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 Principles of Marketing,
Arab World Edition
Philip Kotler, Gary Armstrong, Anwar Habib, Ahmed
Tolba
Presentation prepared by Annelie Moukaddem Baalbaki

CHAPTER THREE
Analyzing the Marketing
Environment

Instructor: Talha Sarfaraz

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 Chapter Learning Outcomes
Topic Outline

3.1 The Company’s Microenvironment

3.2 The Company’s Macroenvironment
3.3 Demographic Environment
3.4 Economic Environment
3.5 Natural Environment
3.6 Technological Environment
3.7 Political and Social Environment
3.8 Cultural Environment
3.9 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 Company’s Microenvironment

A 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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 The Company’s Microenvironment

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 The Company’s Microenvironment
The Company

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

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 The Company’s Microenvironment
Suppliers

• Provide the resources to produce goods and services

• Treated as partners to provide customer value

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 The Company’s Microenvironment
Marketing Intermediaries

Marketing Intermediaries help the company to promote, sell

and distribute its products.

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Resellers are distribution channel firms that help the company find
customers or make sales to them. These include wholesalers and
retailers that buy and resell merchandise.
Physical distribution firms help the company to stock and move goods
from their points of origin to their destinations. Distributors and
agents are organizations based in the markets that generally have
a contractual relationship with the principal company to buy their
products and to distribute them in the local market.
Marketing services agencies are the marketing research firms,
advertising agencies, media firms, and marketing consultancy
firms that help the company target and promote its products to the
right markets.
Financial intermediaries include banks, credit companies, insurance
companies, and other businesses that help finance transactions or
insure against the risks associated with the buying and selling of
goods.
 The Company’s Microenvironment
Competitors

Firms must gain strategic advantage by positioning their

offerings against competitors’ offerings.

Students should note that the competition is just a click away

with online purchasing. This link goes to Bizrate—one of many
comparison shopping sites online. Enter a product like coffee
makers to see the competing products and retailers for this
category.

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 The Company’s Microenvironment
Publics are any groups that have an actual or potential
interest in or impact on an organization’s ability to achieve its
objectives. They include:
• Financial publics
• Media publics
• Government publics
• Citizen-action publics
• Local publics
• The general public
• Internal publics

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A good example of local publics is the BurJuman Breast Cancer
Awareness campaign in UAE. It has run successfully for a
number of years in partnership
with Welcare Hospital. This campaign is supported by a
number of major companies, including Kodak, ENOC/EPPCO,
the Ministry of Social Affairs, TECOM Investments (Dubai
Technology, Electronic Commerce, and Media Free Zone),
Hertz, and GEMS (Global Education Management Systems).
These organizations recognize the importance of community
publics through their involvement in raising community
awareness of this important health issue.
 The Company’s Macroenvironment

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 Demographic Environment
Demography

Demography is the study of human populations in terms of

size, density, location, age, gender, race, occupation, and
other statistics.

• The 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
Changing Age Structure of the Population

• Baby boomers include people born between 1946 and

1964
• This generation accounts for about 30% of the Arab
population
• Baby boomers “think young” no matter how old they are
• Baby boomers are retiring later and working more after
retirement

Emirates NDB is one of many companies in the financial sector

which are successfully targeting the generation of people nearing or
entering retirement.
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 Demographic Environment
Generation X

Generation X includes people born between 1965 and 1976.

This generation tends to display the following traits:
• Skepticism
• Cautious economic outlook
• Less materialistic
• Family comes first
• Research products before considering a purchase

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The Gen Xers are displacing the lifestyles, culture, and materialistic values of
the baby boomers. Many companies are focusing on Gen Xers as a major
target segment. For example, Dubai Islamic Bank targets its sharia-
compliant Takaful product at this age group. The Al Islami Takaful Program
is a sharia-compliant alternative to conventional life nsurance products. The
appeal of Takaful programs is that they offer various plan options which
combine savings and investments to suit particular customer needs,
circumstances, and priorities. Dubai Islamic Bank promotes the plans by
emphasizing the focus on offering investors peace of mind and taking care
of the future of their loved ones. The Takaful programs include a provision
for the payment of Takaful benefits to investors’ beneficiaries or heirs in
the event of their death. Overall, the programs have particular appeal to
those with families to support, by giving the investor comfort in the
knowledge that the future of their loved ones is provided for. As the
bank’s marketing literature puts it:
“As an individual you have many dreams…
A day when your child graduates from a prestigious university
A day when your child gets married
A day when you relax in the comfort of your dream home
A day when you start leading a retired life with enough savings to take care of
you and much more.”
 Demographic Environment
Millennials
Millennials (Generation Y or Echo Boomers) include those
born between 1977 and 2000:
• Comfortable with technology
• Includes
– Tweens (ages 8–12)
– Teens (13–19)
– Young adults (20’s)

One thing that all Millennials have in common is their utter fluency
and comfort with computer, digital, and Internet technology.
“Whereas Gen X spent a lot of time in front of the TV,” says one
expert, the Millennials “are always ‘on.’ They’re consumers of
every imaginable means of communication: TV, radio, cell phone,
Internet, video games—often simultaneously.

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 Demographic Environment
Generational marketing

Generational marketing is important in segmenting people

by lifestyle, life stage and common values, rather than by
age.

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 Demographic Environment
The Changing Arab Family

• Gender and age are often the basis for defining roles and
responsibilities.
• Women are working more outside the house.
• Inherited values and traditions are taught to the next
generation.
• Mothers are more involved in family decision making.

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 Demographic Environment
Geographic Shifts in Population

• Expatriates are coming to the Arab world lured by high

income and a high standard of living.
• The nationals of most Gulf countries are now a minority
population within their own countries.

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 Demographic Environment
Education and Employment

• Since the global recession, unemployment rates have been

rising across the Arab world
• Governments are reassessing their education policies and
training programs

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 Demographic Environment
Increased Diversity

Markets are becoming more diverse

• International
• National

Includes:
• Ethnicity
• Language

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Companies in the Arab world are targeting ethnic groups with specific
products, services, and promotions. Western Union, for example,
refined ethnic marketing and brought mobile remittances to the
region. Labor migration and the money-transfer market are both
booming. Immigrants send money to their families in their country
of origin, through remittances. This boom results from an increase
in economic migration, as more people travel to seek work and a
better quality of life. The remittance market totals about US$290
billion globally, with an annual growth rate of 8 percent. In 2006
Arab world remittances totalled US$59 billion. Western Union has
noticed that there are some differences between people of
different nationalities. In general it finds that expatriates from
South Asia or the Arab world are more price sensitive, while
Europeans tend to look more for convenience, security, and speed.
Western Union aims to work in a wide range of languages to tailor
its marketing to each group, insuring that it offers the most
suitable value proposition.
 Economic Environment
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.

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 Economic Environment
Changes in Income

• Value marketing involves ways to offer financially

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

• Many companies in the Arab world—such as Debenhams and

Neiman-Jashanmal department stores—aggressively target the
affluent. Others—such as Dirham stores—target those with more
modest means. Still other companies tailor their marketing offers
across a range of markets, from the affluent to the less affluent.

• This graphic highlights a car targeted to India’s growing middle

class.

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 Economic Environment
Changes in Consumer Spending Patterns

Ernst Engel—Engel’s Law

As income rises:
• the percentage spent on food declines
• the percentage spent on housing remains constant
• the percentage spent on savings increases.

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 Natural Environment
Natural Environment

The 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
• Increase government intervention
• Environmentally sustainable strategies

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 Technological Environment
The technological environment is the most dramatic force
in changing the marketplace.
• It creates new products and opportunities.
• Safety of new product always a concern.

New technologies create new markets and opportunities. However,

every new technology replaces an older technology. Transistors
hurt the vacuum-tube industry; xerography hurts the carbon-paper
business; CDs hurt phonograph records; and digital photography
hurts the film business. When old industries fought or ignored new
technologies, their businesses declined. Thus, marketers should
watch the technological environment closely. Companies that do
not keep up will soon find their products outdated. And they will
miss new product and market opportunities.

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 Political Environment
Political Environment

The 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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 Political Environment
Legislation Regulating Business

• Increased legislation
• Changing government agency enforcement

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 Political Environment
Increased Emphasis on Ethics and Socially Responsible
Actions

• Socially responsible behavior

• Cause-related marketing

Companies in the Arab world are slowly adopting cause-related

marketing campaigns. As part of its social awareness initiative
‘Making it Our Business,’ Dubai Chamber of Commerce and
Industry collaborates with Vital Voices Global Partnership and the
US Middle East Partnership for Breast Cancer
Awareness and Research, in the ongoing fight against breast cancer.

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 Cultural Environment
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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 Cultural Environment
Persistence of Cultural Values

Core beliefs and values are persistent and are passed on

from parents to children and are reinforced by schools,
mosques, businesses, and governments.

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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 Cultural Environment
Shifts in Secondary Cultural Values

• People’s view of themselves

• People’s view of others
• People’s view of organizations
• People’s view of society
• People’s view of nature
• People’s view of the universe

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Do-It-Yourselfers—Recent Movers:
• Active consumers also view the experience as a form of self-
expression.
• They view their homes as their havens
• View their projects as personal victories over the high-priced
marketplace.
Adventurers:
• Rarely follow a single path or do the same thing twice.
• View the experience as far more exciting than the
entertainment value.
• They are more likely to engage in activities most think are
too dangerous.
 Responding to the Marketing Environment
Views on Responding

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