ANALYZING THE MARKETING

ENVIRONMENT
Chapter 3
 Chapter Three Outline
 Marketing Environment
 The Company’s Microenvironment
 The Company
 Suppliers
 Marketing intermediaries
 Competitors
 Publics
 Customers

 The Company’s Macroenvironment

 The Demographic environment
 The Economic environment
 The Natural environment
 The Technological environment
 The Political and Social environment
 The Cultural environment
 Marketing Environment

 Marketing Environment: consists of the actors and

forces outside marketing that affect marketing
management’s ability to develop and maintain
successful relationships with target customers.
❑ Includes:
 Microenvironment - Forces close to the company that affect
its ability to serve its customers.
 Macroenvironment - Larger societal forces that affect the
microenvironment.
The Company’s Microenvironment
 The Company’s Microenvironment

The success of marketing depends on

building relationships with other
departments, suppliers, marketing
intermediaries, competitors, various
publics, and customers.
 The Company’s Microenvironment
 The Company

 Top management

 Finance

 R&D

 Purchasing

 Operations

 Accounting

 Marketers must work with other departments in the company and make decisions that
support the strategies and plans of top management.
 Class Exercise
 Explain why the marketing department needs other
departments and top management.
 The Company’s Microenvironment
 Suppliers

 Provide the resources to produce goods and services

• Suppliers are an important link in the company’s value

delivery network.

• Supply shortage or delays can cost sales in the short

run and damage customer satisfaction in the long run.

 Treat suppliers as partners to provide customer value.

 The Company’s Microenvironment
 Marketing Intermediaries

 Help the company to promote, sell and distribute its products to final buyers.

 Types of Marketing Intermediaries

 Resellers: Are distribution channel firms that help the company find customers or make sales
to them. Example: Wholesalers and retailers.

 Physical distribution firms: Help the company stock and move goods. Example:
Transportation and warehousing companies.

 Marketing service agencies: Marketing research firms, advertising agencies.

 Financial intermediaries: Insure the risk that is connected with buying and selling of goods.
Example: banks and insurance companies.
 Examples of Retailers in Jordan
 Retailers:
 Carrefour

 Safeway

 Smart Buy
 Leaders

 Abu Shakra

 Hamleys
The Company’s Microenvironment
 Competitors: Those who serve a target market with similar
products and services
 A company must gain strategic (competitive) advantage against
these organizations.

 Firms gain strategic advantage by positioning their offerings

strongly against competitors’ offerings

 Publics : Groups that have an interest in or impact on an

organization's ability to achieve its objectives
 Financial, Media, Government, citizen-action, local ,general,
internal
 The Company’s Microenvironment
 Customers : Are the most important actors in the company’s
microenvironment.

 Five types of customer markets that purchase a company’s goods and services are

 Consumer: Are people who buy goods and service for their personal use.

 Business: Buy goods and services for further processing our use in the their
production processes.

 Reseller: Buy goods and services to resell at a profit.

 Government : Government agencies that buy goods and services to produce public
services or transfer the goods and services to others who needs them.

 International: Buyers in other countries, including consumers, producers, resellers, and

governments.
The Company’s Macroenvironment
 Class Exercise
 Why is internal marketing as important or more
important than external marketing? Explain your
answer.
 Class Exercise
 1) Give one examples of product or services where
marketers can standardize the product or service
for the global market
 2) Give one examples of product or services where
marketers need to adapt the product or service for
global market.
 The Demographic Environment

 Demography: The study of human populations-- size,

density, location, age, gender, race, occupation, and
other statistic.

 Demographic environment: Marketers are very

interested in the demographic environment because it
involves people, and people make up markets.

 Demographic trends: Shifts in age, family structure,

geographic population, educational characteristics,
and population diversity

 Class Exercise
 Think of two products or services and list some of
the demographic variables ( age, gender,
occupation, educational level, location) of their
target customers.
 Class Exercise
 Think of two products or services and list some of
the demographic variables ( age, gender, income,
occupation, educational level, and location) of their
target customers.
 The Demographic Environment
 Changes in the Workforce

 More educated workers

 More white collar: More professional workers

such as engineers, doctors, and teachers.

❑ Generational marketing is important in

segmenting people by lifestyle of life state
instead of age.
 The Economic Environment
 Economic environment consists of factors that affect consumer
purchasing power and spending patterns.

 Marketers pay attention to trends and consumer spending patterns across and
within their world markets.
.
 Types of economies:
: 
 Industrial economies: Are richer markets for many different kinds of products.

 Developing economies: Offer outstanding opportunities for the right kinds of

products.

 Subsistence economies: Consume most of their own agriculture and industrial

output and offer few market opportunities.
 The Economic Environment

 Value marketing: Marketers in all industries

are looking for ways to offer today’s more
financially frugal buyers greater value-just the
right combination of product quality and good
service at a fair price.
 Class Exercise
 You are a marketer for a company. Think of a
product or service that you sell and explain how
you can add more value to your product or service.
 The Natural Environment
 Natural environment: Natural resources that are needed as inputs
by marketers or that are affected by marketing activities.

 Trends in the natural environment:

 Increased shortages of raw materials-

 Nonrenewable resources: oil and coal

 Renewable resources: forests and food

 Firms who require these scarce resources face large cost increases.
 The Natural Environment
 Increased pollution-Industries will almost always damage the
quality of the natural environment.

 Increased government intervention-Countries vary in their

concern and effort to promote a clean environment.

 Increased environmentally sustainable strategies-Meeting

present needs without harming the ability of future generations
to meet their needs.

 Companies are realizing that environmentally responsible

actions can be good business.
 Class Exercise
 If businesses are allowed to regulate themselves,
most of them will act unethically or illegally. Do you
agree or disagree. Explain your answer.
 The Technological Environment
 The technological environment is perhaps the most dramatic force in
changing the marketplace.

 New product opportunities

 The technological environment changes very quickly.

 New technologies replace old technologies.

 Marketers must monitor the technological environment very

carefully.

 More concern for the safety of new products

 The Political Environment
 The Political Environment is made up of laws, government agencies, and
pressure groups that influence or limit various organizations and
individuals in a given society.

 Legislation regulating business:

1. Protect companies from each other: Unfair competition

2. Protect consumers for unfair business practice: Misleading advertising

and packaging, unfair prices

3. Protect the interest of society against bad business practice: Ensures

that companies take responsibility for the social costs of their
production or products.
 The Political Environment

 More focus on ethics

 Socially Responsible Behavior: Some companies

are trying to find ways to protect the long-term
interest of consumers and the environment.

 Cause-Related Marketing: Many companies are

taking up worthwhile causes such as fighting hunger.
 Class Exercise
 Go online and find an example of a company that
uses cause-related marketing.
 The Cultural Environment

 The Cultural environment consists of institutions

and other forces that affect a society’s basic
values, perceptions, and behaviors.
 People’s basic beliefs and values are shaped by the
society where they grow up.
 People absorb a worldview that defines their
relationships with others.
 The Cultural Environment
 Core Beliefs and values are passed from parents to children and
are reinforced by schools, religious institutions, businesses, and
governments.

 Core beliefs and values are difficult to change.

 Secondary beliefs and values are more open to change.

 Example: Believing in marriage is a core belief, believing that

people should marry early is a secondary belief.

 Marketers have some chance of changing secondary beliefs and

values but very little chance of changing core beliefs and values.
 Reference
 Kotler, Philip and Gary Armstrong, Principles of
Marketing, 15th edition, Pearson Education Limited,
2014.