THE MARKETING MIX AND THE MARKETING ENVIRONMENT
The basic reason for a marketing manager to focus on specific target customer or organisation is to have a competitive advantage, by directing company activities towards satisfying that segment more profitable for the firm. Although thousands of variables are involved, marketing decision making can be divided into four strategies. These decisions relates to the kind of product to make; how to promote the product; how to price the product and how to distribute (place) the product. This, therefore bring all the variables in the marketing mix to product, promotion, price and place (distribution). This then constitute the four P’s to denote the four elements of the marketing mix. These components are called marketing mix decision variables because a marketing manager can vary the type and amount of each element. One primary goal is to create and maintain a marketing mix that satisfies the consumer. Pride and Ferell pointed out that the marketing mix is built around the buyer (as stressed by marketing concept), and also that the marketing mix variables are affected in many ways by the marketing environment variables.
The marketing mix variables often are viewed as “controllable” variables because they can be changed. There are many possible ways to satisfy the needs of target customers. A product can have many different features and quality levels. Services can be adjusted. The package can be of various sizes or colours. The brand name can be changed. Various advertising media, newspapers, magazines, radio, television, billboards may, be used. Different prices can be charged. Price discounts may be given, and so on. With these kinds of data, marketing managers are better able to develop a product, promotion, price and distribution that satisfy the people in the target market.
According to Jerome MaCarthy, the marketing mix refers to “the controllable variables which the company puts together to satisfy its target market”. A target market is the group of present and potential customers at which the product is aimed.
The customer is shown surrounded by the four P’s in fig.3.1. The customer is placed in the center of the diagram to show this. And the C stands for the customer which is the target market. The four P’s can be described briefly.
Product: The product area is concerned with developing the right product for the target market. This offering may involve a physical good, a service or both. Remember that product is not limited to “physical goods”.
Product decision does not only involves what products or services the firm should offer to its target market or customers, it also include marketing decisions about package design, brand names, trademarks, warranties, new-product development and positioning.
Promotion: Promotion is concerned with telling the target market about the ‘right’ product. Promotion is the communication link between sellers and buyers. Organizations use many different means of sending their messages about goods, services and ideas. Promotion includes personal selling, advertising and sales promotion. It is the marketing manager’s job to blend these methods. Besides, promotion is used to educate consumers about product features.
Price: In addition to developing the right product, place and promotion, marketing managers must also decide the right price. Thus, price is a critical component of the marketing mix. In setting a price, consideration must be given to the kind of competition in the target market. Price is often used as a competitive tool. Customers reaction to possible prices must be estimated, and also know current practices as to markups, discounts, and other terms of sale. Legal restrictions on pricing must be known.
Place (Distribution): Place is concerned with getting ‘right’ product to the target market place. The product must be at the right time in a convenient and accessible location. In dealing with the distribution variables, a marketing manager attempt to make products available in the quantities desires to as many customers as possible.
A product reaches customers through a channel of distribution. A channel of distribution is any series of firms (or individuals) from producer to final user or consumer. Sometimes a channel system is quite short, running from a producer to a final user or consumer. Often it is more complex, involving many different kinds of middlemen and suppliers. Distribution decisions involve modes of transportation, warehousing, inventory control, order processing and selection of marketing channels.
The Marketing Environment
A company’s marketing environment consist of certain factors which are outside his control. The environment is defined by the place (state, region or country) and all operating forces that affect business transactions. However, these marketing environmental .factors or forces are known as the uncontrollable variables. These factors are said to be uncontrollable because the elements within the environment which affect a firm’s performance. Since they cannot be controlled, the only solution is to recognize their existence and regard them as constraints to the ability of the firm to .make perfect decisions. The marketing environment offers both opportunities and threats. A good marketer therefore, will know how to adapt to the uncontrollable marketing variables.
The marketing environment is made up of a microenvironment and a macro environment. The microenvironment consist of the forces close to the company that affect its ability to serve its consumers, the company, suppliers, marketing channel firms, customer markets, competitors and publics. The macro environment consists of the larger societal forces that affect the whole microenvironment-demographic, economic, competitive, technological, political and legal, social/cultural forces and physical forces.
The micro environment have been identified as actors in the company’s microenvironment which leads to the success of the company. The company’s micro environment are company departments, suppliers, marketing intermediaries, customers, competitors and various publics.
In designing marketing plans, marketing management takes other company groups into account-groups such as top management, finance, research and development (R&D), purchasing, manufacturing, and accounting. All these interrelated groups form the internal environment. Top management sets the company’s mission, objectives and policies. Marketing managers must make decisions with the plans made by top management, and marketing plans must be approved by top management before they can be implemented.
Marketing managers also must work closely with other company departments. Finance is concerned with other company departments. Finance is concerned with finding and using funds to carry out the marketing plan. The Research and Development (R&D) department focuses on the problem of designing safe and attractive products. Purchasing worries about getting supplies and materials, whereas manufacturing is responsible for producing the desired quantity and quality of products. Accounting has to measure revenues and costs to help marketing know how well it is achieving its objectives. Together, all of these departments have an impact on the marketing department’s plans and actions.
Suppliers provide the resources needed by the company to produce its goods and services. Marketing managers must watch supply, availability-supply, shortages or delays, labour strikes, and other events, can cost sales in the short run and damage customer satisfaction in the long run. Marketing managers also monitor the price trends of their key inputs. Rising supply cost may force price increases that can harm the company’s sales volume.
Marketing Intermediaries help the company to promote, sell, and distribute its goods to final buyers. They include resellers, physical distribution firms, marketing services agencies, and financial intermediaries.
Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers who buy and resell merchandise.
Physical distribution firms help the company to stock and move goods from their points of origin to their destinations. Working with warehouse and transportation firms, a company must determine the best way to store and ship goods, balancing such factors as cost, delivery, speed and safety.
Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right market.
Financial intermediaries include banks, credit companies, insurance companies and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods.
The company needs to study its customer markets closely. The various customer markets include consumer markets, business markets, resellers markets, government markets and international markets.
Consumer markets consist of individual and households that buy goods and services for personal consumption. Business markets buy goods and services for further processing or for use in their production process, whereas reseller markets buy goods and services to resell at a profit.
Government markets are made up of government agencies that buy goods and services in order to produce public services. Finally, international markets consist of buyers in other countries including consumers, producers^ resellers, and government.
The marketing concept states that to be successful, a company must provide greater customer value and satisfaction than its competitors’ products.
The company’s marketing environment also includes various publics. A public is any group that has an actual or potential interest in or impact on an organisation’s ability to achieve its objectives. The following are the different types of publics.
a. Financial publics. Financial publics influence the company’s ability to,,, obtain funds. Banks, investment houses, and stockholders are the major financial publics
b. Media publics. Media publics are those that carry news, features, and editorial opinion. They include newspapers, magazines, and radio and television stations.
c. Government publics. Management must take government developments into account. Marketers must often consult the company’s lawyers on issues of product safety, truth-in-advertising, and other matters.
d. Citizen-action publics. A company’s marketing decisions maybe questioned by consumer organizations, environmental groups, minority groups, and other groups. Its public relation department can help it stay in touch with consumer and citizen groups.
e. Local publics. Every company has local publics, such as neighbourhood residents and community organizations. Large companies usually appoint a community-relations officer to deal with the community, attend meetings, answer questions, and contribute to worthwhile causes.
f. General publics. A company needs to be concerned about the general public’s attitude toward its products and activities. The public’s image of the company affects its buying.
g. Internal publics. A company’s internal publics include its workers, managers, volunteers, and the board of directors. Large companies use newsletters, and other means to inform and motivate their internal publics. When employees feel good about their company, this positive attitude spills over to external publics.
The company would have to design an offer to this public that is attractive enough to produce the desired response.
The company and all of the other actors operate in a large macro environment of the marketing, environment. These factor that make up the macro marketing environment are also referred to as uncontrollable marketing decision variables. The environment is said to be uncontrollable because in comparison with the marketing mix elements, the marketer is relatively unable to change the environmental factors in question. In this chapter we shall examine these factors.
Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics. The demographic environment is of major interest to marketers because it involves people, and people make up markets.
The world population is growing at an explosive rate, especially that of the Less Developed Countries (LDC). It is said that the less-developed regions of the world -currently account for 76 percent of the world population and are growing at 2 percent per year. In contrast, the population of the more developed regions is growing at only 0.6 percent per year.
In Nigeria for example the total population is estimated at one hundred million inhabitants, thereby making it to be one of the largest potential markets in black Africa.
Apart from the numerical strength of a country’s population, its distribution by geography, age, sex, income, occupation, religion, ethnic groups and educational qualifications is important to the market, especially in target market selection. Location of plants and warehouses, selection and location of distributions and in physical movement of goods.
The marketer often segments his market by sex, age, income, occupation, religion, ethnicity, and education. A knowledge of population distribution by these demographic variables is essential in this aspect. It also determines the market for products meant for those different demographic groups.
However, the explosive world population growth has a major implication for business. A growing population means growing human needs to satisfy. Depending on purchasing power, it may also mean growing market opportunities. This, marketers keep close watch of demographic trends and developments in their markets.
The economy has tremendous effects on the marketers’ decision because it determines the buying decisions of the buyers. If the economy is healthy, business activities will be smooth and ongoing including marketing activities.
The general state of the economy at a given time whether boom or recession will affect business. In periods of recession for instance, business activities are at their lowest and marketing is mostly affected. In such recessed economy, the individuals have the willingness to buy goods but no financial resources to back up the desire. It is at this period, that marketers are required to put in more efforts to revitalize sales.
In Nigeria the economy has been witnessing recession since 1982. In 1986 the government introduced a package of monetary and fiscal policies under its structural Adjustment programme (SAP) in order to revitalize the economy. In spite of the modest gains from SAP measures, the adjustment process brought about a steeply depreciated value of the Naira, depressed consumer demand, high inflation and interest rates. Marketers also faced difficulties in obtaining foreign exchange to finance imports of raw materials.
Lastly, the economies of the world are tied together through international trade and financial markets. A key factor here is the exchange rate of a nation’s currency in terms of the leading world currencies such as U.S.A dollar, the Japanese Yen, the English Pound (Sterling) and the German Mark. When the exchange rate is adjusted to make the national currency (Naira) stronger’ it will more easily buy foreign goods which will be cheaper, but domestic goods become expensive and their exports drops. On the other hand, if the exchange rate is adjusted to weaken the currency (Naira) i.e. through devaluation, it makes the country’s goods cheaper on the world market and foreign goods, expensive. The implication for marketing is a drastic fall in the demand for many goods and services and, therefore, increased marketing efforts on the part of the marketers.
Competition is a fact of life for most businesses. For a practical standpoint, keen competition may arise because of the presence of a large number of firms marketing the same or similar but differentiated products. The marketer has to closely monitor the activities of his immediate competitors as well as recognise any threats from such competitors.
Since Nigeria operates the mixed – economy system or the capitalist system. The system guarantees free access to and withdrawal from any business venture. Mixed-economy system allows for competition on all business activities except those exclusively reserved for the government.
There are three basic types of market structure that contain some element of competition; namely pure competition, oligopoly and monopolistic or imperfect competition. In pure competition, there are very many suppliers of an essentially homogeneous product. The operations of traders dealing in basic commodities like garri, beans, rice, salt etc.’ In our urban and rural markets approximate pure competition oligopoly competition is obtained when an industry in made up of a few relatively large firms (e.g. tyre, oil exploration and auto assembly).
Monopolistic competition or imperfect competition is where there are many producers of the general product but typically no firm commands more than 20 to 30 percent of the market. Each producer differentiates his brand of the product through unique designs and packaging, thereby claiming ‘ monopoly’ of that particular version of the generic producer.
In the face of keen competition, product modifications and improvements may be effected, prices may be adjusted, and promotional outlays may be raised and more aggressive distribution policies pursued. There is increased competition in industries such as the beer, battery, toiletries, and soft drink industries. For instance, in the detergent industry in Nigeria, the three big names are – lever Brothers Nigeria PLC (LBN) producers of Omo and (Surf blue detergent), Peterson, Zachonis (PZ) industries (Elephant blue detergent) and international Equitable (Apollo Detergent)
These companies dominate the detergent market. New entrants, however, continue to dilute the older companies share of the market.
Competition cannot be controlled; therefore, management must do its best to be alert to the potential threat posed by companies producing similar goods or substitute goods and services.
The technological environment represents the application to marketing knowledge based on discoveries in science, invention’s, and innovations. New technology results in new products and services for consumers, improved existing products, and often lower prices through the development of more cost-efficient production and distribution methods. Technology more simply means the way we do things, the way the marketer produces prices, distributes jpd promotes goods and services are immensely affected by the level of technology available to the country at the time. Technology is crucial; for the development of new products and improvement of existing products that raise our standard of living. Companies know that they have to be innovative in turning out new products and modernising their operation by applying technology. Technology can quickly make products obsolete, calculators for example, wiped out the market for slide rules. Technology can open up new marketing opportunities computers, colour television, lasers, xerography, video cassette recorder, compact disc sound system, cellular phones and so on are just a few of the thousand of new and improved products at the disposal of consumers.
In as much as companies have no control over technology, especially in Nigeria, they can only anticipate changes that are likely to affect them with a view to reducing their impact. When old industries ignored new technology, their business declined. New technologies create new markets and opportunities. The marketer should watch’ the changes in technology.
Political and legal Environment
Marketing decisions are strongly affected by developments in the political and legal environment. The political and legal environment consists of laws, government agencies, and pressure groups that influence and limit various organisations and individuals in a given society.
Marketers must appreciate the fact that government can pass laws, edicts or decrees that may affect them favourably or unfavourably. Companies in general and marketers in particular can only influence laws through lobbying but cannot control them. The government changes its tax laws without much consultations with the business community. Likewise, it can alter interest rates; promulgate laws that reduce the amount of raw materials importation.
In the case of Nigeria mention must be made of the constant change of government through coup and counter coup. This has of course, made the political and legal environment to be very unstable. Such changes in government by the military tends to alter not only the existing political arrangements but also other marketing environmental factors such as economic policies and programmes, existing legislation, contracts and existing patterns of government patronage. All these have implications in one way or the other for marketing activities.
A number of laws governs marketing activities in Nigeria as any other country. Among these are law of Agency. Marketing, like everybody else, have to abide by the laws and regulations in their areas of operations.
Price Control Decrees (Acts) 1970
The price control Decree of may 1970 was promulgated in the wake of astronomical price increases during the civil war years and after. Its main goal was to control inflation by fixing retail price of certain essential commodities like milk, soap and detergents.
The Standards Organisation of Nigeria Decree (No56) 1971
The Nigerian Standards Organisation (now called the standard organisation of Nigeria was promulgated in 1971. The main function of the standards organisation of Nigeria is to standardise methods and products in industries throughout Nigeria and to ensure compliance with government policy on standardisation.
Food and Drugs Decree (Act) No 35 of 1974
This act (previously decree) regulates the manufacture, sale and advertisement of food, drugs, cosmetics and devices; and repealed the existing state laws on those matters.
Counterfeit and Fake Drugs Decree 1988
This decree prohibits the sale and distribution of counterfeit, adulterated, banned and fake drugs or persons without Licence or registration and creates penalties for the breach of the provision of the decree.
Other marketing – related legislation includes, sales tax edicts, the hire purchase Act (1965), sales of goods act (1893) the weights and Measures Act (1974) Trade Marks Act, Nigerian Export Promotion Council decree (1976) Industrial Promotion Act (1979) etc. The overall effect of this legislation is to regulate the marketer.
Social / Cultural Environment
The proper understanding of social/ cultural force is important in marketing. The type of society and the culture of the people will affect the manner in which marketing operations are conducted.
Social attitudes sometimes expressed in movement such as consumerism and environmentalism. This exerts pressure on marketers to reform some of their marketing practices. To put it clearly, the social/cultural environment component of the marketing environment consists of the relationship between the marketer and society and its culture. Therefore, culture can be defined as the learned and expected ways of life which are shared by members of a society. Culture are handed from one generation to the other. Within the culture includes all social institutions (e.g. family, religions), language, customs, traditions, art, dance, attitudes, belief and value system known to the people.
Culture condition is what is acceptable or unacceptable to an individual. A person is born into a culture which he imbibes through socialization and enculturation. Culture is uncontrollable because no company can change or control the culture of a given set of people or society. For example it will be a worthless venture for a marketer if he tries to sell pork or alcohol in a purely muslim community. Only products which are acceptable to a given society may he marketed therein.
Cultural values are dynamic and change in response to pressure from within and outside the society. These changing variables affect the way consumers react to different products and marketing practice. What may be out of bounds today may be totally acceptable in tomorrow’s market place. Subjects that were once taboo – condoms and femine hygiene products like (Always’ pad) are now commonly advertised. The cultural -dynamism has also been expressed in the changing role of women, concern for environment, energy conservation etc. All these suggest that social and cultural environment determine a cofnffany’s marketing strategies.
The physical environment includes the land area, topography, rivers and lakes, the climate, vegetation and mineral deposits. In Nigeria the mineral deposits are immense and include crude oil, natural gas, coal, iron, tin ore, gold, lead, salt and even uranium.
The physical environment involves the natural resources that are needed as input by marketers or that are affected by marketing activities. Environmental concerns have grown steadily during the past two decades. The physical environment is vulnerable to the adverse effects of .pollution of air, land and water, which have reached dangerous levels. The activities of oil exploration in the Nigeria Delta area of Nigeria, and industrialisation in the major cities in Nigeria now constitute threat to our physical environment.
The marketing implication for the distraction of our physical environment is that there will be shortages of raw materials, increased cost of energy and increased pollution.