Principles of Marketing

Seventeenth Edition

Chapter 3
Analyzing the Marketing
Environment
Review from Past Lecturer
Learning Objectives
3-1 Describe the environmental forces that affect the company’s ability to
serve its customers.
3-2 Explain Micro environment
3-3 Explain Macro environment
3-5 Discuss how companies can react to the marketing environment.
Learning Objective 1
Describe the environmental forces that affect the company’s ability
to serve its customers.
A Company’s 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 target customers.

Its divided in two parts :

Macro environment
Micro environment
A Company’s Marketing Environment
1. 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.
Learning Objective 2
Explain Microenvironment
The Microenvironment
The Microenvironment
The Company
In designing marketing plans, marketing management takes other company
groups into account.
• Top management
• Finance
• R&D
• Purchasing
• Operations
• Accounting

Discussion Questions
•What type of collaboration does there need to be between the departments?
•How might projects be integrated between marketing and finance?
•How might projects be integrated between marketing and information systems?
The Microenvironment
Suppliers
• Provide the resources to produce goods and services
• Treat as partners to provide customer value : For example rising supply costs may force price increases that
can harm the company’s customer and sales value
The Microenvironment
Marketing Intermediaries

Marketing intermediaries are firms that

help the company to promote, sell, and
distribute its goods to final buyers.

Example?
 The Microenvironment
Physical distribution firms help the

Resellers are distribution

Marketing Intermediaries company stock and move goods from
their points of origin to their
destinations. (food panda , grab food,
channel firms that help the etc.)
company find customers or
make sales to them.
(supermarkets , Aeon
branches, etc) Physical
Resellers distribution
firms

Marketing
Financial
Marketing services agencies are services Financial intermediaries include
the marketing research firms,
intermediaries banks, credit companies,

agencies
insurance companies, and other
advertising agencies, media firms,
businesses that help finance
and marketing consulting firms
transactions or insure against the
that help the company target and
risks associated with the buying
promote its products to the right
and selling of goods.
markets (home agent, travel
agency, etc.).
 The Microenvironment
Competitors

Firms must gain strategic advantage by positioning their

offerings strongly against competitors’ offerings in the minds of
consumers.

To be successful, a company must provide greater customer value and satisfaction than its competitors
do.
The Microenvironment
Publics
Any group that has an actual or potential interest in or impact on an organization’s
ability to achieve its objectives :

There are many public organizations for instance:

• Financial publics. This group influences the company’s ability to obtain funds (Banks).
• Government publics. Management must take government developments into account.
 The Microenvironment
Customers
 Consumer markets: Consumer markets consist of individuals

 Business markets: Business markets buy goods and services for further processing
or use in their production processes

 Government markets: consist of government agencies that buy goods and services
to produce public services or transfer the goods and services to others who need them.

 International markets: International markets consist of various buyers in other
countries, including consumers, producers, resellers, and governments.
Learning Objective 3
Explain Macro environment
The Macro environment
The Macroenvironment
Demographic Environment
• Demography is the study of human populations—size, density, age,
gender, race, occupation, and other statistics.

• Demographic environment involves different group of people, and people

make up markets.
The Macroenvironment

Demographic Environment
• Baby Boomers – born 1946 to 1964
• Boomers are spending more carefully and work longer.

• Generation X – born between 1965 and 1976

• Skeptical bunch who tend to research products before they consider a purchase and prefer quality to quantity but not as traditional as
baby boomers

• Millennials or Generation Y – born between 1977 and 2000

• the first generation to grow up in a world filled with computers, mobile phones

• Generation Z – born after 2000

• These young consumers also represent tomorrow’s markets—they are now forming brand relationships that will affect their buying
well into the future
Demographic Environment
Changing American family Demographic Trends
• More couples and Divorcing or separating Generational marketing is important in
• More people choosing not to marry or marrying later segmenting people by lifestyle or life stage
instead of age.
• More people marrying without intending to have children
• Increasing number of working women and stay-at-home dads

Changes in the workforce have included:

• More educated workers

• Markets are becoming more diverse.

• International
• Ethnicity
• Straights, Gay and lesbian
• Disabled
 The Macroenvironment
Economic Environment
Economic factors can have a dramatic effect
on consumer spending and buying behavior

Changes in Consumer Spending

Value marketing involves offering financially

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

Discussion question : is there possible to attract low level , or middle level income customer to Pavilion? KLCC? How?
Discussion question : What changes might there be in Malaysia income over the next year? The students might quote current economic declines or rises
 The Macroenvironment
The Natural Environment
The natural environment is the physical environment and the natural
resources that are needed as inputs by marketers or that are affected by
marketing activities.

Trends in the Natural Environment

• Growing shortages of raw materials
• Increased pollution
• Developing strategies that support
environmental sustainability (PWTC example)
The Macroenvironment
Environmental sustainability
Environmental sustainability involves
developing strategies and practices that
create a world economy that the planet
can support indefinitely.

Environmental sustainability means

meeting present needs without
compromising the ability of future
generations to meet their needs.
The Macroenvironment
New technologies can offer exciting
Technological Environment opportunities for marketers

• Most dramatic force in changing the

marketplace
• New products, opportunities
• Concern for the safety of new products

Discussion Question
what changes you have seen in technology in the past four years including
medical products, communications, and media.
The Macroenvironment
Political and Social Environment
The political environment includes laws and government agencies, that
influence or limit various organizations and individuals in a given society

Rules and regulating in business is intended to protect

 Companies
 Consumers
 Socially responsible behavior
 unfair business practices
 Charitable organizations
 The Macroenvironment
Cultural Environment
The cultural environment consists of institutions and other forces
that affect a society’s basic values, perceptions, and behaviors.

Core beliefs and values are persistent and are passed on from parents to children and are reinforced
by schools, churches, and government.

Secondary beliefs and values are more open to change and include people’s views of themselves,
others, organizations, society, nature, and the universe.

Knowing the cultural difference is very important for marketing

Different Greeting Expectation

Example:
Personal
experience of
greeting: hi ,
how are you
Attitude Difference:
American invitations:
Americans often end invitations with a phrase
like
“Come if you want to.”
Americans do not want to force people to
accept unwanted invitations
American offers:
If you go to an American’s home, you will
probably be offered something to eat or drink. If
you refuse the first time, you will probably be
offered again.
You will probably not be offered more than two
times. Guests will be taken at their word. If they
refuse a second time, the host will assume that
they have refused because they do not want
something to eat or drink
Middle east and some Asian countries such as Japan
reactions:
Japanese expect that the person who invites another will
urge the potential guest to accept the invitation. When
Japanese hear expressions like “Come if you want to,” they
feel hurt and are uncertain about the sincerity of the
Invitation
Malaysians feel that offers of food or drink are inappropriate. A
host should serve something whether
the guest wants it or not.
Arabs are taught to refuse again and again. When they visit
American homes, they often leave confused and hungry. An Arab
visited an American home and was served some delicious
sandwiches. The hostess offered him seconds, but he refused. The
hostess didn’t repeat the offer and so he had to sit there looking
at the delicious sandwiches.
In the Ukraine the host will offer food or drink to the guest seven
or eight times. For Americans who really don’t want anything,
they are in a difficult situation because they will run out of ways to
refuse before the Ukraine host runs out of ways to offer.
Both guest and host will feel upset
Creates a misunderstanding because the rules for politeness are different, What is
appropriate in one culture is not always appropriate in another culture
Gesture Misunderstanding
Superstition Belief
Learning Objective 4
Discuss how companies can react to the marketing environment.
Responding to the Marketing Environment
Views on Responding
Uncontrollable Proactive Reactive
• React and • Take • Watch and
adapt to aggressive react to
forces in the actions to forces in the
environment affect forces environment
in the
environment
Any Question?