3

The
Marketing Environment

Dr. Hilmi Masri

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

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The marketing environment includes the
actors and forces outside marketing that
affect marketing management’s ability
to build and maintain successful
relationships with customers

3-4
 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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 Marketing Environment

Macroenvironment consists of the larger societal

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

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• The Company
• Suppliers
• Marketing intermediaries
• Customers
• Competitors
• Publics

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 The Company

Internal environment includes:

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

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 Suppliers

• Provide the resources to produce goods

and services
• Treated as partners to provide customer
value

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 Marketing Intermediaries
• Help the company to promote, sell,
and distribute its products to final
buyers
• Include:
• Resellers
• Physical distribution firms
• Marketing services agencies
• Financial intermediaries

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 Marketing Intermediaries

Resellers are the distribution channel firms

that help the company find customers or
make sales to them
• Include:
• Wholesalers
• Retailers

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 Marketing Intermediaries

Physical distribution firms are the

distribution channel firms that help the
company to stock and move goods from
their points of origin to their final
destination

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 Marketing Intermediaries

Marketing service agencies are the

marketing research firms, advertising
agencies, media firms, and marketing
consulting firms that help the company
target and promote its products to the
right markets

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 Marketing Intermediaries

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

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 Customers

Customer markets consist of individuals

and households that buy goods and
services for personal consumption

Business markets buy goods and services

for further processing or for use in their
production process

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 Customers

Reseller markets buy goods and services to resell

at a profit

Government markets buy goods and services to

produce public services or transfer goods and
services to others who need them

International markets consist of buyers in other

countries including consumers, producers,
resellers, and governments

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 Competitors

Firms must gain strategic advantage by

positioning their offerings against
competitors’ offerings

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 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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 Publics

Financial publics influence the company’s

ability to obtain funds—banks,
investment houses, and stockholders
Media publics carry news, features, and
editorial opinion—newspapers,
magazines, and radio and television
stations
Government publics influence product
safety and truth in advertising

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 Publics

Citizen-action publics include consumer

organizations, environment groups, and
minority groups
Local publics include neighborhood residents and
community organizations
General publics influence the company’s public
image
Internal publics include workers, managers,
volunteers, and directors

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

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 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
Changing Age Structure of the Population

Generational marketing is important in

segmenting people by lifestyle of life state
instead of age

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 Demographic Environment
Changing Age Structure of the Population

Baby boomers include people born

between 1946 and 1964
• Most affluent Americans

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 Demographic Environment
Changing Age Structure of the Population

Generation X includes people born between 1965

and 1976
• High divorce rates
• Concerned about the environment
• Respond to socially responsible companies
• Less materialistic
• Quality of life
• Consumer organizations, environment groups, and
minority groups

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 Demographic Environment
Changing Age Structure of the Population

• Generation Y includes people born

between 1977 and 2000
• Internet generation

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 Demographic Environment
The Changing American Family

More people are:

• Divorcing or separating
• Choosing not to marry
• Choosing to marrying later
• Marrying without intending to have children
• Higher divorce rates
• Increased number of working women
• Stay-at-home dads

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 Demographic Environment
Geographic Shifts in Population

• Trends include:
• Migratory movements between and within
countries
• Moving from rural to metropolitan areas
• Changes in where people work
• Telecommuting
• Home office
• Divorcing or separating

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 Demographic Environment
Changes in the Workforce

Trends include:
• More educated
• More white collar
• More professional

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 Demographic Environment
Increasing Diversity

• Markets are becoming more diverse

• International
• National
• Trends Include:
• Ethnicity
• Gay and lesbian
• Disabled

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 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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 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

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 Economic Environment
Changes in Income

• Income distribution
• Upper-class consumers
• Middle-class consumers
• Working-class consumers
• Underclass consumers

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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 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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 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
• Weapons
• Credit cards
• Communication

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 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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 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
• Protect companies
• Protect consumers
• Protect the interests of society

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 Political Environment
Changing Government Agency Enforcement

• Federal Trade Commission

• Food and Drug Administration
• Federal Communications Commission
• Federal Energy Regulatory Commission
• Federal Aviation Administration
• Consumer Product Safety Commission
• Environmental Protection Agency

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 Political Environment
Increased Emphasis on Ethics and Socially Responsible
Actions

Socially responsible behavior occurs when

firms actively seek out ways to protect
the long-term interests of their
consumers and the environment
• Cause-related marketing

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 Cultural Environment

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 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

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 Cultural Environment
Shifts in Secondary Cultural Values

Major cultural values of a society are expressed in

people’s view of:
• Themselves
• Others
• Organization
• Society
• Nature and the universe

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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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