The microenvironment of a firm is Concept, definition, main factors and structure

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Any firm is created for profit. To prevent the company from becoming unprofitable, there is a marketing management system that allows you to create products that are attractive to the consumer. The success of the organization depends on the work of branches, divisions, departments, intermediaries and the actions of competitors. A successful marketer evaluates the micro-environment and the macro-environment of the firm.

What is the firm's microenvironment

The marketing environment is the basic concept of marketing, it includes a set of subjects and factors that affect the competitiveness in the market. A properly organized firm environment allows maintaining good relations with clients.

The main marketing environment consists of a macro environment and a micro environment. The firm's microenvironment is the entities that are directly related to the firm and its customers. The macro environment is represented by factors that the organization cannot influence. These are demographic, social, ecological and otherindicators.

Main factors of the microenvironment

The firm's marketing microenvironment includes the following entities:

• suppliers;
• marketing intermediaries;
• competitors;
• clients;
• contact audiences.

The microenvironment is divided into internal and external. The development of a marketing plan for the internal environment of the organization consists of the interests of all services of the company. The project is compiled annually for each unit of the enterprise structure.

Without the main factors of the microenvironment, the functioning of the company is impossible. Suppliers provide the company with the necessary resources. Marketing and resellers help promote the product to the end consumer. The clientele is a key link in the work of the company. Contact audiences facilitate interaction and delivery of goods to the buyer. Competitors create a he althy environment and provide choice to the consumer.

Main macro-environment factors

Determine the firm's microenvironment factors within which the company sells a product or service. Factors include:

• demographic conditions (population, age, gender, regional distribution);
• political and legal conditions include the norms that the company follows (regulations, laws, documents);
• natural and climatic conditions (firm location);
• new inventions and achievements in the field of enterprise operation;
• socio-cultural conditions (religion, language, customs, cultural values);
• socio-economic development (growtheconomy in the country and region, the size and dynamics of income of the population).

All conditions of the macro environment are important. The firm is affected by the development and potential of natural resources, the structure, density and size of the population. The financial condition of buyers forms the pricing policy of the enterprise. The stability of market relations depends on the legal protection of the population. The introduction of new technologies contributes to the long-term development of the relationship between the organization and the end user. Traditions and cultural behavior of the population have a huge impact on the sales market.

Enterprise microenvironment

The company's internal microenvironment is the totality of all departments and divisions of the company. Includes:

• accounting and financial services;
• production;
• supply;
• sales;
• Research and Development Department.

Achieving marketing goals is possible with the close interaction of all enterprise services. All departments can be influenced by marketing. Initially, they examine the internal environment of the enterprise and identify the potential of the company.

The company's microenvironment is the company's potential, the set of capabilities and achievements that provide the company's competitive advantage in the market. The potential of the firm consists of the following parts:

• production or sales capacity;
• sales quality;
• competitiveness;
• market share;
• number of implemented innovations;
• payback time on investment;
• financial and credit resources;
• labor efficiency;
• Average product lifespan.

External microenvironment

The external microenvironment of a company is a set of objects that are influenced by the company's marketing department. Objects include: suppliers, intermediaries, clientele, competitors, contact audiences. The external microenvironment includes financial, informational and material groups that are under the influence of the firm.

When conducting an industry analysis, economic activity becomes the main object of study of the external microenvironment. It covers the spheres of production, distribution and consumption of goods and services.

The attractiveness of the external microenvironment depends on the following components:

• rivalry among competitors;
• the threat of an increase in the number of competitive organizations;
• competition from cheaper products that can replace the existing one;
• economic condition and trading ability of suppliers;
• paying customers.

The marketing department should work to study the external microenvironment of the enterprise and determine the development program. The action plan consists of the following steps:

• competitor analysis;
• shopper analysis;
• supplier analysis;
• analysis of market barriers.

To determinethe company's prospects should highlight the key success factors on which the future and financial well-being of the organization depends.

Suppliers

Suppliers are the main factor in the microenvironment. The functioning of the company is impossible without the provision of material resources that are required for the production of goods or services.

The marketing department must track the prices of the supply. Material shortages, unreliable supplier can adversely affect the company's reputation or cause lost profits.

The quality of work largely depends on information about the supplier, his potential and the ability to work with him. If a company requires a one-time purchase of goods, then reduced requirements are imposed on the selection of a supplier.

In the relationship between the company and the supplier, the main condition is the ratio of price and convenience of service. Long-term relationships impose obligations on both parties, but a firm's negative evaluation of a supplier's performance can destroy long-term commitments. There are no clear criteria for determining a good supplier. But some characteristics help to reveal the positive aspects of the supplier:

• on time delivery;
• high quality;
• best price;
• stability;
• quality service;
• promise fulfillment;
• technical assistance;
• communication.

For a preliminary assessment of a potential supplier, third parties are involved whocollaborated with him. Additional parameters for forming a general view are:

• deferred payment;
• discounts;
• percentage of late deliveries;
• number of underdeliveries.

Marketing intermediaries

Intermediaries - legal entities or individuals that connect the producer and consumer. Intermediaries can be divided into marketing and trade.

Marketing intermediaries are elements of the firm's microenvironment, responsible for the promotion of goods and services. They ensure the movement of goods from the point of production to the point of purchase. These include marketing research agencies, advertising companies, consultation centers.

Resellers assist in finding customers, facilitating timing, purchasing procedures and reducing costs. It is more economical to choose an intermediary with a developed network than to create it yourself. Choosing a reseller is not easy, the giants of trade may not allow the manufacturer to enter the market.

Clientele

Customers become the main factor in the firm's microenvironment. A firm should carefully study competitors and their degree of entry into five types of competitive markets:

1. The consumer market consists of individuals or families who purchase goods for themselves and have no income from this.
2. Consumer organizations that buy goods to use them in the production of other goods or services.
3. Intermediatesellers buy goods for further resale and profit.
4. Government agencies buy a good or service to use in activities or give to those in need.
5. International buyers purchase goods outside the country of origin. However, they can be both individuals and organizations.

Competitor

The firm's marketing microenvironment includes competitors that have a significant impact on the actions of the marketer. Competition is divided into the following types:

• competitors-desires that the end consumer wants;
• commodity-generic competitors, thanks to which it is possible to satisfy the desire of the consumer;
• commodity competitors - a kind of product that satisfies the consumer;
• competitor brands - different brands of the same product.

It is important for a marketer to study competitors and identify their strengths and weaknesses. Based on these data, the company's development strategy is developed.

The competitive microenvironment of a firm is the environment formed by competitors who produce similar products within the market. At the same time, a similar product that can replace the main type can become competitive.

Contact Audiences

Contact audiences are part of the microenvironment. The influence of microenvironment factors on the firm determines the ability to achieve its goals. The contact audience can help or hinder the firm in terms ofcustomer service. There are the following types of audiences:

• charity (sponsors);
• searched - the company is interested in them, but often to no avail (media, consumers, suppliers);
• unwanted contact audience uninteresting for the company, but it has to be reckoned with (competitors, tax authorities).

Controlled microenvironmental factors

The controlled elements of the firm's microenvironment include those that change under the influence of the management of the organization and are controlled by the marketing service.

The decision to change the internal factors of the microenvironment is made by the company's management, but it is important for marketers to know only some of them:

1. Field of activity of the company, what product or service is provided to the end consumer.
2. Overall goals set by the management of the enterprise.
3. The functions of the marketing department within the organization, the impact on the company's activities.
4. Relationship between departments.
5. Corporate culture, value system, rules, norms, relationships within the team.

The goal of the company's development determines the management team, the task of the marketer is to manage the controlled factors of the company's microenvironment:

1. Determine the image of the company in the market, differences from competitors. Select the type of consumer to which the product will be directed.
2. Select target market.
3. Organize marketing by type and type.
4. Create a marketing plan to achieve goals and satisfy the end consumer.

Communication links between the organization and the market

Uncontrollable factors determine the success of an organization and determine the extent to which the environment interacts in achieving goals.

The company's task is to identify strengths and weaknesses with the help of analysis and make changes in the marketing plan, if necessary.

Contact with any other organization contributes to the development of communication links. The market gives money and information about whether the product is interesting to the end consumer. Communication with the market is organized through marketing research.