The environmental factors that are affecting sales and marketing function can be classified into :
- Internal environment and
- External environment
This refers to factors existing within a marketing firm. They are also called as controllable factors, because the company has control over these factors :
It can alter or modify factors as its personnel, physical facilities, organization and function means, such as marketing mix, to suit the environment.
There are many internal factors that influence the marketing function, they are :
Top Management: The organizational structure, Board of Director, professionalization of management..etc..Factors like the amount of support the top management enjoys from different levels of employees, shareholders and Board of Directors have important influence on the marketing decisions and their implementation.
Finance and Accounting: Accounting refers to measure of revenue and costs to help the marketing and to know how well it is achieving its objectives. Finance refers to funding and using funds to carry out the marketing plan. Financial factors are financial polices, financial position and capital structure.
Research and Development: Research and Development refers to designing the product safe and attractive. They are technological capabilities, determine a company ability to innovate and compete.
Manufacturing: It is responsible for producing the desired quality and quantity of products. Factors which influence the competitiveness of a firm are production capacity technology and efficiency of the productive apparatus, distribution logistics etc.,
Purchasing: Purchasing refers to procurement of goods and services from some external agencies. It is the strategic activity of the business.
Company Image and Brand Equity: The image of the company refers in raising finance, forming joint ventures or other alliances soliciting marketing intermediaries, entering purchase or sales contract, launching new products etc.
In organization, the marketing resources like organization for marketing, quality of marketing, brand equity and distribution network have direct bearing on marketing efficiency. They are important for new product introduction and brand extension, etc..
External factors are beyond the control of a firm, its success depends to a large extent on its adaptability to the environment. The external marketing environment consists of :
- Macro environment, and
- Micro environment
- Micro environment: The environmental factors that are in its proximity. The factors influence the company‘s non-capacity to produce and serve the market. The factors are :
- Suppliers: The suppliers to a firm can also alter its competitive position and marketing capabilities. These are raw material suppliers, energy suppliers, suppliers of labor and capital. According to michael Porter, the relationship between suppliers and the firm epitomizes a power equation between them. This equation is based on the industry condition and the extent to which each of them is dependent on the other.
The bargaining power of the supplier gets maximized in the following situations:
- The seller firm is a monopoly or an oligopoly firm.
- The supplier is not obliged to contend with other substitute products for sale to the buyer group.
- The buyer is not an important customer.
- The suppliers‘ product is an important input to the buyer‘s business and finished product.
- The supplier poses a real threat of forward integration.
Market Intermediaries: Every producer has to have a number of intermediaries for promoting, selling and distributing the goods and service to ultimate consumers. These intermediaries may be individual or business firms. These intermediaries are middleman (wholesalers, retailers, agent‘s etc. ), distributing agency market service agencies and financial institutions.
- Customers : The customers may be classified as :
- Ultimate customers: These customers may be individual and householders.
- Industrial customers: These customers are organization which buy goods and services for producing other goods and services for the purpose of other earning profits or fulfilling other objectives.
- Resellers: They are the intermediaries who purchase goods with a view to resell them at a profit. They can be wholesalers, retailers, distributors, etc.
- Government and other non-profit customers: These customers purchase goods and services to those for whom they are produced, for their consumption in most of the cases.
- International customers: These customers are individual and organizations of other countries who buy goods and services either for consumption or for industrial use. Such buyers may be consumers, producers, resellers, and governments.
- Competitors: Competitors are those who sell the goods and services of the same and similar description, in the same market. Apart from competition on price, there are like product differentiation. Therefore, it is necessary to build an efficient system of marketing. This will bring confidence and better results.
- Public: It is duty of the company to satisfy the people at large along with its competitors and the consumers. It is necessary for future growth. The action of the company do influence the other groups forming the general public for the company. A public is defined as ; any group that has an actual or potential interest in or impact on a company‘s ability to achieve its objective. Public relations are certainly a broad marketing operation which must be fully taken care of.
Macro environment factors act external to the company and are quite uncontrollable. These factors do not affect the marketing ability of the concern directly but indirectly the influence marketing decisions of the company.
These are the macro environmental factors that affect the company‘s marketing decisions:
- Demographic Forces: Here, the marketer monitor the population because people forms markets. Marketers are keenly interested in the size and growth rate of population in different cities, regions, and nations ; age distribution and ethnic mix ; educational levels; households patterns; and regional characteristics and movements.
- Economic Factors: The economic environment consists of macro-level factors related to means of production and distribution that have an impact on the business of an organization.
Physical Forces: Components of physical forces are earth‘s natural renewal and non-renewal resources. Natural renewal forces are forest, food products from agriculture or sea etc. Non- renewal natural resources are finite such as oil, coal, minerals, etc. Both of these components quite often change the level and type of resources available to a marketer for his production.
- Technological Factors: The technological environment consists of factors related to knowledge applied, and the materials and machines used in the production of goods and services that have an impact on the business of an organization.
- Political and Legal Forces: Developments in political and legal field greatly affect the marketing decisions. sound marketing decision cannot be taken without taking into account, the government agencies, political party in power and in opposition their ideologies, pressure groups, and laws of the land. These variables create tremendous pressures on marketing management. Laws affect production capacity, capability, product design, pricing and promotion. Government in almost all the country intervenes in marketing process irrespective of their political ideologies.
- Social and Cultural Forces: This concept has crept into marketing literature as an alternative to the marketing concept. The social forces attempt to make the marketing socially responsible. It means that the business firms should take a lead in eliminating socially harmful products and produce only what is beneficial to the society. These are numbers of pressure groups in the society who impose restrictions on the marketing process.