The Importance Of The Marketing Environment In Business Success

Marketing Environment During carrying out and managing marketing activities, actually business people and a number of stakeholders involved will be influenced by several internal and external factors that are interrelated to one another. Where the two existing factors can form a marketing environment or marketing environment according to the type of business niche and business strategy model (business model). The environment around existing marketing insights can later help businesses know market conditions and company performance when carrying out marketing strategy innovations.

In other words, business people will be better able to analyze or identify marketing trends (marketing analysis) and manage potential business risks (enterprise risk management). Thus, companies have the opportunity to develop business processes (business development), even during fluctuations in the market value of the business (market value).

However, not all business metrics in the marketing environment can be fully controlled by the company and the company needs to adjust the changes for one reason or another (business process management). Because there are several factors that become business strengths (competitive advantage) and some that become business threats.

Definition of Marketing Environment

Referring to the Indeed website, the marketing environment is all the internal and external factors and forces of a business that affect marketing activities and the ability of a business to serve its customers. Basically, the marketing environment is wide and varied which consists of controllable and uncontrollable factors. A good understanding of the marketing environment will help businesses to:

  • Identifying business opportunities, meaning that companies will be better able to pay attention to and take advantage of market opportunities before losing their business competitive advantage. For example, marketers choose to maximize resources into the marketing funnel in order to increase sales.
  • Identify business threats, where companies are better able to study the marketing environment to find out potential business threats and losses that can affect marketing activities.
  • Analyzing competitors (competitive analysis) and understanding customers (customer acknowledgment) in order to formulate business competitive advantages.
  • Manage change and sustain business growth in a dynamic economy. In addition, marketing managers can also estimate (marketing forecast) and determine the best marketing campaign strategy (marketing campaign) by monitoring the business marketing environment.

Type of Marketing Environment

Based on its basic understanding, the marketing environment includes two types of components of the business environment, namely the internal environment and the external environment. Check out the full explanation below.

1. Internal

The internal environment in the marketing aspect is formed from all the internal factors and strengths of an organization or company. Starting from capital factors and business operational costs (business costs), human resources alias employees, market share, raw materials, and marketing automation technology as well as the entire business process (business process automation). Thus, the internal environment will be under the control of the marketer where he can change or modify the environment according to market demand and business needs (internal growth). Generally, a company’s internal environment that influences marketing includes the marketing department, sales department, human resources department, and manufacturing department. For example, once a company does not have sufficient assets, resources, or raw materials to produce a product or service. This will cause the process of producing goods or services to slow down. As a result, the company is unable to meet customer demand for certain products or services in the target market segment.

2. External

While the external environment in the marketing aspect consists of all marketing factors outside the company. In contrast to the internal environment, marketers do not have much control over external marketing environmental factors. Referring to the Marketing91 website, the external marketing environment is divided into two smaller categories, namely the microenvironment (microenvironment) and the macroenvironment (macroenvironment).

1. Microenvironment

Microenvironment or microenvironment in business includes all factors and strengths that are directly related to the company’s business operations. The micro components of the external environment are also known as the task environment. With a deep understanding of the microenvironment, companies can make decisions in dealing with conflicts and improve relationships with external partners and with consumers (customer relationships). Microenvironment itself has various components or elements of the external environment, namely:

1. Suppliers or Suppliers

This element is in charge of supplying raw materials and all other types of resources that companies need to develop products or business services. In addition, companies also need to carefully examine the various business suppliers in order to provide quality products at the best prices for customers (pricing).

2. Intermediary Parties

Intermediary parties in the market, such as wholesalers, distributors and resellers will assist businesses in storing products in warehouses or warehouses to distributing the company’s products or services to the target market (distribution management). All these intermediaries are an important part of the business because they are the embodiment of the brand image and represent the company’s products in the market.

3. Partners or Partners

Business partners are business entities that carry out a series of business collaborations within a main company (partnership) to develop and promote products. Examples of the types of partnerships that exist in the business environment are advertising agencies, banking and insurance companies, market research organizations, brokers, transportation companies, or even businesses from different industries to expand their customer base.

4. Customers

It is undeniable that customers or consumers are the most important component in a business. Customers can include the target audience for product marketing or business services (services marketing). Where customer preferences, behavior and needs influence all of the company’s marketing efforts and business processes.

5. General public

This element refers to people outside the target audience who are still involved with the company. Nonetheless, the general public plays an important role in the success of a business as it can influence increased brand awareness and purchasing decisions for most of a business’s target audience.

6. Competitors

Competitors or competitors are other business parties that sell products or services similar to the products your company has. Competitors also define part of the same strategic group within the industry. Therefore, it is important for a company to determine its position in the market (market positioning) to decide on a strategy that can help it outperform its competitors.

2. Macroenvironment

The macroenvironment of a business includes all the external forces and factors that impact an entire industry, rather than just changing the business environment directly. This is what makes the macroenvironment also based on the PESTLE analysis process. Similar to the microenvironment, the macroenvironment also has various components or elements of the external environment, namely:

1. Technology

The technological environment is one of the elements that has great potential to affect a company’s business. Call it the process of technology research and development, technology innovation, alternative technology, and others. Even so, technology also provides several opportunities as well as threats to the continuity of the business environment.

2. Demographics

The demographic environment consists of the people who make up the business market itself. The demographic neighborhood population can be characterized based on various factors, such as customer persona which includes the customer’s age, gender, density, size, location, race, and occupation.

3. Social and Cultural

The social and cultural components of the macro environment are formed on the basis of the values, lifestyle, culture, beliefs, and prejudices of each business target audience. Thus, the socio-cultural environment of business will differ from one region to another. Therefore, business people are required to have in-depth knowledge of the social and cultural environment to design a product or service that is liked by most people.

4. Economy

The component of the economic environment is a type of component that affects all industries, both affecting people’s purchasing power and customer purchasing patterns. The economic environment in the macroenvironment is formed on the basis of various economic factors, starting from:

  • Interest rates
  • Gross Domestic Products (GDP)
  • Gross National Product (GNP)
  • Inflation
  • Subsidy
  • Distribution of income (revenue)
  • Government funding
  • Another important economic variable.

5. Politics and Law

The political and legal environment in the macroenvironment refers to every law and policy that applies in a country. In addition to rules and procedures, the politico-legal environment also includes institutions and groups that have an impact on the working capacity of industry in society.

6. Physical (Physical)

The last component of the macro environment is the physical environment that defines the location where a company is located. The physical environment in the macroenvironment includes important components, such as:

  • Climatic conditions
  • Environmental changes
  • Availability of raw materials
  • Natural resources, such as water and air
  • Pollution risk