Searching for an essay?

Browse our database of more than 1700 essays donated by our community members!

Understanding the External Marketing Environment

INTRODUCTION

“All businesses operate within an environment, which directly or indirectly affects the way in which they function, just as we as consumers live within a cultural and social environment which to a greater or lesser degree determines the way in which we behave as individuals,” said Elaine O’Brien, University of Strathclyde.

Unlike the controllable marketing mix variables, the environmental forces are not controllable by marketers. However, marketers can control how they deal with those uncontrollable forces by identifying and monitoring those forces that are relevant to their firms. They also must forecast changes in these forces if they are to develop effective marketing plans and strategies.

5/5


Prices start at $10
Min. deadline 3 hours
Writers: ESL, ENL
Refund: Yes


Payment methods: VISA, MasterCard, JCB, DIscover

essaypro review
5/5

Prices start at $12
Min. deadline 6 hours
Writers: ESL
Refund: Yes


Payment methods: VISA, MasterCard, American Express

ivory research review
4.5/5

Prices start at $120
Min. deadline 3 hours
Writers: ENL
Refund: Yes


Payment methods: VISA, MasterCard, Maestro

myadmissionsessay review
4.5/5

Prices start at $11
Min. deadline 3 hours
Writers: ESL, ENL
Refund: Yes


Payment methods: VISA, MasterCard, JCB, DIscover

All organizations operate within environments. That is, all profit-making and not-for-profit organizations are surrounded by, and must contend with, external forces. Managers cannot govern the nature of these environmental forces. These uncontrollable influences affect consumers’ behaviour and organizations’ development of effective marketing mixes.

Conceptually, the forces that comprise the marketing environment are viewed as existing at two levels. They are categorized as micro and macro influences. The microenvironment consists of those forces that directly affect the marketing programs of a particular firm. The activities of marketing intermediaries, company, customers, suppliers, and competitors are all examples of external forces that influence the marketing actions of a specific organization.

The macro-environment encompasses the broad environmental system within which all organizations must conduct business. In one sense, it defines or creates the structure of the marketplace for all organizations. The particular elements that make up the macro-environment are demographic trends, economic, natural, socio and cultural influences, political and legal issues, and technological advances.

In this study, we are going to evaluate the extent to which the macro-environment affects marketing decisions.

“Companies and their suppliers, marketing intermediaries, customers, competitors, and publics all operate in a macro environment of forces and trends that shape opportunities and pose threats. These forces represent ‘uncontrollable’, which the company must monitor and respond to”. (Kotler, Millennium Edition)

Although these forces are described separately below, marketers must pay attention to their causal interaction, since these sets the stage for new opportunities as well as threats. For example, population growth (demographic) leads to more resource depletion and pollution (natural environment), which leads consumers to call for more laws (political/legal) to reduce environmental damage. The imposed restrictions stimulate new technological solutions and products (technology), which if they are affordable (economic forces) may actually change people’s attitudes and behaviour (socio/cultural).

ENVIRONMENTAL FACTORS THAT AFFECT MARKETING DECISIONS

Political/Legal Environment

Marketing decisions are strongly affected by developments in the political and legal environment. This environment is composed of laws, government agencies and pressure groups that influence and limit various organizations and individuals. Sometimes these laws also create opportunities for business.

“There are a number of reasons why the legal environment is important to managers, particularly those involved with the marketing function. First and most obvious, managers themselves may be convicted for certain legal violations such as price-fixing and mail or wire fraud. Second, product design considerations, often in conjunction with promotional and warranty materials, may lead to expensive product liability exposure, leading to high insurance rates and even bankruptcy. Similarly, private antitrust lawsuits by rivals or dealers may lead to treble damage awards that may be equally staggering (Petty, 1993).”

Marketing decisions are strongly affected by developments in the political and legal environment. This environment is composed of laws, government agencies and pressure groups that influence and limit various organizations and individuals. However, sometimes these laws also create opportunities for business. The followings are some ways of interpreting how the marketing functions of businesses have impinged:

At the most general level, the stability of the political system affects the attractiveness of a particular national market. While radical change rarely results from political upheaval in most Western countries, the instability of many Eastern European governments leads to uncertainty about the economic and legislative framework in which goods and services will be provided.

At a national level, the government passes legislation that directly affects the relationship between the firm and its customers and between itself and other firms. Sometimes legislation has a direct effect on marketers, for example, a law giving consumers rights against the seller of faulty goods. At other times, the effect is less direct, as where legislation requiring local authorities to put out to tender some of their duties has the effect of creating more competitive relationships between firms in a market

The government is additionally responsible for protecting the public interest at large, imposing further constraints on the activities of firms, for example where the government lays down design standards for cars to protect the public against pollution or road safety risks

The government is additionally responsible for protecting the public interest at large, imposing further constraints on the activities of firms, for example where the government lays down design standards for cars to protect the public against pollution or road safety risks.

Even the most liberal advocates of free-market economies agree that the system works best with at least some regulation. Well-conceived regulation can encourage competition and ensure fair markets for goods and services. Thus, governments develop public policy to guide commerce–sets of laws and regulations that limit business for the good of society as a whole. Almost every marketing activity is subject to a wide range of laws and regulations.

Understanding the public policy implications of particular marketing activity is not a simple matter. First, there are many laws created at the federal, state, and local levels, and these regulations often overlap. Second, the regulations are constantly changing–what was allowed last year may now be prohibited. Marketers must work hard to keep up with these changes in the regulations and their interpretations.

Legislation affecting business has increased steadily over the years. This legislation has been enacted for a number of reasons. The first is to protect companies from each other (e.g. Sherman Antitrust Act, 1890). Although business executives may praise competition, they sometimes try to neutralize it when it threatens them. So laws are passed to define and prevent unfair competition.

The second purpose of government regulation is to protect consumers from unfair business practices (e.g. Consumer Product Safety Act, 1972). Some firms, if left alone, would make poor products, tell lies in their advertising, and deceive consumers through their packaging and pricing. Unfair business practices have been defined and are enforced by various agencies. The third purpose of government regulations is to protect the interests of society against unrestrained business behaviour (e.g. National Environmental Policy Act, 1969). Profitable business activity does not always create a better quality of life.

Growth of Special-Interest Groups

The number and power of special-interest group have increased over the past few decades. Political-action committees lobby government officials and pressure business executives to pay more attention to consumer rights, women’s rights, senior citizen rights, minority rights, gay rights, and so on. Many companies have established public-affairs departments to deal with these groups and issues.

An important force affecting business is the consumerist movement-an organized movement of citizens and government to strengthen the rights and powers of buyers in relation to sellers. Consumerists have advocated and won the right to know the true interest cost of a loan and the true benefits of a product. In response to consumerism, several companies have established consumer-affairs departments to help formulate policies and respond to consumers’ complaints.

Clearly, new laws and growing numbers of pressure groups have put more restraints on marketers. Marketers have to clear their plans with the company’s legal, public relations, public affairs, and consumer-affairs departments.

ECONOMIC ENVIRONMENT

The economic environment affects how much we have to spend and how we are likely to spend it. Therefore it plays a significant role in determining the likely demand for products and services. Marketing is influenced by local, National and international economic factors. (Cannon T,1986)

The local economy of a region is important particularly when exceptional circumstances create significant variations to national trends. For example, a factor that has persistently troubled the UK economic performance is the high level of unemployment. In her book, Rosemarie Stefanou (Success in Marketing, 1993) wrote that the level of domestic unemployment has decreased the effective demand for many luxury consumer goods, which, in turn, has adversely affected the demand for the industrial machinery required to produce such goods. In some regions, the local economy particularly the retail and other service sectors has been devastated by the bright of persistent, long-term unemployment.

Other domestic economic variables are the rate of inflation and the level of domestic interest rates (i.e. the cost of borrowing capital). Admittedly, these can be significantly influenced by world economic factors.

High levels of inflation and the high levels of interest rates often used by the UK Treasury to combat inflation, affect the potential return from new investments and can inhibit the adoption and diffusion of new technologies. Governments of every persuasion attempt to encourage economic growth through various policy measures. Tax concessions, government grants, employment subsidies and capital depreciation allowances are but some of the measures that have been used in the past.

International economic developments have a longer-term significance which is sometimes more difficult to evaluate. Changing growth rates in other national economies affect exports and imports, which in turn influence national and local economies.

Another economic development, which has had a significant effect on individual UK enterprises, is Britain’s joining the European Union (EU), which is basically a customs union. This implies that all tariffs between member states on all goods and services be abolished and that a uniform tariff is adopted for all goods and services imported into the customs union area from non-member countries.

The intention of the EU was to create a completely ‘free market’ within the community. This market of 320 million people will give UK firms the kind of advantages that the USA already enjoys. Economists and businessmen as one of the most existing opportunities ever presented to British industry herald the creation of a single European market

The points I have narrated above all demonstrate the importance to marketing firms of continually monitoring the economic environment at both the domestic and world levels. The complex interaction of economic forces and the political responses made by individual governments in an attempt to influence and manage their natural economies can have dramatic effects on individual firm’s business operations.

TECHNOLOGICAL ENVIRONMENT

The technological environment is perhaps the most dramatic force now shaping our destiny. Technology has released such wonders as penicillin, organ transplants and computers. It has also released such horrors as nerve gas and the nuclear bomb. Our attitude towards technology depends on whether we are more impressed with its wonders or its blunders. Every new technology is a force for ‘creative destruction’; i.e. it replaces an older technology. When old industries fought or ignored new technologies, their businesses declined. New technology creates new markets and opportunities. New technology creates major long-run consequences that are not always foreseeable.

Advances in technology affect Marketing decisions in a number of ways.

The creation of new opportunities for products and services is the most obvious impact of technological change. Advances in electronic and computer technology have generated large numbers of new products, from business computers and communication devices, such as the mobile phones and fax machine, to domestic application in video games, music centres and microwave ovens.

Each successful new product presents opportunities for additions and refinements to add to the proliferation, e.g. computer games have been a recent growth market for companies such as Nintendo in the United States. Their success has created marketing opportunities for the development of new products.

Our consumption patterns and lifestyles evolve as a result of technological changes. There have been many recent examples. Developments in transportation systems have changed our purchasing habits as the spread of car ownership enabled convenient shopping further from home, culminating in the need for one-stop, out of town shopping centres. New technology in the kitchen, from microwaves to mixers, has reduced meal preparation times allowing our eating habits to fit in with busy lifestyles and creating the need for a whole new range of food products.

“The impact of technological change on marketing activities can also be seen at the retail level. Electronic point of sale (EPOS) data capture is now being increasingly used by the larger retail multiples. The so-called ‘laser check’ reads a bar code on the product being purchased and stores information, which is used to analyse sales and re-order stock, as well as giving customers a printed readout of what they have purchased and the price charged. Such a system obviates the tedious task of making every item with the retail price and the need for the checkout person to key the price of each item into the till machine. Manufactures of fast-moving consumer goods (FMCGs), particularly packaged grocery products have been forced to respond to these technological innovations by incorporating bar codes on their product labels or packaging”, (David stokes (2nd edition)

The examples given above illustrates how changes in the technological environment can affect the products and services that firm’s produce and the way in which firms carry out their business operations. Technological change, like all other factors in the Microenvironment, poses both threats and opportunities to the marketing.

ED Lazoska from the University of Washington wrote about his thoughts about Technology “In spite of some of the negatives Technology, I’m actually a big proponent of technology. I guess you could say I’m more turned on by its wonders and advantages than I am turned off by its blunders and shortcomings.

For example, I firmly believe that advances in technology will have a profound effect on assertive devices for persons with disabilities. Although some of my peers scoff at my predictions, there will be a time when technology will allow the blind to see, the deaf to hear, and the lame to walk as well as, or better than, persons who are not physically challenged.

However, as an observer of human behaviour, I have to ask, “If technology is so wonderful, why are things like rotary-dial telephones, hand-rolled cigars, and organic foods back in vogue?” If you’ve ever tasted fish that you just pulled out of a clear mountain lake and cooked on a wood fire, you know why the breaded and frozen kind just doesn’t measure up. In spite of all our technology, we can’t make food in a factory that tastes as wonderful as it does when it’s cooked outdoors.

Clearly, technology is both boon and bane. But I’m willing to adapt to it because I’ve seen what happens to those that try to fight it!”

The Demographic Environment

It is of major interest to marketers because it involves people, and people make up markets. Demography is the study of human populations in terms of their size, density, location, age, gender, race, occupation, income, education, and other statistics. The world’s population is growing rapidly. Today’s population of approximately 6 billion is expected to exceed 7.5 billion by 2025. Obviously, this has a major effect on the entire business environment and does not necessarily mean increased market opportunities (if spending power does not accompany the population growth). The large, diverse world population poses opportunities and threats, so marketers keep track of demographic trends both at home and abroad.

Population size and growth

The size of the total population of a country reflects the relationship between the birth rate (number of births per 1000 of the population in a given year) and the death rate (the number of deaths per1 1000 of the population in a given year).

The birth rate in Britain has declined steadily since the peak ‘baby boom’ years following the Second World War. A number of factors have contributed towards the falling birth rate – changing social altitudes towards large families (linked to rising standards of living), the widespread availability of contraception and legalization of abortion, together with the increasing proportion of married women following a career.

Geographical distribution

An understanding of the geographical distribution of the population is vital for marketing planning. Once the areas of highest population density are known, marketers can then establish where the greatest concentration of buyers is likely to be found. In the UK, these areas tend to be found south and east of line extending between River Tees and River Exe, including the southeast and west Midlands regions. High population densities also exist around the major conurbations such as London, Birmingham, Liverpool, Manchester etc, (M.Christopher & M.Mcdonald, 1995)

Some examples in the USA include

Changing Age Structure

Most consumer goods and services tend to be aimed at the needs of a particular age group rather than at the population as a whole. Firms tend to concentrate their efforts.

During the 1990’s, for the first time in the history of the US, there were more Americans over age 30 than under 30. The U.S. population is growing older for three major reasons: (1) the birth rate has been slowly declining (so there are fewer young people to “pull-down” the average age), (2) people are living longer (so there are more older people pulling up the average age), and (3) “Baby Boomers” (which make up almost 1/3 of the U.S. population) are now ALL older than 35 years.

Let’s take a look at how the U.S. population make-up is predicted to change over the next 50 years. The following table was created from information on the U.S. Census website on 6/27/97.

Age Group 1998 2000 2005 2010 2020 2030 2040 2050

Under 5 7.1 6.9 6.7 6.7 6.8 6.6 6.8 6.9

5 to 13 13.2 13.1 12.5 12.0 12.0 12.0 11.9 12.1

14 to 17 5.7 5.7 5.9 5.7 5.3 5.4 5.4 5.4

18 to 24 9.3 9.6 9.9 10.1 9.3 9.2 9.3 9.2

25 to 34 14.4 13.6 12.7 12.9 13.3 12.3 12.4 12.5

35 to 44 16.4 16.3 14.7 12.9 12.3 12.8 11.9 12.0

45 to 54 12.8 13.5 14.5 14.6 11.7 11.2 11.8 11.0

55 to 64 8.4 8.7 10.4 11.9 12.9 10.5 10.2 10.8

65 to 74 6.8 6.6 6.4 7.1 9.7 10.8 8.9 8.8

75 to 84 4.4 4.5 4.5 4.3 4.8 6.8 7.7 6.6

85 & over 1.5 1.6 1.7 1.9 2.0 2.4 3.7 4.6

Source: http://www.census.gov/statab/freq/96s0017.txt

The most significant demographic event to occur in the United States during the 20th century was the “Baby Boom” which occurred following World War II and lasted until 1964. During this time, 78 million Americans were born. With their larger families, American wage earners moved out of the cities and into the suburbs, where affordable housing was available in places such as “Levittowns” scattered throughout the country.

The migration to the suburbs put pressure on communities to provide needed social services — schools, police and fire departments, garbage removal, etc. — as well increasing the demand for land that was once used for farming. Arable land became housing developments. During this period, again for the first time in our history, there were more people living in cities and suburbs than were farming the land.

Life expectancy for Americans is increasing, too, and also has contributed significantly to the aging of our population. Senior citizens (those 65 years of age and older) now constitute the fastest-growing age segment in our population, and this trend will have a major impact on the demand for social services. As this group makes up the highest percentage of voters, you can expect major legislation on social security, Medicare and Medicaid, and other senior services to be forthcoming.

The amount of money subtracted from your paycheck for social security benefits can only increase, as there will be fewer working people to support a growing senior population. Major medical procedures (such as heart transplants and hip replacements), which only a few years ago would not have been performed on senior citizens, are now conducted routinely, improving both longevity and the quality of life. But, such advancements do not come without cost. After all, there is “no free lunch!”

Increasing Education

The U.S. population is becoming more educated. More than one source has noted something to the effect that “a bachelor’s degree today is like a high school diploma 25 years ago — everyone has one!” While that’s not quite true, as of 1995, 46% of our population over the age of 25 had attended some college.

Better-educated people will increase the demand for quality products, books, magazines, and travel. It also suggests a decline in television viewing because college-educated consumers watch less TV than the population as a whole.

According to American Demographics, the workforce is becoming whiter collar. Between 1950 and 1985, the proportion of white-collar workers rose from 41 to 54 per cent, that of blue-collar workers declined from 47 to 33%, and that of service workers increased from 12 to 14%.

Population shifts are of interest to marketers because people in different regions buy different things. Over the past twenty years or so, the U.S. population has been moving South and West — to “The Sunbelt.”

As mentioned above, over the last century the population has also been moving off the farm and into metropolitan areas. After WW2, there was a big migration from the cities to the suburbs, and trend, which continues today. And today, suburbs are becoming so large; they’re eating up the rural areas.

Greater mobility allows the freedom to pursue more lucrative jobs and to more easily upgrade standard of living. But, such mobility comes at a cost — again, there’s no free lunch — as the family unit becomes more fractured, separated by greater distances, and we find ourselves living in a neighbourhood of strangers. Think about the impact this has on our health care system. Family members that used to be living in the same home, or at least the same community, are no longer present to provide care to aging parents. Hence, the health care system must pick up the slack. As more Americans age into disability, and are living away from family (or don’t have family), the stress on our health care system can only increase.

Living with strangers also affects the crime rate. A couple of my classmates from India told me that one reason why the incidence of crimes against persons is so low in India is that everyone is a town or village knows everyone else — your name, who your parents are, where you live, etc. A stranger in town is recognized immediately for what he/she is, and the townspeople are eager to find out why they are there. Of course, the townspeople are only trying to help, but such attention has to be rather disconcerting and discouraging, to a potential thief or kidnapper who wants only to remain anonymous.

The Social/Cultural Environment

Consists of the forces that affect a society’s values, perceptions, preferences, and behaviours. We grow up in a cultural environment that shapes our basic beliefs and values and that defines our relationship with others.

For marketers, it’s important to understand what is going on in the social/cultural environment, as our perceptions and behaviours are constantly changing. While some cultural values tend to remain fairly constant (e.g. the principle that all Americans are entitled to “life, liberty, and the pursuit of happiness” is as strongly believed in today as it was when Founding Fathers drafted the Constitution), others change as their society changes. Further, think about various social situations in which you might find yourself every day. Do you behave differently in front of your friends than you do your parents, or your work associates, or even your college professors?

The UK culture has been influenced by the Protestant work ethic, which prescribes hard work, self-help and the accumulation of material worth. Other advanced industrial societies are also materialistically oriented. Cultural values do, however, change over time and such is particularly evident amongst the young. Evidence suggests that many young people today question the desirability of a culture with core values based upon materialisation.

Cultural Values are Relatively Constant

Core beliefs and values have a high degree of persistence. They are those firmly established within a society and are difficult to change. Such beliefs and values are perpetuated through the family, the church, education, the government and other institutions of the society. As a result core cultural values act as relatively fixed parameters within which marketing firms are forced to operate.

Most Americans believe in working, getting married, having children, being honest, etc. These core beliefs shape specific behaviours we exhibit in everyday life, and are passed on from parents to children.

Secondary beliefs are more open to change. For example, believing in marriage is a core belief; believing that people should get married early in life is a secondary belief

The major cultural values of a society are expressed in people’s view of themselves and of others, as well as their views of organizations, society as a whole, nature, and the universe. The views narrated below are with reference from Philip Kotlers book Market Management (Millennium Edition).

People’s Views of Themselves: has to do with one’s emphasis on serving the self versus serving others. Some seek personal pleasure, others self-realization. Brands are used as a means of self-expression, and people buy products that match their view of themselves (or the person they would like to be). During the 1980s, ambition and materialism increased dramatically. Persons impacting these trends have come to be known as the “Me Generation,” where conspicuous consumption and hedonism were the standards of the day

People’s Views of Organizations While most people are willing to work for large organizations, and expect them to carry out society’s work, the late 1980’s saw a sharp decrease in confidence and loyalty toward American businesses and political organizations. This suggests that organizations must find new ways to win consumer confidence, perhaps by supporting worthy causes and an increase in spending on public relations

People’s Views of Society: Patriots defend it, reformers want to change it, and malcontents want to leave it. People’s views of our society influence their consumption patterns, levels of spending and saving, and attitudes toward the marketplace. The 1980’s and 90’s have seen a significant surge in patriotism (after a low point during the Viet Nam War), and the cry of “Buy American” and “Made in the USA” has been taken up with renewed vigour.

People’s Views of Nature: There’s been a definite change of attitudes toward nature in the past decade. We used to believe we could control nature through technology; now we know that we can easily destroy nature if we are not careful. Nature cannot be controlled — we must learn to adopt a lifestyle that is more in harmony with nature

People’s Views of the Universe: People vary in their beliefs about the origin of the universe and their place in it. Although most Americans practice some form of religion, religious conviction and service have been declining over the years as people seek more immediate means of gratification. There are, however, indications that “spirituality is in,” as reflected in many organizations’ advertising efforts (e.g. IBM showing nuns on their way to vespers talking about the OS/2 network and surfing the net, Gatorade showing

The society in which people grow up shapes their beliefs, values and norms. People absorb, almost unconsciously, a worldview that defines their relationship to themselves, to others, to nature, and to the universe. The cultural environment is made up of institutions and other forces that affect society’s values, perceptions, preferences and behaviours.

The Natural Environment

Involves the natural resources needed as marketing inputs or that are affected by marketing activities. Environmental concerns have grown steadily over the past twenty years. The 1990’s have been called “The Earth Decade” as the natural environment has become a major issue facing the global marketplace.

In many cities around the world, air and water pollution have reached dangerous levels. There is growing concern about the “hole” in the ozone layer and the “Greenhouse Effect” (global warming). The amount of garbage generated every day has some environmentalists concerned that we may soon be buried in our own trash.

Trends in the Natural Environment

Today’s marketing managers should be aware of the following four trends occurring in the natural environment:

1 — Shortages of Raw Materials

Air and water may appear to be infinite resources, but even the most casual observer would say that these resources are under assault from our industrial mechanisms. Water shortages are prevalent in many parts of the world, including some areas of the United States, and one has only to look outside the window in most of our major cities and “see” the air to know that clean air is a very scarce resource indeed

Renewable resources, such as forests and food, must be used wisely. Forestry companies are required to reforest timberlands to prevent soil erosion and ensure sufficient wood supplies to meet future demand. Food supply is already a major problem because more and more of the world’s farmland is being converted to residential neighbourhoods.

2 — Increased Cost of Energy

The cost of energy makes long-term growth of high-energy industries and goods difficult to predict. Much of that energy is used to produce goods and services. But much is used to distribute them, too.

Oil has created the most serious problem for future economic growth, as the major industrial economies depend heavily on it. Until economical energy substitutes can be developed, oil will dominate the world political and economic picture.

Large increases in the price of oil (such as those that resulted from the 1973 OPEC embargo), and threats to its availability (such as Iraq’s invasion of Kuwait that led to Operation Desert Storm) have spurred the search for alternative forms of energy.

3 — Increased Pollution

Growth of industry almost always damages the natural environment. The so-called “green movement” seeks to operate businesses in such a way so as not to damage the natural environment. Their platform covers two dozen areas from agriculture to water. International marketers must consider the varying political power of “greens” in different countries.

For example, the All-Russian Society for Environmental Protection/Sverdlovsk Regional Council – Green Movement Association bills itself as “the oldest non-government ecological organization in Sverdlovsk Oblast.” The Association was founded in 1924 and a wise marketer might take them into account before penetrating too far into the Middle Urals.

Public concern about pollution has created marketing opportunities for some companies. There is a large market for pollution control systems, such as recycling centers and landfills, and consumers are seeking out ecologically responsible companies to give their business to.

4 — Government Intervention in Natural Resource Management

Governments vary in their concern and efforts to promote a clean environment. For example, the German government is vigorous in its pursuit of environmental quality because of the strong green movement in German. In the United States, the Environmental Protection Agency (EPA) was created in 1970, with the objective of setting and enforcing pollution standards and to conduct research on the causes and effects of pollution. Foreign companies doing business in the U.S. are facing stronger controls from government and a more informed and concerned consumer population.

The role of government in managing natural resources also blends into the legal environment. Marketers must take care in identifying natural environmental trends and take into account government regulations. Instead of opposing regulation, marketers should help to develop solutions to the material and energy problems facing industry today and tomorrow.

CONCLUSION

Marketers have virtually no control over the elements of the environment. It is essential, therefore, for marketers to keep abreast of changing trends in the external environment. Monitoring trends enables firms to anticipate and forecast changes, which are likely to affect their activities. They can then devise contingency plans to deal with new situations arising from demographic factors such as the rise of the 55+ age group, technological factors such as the impact of the silicon chip, social-cultural factors such as the increasing proportion of married women in the workforce of economic factors such as high-interest rates.

All these factors mentioned above form an environment, which affects marketing decisions. Information about this environment is a crucial input into the marketing process, therefore. The accelerating pace of technological change makes it harder to keep up, whilst the increased competitiveness of markets means that it is even more essential to do so.

Some organisations systematically analyse their environment to formally assess the possible impact of trends and external events. Environmental scanning techniques can help this analysis. Michael J. Barker (1985) wrote that the” QEUST (an acronym for ‘Quick Environmental Scanning Technique’) is one technique which allows managers of an organisation to pool their views on the future in a systematic way.

Other managers keep in touch with their environment in less formal ways. Successful entrepreneurs often develop informal networks to keep them in touch with what is happening around them. Some seem to have an instinctive understanding of developments in their environment. Research studies among a number of entrepreneurs suggest that those who succeed work hard at developing contacts to give them as much feedback from their environment as possible.

Whatever way it is gained, an understanding of the likely trends and events in the environment is a key part of the marketing process.

BIBLIOGRAPHY

PHILIP KOTLER, (MILLENIUM EDITION), MARKETING MANAGEMENT, PRENTICE HALL, NEWJERSEY

LANCASTER, G.A. & MASSINGHAM,L.C (1988) THE MARKETING ENVIRONMENT IN ESSENTIALS OF MARKETING, McGraw-HILL, NEW JERSEY

CANNON, T.(1986),BASIC MARKETING, PRINCIPLES AND PRACTICE, 2ND EDN, HOLT, RINEHART AND WINSTON, NEW YORK

MICHAEL J.BAKER, (1998), MACMILLAN DICTIONARY OF MARKETING & ADVERTISING, MACMILLAN PRESS LTD, LONDON.

MICHAEL J. BAKER (1985), MARKETING STRATEGY AND MANAGEMENT, MACMILLAN PUBLISHERS LTD, LONDON.

GEOFF LANCASTER & PAUL REYNOLDS (1995), MARKETING, BUTTERWORTH LTD, OXFORD

DAVID STOKES (2ND EDN), MARKETING: A CASE STUDY APPROACH, LETTS, LONDON

ROSEMARIE STEFANOU (1993), SUCCESS IN MARKETING, PAGES 28, 31, 35

MARTIN CHRISTOPHER AND MALCOLM MCDONALD (1995)

Cite this page

Choose cite format:
Understanding the External Marketing Environment. (2021, Feb 07). Retrieved February 28, 2021, from https://essayscollector.com/essays/understanding-the-external-marketing-environment/