Marketing 101: The Microenvironment - Competitors

I want to start this week's post with a bit of caution: even though there may not be a lot to write, this part of the Micro-environment is by no means small or light.  In fact, it is complex, requires a lot of thought and study, and must be properly evaluated.  It's your Competitors.

The marketing concept states that in order for your marketing to be successful, your business must provide greater customer value and satisfaction that your competitors.  In other words, you must do more than simply adapt to the needs of your target customers.  Let me state this again:  You must do more than just give your customers what you think they need, or they say they need.  You must gain a strategic advantage by positioning your products and services against your competitors in the minds of your customers.

This is all about positioning.  You have to differentiate yourself from your competitors.

You can't do this unless you study your competition.  You have to study them, their products, their marketing messages, and figure out how to stand out above them.

This takes time and a lot of studying.

Remember, no single competitive marketing strategy is best for all companies and situations.  You need to take into account your size and position compared to your competitors.  Large firms with dominant positions in an industry can use certain strategies that smaller firms don't have the ability to from a resource standpoint (money and manpower).  But being large is not enough.  There are winning and losing strategies for all sized businesses.  Small businesses must find the strategies that give them larger rates of return. 

When is the last time you took a hard look at your competition?

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Marketing 101: The Micro-environment - Customers

Next in the Marketing Micro-environment, we come to Customers.

Customers are the key to sales.  If you don't have customers, you can't sell anything. Managers must continually study customer needs and try to anticipate how they are developing so they can meet these needs effectively now and in the future.  However not all customers are the same.  Managers must actively study five distinct categories of customer markets.

Consumer Markets
Consumer Markets are made up of individuals and household units.  These customers buy products and services for their own personal use.

Business Markets
Customers in Business Markets typically purchase products and services that will be further processed or used in their own internal business processes.  These customers are commonly referred to as B2B, or business-to-business customers.

Resellers
Customers in Reseller markets purchase products and services specifically to resell them to others for a profit.  Well known resellers in the United States are "big box" stores, such as Target or Walmart.

Government Markets
Customers in Government Markets consist of government agencies that purchase products and services from private companies, and provide public services or transfer products and services to others who they deem need them.  Some industries are much more dependent on Government Markets than others.

International Markets
Customers in International Markets are buyers who reside in other countries.  These buyers include consumers, producers, resellers and even governments.

A business will typically sell it's products and services to multiple Customer Markets.  Customer markets can also provide areas for a business to grow into.  Each market requires it's own special strategic marketing to properly "sell" to it's distinct type of customer.  Each Customer tastes and preferences will also change at different rates, and are effected by larger economic factors in different ways at different times.  A good marketing manager will always have a good sense of what is going on in each of the Customer markets he or she is strategically marketing to.


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Marketing 101: Microenvironment - Marketing Intermediaries

It's time for Marketing 101.  We're still discussing the Marketing Microenvironment.  This week let's discuss Marketing Intermediaries.

Marketing Intermediaries are businesses that help your company to promote, sell, and distribute your products and services to your customers. They can include resellers, physical distribution firms, marketing service agencies, and financial intermediaries.

Resellers
Resellers, such as Target or Best Buy, are distribution channel businesses that help your company find customers or make sales to them.  There are now numerous large reseller organizations (think big box such as Target and Amazon) that have enough power to dictate terms, or even shut out other manufacturers (or even you) from larger markets and groups of customers.  It is absolutely important to have great relationships with resellers.  It is a give and take situation.  Often times, especially with larger organizations such as Walmart, you must be willing to follow their pricing or selling guidelines in order to gain access to their customers.  It may cost you money to get your product on their shelves, or be featured in their advertisements.  Unless you have a long, successful relationship with these resellers, you will typically have to supply them product and services on their terms.  In these situations, successful sales of your product in their stores will be what builds leverage for you in the relationship.

Physical Distribution Firms
Physical Distribution Firms help your business stock and move goods to their points of origin and to their destinations, ie: from the factory to a warehouse and then to the stores.  It is often much more economical to rely on these companies, because logistics is their specialty.  To build a logistics team and infrastructure is often very expensive to do from scratch, and is only really necessary when you are moving massive amounts of goods in highly specialized and time critical ways.  If you are manufacturing internationally, make sure you develop a good relationship with a firm that knows the in's and out's and politics of getting product in and out of ports and dealing with customs. 

Marketing Services Agencies
Marketing Services Agencies usually consist of marketing research firms, ad agencies, consultants, and media firms.  These companies exist to help you find and target your customers.  These businesses typically help to fill in the holes in your marketing staff.  Research firms provide you with qualitative and quantitative data on markets and customers.  Ad agencies help provide fresh, outside creative ideas for your campaigns and strategic marketing efforts.  Agencies can bring multiple types of marketing experts to your business without you having to staff people for each discipline.  Consultants can service the role of internal marketing staff on a temporary, campaign or project basis.

The key to using Marketing Services Agencies is to partner with them to help you with your weaknesses.  Whomever you use, make sure they are filling a hole that you haven't filled yourself on staff.  Make sure that they are invested in bringing you results.  You must keep constant tabs on them: are they doing the right work?  Are they investing your dollars properly?  Are they performing at a level that meets your expectations?  Are they truly concerned with achieving success for you?  Do you have a good working relationship with your account executives?

Financial Intermediaries
Financial Intermediaries help you use money.  They typically include banks, credit companies, insurance companies, other businesses that help you conduct financial transactions or insure against the risks associated with the buying and selling of goods and services.

Marketing Intermediaries are a crucial part of the marketing microenvironment.  You must have effective partnerships with these key elements of the microenvironment if you are going to successfully give value to your customers and get value from them.  Now is as good a time as any to evaluate the relationships you have with your marketing intermediaries.

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Marketing 101: Microenvironment - Suppliers

Last week, we examined the Company in the Marketing Microenvironment.  Your relationship with other departments within your business can greatly effect whether or not you are able to successfully get a product to market, communicate the right message, create customer value, and get value from your customer.  Now let's examine Suppliers.

In the Marketing Microenvironment, Suppliers form a critical link in the company's overall customer value delivery system.  Suppliers provide the resources you need to produce the products and services that you are selling.  Supplier's not only supply you with resources, they also can partner with you in the customer value delivery system. 

When it comes to actual physical resource management, Marketing Managers must watch supply availability.  Resource shortages, delays, labor issues, and other unforeseen events can cost sales in the short term, and damage customer satisfaction in the long term.

However the real key to delivering customer value with your suppliers is partnering with them.  Partnering with them allows them to receive value from you other than payment for goods.  For example, have you considered offering to test new products and goods from your supplier?  What are you doing to help your supplier work with you?  What kind of customer service are you providing to them?  Good partnership management results in success for not only you, but for them, and in the end, your customers.

Take the next week and honestly evaluate the state of your supplier relationships.  It might be a good idea to send them an impromptu survey with carefully worded questions that will help you assess how good (or bad) of a job you are doing maintaining your relationships.

Next time we will examine Marketing Intermediaries.

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Marketing 101: Microenvironment - The Company

In this continuing Marketing 101 series, I think it's time to begin looking at the Marketing Environment.  The Marketing Environment consists of the factors and forces outside marketing that affect marketing management's ability to build and maintain successful customer relationships with target customers.  Within this environment we have the Macro-environment and the Micro-environment.  Let's start with the Micro-environment.

The Micro-environment consists of the factors close to the business (usually involving business relationships) that affect its ability to serve its customers.  We can break the micro-environment down into specific segments:

- The Company
- Suppliers
- Marketing Intermediaries
- Customers
- Competitors
- Publics

Let's start with The Company.

The Company
Inside the Company (think your business), marketing managers must work closely with other company departments.  They simply cannot work within a realm of isolation.  They have to depend on, and take other groups, into account.  These groups can consist of top management, finance, research and development, purchasing, operations, and accounting.  The reality is that these other departments have a direct impact on the marketing department's plans and actions.  In order for these plans and actions to succeed, the "marketing concept" contends that all of these functions must be "thinking consumer", and they must all have bought into the the strategic marketing plan in order to work in harmony to provide customer satisfaction and value.

Top management can directly assist and fast track your plans, or they can stop them in their tracks.  Finance has a direct influence on your budget, and whether money is available for your strategic plans.  R & D has direct influence on product development (think what you are selling).  Purchasing, operations and accounting all influence staffing, media execution and how well you stay on budget.

So the key question is: how is The Company?  Have you taken a hard look at the relationships you and your department have?  How does the rest of the Company perceive you?  Have they bought into your strategic marketing plans?  Are there any conflicts, or relationships that need to be restored?

Take the next few days and sincerely evaluate The Company.

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