company are also an important aspect of the microenvironment because even the slightest delay in receiving supplies can result in customer dissatisfaction. Marketing managers must watch supply availability and other trends dealing with suppliers to ensure that product will be delivered to customers in the time frame required in order to maintain a strong customer relationship. Marketing intermediaries refers to resellers, physical distribution firms, marketing services agencies, and financial intermediaries. These are the people that help the company promote, sell, and distribute its products to final buyers. Resellers are those that hold and sell the companys product. They match the distribution to the customers and include places such as Wal-Mart, Target, and Best Buy. Physical distribution firms are places such as warehouses that store and transport the companys product from its origin to its destination. Marketing services agencies are companies that offer services such as conducting marketing research, advertising, and consulting. Financial intermediaries are institutions such as banks, credit companies and insurance companies. Another aspect of microenvironment is the customers. There are different types of customer markets including consumer markets, business markets, government markets, international markets, and reseller markets. The consumer market is made up of individuals who buy goods and services for their own personal use or use in their household. Business markets include those that buy goods and services for use in producing their own products to sell. This is different from the reseller market which includes businesses that purchase goods to resell as is for a profit. These are the same companies mentioned as market intermediaries. The government market consists of government agencies that buy goods to produce public services or transfer goods to others who need them. International markets include buyers in other countries and includes customers from the previous categories.

Competitors are also a factor in the microenvironment and include companies with similar offerings for goods and services. To remain competitive a company must consider who their biggest competitors are while considering its own size and position in the industry. The company should develop a strategic advantage over their competitors. The final aspect of the microenvironment is publics, which is any group that has an interest in or impact on the organizations ability to meet its goals. For example, financial publics can hinder a companys ability to obtain funds affecting the level of credit a company has. Media publics include newspapers and magazines that can publish articles of interest regarding the company and editorials that may influence customers opinions. Government publics can affect the company by passing legislation and laws that put restrictions on the companys actions. Citizen-action publics include environmental groups and minority groups and can question the actions of a company and put them in the public spotlight. Local publics are neighborhood and community organizations and will also question a companys impact on the local area and the level of responsibility of their actions. The general public can greatly affect the company as any change in their attitude, whether positive or negative, can cause sales to go up or down because the general public is often the companys customer base. And finallythose who are employed within the company and deal with the organization and construction of the companys product.

Sales & Marketing Micro Environmental Factors

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Micro Environmental Factors These are internal factors close to the company that have a direct impact on the organisation's strategy. These factors include the following: Customers: Organisations survive on the basis of meeting the needs and wants of customers by providing them with benefits. Failure to focus on them will result in a failed business strategy. Employees: Employing the proper staff and keeping these workers motivated is an essential part of the strategic planning process of an organisation. Training and development plays an essential role in gaining a competitive edge, particularly in marketing to the service sector. This is clearly apparent in the airline industry. Suppliers: An increase in raw material prices will have a negative effect on the marketing mix strategy of an organisation. Oranisations may be forced to raise prices as a result. Close supplier relationships is one way of ensuring competitive and quality products for an organisation. Micro Environmental Factors Shareholders: Organisations require great inward investment for growth. As they do so, they face increasing pressure to move from private ownership to public. However, going public unleashes the forces of shareholder pressure on the strategy of organisations. Satisfying shareholder needs may result in a change in tactics employed by an organisation. Many internet companies whose share prices rocketed in 1999 and early 2000 saw them tumble as they faced pressures from shareholders to turn in a profit. In a market which has very quickly become overcrowded many have failed to make a profit, meet shareholders' expectations, and thus survive. Media: Positive or negative media attention on an organisation's product or service can in some cases make or break an organisation. Consumer programmes with a wide and direct audience can also have a

very powerful and positive impact within the media. The strength of the media may sometimes force organisations to change their tactics. Competitors: The name of the game in marketing is differentiation. What benefit can the organisation offer which is better then its competitors? Can it sustain this differentiation over a period of time? Competitor analysis and monitoring is crucial if an organisation is to maintain its position within the market. v

In last Lesson we discussed the marketing process. Marketing process consists of four steps: analyzing market opportunities; developing marketing strategies; planning marketing programs, which entails choosing the marketing mix (the four Ps of product, price, place, and promotion); and organizing, implementing, and controlling the marketing effort. This marketing process is influenced by some environmental factors that can be internal to organization or external to organization, today we will be covering Marketing Environment:

MARKETING ENVIRONMENT
In order to correctly identify opportunities and monitor threats, the company must begin with a thorough understanding of the marketing environment in which the firm operates. The marketing environment consists of all the actors and forces outside marketing that affect the marketing managements ability to develop and maintain successful relationships with its target customers. Though these factors and forces may vary depending on the specific company and industrial group, they can generally be divided into broad micro environmental and macro environmental components.

For most companies, the micro environmental components are: the company, suppliers, marketing channel firms (intermediaries), customer markets, competitors, and publics which combine to make up the companys value delivery system. The macro environmental components are thought to be: demographic, economic, natural, technological, political, and cultural forces. The wise marketing manager knows that he or she cannot always affect environmental forces. However, smart managers can take a proactive, rather than reactive, approach to the marketing environment. As marketing management collects and processes data on these environments, they must be ever vigilant in their efforts to apply what they learn to developing opportunities and dealing with threats. Studies have shown that excellent companies not only have a keen sense of customer but an appreciation of the environmental forces swirling around them. By constantly looking at the dynamic changes that are occurring in the aforementioned environments, companies are better prepared to adapt to change, prepare long-range strategy, meet the needs of todays and tomorrows customers, and compete with the intense competition present in the global marketplace. All firms are encouraged to adopt an environmental management perspective in the new millennium. A companys marketing environment consists of the actors and forces outside marketing that affect marketing managements ability to develop and maintain successful relationships with its target customers. 1). Being successful means being able to adapt the marketing mix to trends and changes this environment. 2). Changes in the marketing environment are often quick and unpredictable. 3). The marketing environment offers both opportunities and threats. 4). The company must use its marketing research and marketing intelligence systems to monitor the changing environment. 5). Systematic environmental scanning helps marketers to revise and adapt marketing strategies to meet new challenges and opportunities in the marketplace. The marketing environment is made up of a:

1. Micro environmental 2. Macro-environment. 1. Micro environmental

The microenvironment consists of five components. The first is the organizations internal environmentits several departments and management levelsas it affects marketing management's decision making. The second component includes the marketing channel firms that cooperate to create value: the suppliers and marketing intermediaries (middlemen, physical distribution firms, marketing-service agencies, financial intermediaries). The third component consists of the five types of markets in which the organization can sell: the consumer, producer, reseller, government, and international markets.

The fourth component consists of the competitors facing the organization. The fifth component consists of all the publics that have an actual or potential interest in or impact on the organizations ability to achieve its objectives: financial, media, government, citizen action, and local,

general, and internal publics. So the microenvironment consists of six forces close to the company that affect its ability to serve its customers: a. The company itself (including departments). b. Suppliers. c. Marketing channel firms (intermediaries). d. Customer markets. e. Competitors. f. Publics.

1. The Companys Microenvironment

As discussed earlier the companys microenvironment consists of six forces that affect its ability to serve its customers. Lets discuss these forces in detail:

a. The Company
The first force is the company itself and the role it plays in the microenvironment. This could be deemed the internal environment. 1). Top management is responsible for setting the companys mission, objectives, broad strategies, and policies. 2). Marketing managers must make decisions within the parameters established by top management. 3). Marketing managers must also work closely with other company departments. Areas such as finance, R & D, purchasing, manufacturing, and accounting all produce better results when aligned by common objectives and goals. 4). All departments must think consumer if the firm is to be successful. The goal is to provide superior customer value and satisfaction.

b. Suppliers
Suppliers are firms and individuals that provide the resources needed by the company and its competitors to produce goods and services. They are an important link in the companys overall customer value delivery system. 1). One consideration is to watch supply availability (such as supply shortages). 2). Another point of concern is the monitoring of price trends of key inputs. Rising supply costs must be carefully monitored.

c. Marketing Intermediaries
Marketing intermediaries are firms that help the company to promote, sell, and distribute its goods to final buyers. 1). Resellers are distribution channel firms that help the company find customers or make sales to them. 2). These include wholesalers and retailers who buy and resell merchandise. 3). Resellers often perform important functions more cheaply than the company can perform itself. However, seeking and working with resellers is not easy because of the power that some demand and use. Physical distribution firms help the company to stock and move goods from their points of origin to their destinations. Examples would be warehouses (that store and protect goods before they move to the next destination). Marketing service agencies (such as marketing research firms, advertising agencies, media firms, etc.) help the company target and promote its products. Financial intermediaries (such as banks, credit companies, insurance companies, etc.) help finance transactions and insure against risks.

d. Customers
The company must study its customer markets closely since each market has its own special characteristics. These markets normally include:

1). Consumer markets (individuals and households that buy goods and services for personal consumption).

2). Business markets (buy goods and services for further processing or for use in their production process). 3). Reseller markets (buy goods and services in order to resell them at a profit). 4). Government markets (agencies that buy goods and services in order to produce public services or transfer them to those that need them). 5). International markets (buyers of all types in foreign countries).

e. Competitors
Every company faces a wide range of competitors. A company must secure a strategic advantage over competitors by positioning their offerings to be successful in the marketplace. No single competitive strategy is best for all companies.

f. Publics
A public is any group that has an actual or potential interest in or impact on an organizations ability to achieve its objectives. A company should prepare a marketing plan for all of their major publics as well as their customer markets. Generally, publics can be identified as being: 1). Financial publics--influence the companys ability to obtain funds. 2). Media publics--carry news, features, and editorial opinion. 3). Government publics--take developments into account. 4). Citizen-action publics--a companys decisions are often questioned by consumer organizations. 5). Local publics--includes neighborhood residents and community organizations. 6). General publics--a company must be concerned about the general publics attitude toward its products and services. 7). Internal publics--workers, managers, volunteers, and the board of directors.