A Global Perspective

Philip Kotler
Gary Armstrong
Swee Hoon Ang
3 Siew Meng Leong
Chin Tiong Tan
Oliver Yau Hon-Ming
Learning Objectives
After studying this chapter, you should be able to:

1. Describe the environmental forces that affect the

company’s 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 firm’s 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

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Chapter Outline

1. The Company’s Microenvironment

2. The Company’s Macroenvironemnt
3. Responding to the Marketing Environment

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The 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 customers.

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 The Marketing Environment

Marketing Environment

The microenvironment consists of the actors close to

the company that affect its ability to serve its
customers, the company, suppliers, marketing
intermediaries, c ustomer markets, competitors,
and publics.

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 Micro Marketing Environment
Micro environment factors are closely related to a specific
company/firm and are included as part of the firm’s total
marketing system. Hence, marketers must get adequate
information about Internal Environment.

Micro marketing Environment

Company Suppliers Intermediaries Customers

Competitors Publics
Company-Internal environment includes:

• Top management
• Finance
• R&D
• Purchasing
• Operations
• Accounting

• Suppliers

• Provide the resources to produce goods and services

• Treated as partners to provide customer value

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The Marketing Environment
Marketing Environment

The macro-environment consists of the larger societal

forces that affect the microenvironment.
• Demographic
• Economic
• Natural
• Technological
• Political
• Cultural

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 The Company’s Microenvironment
Marketing Intermediaries
• Help the c ompany to promote, sell, and
distribute its products to final buyers
• Include:
• Resellers- wholesalers and retailers
• Physical distribution firms
• Marketing services agencies- e.g.
advertising agencies, research
• Financial intermediaries

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 The Company’s Microenvironment

Customers

Customer markets consist of individuals and

households that buy goods and services for
personal consumption, businesses, resellers,
government and international markets
Business markets buy goods and services for further
processing or for use in their production process.

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The Company’s Microenvironment
Competitors

• Firms must gain strategic advantage by positioning

their offerings against competitors’ offerings.
• Each firm should consider its own size and industry
position compared to those of its competitors.

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 The Company’s 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- consumer organizations
• Local publics- neighborhoods, residents
• General public
• Internal publics- within the company

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 The Company’s Macroenvironment

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

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The Company’s 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.

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Demographic environment
The Company’s 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.

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 The Company’s 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

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 The Company’s Macroenvironment
Political Environment

• Legislation regulating business

• Public policy to guide commerce—sets of laws and regulations
that limit business for the good of society at large
• Increasing legislation to:
• Protect companies
• Protect consumers
• Protect the interests of society

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The Company’s 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.

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The political and economic environments are closely intertwined, as
political decisions and actions can have a significant impact on
economic conditions, and economic factors can influence political
decisions.

Trade agreements can directly influence economic conditions.

e.g., when countries negotiate free trade agreements, it can lead to
increased economic activity, job creation while imposition of tariffs
can disrupt global supply chains, increase costs for businesses

Wars and instability

Crime
Corruption
 The Company’s 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

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• New ways of producing goods and
services
• New ways of distributing goods and
services
• New ways of communicating with target
markets
The Company’s Macroenvironment
Cultural Environment

The cultural environment consists of institutions and

other forces that affect a society’s basic values,
perceptions, and behaviors.
Language, customs, religious beliefs, values,
business norms

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 The Company’s 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.

• E.g. educating a child is a core belief- but doing a

graduation party is a secondary belief
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Views on Responding
• Uncontrollable
• Reacting and adapting to forces in the environment
• Proactive
• Taking aggressive actions to affect forces in the environment
• Reactive
• Watching and reacting to forces in the environment

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Responding to the Marketing
Environment

• Reactive
• Watching and reacting to forces in the environment

• Environmental forces as uncontrollable and difficult

to predict.
• Passive approach- marketing mix is adjusted to the
changes in the environment
Responding to the Marketing
Environment
Proactive
• adopt the environmental management
perspective
• although many of the environmental forces suc
as demography, culture and natural factors are
uncontrollable, forces such as politics, law and
technology can be influenced by correct and
calculated moves
• Take aggressive actions to affect forces in the
environment
https://www.greatideasforteachingmarketing.com/toys-r-us-
bankruptcy-marketing-environmental-factors/