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Marketing and the organisation’s micro- and macro-environments by Geoff Lancaster Ð'©

1 The micro-environment

The term micro-environment denotes those elements over which the marketing firm has control or which it can use in order to gain information that will better help it in its marketing operations. In other words, these are elements that can be manipulated, or used to glean information, in order to provide fuller satisfaction to the company’s customers. The objective of marketing philosophy is to make profits through satisfying customers. This is accomplished through the manipulation of the variables over which a company has control in such a way as to optimise this objective. The variables are what Neil Borden has termed �the marketing mix’ which is a combination of all the �ingredients’ in a �recipe’ that is designed to prove most attractive to customers. In this case the ingredients are individual elements that marketing can manipulate into the most appropriate mix. E Jerome McCarthy further dubbed the variables that the company can control in order to reach its target market the �four Ps’. Each of these is discussed in detail in later chapters, but a brief discussion now follows upon each of these elements of the marketing mix together with an explanation of how they fit into the overall notion of marketing.

1.1 The �four Ps’ and the marketing mix

The �four Ps’ stands for:

1. Product

2. Price

3. Place and

4. Promotion

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

Place, it is felt, might better be termed �placement’ because it comprises two distinct elements. The first element is channels of distribution that is the outlets and methods through which a company’s goods or services are sold. Thus a channel can be certain types of retail outlet or it can be salespeople selling a company’s industrial products through say a channel which comprises buyers in the chemical industry. The other part of place refers to logistics that relates to the physical warehousing and transportation of goods from the manufacturer to the end customer. Thus, placement might be a better descriptor as it refers to the placing of goods or services from the supplier to the customer. In fact, place has its own individual �mix’ which is termed the �distribution mix’.

Promotion also has its individual �mix’ that is called the �promotional mix’. This comprises advertising, selling and sales promotion. In fact promotion is a misnomer, because in advertising agency circles the mention of promotion usually means �sales promotion’. Some writers are now separating selling away from promotion and calling it �people’ because it is too important an element of marketing to be lumped in with promotion, although in reality it is still promotion (through word of mouth). This fifth P (people) are those who contact customers on a regular basis with the objective of ultimately gaining orders and these people comprise the salesforce. We can thus see that selling is a component part of overall marketing. There are two more Ps for service marketing, but these are dealt with later.

1.2 Models of marketing

Figure 1 attempts to sum up what is meant by marketing at a very simple level. In fact it is one of the earliest models ever attempted to explain the meaning of marketing.

Information

Firm Customer

Operation

Figure 1 Simple diagrammatic representation of marketing

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

Figure 2 is perhaps a more precise diagram of what is meant by marketing and one which we can begin to understand from what has already been said.

Marketing Sales Research Forecasting Buyer Behaviour

Supplier Customer

Product Price Distribution Promotion Personal Segmentation selling targeting & positioning

Channels Logistics Advertising Sales promotion

Figure 2 Model of the process of marketing

This more complex model better explains what we are now beginning to understand about marketing. The bottom line represents the elements of the marketing mix over which a company has control. These elements are manipulated in such a way as to best suit customers’ needs and tastes and this represents an operational flow where things have to be done in order to arrive at the optimum marketing mix. Remember that there are sub-mixes within the individual elements of the marketing mix. This bottom line also equates to the earlier notion of the four Ps, or rather the five Ps, as personal selling has been separated from promotion and becomes �people’.

The top line represents an information flow from the market to the firm. Data is collected through discussions and interviews with customers on and informal and formal basis. A whole range of techniques is available for this process and this 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 dealt with in a later lecture. In addition, data is collected from customers in relation to their likely future purchases and this is known as sales forecasting. Another raft of techniques is available for the subject of sales forecasting which lies at the very heart of marketing and business planning.