Market Environment

Market Environment

The *market environment* is a marketing term and refers to all of the forces outside of marketing that affect marketing management's ability to build and maintain successful relationships with target customers.

The market environment consists of both the macroenvironment and the 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.

o 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.

o 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.

o 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 company's 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 company's 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.

o 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.

o 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.

o The final aspect of the microenvironment is public, which is any group that has an interest in or impact on the organization's ability to meet its goals.

For example, financial publics can hinder a company's ability to obtain funds affecting the level of credit a company has.

o Media publics include newspapers and magazines that can publish articles of interest regarding the company and editorials that may influence customers' opinions.

o Government publics can affect the company by passing legislation and laws that put restrictions on the company's actions.

o Citizen-action publics include environmental groups and minority groups and can question the actions of a company and put them in the public spotlight.

o Local publics are neighborhood and community organizations and will also question a company's 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 company's customer base.

o And finally, the internal publics include all those who are employed within the company and deal with the organization and construction of the company's product.

* The macroenvironment refers to all forces that are part of the larger society and affect the microenvironment. It includes concepts such as demography, economy, natural forces, technology, politics, and culture.

o Demography refers to studying human populations in terms of size, density, location, age, gender, race, and occupation. This is a very important factor to study for marketers and helps to divide the population into market segments and target markets.

An example of demography is classifying groups of people according to the year they were born. These classifications can be referred to as baby boomers, who are born between 1946 and 1964, generation X, who are born between 1965 and 1976, and generation Y, who