Services Marketing Environment

Service Marketing Environment

Service Marketing Environment literally means the surrounds, external objects, influences or circumstances under which someone or something exists. The environment of any organization is the aggregate of all conditions, events, and influences that surround affect it. Since the environment influences an organization in many ways its understanding is of crucial importance. The concept of environment can be understood by looking at some of its characteristics. Marketing activities of a business firm are affected by a large number of environmental factors that surround the company. These factors or forces influence the decision –making capability of the enterprise, the factors or forces are collectively called marketing environment. It comprises all those forces, which have an impact on market and marketing efforts of the enterprise.

According to Philip Kolter___” Marketing environment refer to external factors and forces that affect the company’s ability to develop and maintain a successful relationship with its target customers”.

Services marketing environment across India is changing rapidly and business leaders are under increasing pressure to cope with this dynamic macro-environment. The IT strategies of companies are also witnessing corresponding shifts, realignments, and modifications in order to stay competitive, gain market share or reach out to new markets.

Internal Environment

  1. Goals and objectives of the organization: The goals and the objectives set up the parameters within which the organization decisions can be taken. They greatly influence an ability of an organization to deal with its external environment. Financial and non­financial targets are determined by the goals. 
  2. Corporate image: Every organization enjoys an image among the employees. Some refer to their employers as progressive whereas others refer to them as Conservative. To make the business acceptable to the society, every business must try to improve its image. Objectives based on enlightened lines certainly help to improve corporate image.
  3. Research and development facilities: Research and development is the strength of the business. it helps the business to go ahead of the competitors by introducing new products and improving the existing ones.
  4. Business policies: The knowledge of the internal environment and how it affects the functioning of the organization is important to understand the use of business policies. Broadly, policies cover four functional areas viz. production, marketing, finance, and HRD. Business policies provide the broad guidelines within which an organization has to work. Thus policies should be comprehensive.
  5. Value-based management: Traditional measures for performance measurement like a return on sales, a return investment or a return on net assets have become outdated. New measures like shareholders, views, employee morale and the work ethics which improve the employee satisfaction are considered more important. The value system is internal to business and differs from enterprise to enterprise.

External Environment

  1. Micro Environment: The microenvironment consists of all the factors in the company’s immediate environment that affects the performance of the Company. These include the suppliers, marketing intermediaries, competitors, customers and the public. The micro-environmental factors are more – intimately linked with the company than the macro factors. The micro- forces need not necessarily affect all the forms in a particular industry in the same way. Some of the micro factors may be particular to a firm.
  2. Corporate Resources: Corporate resources include employees, funds, materials, machinery, and management. These resources are controllable. They can be used as per the guidelines provided by the business policies.
  3. Customers: The business exists only because of its customers. Monitoring the customers’ sensitivity is, therefore, a prerequisite for the success of a business- It is important to consider the customers’ likes, dislikes, needs, preferences, buying motives and expectations. A company may have different categories of customers like individuals, households, industries and other commercial establishments and government and other institutions. Higher customer patronage brings increased profit to the business.
  4. Suppliers: Supplier is an important force in the micro-environment of the firm. Supplier, are those people who supply inputs like raw materials and components to the firm. The importance of the reliable source of supply to the smooth functioning of the business cannot be overlooked. Uncertainty regarding the supply or the other supply constraints often compels companies to maintain high inventories leading to increased cost. It is always advisable to, negotiate with several suppliers and not allow a single supplier to enjoy monopoly power. The selection of suppliers is within the control of the management.
  5. Competitors: The role of competitors is beyond the control of the management. It is necessary to study the competitors’ policy on the product, price, promotion, etc. When relevant information is collected about the competitors, it helps to strengthen business and also face the competition more effectively. The business can profit by exploiting the weaknesses of the competitors
  6. Society: Business has to serve the society. Society consists of general public, media, government, financial institutions and organizes a group like trade unions, shareholders’ associations etc. Society directly influences the decisions of the business.

Macro Environment

Economic Environment: The survival and success of each and every business enterprise depend fully on its economic environment. The main factors that affect the economic environment are:

  1. Economic Conditions: The economic conditions of a nation refer to a set of economic factors that have great influence on business organizations and their operations. These include gross domestic product, per capita income, markets for goods and services, availability of capital, foreign exchange reserve, growth of foreign trade, strength of capital market etc. All these help in improving the pace of economic growth.
  2. Economic Policies: All business activities and operations are directly influenced by the economic policies framed by the government from time to time. Some of the important economic policies are:
  1. Industrial policy.
  2. Fiscal policy.
  3. Monetary policy.
  4. Foreign investment policy.