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The marketing environment are forces that affect marketers' capability to build and sustain successful relations with

their customers. It is divided into 2 elements, the internal environment and external environment. The external environment is subdivided into the microenvironment and macroenvironment. This essay discusses the impact of both elements on organisational performance.

To better understand the impact of the microenvironment and macroenvironment on firms, the company Bavarian Motor Works (BMW) is selected as an example.

(Brainmates 2009). The microenvironment are controllable forces which are closer to the firm, and affect its capability to serve its customers. This includes - the

company, suppliers, marketing intermediaries, customers, competitors and publics (Kotler & Armstrong 2008).

Suppliers are a key force, as they can determine the price and quality of parts or raw materials (Kotler & Armstrong 2008). When dominant suppliers control a large portion of the market, the industry's profitability may be restricted as buyers may be forced to accept a price hike, or a lower quality level. However supplier control is not an issue for BMW, as they practice an effective strategy in sustaining a firm control over the supply chain, and in maintaining a long-lasting relationship with their suppliers (BMW Group 2011).

Customers can influence pricing, demand better quality or more services (Kotler & Armstrong 2008). Competition is fierce in the automobile industry; the number of vehicles produced is much higher than market demand. This allows consumers to look for better value for money when purchasing a vehicle. However, BMW takes pride in the quality of their products and service level, which in turn becomes their main selling point (BMW Group 2011). The majority of BMW customers seek product differentiation, instead of low prices.

BMW faces domestic and international competition, which greatly influences its marketing planning. Domestically, BMW faces competition mainly from Mercedes, another luxury carmaker while internationally its main competitors are Korea and Japan manufacturers. Competitors raising their

quality and lowering costs leaves BMW with no choice but to do the same to remain competitive. This is evident with the introduction of cheaper, more affordable entry level models by BMW (Smith 2008).

The macroenvironment on the other hand refers to uncontrollable forces of a wider scope, which in turn impacts the microenvironment demographic, economic, natural, technological, political, and cultural forces (Kotler & Armstrong 2008).

Political factors influence the strategic planning of BMW, as government laws and regulations are concerned with the production of more environmental-friendly vehicles. This forces the industry to abide to regulations aimed at reducing pollution levels (BMW Education 2011). Governments in a bid to lower unemployment rates discourage manufacturers from fully automating their operations, as it would take up local jobs.

Due to the economic crisis in Europe recently, car sales decline accelerated. In December 2011, vehicle sales dropped 5.8 percent on an annual basis (Euronews 2012). Countries that recorded negative growth include Italy (-6%) and United Kingdom (-1.8%). On the other hand, rising Chinese economy (CNBC n.d.) prompted BMW Group to be more aggressive in capturing the Asian market. As result, sales in China soared, with an increase of 38 percent (Goldfarb 2012).

The economic downturn prompted European governments to launch state-aided bailout packages for the automotive industry, especially helpful for the mass-market producers, which were making large losses (Schafer & Milne 2009). This has sparked worries from BMW, as these rescue packages do not address root causes of the massive losses, such as excess capacity (Schafer & Milne 2009).

The rising middle-class population in countries such as China, Singapore and Malaysia possess the buying power for luxury cars. Falling in the category of Generation X where people are not retail brand conscious but prefer reliability and authenticity instead; this is where BMW fit into the picture. Studies show that over 66% of the Generation X people in 17 countries determined that their favorite choice of vehicle is BMW (McDaniel pg113). Not far behind is the Generation Y class with a spending power of 200 billion USD annually (Deloitte 2009).

Technological changes which are happening globally call for technical changes within BMW. Such changes following adequate research and development apply to the assembling of the automobiles, to marketing methods. One example is the implementation of a Facebook fan page to capitalise on the vast amount of users within the online community (McEleny 2010). The firm must adapt positively to keep up with the stiff competition within the global automobile industry. As for the assembly line, process automation increases production rate, at a lower cost.

In conclusion, marketers will always face overwhelming forces from the microenvironment and macroenvironment as they have been unavoidable over the years. Many organizations are forced to allocate resources to tackle these forces but at most times it has proved fruitless. As stated by Jobber and Fahy (2009), these environments are largely uncontrollable by firms and as expected, have significantly impacted on their performances especially in terms of costing, resource allocation and internationalization.

References (2011) "How does legislation affect your business?" BMW Education Programme. [online] Available at: <http://www.bmweducation.co.uk/coFacts/view.asp?docID=63>. [Accessed 01 April 2012].

(n.d.) "World's 10 Largest Auto Markets." CNBC. [online] Available at: <http://www.cnbc.com/id/44481705/World_s_10_Largest_Auto_Markets? slide=11>. [Accessed 15 March 2012].

[Mktgenvironment.jpg] (2009) [image online] Available at: <http://www.brainmates.com.au/brainrants/what-does-a-market-drivenproduct-really-mean>. [Accessed 26 March 2012].

BMW Group. (2012). [online] Available at: <http://www.bmwgroup.com/e/nav/index.html?../0_0_www_bmwgroup_com/h ome/home.html&source=overview>. [Accessed 01 April 2012].

Deloitte. (2008). Insuring the Catalyst-Customer: Generation Y and the Insurance Industry. [online] Available at: <http://www.deloitte.com/assets/Dcom-UnitedStates/Local %20Assets/Documents/us_fsi_insuringcatalyst_customer_genYandInsurance 081208.pdf>. [Accessed 01 April 2012].

Goldfarb, M. (2012) "BMW Says: Thank You, China." Business Insider. [online] Available at: <http://articles.businessinsider.com/2012-0309/europe/31138471_1_china-sales-asian-sales-rolls-royce> [Accessed 20 March 2012]. Jobber, D. & Fahy, J. (2009). Foundations of Marketing. Berkshire: McGraw Hill.

Kotler, P. & Armstrong, G. (2008). Principles of Marketing. Essex: Pearson Education.

McEleny, C. (2010). "BMW adopts fan page on Facebook as official presence." Marketing Week. [online] Available at: <http://www.marketingweek.co.uk/bmw-adopts-fan-page-on-facebook-asofficial-presence/3016619.article>. [Accessed 20 March 2012].

Schafer, D. & Milne, R. (2009) "BMW chief highlights risk of state aid." The Financial Times Limited. [online] Available at: <http://www.ft.com/cms/s/0/c89707b0-0828-11de-8a33-0000779fd2ac.html> [Accessed 26 March 2012].

Smith, S.C. (2008). "Budget Beemer: BMW's new 1-Series models offer style and flash - but for a lot less cash." Orlando Sentinel. [online] Available at: <http://articles.orlandosentinel.com/2008-04-05/news/ridelede5_1_c230-318tibmw-and-mercedes>. [Accessed 01 April 2012]. Unnamed author. (2012) "European car sales decline accelerates." Euronews. [online] Available at: <http://www.euronews.com/2012/01/17/european-car-sales-declineaccelerates/>. [Accessed 20 March 2012].

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