Principles of Marketing

CHAPTER THREE
ANALYZING THE MARKETING ENVIRONMENT

Instructor: Mahmoud Tarda

Ch 13 -1
Ch -1 Copyright
Copyright © 2011
© 2011 Pearson
Pearson Education
Education

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 CHAPTER LEARNING OUTCOMES
Topic Outline
The Company’s Microenvironment 3.1
The Company’s Macroenvironment 3.2
Demographic Environment 3.3
Economic Environment 3.4
Natural Environment 3.5
Technological Environment 3.6
Political and Social Environment 3.7
Cultural Environment 3.8
Responding to the Marketing Environment 3.9

Ch 3 - 2 Copyright © 2011 Pearson Education

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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

Ch 3 - 3 Copyright © 2011 Pearson Education

 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

Ch 3 - 4 Copyright © 2011 Pearson Education

 THE COMPANY’S
MICROENVIRONMENT

Ch 3 - 5 Copyright © 2011 Pearson Education

 THE COMPANY’S
MICROENVIRONMENT
The Company

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

Suppliers
• Provide the resources to produce goods and services
• Treated as partners to provide customer value

Ch 3 - 6 Copyright © 2011 Pearson Education

 THE COMPANY’S
MICROENVIRONMENT
Marketing Intermediaries

Marketing Intermediaries help the company to promote, sell and

.distribute its products

Competitors
Firms must gain strategic advantage by positioning their
offerings against competitors’ offerings.

Ch 3 - 8 Copyright © 2011 Pearson Education

 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

Ch 3 - 10 Copyright © 2011 Pearson Education

 THE COMPANY’S
MACROENVIRONMENT

Ch 3 - 11 Copyright © 2011 Pearson Education

 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

Ch 3 - 12 Copyright © 2011 Pearson Education

 DEMOGRAPHIC ENVIRONMENT
Generational marketing

Generational marketing is important in segmenting people by lifestyle,

.life stage and common values, rather than by age

Ch 3 - 16 Copyright © 2011 Pearson Education

 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.

Ch 3 - 17 Copyright © 2011 Pearson Education

 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.

Ch 3 - 18 Copyright © 2011 Pearson Education

 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

Ch 3 - 19 Copyright © 2011 Pearson Education

 DEMOGRAPHIC ENVIRONMENT
Increased Diversity

Markets are becoming more diverse

• International
• National

Includes:
• Ethnicity
• Language

Ch 3 - 20 Copyright © 2011 Pearson Education

 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.

Ch 3 - 21 Copyright © 2011 Pearson Education

 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.

Ch 3 - 22 Copyright © 2011 Pearson Education

 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 declines
• the percentage spent on savings increases.

Ch 3 - 23 Copyright © 2011 Pearson Education

 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

Ch 3 - 24 Copyright © 2011 Pearson Education

 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.

Ch 3 - 25 Copyright © 2011 Pearson Education

 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.

Legislation Regulating Business

• Increased legislation WHY? 1. TO PROTECT CUSTOMERS
2. TO PROTECT COMPANIES 3. TO PROTECT SOCIETY INTERESTS
• Changing government agency enforcement

Increased Emphasis on Ethics and Socially Responsible Actions

• Socially responsible behavior

• Cause-related marketing

Ch 3 - 27 Copyright © 2011 Pearson Education

 CULTURAL ENVIRONMENT
The cultural environment consists of institutions and other forces that
affect a society’s basic values, perceptions, and behaviors.

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

Ch 3 - 30 Copyright © 2011 Pearson Education

 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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 RESPONDING TO THE MARKETING
ENVIRONMENT
Views on Responding

Ch 3 – 32 Copyright © 2011 Pearson Education