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.

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