Micro Environment

The micro environment, as the name suggests, is the immediate environment that
impacts a business. The micro environment includes considerations related to
suppliers, customers and local stakeholders, including local government agencies or
regulatory bodies. The micro environment can generally be considered the local
environment where the business operates and the business owner is likely to be
somewhat aware of the impacts that they are faced with.

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
timescales 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.

MICRO ENVIRONMENTAL ANALYSIS

This is also known as the task environment and affects business and marketing at
the daily operating level. While the changes in the macro environment affect
business in the long run, the effect of micro environmental changes are noticed
almost immediately. Organizations have to closely analyse and monitor all the
elements of microenvironment in order to adapt to rapid change and stay
competitive.
Consumer
According to Peter Drucker, the aim of business is to create and retain the customer.
Hence consumer occupies the central position in the marketing environment. The
marketer has to closely monitor and analyse changes in consumer tastes and
preferences and cater to (if not try and anticipate) their buying
Competitors
Competition shapes business. A study of the competitive scenario is essential for
the marketer, particularly threats from competition.

Company
Nothing can be as important as self-analysis by the organization itself. "We have
met the enemy, and he is us" - Pogo.
Understanding its own strengths and capabilities in a particular business, that is,
understanding a business in depth should be the goal of a firm's internal analysis.
The objectives, goals and resource availabilities of a firm occupy a critical position in
the microenvironment of marketing. The company with its resources and
capabilities surrounds the consumer in the microenvironment.
2.5.4 Market
The market is to be studied in terms of its actual and potential size, its growth
prospect and also its attractiveness. The marketer should study the trends and
development and the key success factors of the market he is operating
Suppliers
Suppliers form an important component of the microenvironment. With their own
bargaining power they affect the cost structure of the industry. They constitute a
major force, which shapes competition in the industry. Also organizations have to
take a major Marketing Environment decision on "outsourcing" or "in-house"
production depending on this supplier environment.
Intermediaries
Intermediaries exert a considerable influence in the marketing environment. They
can also be considered as the major determining force in the business. In many
cases the consumers are not aware of the manufacturer and buy the product from
the renowned intermediaries as for example Wal-Mart in US, Pantaloons in India.
Public
Public constitute a major force in the micro environment and marketers have to very
carefully study their opinion, values, beliefs and attitudes in order to design a
proper marketing strategy for goods carefully tailored to meet the needs of the
target consumer segment. In a sort of reverse engineering, marketers also use the
media to shape consumer tastes and preferences.