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MARKETING ENVIRONMENT AS A CORRELATE OF
MARKETING PERFORMANCE IN SOME SELECTED
COMPANIES
*Adefulu Adesoga &
*Ajike Emmanuel
The importance of marketing environment can not be disregarded in any organisational
marketing performance. It is an underlying determinant of marketing performance. The
objective of the paper is to find out the correlate between marketing environment
elements and organisational marketing performance (sales and market shares
performance and target market satisfaction). The methodology adopted in this research
includes the survey research method in which the primary source of data was employed.
The research instrument was the questionnaire administered on the samples from the
selected companies. The statistical tool employed was the linear regression analysis to
determine the extent to which changes in marketing performances are explained by
marketing environment elements. The correlation co-efficient determines whether there is
positive or negative relationship between the two variables. The t-test statistics
determines the statistical significance of the changes in the independent variable on the
dependant variable. The study showed that marketing performance was largely influenced
by marketing environments. The study concluded that marketing environment analysis
should be a serious business in organisation and more importantly should be carried out
on regular basis in order to ensure effectiveness in operations.
Adefulu Adesoga & * Ajike Emmanuel are of Department of Business Administration
and Marketing Babcock University, Ogun State, Nigeria.
BJMASS VOL 9. NO 1 & 2 JULY, 2011 222
INTRODUCTION
The managers can control the 4Ps of the marketing mix. He can veiy well decide what
products to offer, what prices to charge, how to distribute the products, and how to reach
target audience. Unfortunately, there are other forces at work which marketers have less
control. These forces are the external marketing environment which surrounds and impacts
upon the organisation. They affect marketing management's ability to build and maintain
successful relationship with target customers. Marketing Environment consist of the
macro-environment and the micro environment. The marketing environment affects the
marketers' decisions. Whatever decision a firm takes depend on element that prevails in the
environment. Effective and efficient firms appreciate the need for marketing research and
marketing intelligence to systematically and objectively search for and analyse information
to guide manager in marketing planning and problem solving. In effect, where a firm did
not take the periscope of the environment seriously, such organisation will face crisis in its
marketing planning efficiency and effectiveness. Therefore, a closer study of the
government policies programs and its vision in the areas of politics and economy demands
serious analyses. The behaviours and attitude of the people, income distribution of the
people, and the character/responses of the competitors with keeping abreast of latest
technology in the area of operations are very vital. It is by proper scrutiny of these factors
that a firm can be able to know what market attitude to demonstrate. It is therefore the
focus of this paper to determine the relationship between marketing environment and
marketing performance.
* Statement of Research Problem
Marketing environment analysis offers the unique benefit to harness the opportunities,
threats, strengths and weaknesses the business firm have to carefully handle to achieve the
firms objectives. Despite the benefits, many firms do not give strategic focus to their
environment, hence this study. It is therefore the intention of this paper to determine the
correlation between the elements of the environment and marketing performance.
Research Question
• Is there any correlation between the elements of the marketing environment and
marketing performance?
• Does the marketing element affect the sales performance of the company?
Objective of the study
The objectives of the study are as follows:
To determine the correlation between the elements of marketing environment and
marketing performance.
To determine the effectiveness of marketing environment elements on the sales
performance.
Variables Identification
The two variables are marketing environment and marketing performance. The Marketing
environment measured by regular supplies and the use of modern equipment's while
marketing performance is measured in terms of sales revenue earned.
Hypothesis
H0 = There is no significant relationship between the elements of the marketing environment
and marketing performance (sales and market share performance)
Hj = There is significant relationship between the elements of the marketing environment
and marketing performance (sales and "market share performance).
Review of related literature
This aspect of the study is divided into three; theoretical, conceptual and empirical.
Conceptualization
Kotler and Armstrong (1994:56) sees marketing environment as consisting of the actors and
forces outside marketing that affect marketing management's ability to develop and maintain
successful transactions with its target customers. In the opinions of Kotler and Armstrong
(1994).56) marketing environment is made up of a micro environment and macro
environment. The micro environment consists of the forces close to the company that affect
its ability to serve its customers. These are the company, marketing channel firms, customer
markets, competitors and publics. The macro environment consists of the larger societal
forces that affect the whole micro environment demographic, economic, natural,
technological, political and cultural forces.
According to Oyedijo (1996:11) marketing environment consists of the forces and
institutional actors whose activities and behaviour have an actual or potential influence on
the ability of a company to develop and maintain profitable exchange relationship with its
target customers. Adetayo (2008:23) quotating from Kotler (1999) opined that company
marketing environment comprises of the non-controllable actors and forces that have impacts
on the firms markets and marketing. The Marketing Environment consists of the actors and
forces that affect the company's ability to develop and maintain successful transactions and
relationship with the target customers.
In the view of Adeleye (2003) marketing environment consists of all factors and forces that
influence the marketing functions of an organisation. This can be divided into two namely:
internal and external forces. In the opinion of Best Marketing solution powered by Golden
Way Media (2010), Marketing Environment relates to internal, external, direct and indirect
facts that affect a company's coming up with, decision and strategy. An organisation's
environment consists of the macro-setting, over which a firm holds very little control. The
micro-environment is that which a firm holds a greater quantity of control. An organisation's
marketing macro-setting consists of factors that manifest on a macro or large scale. These
factors are sometimes social, economic, or political phenomena. A common means of
assessing a company's macro surroundings is via a PEST analysis which is Political,
Economic, Social and Technological analysis. Besides a PEST analysis, a firm would
analyses national political issues, culture and climate, key macroeconomic indicators, health
and indicators like economic growth, inflation, unemployment and other factors. Social
trends, attitudes and the character of technology impact on its societies and the business
processes inside the society.
Empirical Studies
There have been many papers conceptualising the impacts of company's marketing
environment on marketing management's ability to effectively develop and maintain
successful traditions with its target customers. Achumba (2000), Ibidun (2004), Kotler
(1999) and Adetayo (2008). Fewer studies have analysed the correlation between marketing
environment and marketing performance: Kehinde (2007) however, submitted that at 98%
correlation level, company's alertness to its environmental variables will lead to better
business success.
Models for Measuring Performance and Marketing Environment
Marketing Performance Measurement is a term used, by Marketing Professionals to describe
the analysis and improvement of the efficiency and effectiveness of marketing. A number of
marketing decision maker has taken the financial approach to marketing performance. Such
approach include marketing profitability analysis, marginal revenue approach, sales analysis,
vertical integration measures (net effectiveness = revenue direct cost). The non-financial
approaches to marketing performance measurement are brand franchise ratio. However, for
the purpose of this study, the sales revenue, market share size, level of satisfaction for the
target market are adopted as the measure of performance. o
Most authors looked at Marketing Environment at two critical levels: Micro- Environment
and Macro-Environment. This view was supported by Kotler & Armstrong (1994), Achumba
& Osuagwu (1994), Adetayo (2008), Adeleye (2003). The model in figure one and two
below shows the forces in the company's micro environment and macro environment.
Figure 1
Actors in Micro Environment
Source: Kotler P, Armstrong G, Saunders J, & Wong V. (1999). Principles of Marketing, 2nd
European Edition, England, Pearson Educational Ltd. Figure 2: Actors in Macro
Environments
Sources: Kotler P, Armstrong G, Saunders J, Wong V (1999). Principles of Marketing, 2nd
European Edition, England, Pearson Educational Ltd.
Besides, Perreault W. D., Mc Carthy E.J, Parkinson S, and Hewart K (2000) analyzed the
dimensions of Marketing Environment at three (3) levels; Macro Environment, within which
every organization operates. Within this, the organisation competes with a range of others for
individual markets. This is the organization's competitive environment. The organisation
supplies products or services to specific customers. This is the customer environment.
Figure 3: Dimensions of Marketing Environment
Source: Perreault W. D., Mc Carthy E.J., Parkinson S, Hewart K (2000), Basic
Marketing, European Edition, England, MC Graw Hill Publishing Company.
Methodology:
The data for this research work were obtained mainly from the primary source. The data
were collected from five selected firms namely Gracekal Nigeria Enterprises, LeadFoto
Laboratory, Bakers World, Femtec Nigeria Enterprise and Tomic Water Ventures. The
research instrument was the questionnaire. The instrument was structured, undisguised and
multichotomous in design using the five points Likert scale type of responses ranging from
strongly agree, agree, undecided, disagree and strongly disagree. The total population of the
study are 250. A sample size of 150 determined by Yamane formula (n = N + Ne2) were
selected using the purposive sampling technique. The selected 30 sample from each firms
were based on their relevance and possessing necessary information required for the study.
The paper set one major hypothesis which was tested using regression analysis to show their
extends changing the marketing performance is explained by the elements of the marketing
environment. The T test statistic determined the effect of changes in the elements of
marketing environment on marketing performances is statistically significant. If the t-
calculated is greater than t-tab, it is statistically significant. We therefore
BJMASS VOL 9. NO 1 & 2 JULY, 2011 228
reject the null hypothesis and accept the alternative hypothesis. Where t- calculated is less
than t-tab, it is not statistically significant.
Regression model
Y = a + bx + u
Where y = Marketing Performance
x = Marketing Environment Elements a = Intercept
b = Slope of the regression line u = Error term
Model Specification:
We expect some amount of marketing performance at zero elements of Marketing
Environments. We also expect the elements of Marketing Environment to correlate positively
with Marketing Performance. Therefore, a priori expectation is: a > 0, b > 0.
Model Estimation:
o
We estimated our model for numerical values of model parameters. We employed the
ordinary least squares (OLS) using a computer programmes, statistical package for social
scientists (SPSS).We obtained the aggregate regression results in table one (1) for the
selected companies using the data presented.
Data presentation on regular supplies and the use of modern equipments affecting sales
performance
Options X Y
Strongly Agree 65 58
Agree 58 62
Undecided 15 13
Agree 7 9
Strongly Disagree 5 8
Total 150 150
Field Survey 2010
229 BJMASS VOL 9. NO 1 & 2 JULY, 2011
Table 1: Model Summary
Model R R Square Adjusted R Std. Error of
Square the Estimate
1 .960a .922 .921 .28125
A Predictors: (Constant)Y
Table 2- Co-efficients
Model Unstc
Coefl
mdardized
Icients
Standardized
Coefficients
t Sig.
B Std. Error Beta
1 (Constant). Y 101 .8
98
.048 .022 .960 2.107
41.711
.037
.000
a. Dependent Variable:
u
Discussion of Findings / Results:
For the selected manufacturing companies, the extent to which the eienrezs of marketing
environment explain the variation in marketing performance is 92%. At 92% there is a very
strong relationship or association between the elements of the Marketing Environment and
Marketing Performance. In order words, the element of the Marketing Environment is
strongly related to Marketing Strategy design, implementation and execution. From the above,
it's apposite to highlight that Marketing Environment determines Marketing Performance in
all the selected companies for survey. The influence of the elements in the Marketing
Environment as revealed is greatly high as depicted by the R2 for the selected respondents.
The effect of change in independent variable is statistically significant as t- calculated is
greater than t-tab( 41.7 > 2.35) at 0.05%. It can safely be said that the effect of the change in
Marketing Environment elements is statistically significant to Marketing Performance in
terms of sales, market share and satisfaction of target market. This is because the t-cal is
greater than t-tab as revealed by the value of t-cal in table 2. In the situation where the t-cal is
greater than t-tab as reflected above, the decision on the set hypothesis is that we are to accept
H,(alternative hypothesis) and reject Ho (null hypothesis). In so doing, we are saying that
there is significant relationship between Marketing Environment and Marketing Performance.
It is therefore noteworthy for organisations to carefully pay attention to the scrutiny of their
marketing elements in order to achieve Excellent Marketing Performance.
Conclusion
A large number of forces shape the Marketing environment which ultimately affects
Marketing Performance. Some of the forces are controllable while others are uncontrollable.
It is therefore absolutely necessary for organization to evaluate these forces to be able to
know the pattern of marketing decision makers' response to these forces. Marketing
Performance will be enhanced when there is a spirited evaluation of the Marketing
Environment elements in order to know which of the company can control and cannot
control and consequently develop how to adapt these forces. When the focus is to manage
for effectiveness and efficiency, the mpst effective approach is to scan the elements in the
Marketing Environment to know how to respond. Organization should therefore carefully
handle and manage the process of Marketing Environment investigation for optimum
Marketing Performance (sales, market shares and satisfaction of target market).
Recommendations
• Every organisation must be able to identify the environment in which it operates in
order to know forces that provide significant opportunities and threats for the
company.(S WOT Analysis)
• The controllable environment of the organisation should be properly analyzed to help
the marketing decision makers' response.
• The uncontrollable environment in the organisation should be carefully monitored
while the marketing decision maker determines effective ways to adapt its operations
to these forces.
• A research department is recommended for all marketing unit of the organisation to
keep an eagle eye on the local markets as well as monitoring prevailing forces in the
environment.
• Besides, organisations should establish Public Relations Department to lobby and
influence government where matters of the uncontrollable forces are being
considered. For example, at the point of budget preparation, firms could make inputs
to create soft landing of government policies for them.
• Organisations are encouraged to keep abreast of technology by being On the look-out
for the state-of-the-art in their field of operations.
• Organisation are equally encouraged to pay their suppliers on time to enable them
promptly supply the required materials in order to reduce downtime which ultimately
affect revenue generation.
• It is also recommended that effective market and marketing research should be
carried out to curtail serious impact of the micro environment on business policies
and operations.
ReferencesAdeleye, A. (2003), Marketing Principles and Practices, Lagos, Concept Publications
Limited.Adetayo, J. O. (2008), Marketing Concepts and Applications, Ibadan, Rasmed
Publications Limited.Oyedijo, A (1996), Fundamentals of Marketing, Ibadan, Paramount Books Limited.Kotler P, Armstrong G, Saunders J, Wong V (1999). Principles of Marketing, 2nd
European Edition, England, Pearson Educational Ltd.Geoff L., Lester M & Ashford R. (2002), Essentials of Marketing, 4 th Edition, UK, MC-
Graw Hill.William D. P., MC Carthy E. J., Stephen P, & Kate S., (2000), Basic Marketing, European
Edition, England, MC Graw Hill Publishing Company.William D. P. (Jnr), & MC Carthy E. J. (2000), Essentials of Managerial Approach, USA,
MC Graw Hill Companies.Adefulu, A. D. (2010), "Sales Promotion as a correlate of Sales Performance in some
selected Soft Drinks Companies", Babcock Journal of Management and Social Sciences, Vol. 8. No. 1 & 2, July 2010.
Kehinde, O. J. (2007), "Effective Diagnosis of the Marketing Environment: Roadmap to Optimal Business Survival", in Folarin, BA, Ogundele K., Alaka N. S., (eds), "Environment Values and Policies in Nigeria, A Book of Readings, Lagos, Environment & Behaviour Association ofNigeria.
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