External Marketing Environment - Essay Example

 External Marketing Environment Introduction Overtime, the promotional plan must be modified due to the transformations of the setting in which customers live, work and make buying resolutions. This implies new customers will be targeted by the organization while others will be left out. The customers that are still targeted may develop diverse demands, tastes, earnings, way of life, and buying behavior. Though marketers can manage the promotional mix, external environment elements are beyond their control. The organization’s management must first understand the external environment in order to plan for the future. A firm is frequently oblivious about the factors that affect its future. A marketer can comprehend the marketing environment through conducting a marketing research. Acquaintance to the environment assists an organization to modify its promotional mix and recognize new opportunities. Lamb et al (2011, p. 110) cites economic, cultural and social, business, legal and political and demographic elements as the constituents of external marketing environment. Economic Environment There is no more significant component in the external environment affecting marketing than the economic environment. Lamb et al (2011, p111) notes that the economic environment affects the operation of a company on both at micro and macro levels. Micro level refers the individual company while the macro level implies the broader industry, country or international. i. Supply and Demand When there is absence of government intervention and control, supply and demand are the basic underlying forces of the economic dimension. Supply refers to the amount of goods and services sellers and producers are willing to bring to the market at given prices at given time (Lamb et al., 2011, p. 112). Demand on the other hand refers to the amount of goods and services the buyers are willing to buy at a given price and time. The intersection of these two variables determines the market price as well as the amount of the product that will be produced and sold. Often buyers and sellers do not agree, and the equilibrium price does not correctly reflect the value of the quantity of the goods and services in the market (Lamb et al, 2011, p. 112). When such a situation occurs, there is either a shortage or a surplus. In a competitive market structure, when a surplus or a shortage occurs, changes occur until equilibrium is restored. In the case of a surplus, the price is usually lowered to meet the demand level in the short run. In the long run, either the supply will decrease, as the quantities offered are decreased by some firms making production cuts or by other firms going out of business. When a shortage occurs, a company must carefully assess whether this condition id temporary or is actually a market need not being satisfied. ii. The Market and Exchange In every market economy there is a way for the market equilibrium price and quantity to be achieved. The mechanism for doing this by bridging the gap between supply and demand is the market place itself. Market place bridges the gap between what is produced and what is consumed, making the right quantity available to meet the market need (Lamb et al, 2011, p., 113) iii. General Economic Change The economic conditions in a country and the state of national economy change over time. Movements and fluctuations in the economy often follow patterns and have been described as business cycles (Lamb et al, 2011, p. 113). These cycles historically have consisted of four stages which include recession, prosperity, depression, and recovery. Cultural and social Environment In reference to Lamb et al (2011, p. 114), the cultural-social environment is replicated in the other four major environments external to the organization’s marketing mix. These environments include the economic environment, in the types and amounts of goods and services purchased, the business environment, in the distribution structure developed for the delivery of goods and services and the strong interest in ecology, the laws and regulations environment and all the aspects of the demographic environment. i. Lifestyle and Quality of life Lifestyle is simply the manner in which consumers and organizations behave in the market place. For consumers, lifestyles tend to focus on broad cultural trends and general needs, values, and activities closely associated with consumer behavior. These combine to develop an individual’s overall behavior. Consumer’s lifestyle is too reflected by their standards of living. An organization is expected to make available the products and services necessary to provide the desired standards of living and satisfying quality of life (Lamb et al, 2011, p, 114). If the products and services that are desired are being produced and delivered at the right price and quality, and with no associated negative impact in such areas as the environment, then no problems arise. When all these conditions do not occur, conflicts arise. ii. Marketing and Social Responsibility The rapidly changing values of the society and the increased responsiveness in the social and cultural dimension have placed more pressure on marketing personnel to act responsibly, morally and ethically (Lamb et al, 2011, p. 114). Marketing requires not only to provide the right quality of goods and services desired, but also to establish control procedures to inhibit unethical activities from damaging the company’s image. Business Environment The business environment consists of competition, raw materials and technology. i. Competition All companies experience competition from companies that produce and offer similar goods and services. The marketing system is predicated on competition. Companies may face intra-industry, inter-industry and international competition (Lamb et al, 2011, p. 115). Competition results to better products at lower prices, increased number of new and improved products and development of market efficiency in the distribution of products. ii. Raw materials Raw materials should be viewed in terms of their abundance and renewability. Lamb et al (2011, p. 116) notes that the supply and renewability of raw material pose both problems and opportunities for organizations. Companies whose products or entire operations rely on limited raw materials mean that the raw materials may become too costly even when available. iii. Technology One of the most dramatic forces in the business environment that directly impacts individuals and corporate livelihood is technology. Technology provides a culture for developing new products and new methods a culture for developing new markets and opportunities. The managers must carefully monitor technological environment (Lamb et al, 2011, p. 117). Political and Legal Environment The political and legal environment is another external environment of the marketing environment. A number of political and federal laws affect marketing decisions and activities. Federal regulatory agencies affect many marketing activities, including pricing, advertising, distribution and product development (Lamb et al, 2011, p. 119). The political and regulatory bodies have the power to enact laws in addition to some “discretion in establishing operating rules and regulations to guide certain types of industry practices” (p. 120). Demographic Environment Demography refers to the statistical study of certain characteristics of the population. Demographic variables affect marketing decision making. These variables include age, sex, education, income level and geographical location. Lamb et al (2011, p. 121) asserts that the demographic environment is a key variable of interest to marketing management, since people, channels, and businesses make up markets. By noting statistical shifts in the categories within these characteristics, marketing managers can both better meet the needs of the present markets and identify future markets and the corresponding product and service opportunities. Marketing managers can use demographic and business data to forecast the growth and ultimate potential of present products and to provide a picture of future economic conditions. Conclusion An organization functions in a complex, rapidly changing, hypercompetitive external environment that must be continually monitored in order for the firm to survive and prosper in the contemporary market place. Much of the external environment is beyond the control of the organization and greatly influences the functioning of the organization. Contemporary marketing occurs in a rapidly changing, hypercompetitive external environment. While the organization can have a degree of control over the external marketing environment, these outside forces are not under the organization’s control and change at an accelerated speed. References Lamb, C. W., Hair, J. F., & MacDaniel, C. (2011). Essentials of Marketing. (7th ed.). Cengage Learning. Read More