Marketing Environment

Every marketing strategy has to meet with certain challenges when it's launched in the market. A detailed identification of such challenges is done by a rigorous market research so that any component of marketing is not overlooked. In fact, the basic task undertaken by marketing teams is to analyze the marketing environment in such a way so that the firm's plans can be met timely. Also, marketing environment is a broad term that comprises various factors that affects the business of a firm, one of which may be marketing, as mentioned earlier. Stated simply, concepts in marketing environment can be explained broadly in following two ways:

• Internal and external forces/factors/parameters that can directly or indirectly influence (positively or negatively) the capability of a firm to carry out its business plans.
• The business laws, trading rules and regulations in existence upon which the business firm has no direct control but they can be phenomenal in influencing the firm's business.

Components of Marketing Environment
There are two components of marketing environment forces, viz., the external factors and the internal factors. We'll look in detail about both these features.

The External Factors
Broadly classified, the external factors consist of micro-environment and macro-environment. Let's discuss them in detail.

1. Micro-Environment: This type of marketing environment influences the firm directly. It includes suppliers, distributors, consumers and local stakeholders whose every step significantly affects the business of the firm.
2. Macro-Environment: In this type of marketing environment, all factors that influence the business of organization are out of control of the firm. For example, consider foreign trade laws. The firm doesn't frame these laws and it has to follow these laws, inevitably. Globalization is also an example of ever changing factors like politics, marketing trends, culture, economics on which a firm has no control but to change as per the needs of market.

The Internal Factors
In the internal market environment, the parameters that are crucial for a firm are all internal or within the firm. The five pillars around which internal marketing environment revolves are the five M's, viz.,:

1. Men
2. Machine
3. Money
4. Materials
5. Markets

Managing internal factors in a marketing environment is essential for a firm to perform at peak. It has to be understood more than external control, improvement in any internal plans can be made easily, if the firm works hard to improve its efficiency.

Most Important Marketing Environmental Factors
For gaining a competitive edge, firms have to ensure that they're successfully able to follow some marketing tools that can help them immensely in external marketing environment. They're as follows.

SWOT Analysis
What is the strength of your business that you can leverage in a tough marketing environment? Is it your business location, a new product/service you've thought to launch or specialist marketing expertise? Just focus on your strengths. These are the key factors that marketing teams should analyze while planning on marketing goals. Once you're aware of the SWOT of your marketing team and your firm, you'll be able to perform with more effectiveness. Do a SWOT (Strength, Weakness, Opportunities and Threats) analysis for every market segment and not together for the entire firm, as that will lessen your task.

PEST Analysis
PEST refers to Political, Economic, Sociocultural and Technlogical factors that may have significant influence on the business plans of a firm. As a part of your market research, analyze properly, how each of these factors affect your chances of success. Success in a tough external marketing environment is dependent highly on how well you use potential of the market and avoid the pitfalls. This is true especially in countries where there is a huge demographic diversity of culture. What appeals to one community, may not appeal to others. So, the PEST factors have to be given importance.

Five Force Analysis
Similar to above tools, five force analysis is another tool to ensure that the firm is prepared for all the risks. However unlike above tools, five force analysis focuses on a single objective of SBU or strategic business unit. The strategic planning to deal with competitors and cover a significant market share before the other rivals are able to do so, forms one of the most important aspects of five force analysis. A brief overview of five features will help you to understand this parameter in a better way.

1. Threats of entry: What are the possible factors that can prove obstacle for your SBU's success? Will competitors come up with a new strategy? Or will government put some more stringent laws on trades? How beneficial will be differentiation of firms' product be? Similar questions need to be researched in the domain of threats of entry.
2. The power of buyers: The number of buyers will be high for something that is supplied by few large players in the market. To target such products and items, you need to come up with some strategy. Similarly, for distributing your products to various distributors, you need to look at the costs for supplying and distributing.
3. The power of suppliers: Your marketing environment is influenced by the power of your suppliers. For instance, switching from one software firm to other will cost more. Also, if your customers are not concentrated in one specific area and are spread to remote and large places, you need to consider those factors also.
4. The threats of substitute: Consider fax service that was popular in the last few years. With email now easier and popular, it has somewhat replaced fax services. Similarly, what if some other products are more handy than the one your firm launched? Analysis of marketing environment for threats of substitute is important
5. Competitive rivalry: This factor is at the helm of all five forces. All other factors vary and can get controlled depending on how deep is the competitive rivalry.

Analyzing marketing environment is an integral part of a firm's strategy to introduce a new product and ensure success of a firm. Marketing has grown to be complex with time and success can only be achieved by proper research and benefiting from positives of marketing environment.