Principles of Marketing

Kotler and Armstrong

Chapter 3:
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Textbook
Analyzing the Marketing
Cover
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Environment

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Analyzing the Marketing Environment
Learning Objectives

• Objective 1: Describe the environmental forces that

affect the company’s ability to serve its customers.

• Objective 2: Explain how changes in the demographic

and economic environments affect marketing
decisions.

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 Analyzing the Marketing Environment
Learning Objectives

• Objective 3: Identify the major trends in the firm’s

natural and technological environments.

• Objective 4: Explain the key changes in the political

and cultural environments.

• Objective 5: Discuss how companies can react to the

marketing environment.

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 Analyzing the Marketing Environment

Learning Objective 1

• Describe the environmental forces that affect

the company’s ability to serve its customers.

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 A Company’s Marketing Environment

The marketing environment includes the actors

and forces outside marketing that affect
marketing management’s ability to build and
maintain successful relationships with target
customers.

The Microenvironment
The Macroenvironment

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 A Company’s 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.

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 A Company’s Marketing Environment

Macroenvironment consists of the larger societal

forces that affect the
microenvironment—demographic, economic,
natural, technological, political, and cultural
forces.

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A Company’s Marketing Environment

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The Microenvironment
Actors Affecting a Firm’s Ability
to Serve Customers

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 The Microenvironment
The Company
In designing marketing plans and competitive advantages ,
marketing management takes other company groups into
account.

• Top management Marketing manager

• Finance must also work
• R&D closely with other
• Purchasing company
• Operations department
• Accounting
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 The Microenvironment
Suppliers
•Provide the resources to produce goods and services

•Treat as partners to provide customer value

•Supply availability
• Supply shortages or delay
• Labor strike
• Cost sales in the short run and damage customer satisfaction
in the long run
• Monitor the price trends
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 The Microenvironment
Marketing Intermediaries

• Marketing intermediaries
are firms that help the
company to promote,
sell, and distribute its
goods to final buyers.

Partnering with intermediaries: Coca-Cola provides its retail

partners with much more than just soft drinks. It also pledges
powerful marketing support.

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 The Microenvironment
Marketing Intermediaries

Physical
Resellers distribution
firms

Marketing Financial
services intermediarie
agencies s

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 The Microenvironment
Competitors

• Firms must gain strategic advantage by positioning

their offerings strongly against competitors’
offerings in the minds of consumers.
•Market Intelligent

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 The Microenvironment
Publics
•Any group that has an actual or potential interest in or
impact on an organization’s ability to achieve its
objectives:
• Financial publics
• Media publics
• Government publics
• Citizen-action publics
• Local publics
• General public
• Internal publics

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The Microenvironment
Customers

• Consumer markets
• Business markets
• Reseller markets
• Government markets
• International markets

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 The Macroenvironment
Macro environmental Forces

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 Analyzing the Marketing Environment

Learning Objective 2

• Explain
how changes in the demographic and
economic environments affect marketing
decisions.

Demographic Environment
Economic Environment

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 The Macroenvironment
Demographic Environment
•Demography is the study of human populations-- size,
density, location, age, gender, race, occupation, and other
statistics.

•Demographic environment involves people, and people

make up markets.

•Demographic trends include changing age and family

structures, geographic population shifts, educational
characteristics, and population diversity.

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 The Macroenvironment
Demographic Environment

•Baby Boomers - born 1946 to 1964

•Generation X - born between 1965 and 1976
•Generation Y – born between 1977-1991
•Millennials- born between 1992 and 2000
•Generation Z – born between 2000 and 2010
•Generation Alpha – born after 2010

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The Company’s Macroenvironment
Demographic Environment

Generational marketing is important in

segmenting people by lifestyle or life stage
instead of age.

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The Company’s Macroenvironment
Demographic Environment

•Changing role and structure family

•Changes in the workforce

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 The Company’s Macroenvironment
Demographic Environment

Geographic Shifts in Population

•Growth in U.S. West and South and decline in

Midwest and Northeast

•Change in where people work

•Telecommuting
•Home office

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 The Company’s Macroenvironment
Demographic Environment

•Key Demographic Trends

• Changing household type
• Geographic population shifts
• Better-educated, more white-collar
workforce
• Increasing Diversity

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 The Company’s Macroenvironment
Economic Environment
The economic environment consists of factors that affect
consumer purchasing power and spending patterns.

•Industrial economies are richer markets.

•Subsistence economies consume most of their own

agriculture and industrial output.

•Developing economies also offer outstanding marketing

opportunities.

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 The Company’s Macroenvironment
Economic Environment

Changes in Consumer Spending

Value marketing involves offering financially cautious

buyers greater value—the right combination of quality
and service at a fair price.

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 The Macroenvironment
Income Distribution

Over the past several decades, the rich have grown

richer, the middle class has shrunk, and the poor
have remained poor.

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 The Macroenvironment
Income Distribution

•Key Economic Trends

•Income distribution is skewed.
• Upper class, middle class, working class and the
underclass.
•Consumer spending patterns are changing.

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Analyzing the Marketing Environment
Learning Objective 3

• Identify
the major trends in the firm’s natural
and technological environments.

Natural Environment
Technological Environment

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 The Macroenvironment
The Natural Environment
The natural environment is the physical
environment and the natural resources that are
needed as inputs by marketers or that are affected
by marketing activities.

Trends in the Natural Environment

•Growing shortages of raw materials
•Increased pollution
•Increased government intervention
•Developing strategies that support environmental sustainability
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 The Macroenvironment
Technology Environment

Technological environment is Forces that create

new technologies, creating new product and
market opportunities

•Key Technological Trends

•The technological environment is characterized by rapid change.
•New technologies create new opportunities and markets but
make old technologies obsolete.
•Leads the world in research and development spending.

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 Analyzing the Marketing Environment
Learning Objective 4

•Explain the key changes in the political and

cultural environments.

Political and Social Environment

Cultural Environment

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 The Company’s Macroenvironment
Political and Social Environment
The Political Environment Includes laws,
governmental agencies, and pressure groups that
impact organizations and individuals and limit
various organizations and individual in a given
society.

•Key trends include:

•Increased legislation to protect businesses as well as
consumers.
• Changes in governmental agency enforcement.
• Increased emphasis on ethical behavior and
social responsibility.
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 The Company’s Macroenvironment
Political and Social Environment

Legislation regulating business is intended to protect

•Companies from each other
•Consumers from unfair business practices
•The interests of society against unrestrained business
behavior

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 The Macroenvironment
Cultural Environment

The cultural environment consists of

institutions and other forces that affect a
society’s basic values, perceptions, and
behaviors.

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 The Company’s Macroenvironment
Cultural Environment

The Persistence of Cultural Values

Core beliefs and values are persistent and 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

and include people’s views of themselves, others,
organizations, society, nature, and the universe.

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 The Macroenvironment
Cultural Environment

Shifts in Secondary Cultural Values of People’s Views

Universe
Nature
Society
Organization
Others
Themselves

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 Analyzing the Marketing Environment
Learning Objective 5

•Discuss how companies can react to the

marketing environment.

Responding to the Marketing Environment

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 Responding to the Marketing
Environment
Views on Responding

Uncontrollable Proactive Reactive

• React and • Take • Watch and

adapt to aggressive react to
forces in the actions to forces in the
environment affect forces environment
in the
environment

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