The three components of the marketing environment
The most appropriate marketing strategy for an organization will depend upon the marketing environment in which it operates. There are three broad categories of the marketing environment, which are:
- The internal environment,
- The micro environment, and
- The macro environment
The internal environment
The internal environment refers to the organization/the firm itself. Using the strategic 4C’s – the internal environment relates to the corporation.
In particular, we are concerned with resources, capabilities, corporate culture, management style and leadership, track record of success, current strategy, stakeholder goals and values, and so on. Based upon these internal factors we are better placed to construct an appropriate marketing strategy.
The internal environment should be the centerpiece of strategy development. That is, marketing strategy should be based upon the strengths and position of the organization. The goal is to leverage the strengths of the organization against the opportunities presented by the marketplace.
The micro environment
The micro environment refers to the industry in which the firm operates. In terms of the strategic 4C’s, the micro environment relates to competitors and customers.
When examining the micro environment we are particularly interested in target markets (consumers), direct and indirect competitors, suppliers (and their bargaining power) and our distribution channels (wholesalers and retailers).
The micro environment requires significant analysis and much of the firm’s market research efforts will be focused on understanding consumers in particular, but also monitoring and predicting competitor activity.
The various factors and opportunities within the micro environment need to be overlaid against the strengths and capabilities of the firm as identified in the internal environment in order to design a successful competitive marketing strategy.
The macro environment
The third marketing environment of interest is referred to as the macro environment. When the word “environment" is used in strategic discussions it is generally referring to the macro environment. In regards to the strategic 4C’s, the macroenvironment refers to context.
The macro environment consists of trends and factors that may influence the firm that are outside of their direct industry relationships.
It is common to structure/summarize the macro environment using the letters PEST or PESTLE. Where P = political, E = economic, S = social/cultural, T= technology, L= legislation, and E = environmental concerns.
The macro environment is more useful for longer term marketing strategies, with the goal of identifying long-term trends and opportunities.