Discuss the Micro Environmental factors in Marketing Environment Dynamics

The Micro environment factors are partially controllable and the management can adjust them to suit the objectives of the organisation depending on how these factors are placed in the environment.

1. Company – Apart from external environment,Strategy development also depends on the strengths and capabilities of the organisation. The organisation is able to do a detailed analysis, as lot of information is available about the performance, organisational structure, management style, etc. Proper coordination between various departments, and flow of correct information is key to smoothly running the activities with minimal costs and effectiveness. A simple classification to look for in an organisation is given below (7M’s)-

a) Members –
Human resources information: staff appraisal records, manpower plan, skills testing programme, data with recruitment and retaining managers, etc.
Quality of management: Availability of skills with in the company, manager, employee capability and performance
Wages, costs and productivity
Training needs, etc.

b) Make-up –
Organisational culture and organisational structure: the geographical spread, power structure to understand centralised or de-centralised, the culture which includes shared values, attitude, etc., whether the organisation follows the set rules and procedures (integrity).

c) Management –
Experience, stability of senior and middle management,
Quality of decision making,
Their career path, performance and plans of succession,
Responsibilities and coordination amongst the management team.

d) Money – Financial condition and availability of capital: shareholders interest in investment, ability to take loans, current and future financial returns, ability to handle interest rate changes, etc.

e) Machinery – Capital equipment, technological capability: able to make a new product or modify the new product with current machinery,
Depreciation, decisions of investment in new plant,
Maintenance and quality, etc.

f) Materials – Purchasing and supply, existing materials being procured, supply management and costs: consistent supply from the suppliers, dependence on the suppliers, etc., assembling of the raw materials, etc.

g) Markets – Marketing, distribution, brand image, current product line and respective life cycle: Competition, market position of products, distribution networks effectiveness, ability to depend on existing products, financial returns, etc.

2. Marketing Intermediaries –this includes distributors, wholesalers, retailers, marketing agents, etc. These channels help in distribution of products. A clear understanding and communication with them is necessary for ease of distribution. Some firms sign exclusive distribution contracts for distribution of their products.

For example, Motorola signed exclusive contract with ecommerce giant Flipkart for sale of its mobile phones to penetrate into the Indian market.

Competitors too can influence such distribution channels and sign contracts. The firm should be ready to face such challenges. Most organisations focus on product development and for their distribution rely on the expertise of intermediaries. For example, Nike relies on its intermediaries for its production, advertising, retail. Its core competency lies in R & D.

Some organisations rely solely on their store outlet to give customers an experience of their brand and service. For example, Apple store, etc.

Organisations select their intermediaries basis their product line, finance, target markets, etc.

3. Suppliers – suppliers includes individuals and firms that provide inventory/raw materials to the organisation and its competitors to manufacture a product. Marketers have to keep a close watch on the costs and availability of the products needed for production. It is important to maintain a good relation with the suppliers to gain competitive advantage and smooth supply of products. The organisation should always be ready to switch to a new supplier to avoid any challenges. This should be part of the planning process. Knowledge of all the supplies in the market and their quality, price, etc., should be readily available with the management.

As suppliers are external to the organisation, any breakdown in relationship will affect the overall production, hence the suppliers form a critical factor in the environment.

4. Customers – there are 4 kinds of customers depending on the market they belong to. The organisation needs to study these markets closely as each one of them is different from the other.

(1) Consumer Market – these are individuals, households or institutional buyers that buy products for personal consumption. Institutions include, hospitals, schools, etc.

(2) Business/ Industrial Market – organisations which buy products for further processing and manufacturing other products. For example, Shoe manufacturers fall under business market as they buy their raw materials like leather, etc. from suppliers to manufacture shoes. Here the shoe manufacturers fall under business market for the suppliers of raw materials.

(3) Reseller Market – these customers buy products to sell them at profits.

(4) International Market – these are the buyers of all types in foreign countries. Because of globalisation, and most of the governments opening up their markets for foreign investment and trading, lot of business is taking place across the borders of the nations.

The analysis of customer preferences provides the information needed to decide whether an organisation should venture the market and deal with competition. Customers can also be classified on the basis of age, gender, etc. The organisations have to believe that no two customers will have same preferences and hence the segmentation of the market is done linking the capabilities of the organisation with the unmet needs of the market.

5. Competitors – Competitors are the organisations which offer the same line of products or the products substitutes. It can be 2 or more stationery stores in the neighbourhood, or a firm offering same kind of products. For example, Pears and Dove soaps, Yamaha and Kawasaki motorbikes, etc.

The competitors have an impact on the consumers by offering them an alternative product. They also have an impact on the suppliers and intermediaries by signing exclusive contracts with them. For example, Motorola and Flipkart, etc.

The competition is a partially controllable factor. For example, a price cut by a competitor can be countered by a similar price cut in the organisations product to an extent. The organisations keep a close watch on the product offerings, pricing strategy adopted, etc. by each other. Any change in the strategy of the competitor, results in altering the business and marketing strategies at the right time to stay ahead of the competition. For example, if an organisation cannot offer a further price cut in the offering as compared to its competitors, the organisation looks at ways of reducing the cost in different functions like not giving salary hike, hiring of a different employee at less salary, reducing the packaging costs, etc. Most of the Laptop manufactures have stopped giving free Laptop bags with its products, many mobile manufacturers don’t provide earphones etc. with the mobile phones to reduce costs and offer the products at competitive price.

The level to which the competitors fight to remain in the market depends on the objectives of the organisation like profits, societal benefits, etc.