3

Principles of Marketing

The
Marketing Environment

Learning Objectives
After studying this chapter, you should be able to:
1.
Describe the environmental forces that affect the
companys ability to serve its customers
2.
Explain how changes in the demographic and
economic environments affect marketing decisions
3.
Identify the major trends in the firms natural and
technological environments
4.
Explain the key changes in the political and cultural
environments
5.
Discuss how companies can react to the marketing
environment
3-2

Chapter Outline

1.
2.
3.

The Companys Microenvironment

The Companys Macroenvironemnt
Responding to the Marketing
Environment

3-3

The Marketing Environment

The marketing environment includes the
actors and forces outside marketing that
affect marketing managements ability to
build and maintain successful relationships
with customers

3-4

The Marketing Environment

Marketing Environment
Microenvironment consists of the actors
close to the company that affect its ability to
serve its customers, the company, suppliers,
marketing intermediaries, customer markets,
competitors, and publics

3-5

The Companys Microenvironment

Marketing Environment
Macroenvironment consists of the larger societal
forces that affect the microenvironment

Demographic

Economic

Natural

Technological

Political

Cultural
3-6

The Companys Microenvironment

The Company
Suppliers
Marketing intermediaries
Customers
Competitors
Publics
3-7

The Companys Microenvironment

The Company
Internal environment includes:

Top management

Finance

R&D

Purchasing

Operations

Accounting
3-8

The Companys Microenvironment

Suppliers

Provide the resources to produce goods and

services
Treated as partners to provide customer
value

3-9

The Companys Microenvironment

Marketing Intermediaries

Help the company to promote, sell,

and distribute its products to final
buyers
Include:

Resellers
Physical distribution firms
Marketing services agencies
Financial intermediaries
3-10

The Companys Microenvironment

Marketing Intermediaries
Resellers are the distribution channel firms
that help the company find customers or
make sales to them

Include:

Wholesalers

Retailers
3-11

The Companys Microenvironment

Marketing Intermediaries
Physical distribution firms are the
distribution channel firms that help the
company to stock and move goods from
their points of origin to their final destination

3-12

The Companys Microenvironment

Marketing Intermediaries
Marketing service agencies are the
marketing research firms, advertising
agencies, media firms, and marketing
consulting firms that help the company
target and promote its products to the right
markets

3-13

The Companys Microenvironment

Marketing Intermediaries
Financial intermediaries include banks,
credit companies, insurance companies, and
other businesses that help finance
transactions or insure against the risks
associated with the buying and selling of
goods

3-14

The Companys Microenvironment

Customers
Customer markets consist of individuals and
households that buy goods and services for
personal consumption
Business markets buy goods and services for
further processing or for use in their
production process
3-15

The Companys Microenvironment

Customers
Reseller markets buy goods and services to resell at
a profit

Government markets buy goods and services to

produce public services or transfer goods and
services to others who need them
International markets consist of buyers in other
countries including consumers, producers, resellers,
and governments
3-16

The Companys Microenvironment

Competitors
Firms must gain strategic advantage by
positioning their offerings against
competitors offerings

3-17

The Companys Microenvironment

Publics
Any group that has an actual or potential interest
in or impact on an organizations ability to
achieve its objectives

Financial publics

Media publics

Government publics

Citizen-action publics

Local publics

General public

Internal publics
3-18

The Companys Microenvironment

Publics
Financial publics influence the companys
ability to obtain fundsbanks, investment
houses, and stockholders
Media publics carry news, features, and
editorial opinionnewspapers, magazines,
and radio and television stations
Government publics influence product safety
and truth in advertising
3-19

The Companys Microenvironment

Publics
Citizen-action publics include consumer
organizations, environment groups, and minority
groups
Local publics include neighborhood residents and
community organizations
General publics influence the companys public image
Internal publics include workers, managers,
volunteers, and directors
3-20

The Companys Macroenvironment

Demographic environment
Economic environment
Natural environment
Technological environment
Political environment
Cultural environment
3-21

The Companys Macroenvironment

Demographic Environment
Demography is the study of human populations in
terms of size, density, location, age, gender, race,
occupation, and other statistics
Demographic environment is important because it
involves people, and people make up markets
Demographic trends include age, family structure,
geographic population shifts, educational
characteristics, and population diversity
3-22

The Companys Macroenvironment

Demographic Environment
Changing Age Structure of the Population

Generational marketing is important in

segmenting people by lifestyle of life state
instead of age

3-23

The Companys Macroenvironment

Demographic Environment
Changing Age Structure of the Population

Baby boomers include people born

between 1946 and 1964

Most affluent Americans

3-24

The Companys Macroenvironment

Demographic Environment
Changing Age Structure of the Population

Generation X includes people born between 1965 and

1976

High divorce rates

Concerned about the environment
Respond to socially responsible companies
Less materialistic
Quality of life
Consumer organizations, environment groups, and minority
groups

3-25

The Companys Macroenvironment

Demographic Environment
Changing Age Structure of the Population

Generation Y includes people born

between 1977 and 2000

Internet generation

3-26

The Companys Macroenvironment

Demographic Environment
The Changing American Family
More people are:

Divorcing or separating

Choosing not to marry

Choosing to marrying later

Marrying without intending to have children

Higher divorce rates

Increased number of working women

Stay-at-home dads
3-27

The Companys Macroenvironment

Demographic Environment
Geographic Shifts in Population

Trends include:

Migratory movements between and within

countries

Moving from rural to metropolitan areas

Changes in where people work

Telecommuting

Home office

Divorcing or separating
3-28

The Companys Macroenvironment

Demographic Environment
Changes in the Workforce

Trends include:

More educated

More white collar

More professional

3-29

The Companys Macroenvironment

Demographic Environment
Increasing Diversity
Markets are becoming more diverse

International
National

Trends Include:

Ethnicity
Gay and lesbian
Disabled
3-30

The Companys Macroenvironment

Economic Environment
Economic environment consists of factors
that affect consumer purchasing power and
spending patterns

Subsistence economies consume most of their

own agriculture and industrial output
Industrial economies are richer markets
3-31

The Companys Macroenvironment

Economic Environment
Changes in Income

Value marketing involves ways to offer

financially cautious buyers greater value
the right combination of quality and service
at a fair price

3-32

The Companys Macroenvironment

Economic Environment
Changes in Income

Income distribution

Upper-class consumers
Middle-class consumers
Working-class consumers
Underclass consumers
3-33

The Companys Macroenvironment

Economic Environment
Changes in Consumer Spending Patterns

Ernst EngelEngels Law

As income rises:

The percentage spent on food declines

The percentage spent on housing remains
constant
The percentage spent on savings increases
3-34

The Companys Macroenvironment

Natural Environment
Natural environment involves the natural resources
that are needed as inputs by marketers or that are
affected by marketing activities

Trends

Shortages of raw materials

Increased pollution
Increased government intervention
Environmentally sustainable strategies

Green marketing
3-35

The Companys Macroenvironment

Technological Environment
Most dramatic force in changing the marketplace with
many positive and negative effects

Rapid change

Provides new markets and new opportunities

Internet
Medicine
Miniaturization
Weapons
Credit cards
Communication

3-37

The Companys Macroenvironment

Political Environment
Political environment consists of laws,
government agencies, and pressure groups
that influence or limit various organizations
and individuals in a given society

3-38

The Companys Macroenvironment

Political Environment

Legislation regulating business

Public policy to guide commercesets of laws

and regulations that limit business for the good
of society at large

Increasing legislation

Protect companies
Protect consumers
Protect the interests of society
3-39

The Companys Macroenvironment

Political Environment
Changing Government Agency Enforcement

Federal Trade Commission

Food and Drug Administration
Federal Communications Commission
Federal Energy Regulatory Commission
Federal Aviation Administration
Consumer Product Safety Commission
Environmental Protection Agency
3-40

The Companys Macroenvironment

Political Environment
Increased Emphasis on Ethics and Socially Responsible
Actions

Socially responsible behavior occurs when

firms actively seek out ways to protect the
long-term interests of their consumers and
the environment

Cause-related marketing
3-41

The Companys Macroenvironment

Cultural Environment
Cultural environment consists of institutions
and other forces that affect a societys basic
values, perceptions, and behaviors

3-42

The Companys Macroenvironment

Cultural Environment
Persistence of Cultural Values

Core beliefs and values have a high degree

of persistence, are passed on from parents
to children, and are reinforced by schools,
churches, businesses, and government
Secondary beliefs and values are more open
to change
3-43

The Companys Macroenvironment

Cultural Environment
Shifts in Secondary Cultural Values
Major cultural values of a society are expressed in
peoples view of:

Themselves

Others

Organization

Society

Nature and the universe

3-44

The Companys Microenvironment

Cultural Environment
Shifts in Secondary Cultural Values

Peoples view of themselves

Yankelovich Monitors consumer segments:

Do-It-Yourselfersrecent movers
Adventurers

Peoples view of others

3-45

The Companys Macroenvironment

Cultural Environment
Shifts in Secondary Cultural Values

Peoples view of organizations

Peoples view of society

Patriots defend it
Reformers want to change it
Malcontents want to leave it
3-46

The Companys Macroenvironment

Cultural Environment
Shifts in Secondary Cultural Values

Peoples view of nature

Some feel ruled by it

Some feel in harmony with it
Some seek to master it

Peoples view of the universe

Renewed interest in spirituality

3-47

Responding to the Marketing

Environment
Views on Responding

Uncontrollable

Proactive

Reacting and adapting to forces in the

environment
Taking aggressive actions to affect forces in the
environment

Reactive

Watching and reacting to forces in the

environment
3-48

PowerPoint created by:

Ronald Heimler

Dowling College, MBA

Georgetown University, BS Business
Administration
Adjunct Professor, LIM College, NY
Adjunct Professor, Long Island University,
NY
Lecturer, California Polytechnic State
University, Pomona, CA
President, Walter Heimler, Inc.