The Marketing Environment

Learning Goals

1. Understand environmental forces

2. Learn how demographic and economic factors affect
marketing
3. Identify trends in the firm’s natural and
technological environments
4. Explore key changes in political and cultural
environments
5. Realize how companies react to the marketing
environment

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 The Marketing Environment
• Marketing Environment:
The actors and forces outside marketing that affect
marketing management’s ability to build and maintain
successful relationships with target customers
• Microenvironment
Includes the actors close to the company
• Macroenvironment
Involves larger societal forces

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The Marketing Environment

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The Marketing Environment

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 Microenvironment
Actors –Marketing must
consider other parts of
1. The company the organization
2. Suppliers including finance, R&D,
purchasing, operations
3. Marketing
intermediaries and accounting
4. Customers –Marketing decisions
must relate to broader
5. Competitors company goals and
6. Publics strategies
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 Microenvironment
Actors –Marketers must watch
supply availability and
1. The company pricing
2. Suppliers –Effective partnership
3. Marketing relationship
intermediaries management with
4. Customers suppliers is essential
5. Competitors
6. Publics
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 Microenvironment
Actors –Help to promote, sell and
distribute goods to final
buyers
1. The company
–Include resellers, physical
2. Suppliers
distribution firms,
3. Marketing marketing services
intermediaries agencies and financial
4. Customers intermediaries
5. Competitors –Effective partner
6. Publics relationship management
is essential 3-7
 Microenvironment
Actors –The five types of
customer markets
1. The company • Consumer
2. Suppliers • Business
3. Marketing • Reseller
intermediaries • Government
4. Customers • International
5. Competitors
6. Publics
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 Microenvironment
Actors –Conducting competitor
analysis is critical for
1. The company success of the firm
2. Suppliers –A marketer must
3. Marketing monitor its
intermediaries competitors’ offerings
4. Customers to create strategic
advantage
5. Competitors
6. Publics
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 Microenvironment
–A group that has an
Actors actual or potential
interest in or impact on
an organization
1. The company –Seven publics include:
2. Suppliers • Financial
3. Marketing • Media
intermediaries • Government
4. Customers • Citizen-action
5. Competitors • Local
6. Publics • General
• Internal 3 - 10
 Publics

• Publics is the group of people that influence the

business activities of a company or people who have
real or potential interest in the company.
• This public is responsible for building your
company’s image amongst the customers or the
industry.

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 Publics
Financial Publics:
• These are the people that affect a company’s funding. Banks,
investors, brokerage firms, stock holders etc. This type of
publics affect a company’s ability to take loans, favourable
payment terms etc. They also determine how the customers or
other publics perceive a business.
• Example: If a company is a supplier of some auto-part to an
automobile giant and if the automobile giant finds that the
product is faulty, it may directly hinder the company’s ability to
work with the other giants. Or if a company is known to always
be in losses, investment houses may refrain from investing in
such companies.

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 Publics
Media publics:
• This type of publics generally use newsletters, articles,
blogs, magazines, radio announcements etc. to make a
perception about a business in the minds of the
stakeholders.
• Having good media relations can always help a
company hide its faults and highlight its strengths. But
if the media relations are not good, it might lead to
heavy losses.

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 Publics

Government publics:
• The Government rules and regulations need to be
followed while operating a business.
• Any change in the rules should be noted and
corresponding alterations should be done in the
business procedures.
• A business should always be updated about the
Government policies and may consult a Government
official or advocates etc. for doing so.

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 Publics
Citizen-action publics:
• These are the voluntarily or involuntarily formed public groups
for the benefit of the general consumer.
• These include consumer groups, environmental groups and
minority groups etc.
• A company’s PR department needs to be updated about what
these groups have to say regarding the company.
• The general public that might affect the business should be
known and efforts should be taken to keep friendly
relationships with them.

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 Publics

Find and discuss one example of

citizen action publics.

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 Publics

Local publics:
• These include the neighborhood citizens, general local
bodies etc. A community relations officer needs to be
appointed to solve the issues of the local public.

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 Publics

General publics:
• General public includes the general customers.
• The customers brand perception is very important for
the company’s success.
• Various advertising campaigns might be undertaken to
build a healthy image.
• General public’s perceptions can be judged through
their feedback on social media.

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 Publics
Internal publics:
• A company’s employees, managers, distributors, suppliers,
volunteers, stakeholders, Board of Directors etc. are very
important assets of a company.
• If the internal public is happy and content, then only they
will try to increase the goodwill of the company, in the
outside world.
• Newsletters, memos, company meetings etc. can be used
to educate and motivate the employees. They can also be
used to inform the employees about the new
advancements in the company.

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 Publics

• The companies can prepare marketing plans for

the major publics as well as for the customer
markets.
• Suppose the company wants a specific
response from a particular public, such as
goodwill, favorable word of mouth, or donation
of time or money.
• The company would have to design an offer to
this public that is attractive enough to produce
the desired response.
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Macroenvironmental
The MacroenvironmentForces

• Demographic • Technological
• Economic • Political
• Natural • Cultural

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 Demographic Environment

• Demographic Environment:
–The study of human populations in terms of size,
density, location, age, gender, race, occupation and
other statistics
–Whether marketing to domestic or international
markets, demographic information can provide
important insights about a target market and how to
address consumer needs.

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Demographic Environment

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• Marketers typically combine several variables to create a
demographic profile of a target market.
• Common demographic variables to consider for global and
domestic marketing purposes include the following:
➢ Age: Age bands, such as 18–24, 25–34, etc., are great
predictors of interest in some types of products. For
example, few teenagers wish to purchase denture cream.
➢ Social class: Social-class bands such as wealthy, middle,
and lower classes. The rich, for instance, may want different
products than middle and lower classes, and may be willing
to pay more.

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➢ Gender: Males and females have different physical
attributes that require different hygiene and clothing
products. They also tend to have distinctive male/female
mindsets and roles in the family and household decision
making.
➢ Religious affiliations: Religion is linked to individual
values as well as holiday celebrations, often tied to
consumer preferences and spending patterns.
➢ Income brackets: Indicating level of wealth, disposable
income, and quality of life.

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➢ Education: Level of education is often tied to consumer
preferences, as well as income.
➢ Geography: Area of residence, urban vs. rural, and
population density can all be important inputs into
marketing strategy and decisions about where and how to
target advertising and other elements of the promotion mix.

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 Demographic Environment

• Changing age structure of the U.S.

population is the single most important
demographic trend
• Baby boomers, Generation X, and
Generation Y are the key groups

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 Demographic Environment

Key Generations • Born between 1946 and

1964
• Represent 28% of the
population; earn 50% of
Baby Boomers personal income
Generation X • Many mini-segments exist
Generation Y within the boomer group
• Entering peak earning years
as they mature

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 Demographic Environment

Key Generations • Born between 1965 and 1976

• First latchkey children
• Maintain a cautious
Baby Boomers economic outlook
Generation X • Respond to socially
responsible companies
Generation Y
• Will be primary buyers of
most goods by 2010

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 Demographic Environment

Key Generations • Born between 1977 and

1994
• 72 million strong; almost as
Baby Boomers large a group as their baby
boomer parents
Generation X
• New products, services,
Generation Y and media cater to GenY
• Challenging target for
marketers

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 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

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 Economic Environment
• The economic environment is the sum total of the
economic conditions and the nature of the economy in
which the business has to operate and compete.
• This will include the nature of the economy, the
direction in which it is progressing, the availability
of resources (labour, capital, etc) and the conditions of
the market as well.
• All these factors in combination create the economic
environment for a firm.

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 Technological Environment

• The most dramatic force shaping our destiny

• Rapidly changing force which creates many new
marketing opportunities but also turns many
existing products extinct.

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Factors of Technological Environment
1. Pull of Technological Change
• Technological change generally refers to the
advancements in the production and manufacturing
process of different goods and services. So it is when
we improve the way products are made or services are
delivered. In these times there is always a new
invention or better technology around the corner.

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• This technological change brings both opportunities
and threats to a business. There is always the
advantage of assessing the technological environment
and embracing the new technology.
• This can make your product better, bring down costs,
edge out the competition, increase production
capacity, etc. But at the same time, such changes if not
adopted by the businesses can make them obsolete and
out of fashion very quickly.

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2. Opportunities from New Innovations
• There are so many concepts, products, services, etc
that have been unexplored in the market. The
advancements in technology mean that there is the
possibility of a new invention every single day.
• And firms have to be alert about their technological
environment to smell out a great opportunity. If the
firm can capitalize on a new invention or product, it
can become a pioneer in the industry.

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• For example, see the boom in the smartwatch and
fitness tracker market. It all started back in 1998.
• Such new products enter the market every year. And
to capture this market a firm has to be aware of its
technological environment.

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3. Risk of Technological Environment
• With opportunities come threats.
• If the company does not keep a track of the
new innovations and advancements in the industry,
they risk being out of date.
• If a business cannot adopt a new technology, it can be
forced out of the competition. There is also the ever-
present risk of new innovations and entrants to the
market.

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4. Role of Research and Development
• The other important aspect of the technological
environment is the role of the R & D of the country.
Technology and business are very interdependent.
• The benefits of all the R&D a country does reaches
the public via the businesses. These findings and
developments improve our quality of life and uplift
the economy and society.

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 Political-legal Environment

• Consists of laws, government agencies and pressure

groups that influence or limit various organizations
and individuals in a given society
– Legislation affecting businesses worldwide has increased
– Laws protect companies, consumers and the interests of
society
– Increased emphasis on socially responsible actions

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• This is a non-market factor, but it can still greatly
impact a business.
• The political-legal environment is a combination of a
lot of factors such as the current political party in
power, the degree of politicization of trade
and industry, the efficiency of the current government,
government policies, current legal framework, the
public attitude towards the economy, etc.

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• All these factors will shape the political-legal
environment in which the firm has to operate and
compete.
• There are three main elements of a political-legal
environment. Let us have a look.
1. Government
2. Legal
3. political

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1. Government
• You must have often heard that an election year is an
extremely important factor for the economy. This is why
the type of government governing at the centre and the
state has a huge impact on the businesses.
The government decides all the fiscal policies, monetary
policies, and taxation modules as well.
• So the type of government in power has a huge impact on
the economy and the firms that operate and compete in the
economy.

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2. Legal
• A sound legal system is essential to the success of any
business. So a country must have a sound and functioning
legal system with laws that equally protect both
consumers and manufacturers.
• There are various other matters like company law,
royalties law, patent law, intellectual property rights.
• International laws etc that also have a great influence on
the business of firms. For example, the new GST laws are
going to have a significant effect on the businesses.

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3. Political
• Political stability in a country is essential for a stable
economy and stock market.
• Also, various political groups also hold a lot of
influence on businesses and unions.
• So the political environment of a country is a major
factor in the success of a firm.

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 Cause-Related Marketing

• Marketers create link between brand and charitable

organization
• Demonstrates social responsibility
• Helps build positive brand image
• Examples include General Mill’s Box Tops for
Education, Tang and Mothers Against Drunk Driving,
Eddie Bauer and local schools

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Why Cause Related Marketing?

What is Niche marketing?

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Benefits of Cause Marketing

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 Social and Cultural Environment

• Made up of institutions and other forces that affect a

society’s basic values, perceptions, preferences and
behaviors.

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 Social and Cultural Environment
• The social environment and the cultural environment
in which a firm operates can be a major factor in the
success or failure of the firm.
• The social environment comprises of many dynamic
factors such as social traditions, cultural influences,
values and beliefs prevailing in the society, social
stratification, etc.
• Social stratification refers to a society's categorization
of its people into rankings of socioeconomic tiers
based on factors like wealth, income, race, education,
and power.

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• Companies, especially international companies always
study the cultural and social environment of a country
before entering the market.
• It is important that your goods and services are in
tandem with the social environment of the country.
Otherwise, the company could face a backlash and run
into losses.

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 Responding to the Marketing Environment

• “There are three kinds of companies: those

who make things happen, those who watch
things happen, and those who wonder what’s
happened.”

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