Describe the microenvironmental forces. Consider how they affect all aspects of business.
Micro environment factors, are factors close to a business that have a direct impact on its business operations and success. Before deciding corporate strategy businesses should carry out a full analysis of their micro environment. In this article we discuss common micro environment factors.
To learn about other factors, that are part of a firm's Marketing Environment read our articles about Macro Environment Factors and Internal Environment Factors.
The diagram below shows the 6 stakeholders involved in the Micro Environment - Customers, Employees, Competitors, Media, Shareholders and Suppliers.
Customers
As all businesses need customers, they should be Centred (Orientated) around customers. The firm's marketing plan should aim to attract and retain customers through products that meets their "wants and needs" and excellent customer service.
Employees
Employing staff with relevant skills and experience is essential. This process begins at recruitment stage and continues throughout an employee's employment via ongoing training and promotion opportunities. Training and development play a critical role in achieving a competitive edge; especially in Service Sector Marketing. If a business employs staff without motivation, skills or experience it will affect customer service and ultimately sales.
Suppliers
Suppliers provide businesses with the materials they need to carry out their business activities. A supplier's behaviour will directly impact the business it supplies. For example if a supplier provides a poor service this could increase time scales or product quality. An increase in raw material prices will affect an organisation's Marketing Mix strategy and may even force price increases. Close supplier relationships are an effective way to remain competitive and secure quality products
Shareholders
As organisations require investment to grow, they may decide to raise money by floating on the stock market i.e. move from private to public ownership. The introduction of public shareholders brings new pressures as public shareholders want a return from the money they have invested in the company. Shareholder pressure to increase profits will affect organisational strategy. Relationships with shareholders need to be managed carefully as rapid short term increases in profit could detrimentally affect the long term success of the business.
Media
Positive media attention can “make” an organisation (or its products) and negative media attention can “break” an organisation. Organisations need to mange the media so that the media help promote the positive things about the organisation and reduce the impact of a negative event on their reputation. Some organisations will even employ public relations (PR) consultants to help them manage a particular event or incident.
Consumer television programmes with a wide and more direct audience can also have a very powerful impact on the success of an organisation. Some businesses recognise this and will change their reaction when consumers mention that they are going to contact a consumer television programme or the newspapers about the business.
Competitors
The name of the game in marketing is differentiation. Can the organisation offer benefits that are better than those offered by competitors? Does the business have a unique selling point (USP)? Competitor analysis and monitoring is crucial if an organisation is to maintain or improve its position within the market. If a business is unaware of its competitor's activities they will find it very difficult to “beat” their competitors. The market can move very quickly for example through a change in trading conditions, consumer behaviour or technological developments. As a business it is important to examine competitors' responses to these changes so that you can maximise the impact of your response.
Conclusion
Businesses can not always control micro environment factors but they should endeavour to manage them along with Macro Environment and Internal Environment factors.