Marketing Environment

Abstract:

This paper shows different internal factors which are influencing the environmental scanning process. Out of a critical analysis of the classical theory (Aguilar, 1967) the author presents a holistic approach of understanding the environmental scanning process. Therefore the paper considers the areas of management, technique and methods, structure and culture regarding their influences on the way a company perceives on external environment changes as well as they respond on it. Finally the “symbiotic” relationship between external and internal forces as well as the influence of other functions among the marketing department is presented.

Keywords: marketing, environmental scanning, organisation culture, internal environment, Introduction:

Short product life cycles, a high competition pressure and a further development of technology are only some characteristics of today’s business markets. Competitive positioning needs further more a totally marketing orientation of the whole company. They have to focus their marketing environment (Mercer, 1998). The marketing environment includes all actors and drivers which influence the “business” of an organisation in a directly or indirectly way (Kotler & Keller, 2006; Palmer & Hartley, 1999). It contains the macro-, the micro- and the internal environment. Kotler & Keller (2006) separate the environment in the task environment and the broad environment. The task environment includes these forces and actors, which affect the firm’s activities immediately. Separated in an external and internal view, the microenvironment includes all external actors and forces (e.g. suppliers, competitors, distributors, target customers). The internal environment contains the organisation. This implies the organisations current and potential capabilities. Beyond the task environment is the broad environment (macro environment) which comprises all these forces. They have an indirect effect an organisation’s relationship to their markets. It is often broken down into the demographic-, economic-, physical-, technological-, political-legal- and social-cultural environment (Kotler & Keller, 2006; Palmer & Hartley, 1999).

Marketing orientated companies have to monitor their strategies and objectives along the needs and trends of their markets. The identification and management of environmental opportunities is essential regarding the way companies determine their objectives and devise their strategies (Costa & Teare, 2000). Environmental scanning can be used to identify these external trends and opportunities as well as to evaluate the internal assets and competencies (Drummond & Ensor, 2001; Fahey & Narayanan, 1986). Getting and understanding the data, the environmental scanning extracts are fundamental regarding the way a company make their decisions and develop their strategies to enjoy a competitive chance (Lenz & Engledow, 1986).

Aguilar (1967) defines the marketing environmental scanning process as the activity of acquiring information about the external environment. His research is often described as a pioneer effort. His classical model gave an important due on the developing of information systems in the management theory in the time. His theory is based on the contingency theory, a systematically approach of understanding an organisation as an open system which interacts with different external conditions of the environment. Lawrence & Lorch’s (1967, 1969 & 1970) research describes an organisation as a “passive reactor” of external forces, which dictated strategy and performance. Obviously, the assumptions of the classical theory lead the manager to create an organisation structure which is able to respond efficiently and effectively on all changing environmental demands and issues (Donaldson, 1982; Varadarajan, Clark & Pride, 1992; Lozada & Calatone, 1996; Harker, 2001). Their research shows the importance of environmental understanding in relation to the firm performance. The main weakness of the classical model is the mechanistic way of understanding. The classical theory acts on the assumption of an objective interpretation of data by a rational and technical process. The theory gives no answer on firm’s differences in the same line of business, which are influenced by similar external environment issues. Aguilar (1967) does not examine in a total or empirical way to what extent the external environment issues shape the organisation in processing. Today markets and their actors request a further more complex and interrelated under]standing of marketing. The holistic view “(...) is based on the development, design and implementation of marketing programs, processes and activities that recognize their breadth and interdependencies” (Kotler & Keller, 2006, p.17). This view goes beyond classical assumptions of environmental practice. An organisation and their individuals are shared by interests, belief and culture of their employees and managers. The environment is characterised by uncertainty. People involved in the environmental scanning process have to handle with a flood of information. The information level they work with is incomplete. In addition the classical model pays no attention to their conceptual and empirical research on human communication, a catalyst of the environmental scanning process. Communication is not objective. The communication process is determined by various factors, like cultural or structural impediments (more on these matters later). The classical theory shows a technical and rational knowledge by reducing the complex relationship between the organisation and the external environment to a one-way-relationship, but environmental practice is not objective and rational (Arrington & Sawaya, 1984). It is influenced by different internal and external issues (Fulk & Boyd, 1991; Kourteli, 2000).

Every organisation is shaped by and/or shapes the external macro and micro environment. One the one hand the environment is controllable. There are possibilities to get an influence on external forces, for example on politicians and their laws (e.g. cigarette companies did by spending charitable donation to parties) or by changing consumer’s behaviour with a new advertising strategy (e.g. Kellogg’s did by selling their cereals not only for breakfast, but also for lunch and dinner) (Dearlove & Glantz, 2000). But on the other hand there are also uncontrollable issues which influence the business (e.g. presently new laws and regulations in the US influence the gambling industry) (Blitz, 2006; Varadarajan et al., 1992). Looking only on external forces of environmental practices does not illuminate the fact that in reality companies interpret and respond differently on similar environmental issues (Gunningham, Kagan & Torton, 2003; Prakash, 2000). How could you otherwise understand why companies come up with many different responses on nearly the same external marketing environment? For example the “Centre for Insolvency and Recapitalisation University of Mannheim, Germany” figured out that 71% of company’s insolvency reasons are internal reasons (ZIS, 2006). The following part focuses on the different internal characteristics of an organisation, which could have an influence on the way it responds and perceives on the external environment.

Internal factors influencing the environmental practice

“An organization that assigns marketing responsibilities to a narrow group of people may in fact create tensions within the organization that make it less effective at responding to changing customer needs than one where marketing responsibilities in their widest sense are disseminated throughout the organization” (Palmer & Hartley, 1999, p.50).

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