Learn how to prepare a Marketing Plan for a company (with example)

Marketing Management Course
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2.7 Micro Environmental Analysis

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In this chapter you will present information about your findings of the micro environment. While presenting the information, you should ensure that you do not get into too much detail. Rather, you should just focus on giving the summary of your findings. Write only those findings that are directly related to the growth of the company.

Micro environment analysis covers all those factors that are present in the local market and impacts the functioning of the company.

You can conduct micro environment analysis by using the Porter’s Five Forces Analysis. In this tool, there are five areas that you should look into in order to understand the local market.

These five areas are:

  • Bargaining power of buyers
  • Bargaining power of buyers
  • Threat of new entry
  • Threat of substitution
  • Competitive rivalry

These are the forces among which a company operates day and night. Therefore, after you are convinced that the macro factors are good, you should conduct in depth analysis of these micro factors.

One of the major difference in the macro and micro factors is that the micro factors changes quickly than the macro factors. You have to constantly keep an eye on the micro factors. Moreover, you will get the information on the macro factors easily, but getting all the information on the micro factors is somewhat difficult.

Your brand value and capital can influence the micro factors but it cannot influence the macro factors.

As for example, if your brand is of highest value, then it is more likely that the good suppliers of an area would like to associate themselves with you rather going with somebody who are of low capital power. Also, if your brand is well known among the consumers, then they will prefer to pay you more.

It is quite possible that if in a market there are four average companies that are facing tough bargaining power of customers, then entry of a mega brand in the area may reduce the customers’ bargaining power. It is because of the brand value and reputation it carries. The customers will not get the same brand value if they purchase from local companies. It is where the bargaining power of the customers can go low.

I will discuss about these forces in detail in another course. For now, let us move on to the next chapter.