Chapter Three

Analyzing the Marketing

Environment

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 Analyzing the Marketing
Environment
Topic Outline

• The Company’s Microenvironment

• The Company’s Macroenvironemnt
• 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 target customers

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 The 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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 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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 Honda requires that strategic suppliers
open up their books and give Honda full
access to their financial information. This
helps Honda purchasing associates, Honda
engineers, and supplier engineers to work
as a team to achieve target costs and quality
standards
 The Company’s
Microenvironment
Marketing Intermediaries

• Help the company to promote, sell

and distribute its products to final
buyers

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 The Company’s
Microenvironment
Types of Marketing Intermediaries

Physical
Resellers distribution
firms

Marketing
services Financial
agencies intermediaries

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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
stock and move goods from their points of
origin to their destinations
 . Marketing services 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
 . 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
For example, when Coca-Cola signs on as
the exclusive beverage provider for a fast-
food chain, such as McDonald’s.

• Partnering with intermediaries: Coca-Cola

provides its retail partners with much
more than just soft drinks. It also pledges
powerful marketing support.
 The Company’s
Microenvironment
Competitors
• Firms must gain strategic advantage by
positioning their offerings against
competitors’ offerings

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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
– Local publics
– General public
– Internal publics
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• Financial publics. This group influences the
company’s ability to obtain funds. Banks, investment
analysts, and stockholders are the major financial
publics.
• • Media publics. This group carries news, features,
editorial opinions, and other content. It includes
television stations, newspapers, magazines, and
blogs and other social media.
• • Government publics. Management must take
government developments into account. Marketers
must often consult the company’s lawyers on issues
of product safety, truth in advertising, and other
matters.
• Citizen-action publics. A company’s marketing
decisions may be questioned by consumer
organizations, environmental groups, minority groups,
and others. Its public relations department can help it
stay in touch with consumer and citizen groups.
• Internal publics. This group includes workers,
managers, volunteers, and the board of directors. Large
companies use newsletters and other means to inform
and motivate their internal publics. When employees
feel good about the companies they work for, this
positive attitude spills over to the external publics.
• General public. A company needs to be concerned
about the general public’s attitude toward its products
and activities. The public’s image of the company
affects its buying behavior.
• Local publics. This group includes local community
residents and organizations. Large companies usually
work to become responsible members of the local
communities in which they operate
 Macro Environment of Marketing
Macro environment factors which consist of external
forces. These external factors influence the company’s
marketing strategy is a great length.
The external environment factors are uncontrollable and
the company finds it hard to tackle the external factors.
Elements of macro-environment of marketing are;
• Demographic factors.
• Economic factors.
• Natural forces.
• Technology factors.
• Political factors.
• Cultural factors
 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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 The Company’s
Macroenvironment
Demographic Environment

• Changing age structure of the

population
– Baby boomers include people born
between 1946 and 1964 (Post
World War 2)
– Most affluent Americans
– https://www.youtube.com/watch?v=-
sbf12-koKM
Nike ad
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 The Company’s
Macroenvironment
Demographic Environment
• Generation X includes people born
between 1965 and 1976
– High parental divorce rates
– Cautious economic outlook
– Less materialistic
– Family comes first
– Lag behind on retirement savings

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 The Company’s
Macroenvironment
Demographic Environment
• Millennials (gen 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)

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 The Company’s
Macroenvironment
Demographic Environment

Generational marketing is important in

segmenting people by lifestyle of life state
instead of age

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 The Company’s
Macroenvironment
Demographic Environment
More people are: (USA Perspective)
• Divorcing or separating
• Choosing not to marry
• Choosing to marrying later
• Marrying without intending to have children
• Increased number of working women
• Stay-at-home dads

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 The Company’s
Macroenvironment
Demographic Environment
(Geographic shift)
• Growth in United States West and
South and decline in Midwest and
Northeast
• Moving from rural to metropolitan
areas
• Changes in where people work
– Telecommuting
– Home
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 The Company’s
Macroenvironment
Demographic Environment

• Changes in the workforce

– More educated
– More white collar

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 The Company’s
Macroenvironment
Demographic Environment
Increased Diversity
Markets are becoming more diverse
– International
– National
• Includes:
– Ethnicity
– Gay and lesbian
– Disabled

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 The Company’s
Macroenvironment
Economic Environment

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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 The Company’s
Macroenvironment
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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 The Company’s
Macroenvironment
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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 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
– Increase government intervention
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 The Company’s
Macroenvironment
Technological Environment

• Most dramatic force in changing the

marketplace
• Creates new products and
opportunities
• Safety of new product always a
concern

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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 Company’s
Macroenvironment
Political Environment
• Legislation regulating business
– Increased legislation
– Changing government agency
enforcement
• Increased emphasis on ethics
– Socially responsible behavior
– Cause-related marketing

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 The Company’s
Macroenvironment
Cultural Environment

Cultural environment consists of

institutions and other forces that affect a
society’s basic values, perceptions,
and behaviors

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 The Company’s
Macroenvironment
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, churches,
businesses, and government
Secondary beliefs and values are more
open to change and include people’s
views of themselves, others,
organizations, society, nature, and the
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ea Chapter 3- slide 28
 Responding to the Marketing
Environment
Views on Responding

Uncontrollable Proactive Reactive

• React and • Aggressive • Watching
adapt to actions to and reacting
forces in the affect forces to forces in
in the the
environment environment environment

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