The marketing environment

The term "marketing environment" relates to all of the factors (whether internal, external, direct or indirect) that affects a firm's marketing decision-making/planning. A firm's marketing environment consists of three main areas, which are:

• The macro-environment, over which a firm holds little control
• The micro-environment, over which a firm holds a greater amount (though not necessarily total) control
• The internal environment

The macro-environment

A firm's marketing macro-environment consists of factors that manifest on a large or macro scale. These are typically economic, social or political phenomena. A common means of assessing a firm's macro-environment is via a PEST (,i.e. Political, Economic, Social and Technological) analysis. Within a PEST analysis, a firm would analyse national political issues, culture and climate, key macroeconomic conditions, health and indicators (such as economic growth, inflation, unemployment, etc.), social trends/attitudes, and the nature of technology's impact on its society and the business processes within the society.

The Four Ps

In the early 1960s, Professor Neil Borden at Harvard Business School identified a number of company performance actions that can influence the consumer decision to purchase goods or services. Borden suggested that all those actions of the company represented a “Markrting Mix”. Professor E.Jerome McCarthy at the Michigan State University in the early 1960s, suggested that the Marketing Mix contained 4 elements: product, price, place and promotion.

• Product: The product aspects of marketing deal with the specifications of the actual goods or services, and how it relates to the end-user's needs and wants. The scope of a product generally includes supporting elements such as warranties, guarantees, and support.
• Pricing: This refers to the process of setting a price for a product, including discounts. The price need not be monetary; it can simply be what is exchanged for the product or services, e.g. time, energy, or attention. Methods of setting prices optimally are in the domain of pricing science.
• Placement (or distribution): refers to how the product gets to the customer; for example, point-of-sale placement or retailing. This third P has also sometimes been called Place, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also referring to how the environment in which the product is sold in can affect sales.
• Promotion: This includes advertising, sales promotion, including promotional education,publicity, and personal selling. Branding refers to the various methods of promoting the product, brand, or company.

These four elements are often referred to as the marketing mix, which a marketer can use to craft a marketing plan.

The four Ps model is most useful when marketing low value consumer products. Industrial products, services, high value consumer products require adjustments to this model. Services marketing must account for the unique nature of services.

Industrial or B2B marketing must account for the long term contractual agreements that are typical in supply chain transactions. Relationship marketing attempts to do this by looking at marketing from a long term relationship perspective rather than individual transactions.

As a counter to this, Morgan, in Riding the Waves of Change (Jossey-Bass, 1988), suggests that one of the greatest limitations of the 4 Ps approach "is that it unconsciously emphasizes the inside–out view (looking from the company outwards), whereas the essence of marketing should be the outside–in approach".

The marketing concept

The term marketing concept pertains to the fundamental premise of modern marketing. This can be laid out as recognising consumer needs/wants, and making products that correlate with consumer desires.

Marketing orientations

An orientation, in the marketing context, relates to a perception or attitude a firm holds towards its product or service, essentially concerning consumers and end-users. There exist several common orientations:

Product orientation

A firm employing a product orientation is chiefly concerned with the quality of its own product, and not in necessarily ascertaining consumer desires. A firm would also assume that as long as its product was of a high standard, people would buy and consume the product.

However, utilizing a product orientation has a prime disadvantage of making a firm lose out to competitors, who may produce technologically superior goods that engender higher consumer demand and thus market share. A product orientation may perhaps work best in a monopolistic market form, due to the inherent high barriers to entry within a monopoly.

Sales orientation

A firm using a sales orientation focuses primarily on the selling/promotion of a particular product, and not determining new consumer desires as such. Consequently, this entails simply selling an already existing product, and using promotion techniques to attain the highest sales possible.

Such an orientation may suit scenarios in which a firm holds dead stock, or otherwise sells a good that is in high demand, with little likelihood of changes in consumer tastes diminishing demand.

Production orientation

A firm focusing on a production orientation specializes in producing as much as possible of a given good. Thus, this signifies a firm exploiting economies of scale, until the minimum efficient scale is reached.

A production orientation may be deployed when a high demand for a good exists, coupled with a good certainty that consumer tastes do not rapidly alter (similar to the sales orientation).

Marketing orientation

The marketing orientation is perhaps the most common orientation used in contemporary marketing. It involves a firm essentially basing its marketing plans around the marketing concept, and thus forging products to suit new consumer tastes.

As an example, a firm would employ market research to gauge consumer desires, use R&D to develop a good attuned to the revealed information, and then utilise promotion techniques to ensure persons know the good exists. The marketing orientation often has three prime facets, which are:

Customer orientation

A firm in the market economy survives by producing goods that persons are willing and able to buy. Consequently, ascertaining consumer demand is vital for a firm's future viability and even existence as a going concern.

Organizational orientation

All departments of a firm should be geared to satisfying consumer wants/needs.

Mutually beneficial exchange

In a transaction in the market economy, a firm gains revenue, which thus leads to more profits/market share/sales. A consumer on the other hand gains a need/want that is satisfied, utility, reliability and value for money from the purchase of a good. As no one has to buy goods from any one supplier in the market economy, firms must entice consumers to buy goods, and thus seek to satisfy consumers' utility. If an exchange is not mutually beneficial in nature, it is not consistent with contemporary marketing ideals.

Introduction to Marketing

Marketing is an integrated communications-based process through which individuals and communities discover that existing and newly-identified needs and wants may be satisfied by the products and services of others.

Marketing is defined by the American Marketing Association as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. ^[1] The term developed from the original meaning which referred literally to going to market, as in shopping, or going to a market to buy or sell goods or services.

The Chartered Institute of Marketing, which is the world's largest marketing body^{[citation needed]}, defines marketing as "The management process responsible for identifying, anticipating and satisfying customer requirements profitably."^[2]

Marketing practice tended to be seen as a creative industry in the past, which included advertising, distribution and selling. However, because marketing makes extensive use of social sciences, psychology, sociology, mathematics, economics, anthropology and neuroscience, the profession is now widely recognized a science, allowing numerous universities to offer Master-of-Science (MSc) programmes. The overall process starts with marketing research and goes through market segmentation, business planning and execution, ending with pre and post-sales promotional activities. It is also related to many of the creative arts. The marketing literature is also infamous for re-inventing itself and its vocabulary according to the times and the culture.

Seen from a systems point of view, sales process engineering views marketing as a set of processes that are interconnected and interdependent with other functions^[3], whose methods can be improved using a variety of relatively new approaches.