Internal marketing environment
The internal marketing environment refers to the factors within an organization that affect its marketing operations. These are variables that the company can control and manipulate to meet its objectives and respond to the external marketing environment.
The internal marketing environment includes aspects such as:
- Product/Service: The offering a business provides to the market. This includes its features, quality, variety, and innovation behind it. Apple’s iPhone is an example. The company controls the iPhone’s features, design, and quality, which is crucial in the company’s marketing and branding strategy.
- Price: The strategies related to setting the price of products/services, which includes discount policies, terms of payment, list prices, etc. Walmart, known for its “Everyday Low Prices” policy, is a prime example. The company’s strategy to offer low prices is critical to its marketing and competitive strategy. How does Walmart make money: Business Model & Supply Chain Strategy
- Place/Distribution: The channels and logistics a company uses to get the product/service to the customer. For example, Amazon’s extensive distribution network, including its warehouses and delivery systems, is under its control and crucial for its promise of speedy delivery. “All-Inclusive” business model of Amazon Prime
- Promotion: The various ways a company communicates with its potential customers. This includes advertising, sales promotions, public relations, and direct marketing. For instance, Nike’s advertising campaigns, often featuring well-known athletes, are under the company’s control and play a crucial role in shaping the brand’s image. Nike doesn’t sell shoes. It sells an idea with its marketing strategy!!
- People: The employees of a company who can influence the marketing directly or indirectly. This includes salespeople, customer service representatives, public relations staff, and the marketing team. For example, The Ritz-Carlton hotel chain is known for its exceptional customer service. The company’s employees are a key part of its marketing strategy to provide a high-end luxury experience. Ritz-Carlton Business Strategy: Maximum Customer Satisfaction
- Process: The procedures, mechanisms, and flow of activities consumed by services are essential elements of the marketing strategy. For instance, Domino’s Pizza has a pizza tracking system that allows customers to track their orders in real-time from preparation to delivery, enhancing the customer experience and playing into their marketing and brand promise. Domino’s is not a pizza delivery company. What is it, then?
- Physical Evidence: The environment in which the service is delivered and where the firm and customer interact can influence the customer’s service experience. For example, Starbucks carefully designs its stores to provide a specific ambiance and experience, a part of its overall branding and customer experience strategy.
- Organizational Culture: The value system, principles, and behaviors that guide business decisions and activities. For example, Google’s culture of innovation and creativity drives its product development and forms part of its employer branding strategy. Organizational Culture: Defining | Improving | Examples
- Resources: Includes the company’s financial, human, and operational resources. For example, Tesla’s cutting-edge R&D and manufacturing facilities enable it to produce high-tech electric vehicles, which is central to its value proposition and marketing. How does Tesla make money: Business Model & Supply Chain Analysis
- Technology: The technological capabilities of a company that can affect its marketing efforts, including its digital marketing capabilities and its ability to innovate. For instance, Netflix’s recommendation algorithm improves user experience by providing personalized content suggestions, a significant part of the company’s value proposition and marketing strategy. Netflix – Constantly Pivoting its Business Model to Success
It’s important to note that a company’s internal marketing environment is often shaped by its overall strategic decisions, including its mission, vision, and corporate strategy. Understanding the internal environment is crucial to formulate effective marketing strategies as it provides insights into a company’s strengths and weaknesses.
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External marketing environment
The external marketing environment refers to the factors outside a company that affect its ability to serve its customers. These factors are generally beyond the company’s control and can have both direct and indirect effects on its marketing strategies and performance. They are typically categorized as either micro or macro-environmental factors.
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- Customers: Customer preferences and behavior changes can dramatically affect a company’s marketing strategy. Fitness brands like Under Armour saw a shift in customer behavior during the COVID-19 pandemic as more people started working out at home. This changed their marketing strategy to cater to at-home fitness enthusiasts.
- Competitors: The strategies and actions of direct and indirect competitors can shape the market and influence a company’s marketing efforts. When Samsung launched its Galaxy smartphones, it directly influenced Apple’s marketing efforts, as they had to differentiate their iPhones and compete on features, innovation, and pricing.
- Suppliers: Changes in the cost of materials, supply availability, and the reliability of suppliers can affect a company’s ability to produce its goods or services. A shortage in the supply of semiconductor chips has impacted various industries, particularly the automotive industry, affecting the production and delivery timelines for many companies like General Motors and Ford.
- Intermediaries: Distributors, wholesalers, retailers, and others who help the company distribute its products to the final consumers. The rise of e-commerce platforms like Amazon has changed the distribution strategies for many companies, influencing how they market and sell their products.
Macro-Environmental Factors (PESTLE Analysis):
- Political: This includes government policies, regulations, political stability or instability, and legal issues affecting a company’s operations. For example, Brexit brought about significant political changes and new trade regulations that companies had to consider in their marketing and operational strategies.
- Economic: This includes factors such as inflation, unemployment, economic growth, exchange rates, and consumer confidence that can influence customer buying power and spending patterns. The 2008 global economic recession changed consumer spending patterns dramatically, leading companies to adjust their marketing strategies to focus more on value and affordability.
- Sociocultural: This includes societal trends, values, attitudes, lifestyle changes, demographics, and cultural aspects influencing demand for a company’s products or services. For instance, The growing focus on health and wellness in many societies has led food and beverage companies, like Coca-Cola and McDonald’s, to introduce healthier options and adjust their marketing campaigns.
- Technological: This includes technological advancements, innovation, and changes that could create opportunities for new products, services, or marketing techniques. For example, the advancement of streaming technology has completely transformed the film and TV industry. Companies like Netflix and Disney+ have leveraged this technology to reach audiences directly, bypassing traditional distribution channels.
- Environmental: This includes environmental factors such as weather, climate change, and natural disasters that can affect customer buying patterns or a company’s ability to produce or distribute its products. Increased awareness of climate change and sustainability has impacted various industries. Companies like Patagonia in the clothing industry have made sustainability a key part of their marketing and branding strategy.
- Legal: These are laws and regulations that a business must comply with, such as consumer laws, employment laws, health and safety laws, etc. Changes in data protection laws, like the introduction of the General Data Protection Regulation (GDPR) in the EU, have forced companies to adapt their digital marketing strategies and practices.
Understanding the external marketing environment is crucial for a company to adapt its marketing strategies effectively, anticipate changes, identify opportunities, and minimize threats.