What is the microenvironment?
This lesson covers the microenvironment in greater detail. It considers the interface between a business and its microenvironment. Let's just review what microenvironment is again based upon the earlier lesson on the marketing environment which contains the topic. Our microenvironment is the totality of people and other connected groups of people/organisations that are very close to the business, and which all have a direct and measurable impact upon the customer experience.
So as we said in our earlier lesson, examples of the influencers would include your company itself, your suppliers, any marketing or advertising agencies with whom you have a close working relationship, the segments and markets which you target and your competition.
Don’t forget to review your stakeholders which are those people and organisations that interconnect with your business that might not be paying for your products or services i.e. not your customers. Stakeholders are the publics with whom you interact for example your neighbours, and other interested parties. The key to the microenvironment is that it is relatively controllable and we have some influence over how things happen, whereas with the macroenvironment we have far less influence.
What are the elements of a business’s microenvironment?
Now let's go on to consider the building blocks that make up our microenvironment. More specifically we are going to consider our customers, our stakeholders, our suppliers, our distributors, and our employees, all of whom make up our microenvironment.
Customers are vital to our business because without paying customers we have no business. When we define marketing we often talk about customer needs, how we identify needs, satisfy them and anticipate them into the future. Today when tend to focus less on products and services and more on customer i.e. customer orientation. We think less of the Product Life Cycle (PLC) and more about the Customer Life Cycle (CLC) whereby we attempt to recruit and retain customers, and then extend products and services to them throughout their lives. So know your customers well.
Stakeholders are those members of the microenvironment that have a direct influence on your business although they are not generally paying customers. Employees (see below) are stakeholders in your business. The government or governments of countries in which you trade are all stakeholders. Your local community or neighbours are stakeholders, for example think of the local community’s influence when a car firm wants to build a new factory, or when an airport wants to build a new runway.
Competitors influence your actions. If a competitor launches a new product for example, you will review your own marketing plan. Competitors, whom are part of your microenvironment and compete for your customers, might try to take your best employees and might distribute through the same channels as your company.
On some occasions you might collaborate with a competitor. There are examples of alliances and joint ventures in the car industry such as those between Toyota, Peugeot and Citroen in Europe.
Suppliers are those companies that supply your business with goods and services to which you add value through transformation. From a manufacturing point of view suppliers would supply raw materials and components which are transformed into finished goods. From a retail perspective suppliers would deliver produce which is broken down from bulk, packaged and merchandised in stores to attract customers and consumers. Today suppliers are a vital part of the supply chain, which sees valued-added at all stages from conception to consumption (and post-purchase evaluation).
Distributors are the intermediaries between the manufacturer and the consumer. Distributors are marketing companies too, and participate in the marketing process. Distributors are important channels since large manufacturing brands do not wish to distribute all the way to the final consumer. For example Coca-Cola cannot have a direct supplier relationship with every consumer (although it does have a strong brand relationship with consumers). Intermediaries perform this important distribution role.
There are a number of different levels of distribution. A window manufacturer might sell directly to the homeowner whereby there are no intermediaries. Often intermediaries would be a wholesaler, a retailer, or an agent. Each of these are covered in more detail in the lesson on place and the marketing mix.
Employees are those people that are employed to work for an organisation. Employees are an important because they drive value through customer satisfaction and embody the marketing concept. They are the vital interface between a brand and its customers. People buy from people and your employers build close customer relationships. Of course managing people and organizational behaviour/behavior are management disciplines in their own right. Employees would need to be recruited and trained, motivated and developed, all of which would support the functions and philosophy of marketing.