What Is the Microenvironment in Marketing?

REWORKING

Name: Yang Jinsong

Class: FS

SCN: CZS2017 HND008

What is the Microenvironment in Marketing?

Microenvironment is the set of proximate factors for a company that affect its reach, competency and value offering to its consumers. Any change in these factors directly affects the firm. (Philip Kotler, Principles of Marketing 4th European Edition,2013) “The forces close to the company that affect its ability to serve its customers-the company, market channel firms, customer markets, competitors and publics, which combine to make up the firms value delivery system.” Unlike the internal environment, the microenvironment usually comprises factors " close to or " that have a direct impact " on the company.

The five points in a company’s Microenvironment includes:

1. Suppliers: ‘’suppliers provide main resources which are needed by the company. And suppliers from an essential link in the company’s overall value delivery system.’’ (SQA,2013)                                          

Marketing Intermediaries: ‘’Marketing Intermediaries such as retailers, wholesalers, physical distribution, firms. Help the company to promote, sell, and distribute its goods to ultimate consumers.’’ (SQA,2013)

The Day Dream Toy company products wooden toys firstly. They need woods to product their goods, so, a company want to make more profits, they need the cheaper raw and processed materials. If the supplier increases the price of raw and processed material, the Day Dream Toy company will increase the price of goods to keep profits, and that they will lose some demand. If not they will lose some profits to keep profits balance.

1. Customers: In nowadays, “a successful marketing aims at satisfying customer’s needs and want, keep the strong relationship with customers, and low calories products and healthy product.” (SQA ,2013) 

The Day Dream Toy company do a customer-satisfied toy attracts customers greatly in terms of quality, appearance, price and safety. And the “Country Cousins” is a big success, its special image attracts many customers. They know what every customer’s need and want is, they product the goods of people like, so, they got success.

1. Competitions: “competent marketers should take every effort to meet their customer’s needs more effectively and efficiently than their competitors do. The competent marketers should formulate the strategy to compete. Then the company’s goods will to be more competitive.” (SQA ,2013)    

The “Country Cousins” is a very competitive bidding. The Day Dream Toy company is the winner in the bidding. They have accumulated popularity for a long time and are better at product design and product quality than other manufacturers. And more effective and direct marketing strategy, defeating other competitors.

1. Publics: “a public indicates any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives.” (SQA ,2013)

 The Day Dream Toy company firstly use the Mail order selling to serve to bring the company’s name to the attention of the public, and more importantly to the toy industry. They did this can raise the visibility of the company. And the “Country Cousins” in the Tv publicity, Day Dream Toy company’s popularity has been further improved. And it acquired an ailing publishing company. This was the company’s first venture into publishing, and they use it to increase the popularity of company. People know it by the TV and publication, people would like to buy the goods, which is high visibility.

What is the Macroenvironment?

(Philip Kotler, Principles of Marketing 4th European Edition,2013) describes the macroenvironment as:

“The larger societal forces that affect the whole microenvironment-demographic, economic, natural, technological, political and cultural forces”.

“The macroenvironment consists of the larger forces which affect the way in which an organization operates and over which the organization has little or no control”. (SQA ,2013)

There are four types to consist of macroenvironment:

1. Political/Legal: The existing legislation and future changes will affect the company’s going. Domestic politics and international politics also can affect the company. It is important to take account of existing legislation and future changes, in the same way, we have to remember the domestic politics and international. (SQA ,2013)

The proportion of national industry is out of balance, and the industrial structure needs to be adjusted, so the government began to support the development of light industry, such as opening more welfare homes for children, attracting more toy manufacturers, making more toy industry development;

1. Economic: “Factors such as rates of inflation, interest rates, exchange rates, industrial output, levels of disposable income and balance of payments. And these influence costs, prices and demand.” (SQA ,2013)

The country's economic depression has led to lower incomes and lower demand for other unnecessary items. People’s incomes need more to maintain their standard of living, so, the toys for children will be decreased.

1. Sociocultural: “The people’s basic beliefs, attitudes and values are shaped by the society in which they grow up. It is influenced by societal and culture norms.” (SQA ,2013)

Many customers of Day Dream Toy company have grown up, they are younger, and they didn’t have child, so, virtually lost many customers. In modern times, many people do not want to have children. So, this problem makes the child population decrease, the customers also be decrease.

1. Technological: “Technology is a major environmental influence upon marketing strategy. New products and sometimes new industries, new markets and opportunities are created by new technologies”. (SQA ,2013)  

The new technological toys were coming, but at first, Day Dream Toy company keep producing the wooden toys for customers. There is a part of people accepted the new technological and given up the wooden toys, so, this is made the company’s sales decrease. The new pay technological made the sales increased, the mail order selling, and on-line selling made a great effect for the development of Day Dream Toy company.

How to collect and use market research information?

There are three major types of market research information:

1. Exploratory Research: “Usually carried out to gather preliminary information which will help to help to determine the research objective rather than solve the problem.” (SQA,2013)
2. Descriptive Research: it helps to understand the problem in more detail. (SQA,2013)
3. Cause/Predictive Research: It need to be tested to determine possible outcomes, for example, if the price of a product increases by X sales, establishing a "causal correlation" may reduce by y. (SQA,2013)

Secondary Research: secondary, or “desk” research uses existing information. Originally collected for other purposes, it is now used for the second time. It can provide a large amount of information quickly and cheaply, but it is not always sufficiently relevant to the question being investigated to provide a complete answer, so it usually requires some preliminary research. (SQA, 2013)

“Primary research and secondary research can be obtained from internal (inside the organisation) and external (outside the organisation) sources.”

Internal research sources may include:

1. Customer comments or complaints.
2. Guarantee cards.
3. Customer usage rates.
4. National product sales.
5. Regional product sales.
6. Conducted research date.

External research sources may include:

1. Multimedia such as internet, newspaper, periodicals, etc.
2. Industry magazines.
3. Government statistics.
4. Reports from Chamber of commerce.
5. Specialist marketing news or reports.
6. Articles from professional bodies.
7. Rules or policies of trade associations.

(SQA,2013)

Primary Research: It is called field research, including obtaining information that did not exist before. It is obtained by going out of the market ("field") and conducting some kind of investigation. A questionnaire is usually used to organize and statistically analyze the results of the survey in order to draw conclusions. Although the preliminary findings will fill the information gap, the main obstacles are the cost and time of conducting the research. (SQA,2013)