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Week 3 Handout

Overview
After learning the basic concepts of Marketing and the steps in the Marketing Process, we can now dig deeper
into the first step of the process- i.e. understanding the marketplace and customer needs and wants.

Marketing Process
In this module, you’ll see that marketing operates in a complex and changing environment with several actors
and environmental forces that shape marketing opportunities, pose threats, and affect a company’s ability to
engage customers and build customer relationships. Understanding the marketing environment and managing
marketing information by turning them into fresh customer insights will enable companies to develop effective
marketing strategies, which will help them succeed in today’s marketplace.

Learning Objectives
Below are the learning objectives for Module 3:

1. Describe the environmental actors and forces that affect the company’s ability to serve its customers (01
Marketing Environment)
2. Explain the impact of demographic and economic environments, natural and technological
environments, as well as political and cultural environments in making marketing decisions and how
companies react to the marketing environment (02 Responding to Environmental Forces)
3. Explain the importance of information and how companies analyze marketing information to gain
insights about the marketplace and customers (03 Marketing Information & Customer Insights)
4. Define the marketing information system and the marketing research process (04 Developing,
Analyzing and Using Marketing Information)
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01 The Marketing Environment

Introduction
A company’s marketing environment consists of the actors and forces outside marketing that affect marketing
management’s ability to build and maintain successful relationships with target customers. Companies must
constantly watch and adapt to the changing environment, pushing marketers to be environmental trend trackers
and opportunity seekers.
Marketers have disciplined methods- marketing research and marketing intelligence (to be discussed further in
the succeeding pages)- for collecting information and developing insights about the marketing environment,
dwelling more time in customer and competitor environments. Studying the environment enables marketers to
adapt their strategies to meet new marketplace challenges and opportunities.

The Microenviroment and Macroenvironment

The marketing environment consists of a microenvironment and a macroenvironment:
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Microenvironment Actors

In their role to build relationships with customers by creating customer value and satisfaction, the success of the
marketing management requires building relationships with their microenvironment in making up the
company’s value delivery network.

Microenvironment
Description
Actors

All of the interrelated groups below, which form the internal environment, are taken into
account in designing marketing plans. They all share the responsibility, with marketing
taking the lead, for understanding customer needs and creating customer value.

• Top Management
• Finance
The Company • Research and Development (R&D)
• Purchasing
• Operations
• Human Resource
• Accounting
• Public Relations

Suppliers provide the resources needed by the company to produce its goods and services.
Suppliers Marketing managers must watch supply availability and costs because supplier problems on
these can seriously affect sales and even customer satisfaction in the long run.
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Marketing intermediaries help the company promote, sell and distribute its products to final
buyers.

• Resellers (distribution channel firms) – help the company find customers or make
sales to them
Marketing • Physical distribution firms – help the company stock and move goods
Intermediaries • Marketing services agencies (marketing research firms, advertising agencies,
media firms, marketing consulting firms) – help the company target and promote
its products to the right markets
• Financial intermediaries (banks, credit companies, insurance companies) – help
the company finance transactions or insure against risks associated with the buying
& selling of goods

A company must gain strategic advantage by positioning their offerings strongly against
competitors’ in the minds of consumers, providing greater customer value and satisfaction
Competitors than its competitors do. Each company should consider its own size and industry position
vs. its competitors, as there is no single competitive marketing strategy that is best for all.

A public is any group that has an actual or potential interest in or impact on an

organization’s ability to achieve its objectives.

• Financial publics (banks, investment analytics, stockholders) –influence the

company’s ability to obtain funds
• Media publics (TV stations, newspapers, magazines, blogs, social media) – carry
news, features, editorial opinions and other content
• Government publics (government developments) – raise possible issues of
product safety, truth in advertising and other matters
Publics • Citizen-action publics (consumer organizations, environmental groups, minority
groups) –may question the marketing decisions of the company
• Internal publics (workers, managers, volunteers, board of directors) – need to be
informed and motivated to feel good about the company they work for; this
positive attitude spills over to the external publics
• General public– has buying behaviour that gets affected by their attitude toward
and image of a company’s products and activities
• Local publics(local community residents & organizations) – expect large
companies to be responsible members of the local communities in which they
operate

The customers are the most important actors as the aim of the entire value delivery network
is to engage and create strong relationships with them.

• Consumer markets – for personal consumption

Customers / • Business markets – for further processing or use in their production processes
Customer Markets • Reseller markets – for reselling at a profit
• Government markets – for producing public service or transferring goods &
services to those in need
• International markets – for consumption, production, reselling, or government
usage in other countries
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Additional Sources:

• Watch the video and read through the link below, expounding further on the microenvironment actors:
https://www.marketingtutor.net/micro-environment-definition-factors-example/
https://www.youtube.com/watch?v=d1QUX2AFjz0
• Watch how Honda views its suppliers as long-term strategic partners. How important is having a solid
partnership with a company's suppliers? As a consumer, can you identify companies with good supplier
partnerships? Is there any kind of impact on you as a consumer? https://youtu.be/zUAzpww5XXg

02 Responding to Environmental Forces

Introduction

The microenvironment actors operate in a larger macroenvironment of forces that shape opportunities and pose
threats to the company. These changing forces in the marketing environment are sometimes unforeseeable and
uncontrollable, yet some can be predicted and handled through skillful management. Understanding and
adapting well to these forces enable companies to thrive and develop effective marketing plans.
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Macroenvironment Factors
Macroenvironment
Description
Forces

Demography is the study of the characteristics of human population (size, density,

location, age, gender, race, occupation) – the major interest to marketers because it
involves people, which make up markets.

• Changing age structures – different generations have different buying

behaviors
• Shifting family profiles – the changing dynamics of and evolving diversity
in families/households should also be reflected in marketing
• Geographic population shifts – people living and/or working in different
Demographic regions/areas buy differently
• Improving educational characteristics – the educational attainment of
people has an impact on what and how they buy
• Increasing population diversity (ethnicity, race, gender, disabilities) –
different diversity segments pose various opportunities for marketers to
diversify their marketing programs

Take a look at the Philippines’ Demographics as of 2020:

https://www.worldometers.info/demographics/philippines-demographics/

Economic factors affect consumer buying/purchasing power and spending

Economic patterns/behavior. Changes in major economic variables (income, cost of living,
interest rates, savings & borrowing patterns) have a large impact on the marketplace.

The unexpected happenings in the physical environment and/or the natural resources
needed as inputs to or affected by marketing activities can have various impacts on
marketing strategies.

• Shortages of raw materials – scarce resources are facing large cost

increases
• Increased pollution – industries damage the quality of the natural
Natural environment (waste disposals, chemical pollutants, littering, etc.)
• Increased government intervention in natural resource management -
efforts to promote a clean environment vary in different countries,
depending on available funds and political will
• Environmental sustainability movement – enlightened companies develop
strategies and practices that create a world economy that the planet can
support indefinitely with more efficient operations and less wasteful
products

Technological advances are perhaps the most dramatic forces affecting today’s
marketing strategies, creating new product and market opportunities and advantages
Technological
for both buyers and sellers. Companies that fail to keep up with technological change
will miss out on such new opportunities.
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The developments in the political environment (laws, government agencies, pressure

groups) strongly affect marketing decisions. Agreeing that the system works best
with at least some regulation, companies are pushed to be socially responsible.

• Increasing legislation regulating business – governments develop public

policy to guide commerce (laws covering issues on competition, fair-trade
practices, environmental protection, product safety, truth in advertising,
consumer privacy, packaging and labeling, pricing, etc.)
 Protect companies from each other
Political-Social  Protect consumers from unfair business practices
 Protect the interests of society against unrestrained business
behavior
• Increased emphasis on ethics and socially responsible actions – business
is also governed by social codes and rules of professional ethics
 Socially responsible behavior – companies seek out ways to protect
the long-run interests of their consumers and the environment
 Cause-related marketing – companies link their products and
marketing programs to benefiting worthwhile causes or charitable
organizations

The cultural factors (society’s basic values, beliefs, perceptions, preferences,

behaviors) strongly affect how people think and consume, thus having a huge impact
on marketing decision-making.

• The persistence of cultural values –core beliefs and values have a high
degree of persistence and shape more specific attitudes/behaviors found in
everyday life, which marketers have little chance of changing
• Shifts in secondary cultural values – secondary beliefs and values are
more open to change, and cultural shifts can be predicted by marketers in
order to spot new opportunities or threats
 People’s views of themselves – people use products/services as a
means of self-expression and buy products/services that match their
views of themselves
Cultural  People’s views of others – people’s attitudes toward and interactions
with others shift over time, which also affect how companies market
their brands and communicate with customers
 People’s views of organizations – people vary attitudes toward
different organizations, and the growing trend in declining
organization loyalty/trust challenges organizations to find new ways
to win consumer and employee confidence
 People’s views of society – people’s orientation to their society
influences their consumption patterns and attitudes toward the
marketplace
 People’s views of nature – people have recognized that nature is
finite and fragile, hence the growing market of consumers who have
renewed love of things natural/organic
 People’s views of the universe – people’s religion and spirituality
affect not just what they seek in life but also what they buy
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Responding to the Marketing Environment

Marketing management cannot always control
environmental forces, but whenever possible,
smart marketing managers take a proactive rather
than reactive/passive approach to the marketing
environment.
Some companies passively accept the marketing
environment as an uncontrollable element to
which they must adapt, analyzing environmental
forces and designing strategies that will help
them avoid the threats and take advantage of the
opportunities the environment provides.
Other companies take a proactive stance toward
the marketing environment, developing strategies
to change the environment and taking aggressive
actions to affect the publics and forces in their
marketing environment.

Additional Sources:

• Watch this video expound further on the macroenvironment forces:

https://www.youtube.com/watch?v=y9RDg_JMmPc
• Watch how technological advances can improve customer experience in the retail industry. Can retail
companies survive by being passive or simply reacting to changing marketing environments? What
advantage do proactive companies have in the retail industry against the passive and reactive ones?
https://www.youtube.com/watch?v=iRvaWHk3A8k

03 Marketing Information & Customer

Insights
Introduction
With the aim to create value for customers and build meaningful relationships with them, marketers need to
gain fresh and deep insights into what customers need and want. Such customer insights come from good
customer/marketing information, which companies use to gain powerful customer/market insights in order to
develop a competitive advantage and make better decisions.
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Marketing Information
Given the recent explosion of information technologies, wherein consumers themselves generate tons of
marketing information using different devices, media and apps, companies are often overloaded with and
overwhelmed by great quantities of marketing information and data. This problem is summed up in the concept
of big data- i.e. huge and complex data sets generated by today’s sophisticated information generation,
collection, storage, and analysis technologies.
Big data presents marketers with both big opportunities and big challenges. Although accessing and sifting
through so much data can be a daunting and tedious task, companies that effectively use such data surplus can
gain rich and timely customer insights. The challenge is not just to gather information, but more so to acquire
better information and make better use of such information.

Customer Insights and Marketing Information Systems

The real value of marketing information lies in how it is used and transformed into customer insights as the
basis for creating customer value, engagement and stronger customer relationships. Several companies are now
restructuring their marketing information and research functions by creating customer insights teams, who’s in
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charge of developing actionable insights from marketing information and working strategically with marketing
decision makers to apply those insights.
Here’s a short video, showing the consumer insights team of Netflix. Based on how Netflix created their
consumer insights team, what is the main role of this function to a company? How can such a team succeed in
developing actionable customer insights?
https://www.youtube.com/watch?v=ikkOD7SFjPY
An effective marketing information system (MIS) is a must for companies to provide their managers and
decision makers the right information, in the right form, and at the right time. Such marketing information
systems consist of people and procedures dedicated to (1) assessing information needs by interacting with
information users (i.e. marketing managers, internal and external partners); (2) developing needed information
by interacting with the marketing environment through internal company databases, marketing intelligence
activities, and marketing research; (3) and analyzing and using the information to develop actionable
customer and market insights, make marketing decisions, and manage customer engagement and relationships.
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Assessing Marketing Information Needs

The marketing information system begins and ends with
information users, i.e. not just a company’s marketing and
other managers, but also external partners such as
suppliers, resellers, and marketing services agencies. These
users assess their information needs and then deliver
information and insights that meet those needs.

The MIS must monitor the marketing environment to

provide decision makers with information and insights they
should have to make key marketing decisions. Moreover,
the company must decide whether the value of insights
gained is worth the costs of providing it given that both
value and cost are often hard to assess.

Additional Readings / Sources:

• To learn more about the concept of big data, you may check out this link:
https://intellipaat.com/blog/tutorial/hadoop-tutorial/big-data-overview/
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04 Developing, Analyzing and Using

Marketing Information
Introduction
After assessing what information is really needed, marketers can obtain the needed information from internal
databases, competitive marketing intelligence, and marketing research. Such information gathered requires
additional analysis in order to turn them into customer and market insights that will improve marketing
decisions.

Developing Marketing Information

Information
Description
Sources

Collections of consumer and market information obtained from data sources within the
company’s network
Examples:

Internal Databases • Marketing Department – customer characteristics, in-store and online sales
transactions, web and social media site visits
• Customer Service Department – customer satisfaction, service problems
• Accounting Department – sales, costs, cash flows
• Operations – production, shipments, inventories
• Sales Force – reseller reactions, competitor activities

Systematic monitoring, collection, and analysis of publicly available information about

consumers, competitors, and developments in the marketing environment

Marketing Objectives:
Intelligence
 To understand the consumer environment
 To gain insights into how consumers talk about and engage with products
 To assess and monitor competitors’ activities
 To provide early warnings of opportunities and threats

Systematic design, collection, analysis, and reporting of data relevant to specific marketing
situations and decisions
Steps:
Marketing
Research 1. Define the problem and research objectives – the hardest yet most important step, as
it guides and lays the foundation for the entire research process

2. Develop the research plan for collecting information

• Gathering secondary data – information that already exists somewhere,
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having been collected for another purpose

Data from outside suppliers
Commercial online databases
Internet search engines
• Primary data collection – information collected for the specific purpose at
hand
Research approaches
 Observational research – gathering primary data by
observing relevant people, actions and situations
 Survey research – gathering primary data by directly asking
people questions about their knowledge, attitudes,
preferences, and buying behaviour
 Experimental research – gathering primary data by selecting
matched groups of subjects, giving them different treatments,
controlling related factors, and checking for differences in
group responses
Contact methods
 Mail, telephone, and personal interviewing
 Focus group interviewing
 Online marketing research
 Online behavioural and social tracking and targeting
Sampling plan
 Sampling unit – who is to be studied?
 Sample size – how many people should be included?
 Sampling procedure – how should the people in the sample
be chosen?
Research instruments
 Questionnaires – may be administered in person, by phone,
by email or online
 Mechanical instruments – the use of people meters, checkout
scanners, GPS technologies, EEG & MRI technologies
(neuromarketing), etc. to track consumer movements,
activities, behaviors, and even feelings and brain responses
3. Implement the research plan
• Collect, process and analyze information
• Check data for accuracy and completeness
• Tabulate results and compute statistical measures

4. Interpret and report the findings – both researchers and managers should work
together when interpreting research results and share the responsibility for the
research process and resulting decisions

Analyzing & Using Marketing Information

After collecting relevant data and information from internal databases, marketing intelligence and/or marketing
research, additional processing and analysis may still be required to learn more about the relationships within
sets of data and gain customer & market insights that will help improve marketing decisions.
Given the challenge of dealing with vast information scattered widely across various sources in this current big
data era, marketers must sift through the mountains of data to mine the gems- the bits that yield actionable
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customer insights. As such, marketers apply marketing analytics to the large and complex sets of data in order
to dig out meaningful patterns in big data to gain customer insights and gauge marketing performance.
Moreover, companies are turning to customer relationship management (CRM) to manage detailed
information about individual customers and carefully manage customer touch points to develop deeper
customer relationships and maximize customer loyalty. Then again, marketing information has no value until it
is used and made readily available and accessible to marketing managers in order to make better marketing
decisions.

Additional Readings / Sources:

• Watch this video to see how neuromarketing works: https://www.youtube.com/watch?v=lHzQ_bA-Cbw

• To expound further on the concept of marketing research, you may watch this video:
https://www.youtube.com/watch?v=ReeO5P58BPo
• Watch this video, expounding on CRM: https://www.youtube.com/watch?v=hnEQq7kNFWo
• Watch this video and read through the link below to learn more about how SAS explains Marketing
Analytics: https://www.sas.com/en_us/insights/marketing/marketing-analytics.html
https://www.youtube.com/watch?v=-oHGG5jJPHQ
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Week 3: Wrap-up and Looking Ahead

Wrap-up

In summary, in order to fully understand the marketplace and customer needs and wants during the first step of
the marketing process, marketers have to start with analyzing the complexity of the environment which
marketing operates in, effectively linking with microenvironment actors and adapting to macroenvironment
forces that can affect their success in sustainably creating value for customers. From the several factors within
the marketing environment and with the big data era we’re currently in, the challenge is to sift through and
analyze the vastness of marketing information available through effective marketing information systems (MIS)
to gain actionable customer and market insights that can lead to better marketing decisions during the
succeeding steps of the marketing process.

Looking Ahead
Learning how to analyze the marketplace and use relevant marketing information to develop customer insights
will help us in delving deeper into understanding both customer and competitor behaviors in the next lesson.
This will enable better understanding of customer needs and wants in order to create superior customer value
and build stronger customer relationships.
This module will be helpful as you assess the current marketing situation of your partner company. Take note of
the various factors within the marketing environment that can have either a positive or a negative influence on
your partner company as well as the useful techniques in gathering more relevant marketing information that
can lead to better marketing strategies for the company.