marketing enviroenment

Marketing environment consists of the actors and forces that affect a company’s capability to operate effectively in providing products and services to its customers and the marketing environment includes both the micro-environment and macro-environment.
On the one hand, the micro=environment is the internal environment and operations stakeholders such as suppliers, employees and retailers over which the company has a degree of control. This shows the micro-environment is inside the company’s control which means the company has some abilities to control these relationships. A useful tool for examining the micro-environment is Porter’s five forces, which can determine the attractiveness of the industry and the profitability of firms within the market. The five forces are the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitutes and finally the industry competitors. Firstly, the threat of new entrants is the ability of new firms to enter the market which is decided by barriers to entry, and this will impact the attractiveness of the market. Innisfree is a Korean company that is entering the Chinese market, there is no legislation which does not allow Korean cosmetics enter into China as well, meanwhile more and more domestic people tend to using Korean cosmetics which implies the Korean cosmetics are becoming popular among Chinese people. Therefore, except the Innisfree Company, other Korean cosmetics companies like Laneige, Skinfood, and Etude House are also entering Chinese market. The second force based on Porter is the bargaining power of suppliers. The greater the bargaining power of the providers of the resources like land, labor and capital, the higher cost is highly to be. Since the Innisfree is developing the Chinese market, the advantage of it is the labor because of the cheap labor in China. Besides, the resources and the methods to make the Innisfree products are from Amero Pacific in Korean, and there are a few producers in China, some are individuals, and some are big trading companies, which mean the Innisfree Shoppe in Parkson in Huaihai Road in Shanghai can choose the cheaper producer to supply them products. Therefore, Innisfree is able to sell their products and lowers the power of their suppliers. On the contrary, the bargaining power of buyers is the number of firms can influence the power of buyers, and the smaller the number of buyers, the greater their bargaining power. As many Korean cosmetics have homogeneous goods like makeup base with three colors for three kinds of people because of their different skin color, a new kind of BB cream named Air BB, buyers can have many choices to choose the brand they prefer. In that case, unless the Innisfree can have the lower price or the better products, the number of buyers can be decreased with the increasing number of Korean cosmetics companies coming into China. Due to this, the availability of substitutes can reduce the attractiveness of Innisfree as it reduces the ability of the Innisfree Company to charge higher prices. With the similar cosmetics made by different Korean cosmetics companies, Innisfree is facing the problem of an increase in its substitutes, which means if the Innisfree charge a higher price than companies like the Faceshop, Laneige and Etude House, fewer people may buy the Innisfree products, and this cause the threat of substitutes. According to Porter, the last force is the industry competitors. This is the degree of competitiveness between rival firms in a market will influence the attractiveness of the market. Nowadays, the Korean cosmetics is sold by Innisfree, Laneige, Etude House, Skinfood, the Faceshop and Mamonde in China, which are the popular brands among women, and this can develop an oligopoly market structure in China. Because of this, Innisfree is meeting with the competition in price, product and even place, which means Innisfree have the similar products with other Korean cosmetics companies and the similar price. Therefore, if the Innisfree wants to be better off, it needs to differentiate its goods, also it can sell in a better place like the Shoppe in Parkson in Huaihai Road.