Chapter 2: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

• marketing environment offers both

opportunities and treat
 The Marketing Environment

• Marketers need to look at the factors surrounding their

efforts/activities in order to:
 Effectively plan the activities for the future
 Develop and maintain successful transactions with
its target customer

• Marketing environment can lead to new opportunities

for marketing or alternatively, limit the attractiveness
of the potential opportunity.
 ANALYSIS OF ENVIRONMENTAL FACTORS:
Microenvironment & Macroenvironment Factors

MACROENVIRONMENT

Customer Political/
Natural
Legal

Company Public

MICROENVIRONMENT
Technology
Intermediaries Suppliers Economy

Competitors

Demographic Social/Culture
Microenvironment

• consists of the actors close to the company

that affect its ability to serve its customers
 the company
 Suppliers
 Intermediaries
 customer markets
 Competitors
 publics

3-5
Company

Internal environment includes:

 Top management
 Finance
 R&D
 Purchasing
 Operations
 Accounting
Supplier

 Provide the resources to produce goods and

services
 Treated as partners to provide customer
value
Marketing Intermediaries

 Help the company to promote, sell,

and distribute its products to final
buyers
 Include:
 Middlemen
 Physical distribution firms
 Marketing services agencies
 Financial intermediaries
Middlemen
• Are business firms that help company find customer
or close sales with them.
a. Agent middlemen - Brokers and manufacturers’
representative
b. Merchant middlemen
- Wholesalers and retailers
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

• Company must determine the best ways to

store and ship goods while balancing factors
such as cost, delivery, speed and safety
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
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
Customers
• Customer are the people who buy the product.
• Consists of customer market, business market,
reseller market, government market and international
market.

• 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
• Reseller markets
- buy goods and services to resell at a profit.
- buyers who purchase with the intent of selling
those products to others.
- Retail stores purchase goods from the
manufacturer at the base price, called the
wholesale price, and sell the items at a higher
amount, called the retail price, for a profit.
- includes wholesalers, retailers, and distributors.
- Example: grocery stores, department stores and
specialty stores, such as home improvement or
pet supply stores.

Department store Specialty store

Grocery store
• Government markets
- buy goods and services to produce public services
or transfer goods and services to others who
need them.

- purchase or rent goods to fulfil their functions

and responsibilities to the public.

- purchase a wide range of products and services

- consists of federal, state, and local authorities.

• International markets

- consist of buyers in other countries including

consumers, producers, resellers, and
governments
Competitors

• Other organizations that are competing with the

company for the same consumers with the intention
of fulfilling the same needs and wants.

• Includes all organizations that could possibly satisfy

the needs and desires of the organization’s target
market.

• Firms must gain strategic advantage by positioning

their offerings against competitors’ offerings
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
• 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

• 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
Macroenvironment
• consists of the larger societal forces that affect the
microenvironment
• It is an uncontrollable environment in which
marketers have little or no influence.
 Demographic
 Economic
 Natural
 Technological
 Political
 Cultural
Demographic
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
 Generational marketing is important in
segmenting people by lifestyle of life state
instead of age

Changing Age Structure of the Population

Baby boomers include people born between 1946 and

1964
Generation X includes people born between 1965 and
1976
Generation Y includes people born between 1977 and
2000
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

Changes in the Workforce

Trends include:
 More educated
 More white collar
 More professional
Economic

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

Value marketing involves ways to offer
financially cautious buyers greater value—
the right combination of quality and service
at a fair price

 Income distribution
 Upper-class consumers
 Middle-class consumers
 Working-class consumers
 Underclass consumers
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
Technological

Most dramatic force in changing the marketplace with

many positive and negative effects
 Rapid change
 Provides new markets and new opportunities
 Internet
 Medicine
 Miniaturization
 Weapons
 Credit cards
 Communication

Miniature
Political

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
 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
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
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
Cultural Environment

Cultural environment consists of institutions and

other forces that affect a society’s basic values,
perceptions, and behaviors
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
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
 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
Responding to the Marketing
Environment
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