Marketing environments are fundamentally concerned with the factors and forces that affect an organisations functions and relationship with consumers and society. These factors and forces are both internal and external. The internal environment is concerned with the resources, structures and planning of the organisation itself. It can be usefully categorised and analysed as the Five M’s of Marketing: Manpower, Material, Machinery, Minutes and Money. Throughout the sectional analysis that the Five M’s focuses, SWOT – Strength, weaknesses, opportunities and threat analysis is often deployed.
Five M’s of Marketing:
Manpower – Staff
Manpower is simply the human resources required to perform marketing functions that stem from the organisation’s marketing strategy. Although, the organisations staffs who are or will be assigned to complete a task or the focus this is not exclusive. Part of this analysis is also the impacts on and productivity of those staff who aren’t directly engaged in a specific campaign related task. Fundamentally, this allows the organisations how to orientate their general operations to support and complement their core marketing functions.
Material – Production
This section of analysis is focused on the overall organisational operations and core supply chain which forms the organisations operational functions. It focuses on the manner in which suppliers and processes add value to their overall marketing strategy. This can be specific, with a focus on individual component value or more general considering collective output and its relationship with marketing strategy.
Machinery – Equipment and Technology
Fundamentally, these are assets which are directed for the delivery and implementation of an organisations marketing strategy, this has broadened significantly in recent years from physical assets to include digital resources. This ranges from basic marketing software to information infrastructure such as servers. The focus of this analysis is how effectively these range of mechanised resources are being used.
Minutes – Time
This is an analytic focus review of the time allocation and focus marketing planning process, at an individual and organisation wide level. This considers the reactive speed of the organisation to develop and bring to market products or services. It also evaluates the timeliness of organisations ability to adapt to market forces and trends.
Money – Finance
The fifth element of the 5 M’s of Marketing looks at the financial component of marketing functions and related budgetary matters. This considers and evaluates the current strategic project’s return on investment and the financial success and viability of present and future strategic marketing activity.
External Environment
Organisations operate in a fast paced and ever-changing world. External forces have a significant impact on the trading environment and society organisations operate within. This ranges from international trade issues to localised cultural sensitivities. As such external factors and forces are things outside an organisation but have an impact on the organisation. This impact whether positive or negative needs to be planned for it is the reaction a business can rarely control the external factor or force itself. Implementing a successful marketing strategy requires a wide-ranging strategic framework, this is provided by a PESTLEE Analysis.
Political Factors
An organisation must consider and plan for the ways and manner in which a government intervenes in an economy and its impact on organisations. This includes: Government spending, political stability, environmental regulations, trade polity, tariffs and taxation policy. The vast range of political and policy areas that impact on the way organisations operate make planning for any potential impact essential. Organisations need to possess an ability to adapt and change their operations, and crucially adapt their marketing policy and functions.
Economic Factors
Economic factors have a significant impact on how an organisation conducts its operations and their profitability. These factors can be usefully categorised into macro and micro-economic factors. Global, national and government level economic factors are macro while micro factors are focused on the factors that influence the way the consumer engages with organisations and their spending power. This is particularly relevant for business to consumers (B2C) centric organisations. Economic factors include: Interest rates, inflation, minimum wage level, unemployment figures, cost of living, and credit availability.
Social Factors
These factors are orientated around the culture norms and expectations of workers, consumers and society. They’re concerned with the attitudes of the population and their shared beliefs. These factors include age distribution, population growth, health consciousness and career attitudes. Organisations can use these factors to understand the consumer they serve and the climate in which they operate.
Technological Factors
Ever-emerging technological innovation and change means organisations need to understand technology will affect their operations. Organisations try to understand the impact the way they market products. Technological factors affect the delivery of marketing and communication as well as the production and/or nature of products.
Legal Factors
Organisations have to understand and adhere to laws in order to successfully function. This is particularly relevant to organisations that operate globally who have to adhere to multiple jurisdictions individually and often unique rules and regulations. Legal factors include – data protection, health and safety, equality legislation, consumer rights, advertising standards and product standards.
Environmental Factors
The twenty-first century has seen an intensified focus on environmental issues from government, business and society. Such issues have become increasingly relevant because of consumer environmental expectations, pollution targets, sustainability issues, governmental environmental regulation and the increasing scarcity of raw materials. Consumers and government are increasingly demanding organisations to maintain and project a high ethic and sustainable standard. As such organisations regulatory and society expectations in their overall operations and marketing functions are a central consideration.
Ethical Factors
The most recent addition this sectional analytic marketing environment framework is ethical factors. These are concerned with issues of morality and humanity in relations to organisational practises and consumer expectations. Issues such as fair trade, slavery and human trafficking and child labour laws, corporate social responsibility, animal rights and tax practices are considered.
Summary of Marketing Environments
Analysis of the internal environment focuses on accessing the capabilities and the constraints an organisation possesses. It fundamentally considers the organisations available resources and the necessary resources to achieve strategic objectives. While also considering internal departmental and resources weaknesses and/or barriers to success.
An organisation cannot assess its marketing strategy and function’s internal or external environment in isolation. The internal environment must be orientated to the external environment in order to fully implement a successful marketing strategy.
Analysing the external marketing environment is central to facilitating successful organisational operations and functions, PESTLEE analysis provides a simple framework to achieve this. This simple strategic framework provides a holistic understanding of the business environment in a micro and macro sense. Engaging in this strategic analysis will also support and improve stakeholder’s ability to deploy strategic thinking and analysis in other areas that can be beneficial to the organisation.
At a basic level this enables an organisation to develop a self-awareness that is a building block for which to build, adapt and grow. Focusing not only on specific organisational strengths and weakness but threats that a globalised world provides is central to strong organisational planning. More than this, external analysis identifies opportunities and allows organisations to fully utilise them.
