BUS305: Small Business Management

Key Points

• Marketing managers must stay informed of technology trends so they can be part of the next big thing, rather than becoming outdated and suffering the consequences financially.
• Marketing managers must watch factors in the microenvironment, such as supply availability, and other trends dealing with suppliers to ensure that products will be delivered to customers in the time frame required in order to maintain a strong customer relationship.
• Forecasting new trends has become increasingly important as Marketers try to understand Americans by analyzing major life events and their need to be connected to their peers through social media outlets.

Terms

• Micro environment: Refers to the forces that are close to the company and affect its ability to serve its customers; it includes the company itself, its suppliers, marketing intermediaries, customer markets, competitors, and publics.
• Macro environment: Major external and uncontrollable factors that influence an organization's decision making, and affect its performance and strategies. These factors include economic, demographics, legal, political, and social conditions, technological changes, and natural forces.

Example

Electric cars are called zero-emission vehicles by their advocates, but they do not have zero emissions according to some experts. While an electric car does not emit exhaust, the technology required to charge their batteries does, according to the US Environmental Protection Agency (EPA). Critics argue that the more electric cars that are driven, the more pollution from smokestacks at the plants that provide the electric power. This is an example of a "trend" that marketers predicted to be more popular than they actually were once mass-produced.

The Micro Environment and Trends

The micro environment refers to the forces that are close to the company and affect its ability to serve its customers. It includes the company itself, its suppliers, marketing intermediaries, customer markets, competitors, and publics. The technological environment is perhaps one of the fastest-changing factors in the macro environment. This includes technological developments in areas ranging from antibiotics and medicine to nuclear and chemical weaponry, and credit cards.

How the Micro Environment Applies to Organizations

The corporate aspect of the micro environment refers to the internal environment of a company. This includes all departments, such as management, finance, research and development, purchasing, operations, and accounting. Each of these departments has an impact on marketing decisions. For example, research and development have input as to the features a product can perform. Accounting approves the financial side of marketing plans and budgets.

The suppliers of a company are also an important aspect of the micro environment. For instance, delivering supplies late can result in customer dissatisfaction. Marketing managers must watch supply availability and other trends involving suppliers to ensure that products will be delivered to customers within the time frame required to maintain a strong customer relationship.

Technology Trends and Marketing

As industries such as pharmaceuticals and national defense expand, they create new markets and new uses for products. Such advances require companies to compete effectively, stay abreast of the latest trends, and update their product technologies as they become outdated.

Technology is the knowledge of how to accomplish tasks and goals. Technology affects marketers in several ways. First, aggressively advancing technology is spawning new products and processes at an accelerating rate that threatens almost every existing product.

Second, competition continues to intensify between old and new organizations as many substitute technologies compete with established products. Third, product innovations that result in superior performance or cost advantages are the best means for protecting and building market position without sacrificing profit margins. This is especially true in today's world when many markets are experiencing flat or slow growth when excess capacity is commonplace.

History provides many examples of companies that have lost their competitive advantage because a competitor came into the market with a product that had superior cost advantage or performance characteristics. These examples are not limited to small or weak companies. Even industrial giants including AT&T, General Electric, and IBM have seen parts of their markets eroded by competition with a distinctly superior product.

Forecasting New Trends

There are thousands of forecasters who claim to be able to predict or at least determine the direction of future markets. One that has an excellent track record is Roper Starch, a research firm that has been looking at trends for over 50 years. The 2000 Roper Report identified four concepts that may help marketers understand Americans in the next decades:

• "High Pace/High Peace": Americans' high-speed lifestyles create new goals and needs": As the pace of life is picking up, there is growing desire and demand for peace. The shift to "High Pace/High Peace" is evident in the marketplace. Increasingly, brands seem to be "high-pace" (efficiency-oriented, intense brands like Apple) or "high-peace" (relaxing, spa-pace brands like Banana Republic, and personalities like the Dalai Lama). Data suggest that there are opportunities for marketers to become a bridge to get people to both their high pace and high peace goals.
• "Kinnections": The movement to connection in technology, relationships, and brands": In a whole host of areas – from communications and computing to attitudes towards family and community – connections are up. This sense of connection is apparent in the marketplace as well in cause-related marketing and a greater desire for brands to go beyond the basics like quality and value to connect in new ways with consumers. Companies like Facebook, Twitter, and LinkedIn are now synonymous with the new, ultra-connected society.
• "Diversity/Destiny": The US increasingly is "the world's nation": our foreign-born population has almost tripled in the past 30 years. African-Americans, Hispanics, and other minorities make up the majority of the nation's population growth in the past decade – and will account for an even larger proportion of the nation's growth in the decade to come. To succeed, marketers must be culturally aware.
• "Marketing by life stage": Marketers have traditionally relied on standard demographics to understand and predict consumer behavior. Research shows, however, that life stage can be a more powerful predictor of consumer attitudes and behavior than traditional demographic analysis. Classifying Americans by the life events they have experienced, rather than by demographic traits, can yield insights and understanding into a market that might otherwise have been overlooked.

Source: Boundless
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 License.