Lesson 1, Topic 1
In Progress

Responding To The Marketing Environment


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There are two approaches organizations can follow while responding to the environmental forces of marketing forces. marketing and proactive marketing:

Reactive Marketing:

The reactive marketing views marketing environmental forces as totally uncontrollable and difficult to predict. This is a passive approach, under which, the organization tries to adjust its marketing mix and program according to the changes in the environment. The adjustments take place only after changes occur in the environment. The organization analyses the environmental changes and finds suitable way to avoid the threat and utilize the new opportunities in the market. In essence, they wait for the environment to change and react only after the change takes place.

Proactive Marketing:

Organizations that adopt the environmental management perspective follows proactive marketing. Proactive marketing believes that although many of the environmental forces such as demography, economy, culture and natural factors are not controllable, the environmental forces such as politics, law and technology can be influenced by correct and calculated moves. Proactive marketing uses political, psychological, economic and public relations skills to influence the environmental forces to the organization’s benefits. The technique of political lobbying, financing political parties and elections, using publicity to shape public opinion and many others are used by organizations to bring the environmental forces to their favor.

Understanding the Environment:

The first step towards effectively integrating an organization with the external environment is scanning, analysing, and incorporating external factors into strategic marketing tactics and strategies. Various frameworks such as the PESTEL model, Porter’s) forces, and a SWOT analysis are useful in framing the key issues an organization faces alongside the internal capabilities of addressing them. Responding to the external environment revolves largely around avoiding threats and capturing opportunities utilizing (or capturing) competitiveadvantages.

Marketing Strategy:

Responding to the external environment is ultimately a question of strategy. Strategy requires the key input of data and understanding of external factors, which are weighed, measured, and considered by the organization. The organization seeks opportunities to leverage what the firm is good at to identify the key segments, differentiate from the competition, and ultimately develop a profitable position within the industry. There are countless ways to address external factors, but the general concept can be captured well in the following models.

The Ansoff Matrix

Depending on the organization’s current capabilities, products and services, and the maturity of the market, a marketing team could derive different generalized strategies to capture value. This is best illustrated by the Ansoff matrix, where new and existing products can be considered in the context of new and existing markets.

Segmentation:

The next critical consideration utilizing external environmental information about the market ishow to segment the market and position the firm to capture value. This is a process where thefirm identifies key target markets, and understands the needs the firm could fill when addressing these target markets. By positioning the firm to match the needs, values, and behaviours of their core target segments, the firm can gain a competitive advantage through a strong market position with key target groups.

The 4Ps

Product, place, price, and promotion. These four aspects of marketing strategy should be a direct reflection of what the external environment demands, and the core target segments require from the firm. By building up a product that reflects the current needs in the market, distributing that productto target markets at the appropriate price point, and promoting the product for growth, an organization can capture external opportunities and avoid external threats. This is a questionof focus, based upon data from the external environment.