PRINCIPLES OF MARKETING

CHAPTER TWO

THE MARKETING ENVIRONMENT

OBJECTIVES THIS UNIT
After studying this unit, you have to be able to:-
Explain what the marketing environment is and how
does it influence the companies performance.
Define the company's micro-environment and
identify the major micro-environment forces.
Define the company's macro-environment and identify
the possible macro-environment forces.
Explain how companies respond to the marketing
environment.
2.1 Introduction

• The unit describes the environments in which

companies operate and shows the influence of
external forces on marketing decisions.

• Marketers need to be good at building

relationships with customers, others in the
company and external partners.

• To do this effectively, they must understand the

major environmental forces that surround all of
these relationships.
2.1 Introduction

• A company’s Marketing Environment

– consists of the actors and forces outside
marketing that affect marketing
management’s ability to build and maintain
successful relationships with target customers.

• Successful companies know the vital importance

of
1. Constantly watching and
2. Adapting to the changing environment.
• As we move into the 21stC, both consumers and
marketers wonder what the future will bring.

• The environment continues to change rapidly.

• More than any other in the company, marketers must

be the trend trackers and opportunity seekers.

• Although every manager in an organization

needs to observe the outside environment,
marketers have two special aptitudes.
• They have disciplined methods for collecting
information about the marketing environment.
1. Marketing Intelligence and
2. Marketing Research
• They also spend more time in the customer and
competitor environments.

• By carefully studying the environment, marketers

adapt their strategies to meet new market place
challenges and opportunities.
• The microenvironment
– consists of the actors close to the company
that affect its ability to service its
customers.

– The company,
– Suppliers,
– Marketing intermediaries,
– Customer markets,
– Competitors and
– Publics
• The macro environment
– consists of the larger societal forces that affect
the microenvironment.

–Demographic,
–Economic,
–Natural,
–Technological,
–Political, and
–Cultural forces.
2.2. The Company’s Microenvironment
• Marketing management's job is to create attractive
offers for target markets.
• However, marketing managers cannot simply focus on
the target market's needs.
• Their success also will be affected by actors in the
company's micro-environment
1. Other company departments,
2. Suppliers,
3. Marketing intermediaries,
4. Customers,
5. Competitors, and
6. Various publics.
2.2.1.The Company
• In designing marketing plans, marketing
management takes other company group into
account- groups such as top management,
finance, research and R&D , purchasing,
operation, and accounting.
• All these interrelated groups form the internal
environment.
• Top management sets the company’s mission,
objectives, broader strategies and policies.
• Marketing managers make decision within the
strategies and plans made by top management.
• Finance is concerned with finding and using
funds to carry out the marketing plans.
• R and D department focuses on the designing of
safe and attractive products.
• Operation is responsible for producing and
distributing the desired quality and quantity of
products.
• Purchasing worries about getting supplies and
raw materials.
• Accounting has to measure revenues and costs to
help marketing know how it is achieving its
objectives.
• Together, all of these departments have an impact
on the marketing department’s plans and
actions.
• Under the marketing concept all of these must
“think customers’’.
• They should work in harmony to provide
superior customer value and satisfaction.
2.2.2.Suppliers

• Suppliers
– are firms and individuals that provide the
resources needed by the company and its
competitors to produce goods and services.

• Suppliers form an important link in the company’s

overall customer value delivery system.

• Supplier problems can seriously affect

marketing.
1. Marketing managers must watch supply
availability-
– supply shortages and delays, labor strikes, and
other events :

i. Can cost sales in the short-run and

ii. Damage customer satisfaction in the long run.

• Marketing managers also manage customer

satisfaction in the long run.
2. Marketing managers also monitor the price
trends of their key inputs.

• Rising supply costs may force price increases

that can harm the company’s sales volume.

• Therefore, Increasingly, today’s marketers are

– treating their suppliers as partners in
creating and delivering customer value.
 1.3.Marketing Intermediaries

• Marketing Intermediaries
– are firms that help the company to promote,
sell and distribute its goods to final buyers.
• They are
A) Resellers
B) Physical Distribution Firms
C) Marketing Services Agencies
D) Financial Intermediaries
• A) Resellers –
– are distribution channel firms that help the
company find customers or make sales.
• These include wholesalers and retailers who buy and
sell merchandise.
• Selecting and partnering with resellers is not easy.
• Most organizations now face large and growing
middlemen firms
• These organizations frequently have enough power:-
1. To dictate terms or
2. Even shut the manufacturer out of markets.
B) Physical Distribution Firms

• They are firms helps the company to stock and

move goods from their points of origin to their
destinations.

• Working with warehouse and transportation

firms, a company must ;-
1. Determine the best ways to store and ship goods,
2. Balance such factors as cost, delivery, speed and
safety.
C) Marketing Services Agencies
• They are the firms like
– marketing research firm,
– advertising agencies,
– media and
– marketing consultancies
• that help the company to target and promote its
products to the right markets.
• When the company decides to use one of these
agencies,
– it must choose carefully because the firms
vary in creativity, quality, service and price.

• The company has to

1. Review the performance of these firms
regularly and
2. Consider replacing those that no longer
perform well.
D) Financial Intermediaries
• Includes 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.
• Most firms and customers depend on financial
intermediaries to finance their transactions.
• The company’s marketing performance can be
seriously affected by
1. Rising credit costs and
2.Limited credit.
• Like suppliers, marketing intermediaries form an
important component of the company’s overall
value delivery system.
• In its quest to create satisfying customer
relationships, the company must do more than
just optimize its own performance.
• It must partner effectively with suppliers and
marketing intermediaries to optimize the
performance of the entire system.
1.4.Customer

• The company needs to study its customer markets closely.

1. Consumer Markets –
2. Business Markets –
3. Reseller Markets-
4. Government
5. International Markets-

• Consumer 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.
1.4.Customer

• Reseller Markets-buy goods and services to resell at profit

• Government Market-are government agencies that buy

goods and services to produce public service or transfer
the goods and services to others who needs them.

• International Markets- buyers in other countries

including consumers, producers, resellers, and
governments.

• Each market type has special characteristics that call for

careful study by the seller.
1.5.Competitors

• The marketing concept states that to be successful, a

company must provide greater customer value and
satisfaction than its competitors do.

• Thus, marketers must do more than simply adapt to

the needs of target consumers.

• They also must gain strategic advantage by

positioning their offerings strongly against
competitors’ offerings in the minds of consumers.
• Single competitive marketing strategy is not best for
all companies.
• Each firm should consider its own size and industry
position compared with those of its competitors.
• Large firms with dominant positions in an industry can
use certain strategies that smaller firms cannot afford.
But being a large is not enough.
• There are winning strategies for large firms, but there
are also losing ones.
• And small firms can develop strategies that give them
better rates of return than large firms enj oy.
1.6.Public

• A public
– is any group that has an actual or potential
interest in or impact on an organization’s ability
to achieve its objectives.
1. Financial publics
2. Media publics
3. Government Publics
4. Citizen action
5. Local Publics
6. General Public
7. Internal Publics
• A Financial publics-
– influence the company’s to obtain funds. Banks,
investment houses, and stockholders are the major
financial publics.
• Media publics-
– carry news, features, and editorial opinion. They include
newspapers, magazines & radio & television stations.

• Government Publics-
–management must take government developments
into account. Marketers must consult the company’s
lawyers on issues of product safety, truth in
adverting, & 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.
• Local Publics-
– include neighborhood residents and community
organizations. Large companies usually appoint a
community relations officer to deal with community,
attend meetings, answer questions, and contribute to
worthwhile causes.
•General Public-
– A company needs to be concerned about the general
public’s attitude towards its products and activities.
• The publics image of the company affects its buying.

•Internal Publics-
– include workers, managers, volunteers and the
BOD.
• Large companies use newsletters and other means to
inform and motivate their internal publics.
• When employees feel good about their company, this
positive attitude spills over the external publics.
• A company can prepare marketing plans for these
major publics as well as its customers markets.
• Suppose the company wants a specific response from a
particular public, such as
– Goodwill,
– Favorable word of mouth, or
– Donations of time or money.
• The company would have to design an offer to this
public what is attractive enough to produce the
desired response.
  
2.2. The Company’s Macro Environment

• The company and all actors operate in a larger

macro environment of forces that
– Shape opportunities and
– Pose threats to company.
• The figure below shows the six major forces in
the company’s macro- environment.
• In the remaining sections of this unit,
– We examine these forces and
– Show how they affect marketing plans.
2.1.Demographic Environment
• Demography is the study of human
population in terms of
• Size,
• Density,
• Location,
• Age,
• Gender,
• Race,
• Occupation and
• Other statistics.
• Demographic tell marketers
1. Who current and potential customers are?
2. Where they are ?
3. How many are likely to buy what the marketer is
selling?

• The demographics environment

– is of major interest to marketers because it
involves, people that make up markets.

• Changes in the world demographic environment have

major implications for business.
• The world population is growing at an explosive
rate. It now totals more than 6 billion and will
exceed 7.9 billion by the year 2025.
• The world’s large and highly diverse population
poses both opportunities and challengers.
• Thus, marketers keep close track of
demographic trends and developments in their
markets, both at home and abroad.
• As a result marketers basically focus on the
following demographic issues:-

1. Changing age and family structures

2. Geographic population shifts
3. Educational Characteristics, and
4. Population diversity
2.2. Economic Environment

• Marketers require buying power as well as

people.
• The economic environment consists of factors
that affect consumer

– Purchasing power and

– Spending patterns.
• Nations vary greatly in their levels and
distribution of income.

• Some countries have subsistence economies-

they consume most of their own agricultural
and industrial output.
– These countries offer few market opportunities.

• The other extreme are industrial economies-

• which constitute rich markets for many different
kinds of goods.
• Marketers must pay close attention to major
trends and consumer spending patterns both
across and with in their world markets.

• Following are some of the major economic trends:

1. Changes in Income:
• GDP, Per Capita Income, Disposable Income,
Real Income
2. Growth and Recession:
3. Changing consumer spending patterns
1. Changes in Income:
• GDP, Per Capita Income, Disposable Income and
so on are economic variables that may describe a
nation’s aggregate favorable or unfavorable nature
of the economy.
• Individual’s purchasing power is relied on such
general truths.
• These economic variables are taken as misleading
figures for there might be a large amount of money
shifting towards one group, rich people.
• Therefore, it is advisable to refer to market
segment’s income rather than nation wide margin of
earning.
 2.Growth and Recession:
• These two economic variables affect the
marketing environment differently.
• Growth
– An increase in the capacity of an economy to
produce goods and services, compared from
one period to another.
– Economic growth attracts many companies
even from highly developed countries.
• Recession
– is a significant decline in activity spread across
the economy, lasting longer than a few months.
• It is visible in
– Industrial production,
– Employment,
– Real income and
– Wholesale-retail trade.

• The technical indicator of recession is two

consecutive quarters of negative economic growth
as measured by a country’s GDP.
3.Changing Consumer Spending Patterns
• Consumers at different income levels have different
spending patterns.
• Ernest Engel, who studied how people shifted their
spending as their income rise/rose, noted some of
these differences over a century ago.
• Ernest Engel found that as family income rises:-
1. The percentage spent on food declines,
2. The percentage spent on housing remains about constant
( except for such utilities as gas, electricity, and public
services, which decrease), and
3. Both the percentage spent on most other categories and
that devoted to savings increase.
• Changes in major economic variables have a large
impact on the market place such as
– Income,
– Cost of living,
– Interest rates,
– Savings and
– Borrowing patterns
• Companies watch variables by using economic
forecasting.
• With adequate warning, they can take advantage of
changes in the economic environment.
2.3.Natural Environment

• The natural environment involves

– the natural resources that are need as inputs by
marketers or that are affected by marketing
activities.
• In many cities around the world, air and water
pollution have reached dangerous levels.
• World concern continues to increase about the
possibilities of global warming and may
environmentalists fear that we soon will be buried
on our own trash.
• Marketers should be aware of several trends in the
natural environment.

– Growing shortages of raw materials.

– Increased pollution

– Government intervention in natural

resource management
1. Growing Shortages of Raw Materials.
• Air and water may seem to be infinite resources,
but some groups see long-run dangers.
• Renewable resources, such as oil, coal, and various
minerals, pose a serious problem.
• Firms making products that require these scarce
resources face large cost increases, even if the
materials do remain available.
• They may not find it easy to pass these costs on
to the consumer.
• However, firms engaged in R&D and in exploration
can help by developing new sources and materials.
2.Increased Pollution
• Industry will almost always damage the quality of the
natural environment.
• Consider:-
1.The disposal of chemical and nuclear wastes, the dangerous
mercury levels in the OCEAN,

2.The quantity of chemical pollutants in the SOIL and food

supply; and
3.The littering/garbage of the environment with non-
biodegradable:-
• Bottles,
• Plastics, and
• Other packaging materials.
3. Government Intervention in Natural Resource Mgmt
• The governments of different countries vary in their
concern and efforts to promote a clean environment.
• Like the German government vigorously pursue
environmental quality.
• Essentially, many poorer nations, do little about
pollution, because they lack the needed funds or
political will.
• Even the richer nations lack the vast funds and
political harmony needs to mount a worldwide
environmental effort.
• The general hope is that
1. Companies around the world will accept more
social responsibility
2. Less expensive devices can be found to control
and reduce pollution.
• Concern for the natural environment has generate the so-
called green movement.
• Today, progressive companies go beyond what
government regulations dictate.
• They are developing environmentally sustainable
strategies and practices in an effort to create a world
economy that the planet can support indefinitely.
• They are responding to consumer demands with
– Ecologically safer products,
– Recyclable or biodegradable packaging,
– Better pollution control, and
– More energy-efficient operations.
• Some organizations run a pollution prevention
pays program that has led to a substantial reduction
in pollution and costs.
• Others use a special software package:-
– To choose the least harmful materials,
– To cut hazardous waste,
– To reduce energy use, and
– To improve product recycling in its operations.
– To eliminated polystyrene cartons
– Use smaller, recyclable paper wrappings and
napkins.
2.4. Technological Environment
• This environment is perhaps the most dramatic forces
now shaping our destiny.

• Technology has released such wonders

– as antibiotics, organ transplants, laptop computers
and the Internet.
• Technology also has released such horrors
– as nuclear missiles, chemical weapons and assault
rifles.
• It has released such mixed blessings
– as the television automobile and credit cards.
• ‘’The technological environment changes rapidly’’.
• Think of all of today’s common products that were not
available 100 years ago, or even 30 years ago.
1. Abraham Lincoln didn’t know about automobiles,
airplanes, radios, or the electric light.
2. Woodrow Wilson didn’t know about television, aerosol
cans, automatic dishwashers, room air conditioners,
antibiotics, or computers.
3. Fraanklin Delano Roosevelt didn’t know about
Xerography, synthetic detergents, tape recorders birth
control pills, or earth satellites.
4. John F. Kennedy didn’t know about personal computers,
compact disk players, DVD players or the Internet.
• New technologies create new markets
&opportunities.
• However, every new technology replaces an older
technology:-

1. Transistors hurt the vacuum-tube industry,

2. Xerography hurt the carbon paper business,
3. The auto hurt the railroads and
4. Compact disks hurt phonograph records.
5. Cell phone hurt regular phone.
• When companies not keep up new technologies
and technological changes :-

1. Their business declined.

2. Their products outdated.
3. They miss new product and market opportunities.
• Therefore, marketers should watch the
technological environment trends closely.

1. Accelerating pace of the technological change

2. Increased regulation of technological change

3. Unlimited opportunities for innovation

4. Varying R&D budgets

1. Accelerating Pace of the Technological Change
 Many of today’s common products weren't
available 40yrs ago.
–PCs, digital wrist watches, radio recorders or fax
machines were not available some decades ago.
 More ideas are being worked on;
 The implementation new ideas is Successfully
rapid; and
 The introduction and peak production is
shortening considerably.
• The advent of PCs and fax machines has made it
possible for people to telecommute- that is, work
at home.
1.Reduce auto pollution,
2.Bring the family closer together, and
3.Create more home- centered entertainment
and activity.
4.Impact the shopping behavior and marketing
performance.
2. Increased Regulation of Technological Change
• As products become more complex, the public needs to
know that these products are safe.
• Therefore, government agencies powers to investigate and
ban potentially unsafe products.

• Safety & health regulations have also increased in the

areas of :-
• Food, • Electrical appliances and
• Automobiles, • Construction.
• Clothing

• Marketers must be aware of these regulations when

Proposing, Developing and Launching new products.
3. Unlimited Opportunities for Innovation
• Scientist today are working on new technologies that will
revolutionize products and production processes.
• Some of the most exciting work is being done in
biotechnology, solid-state electronics, robotics and
materials sciences,
• Researchers are working on AIDS cures, painkillers, totally
safe contraceptives & nonfattening foods.
• They are designing robots for firefighting, underwater
exploration, military action and home nursing.
• In addition, scientists also work on fantasy products, such as
small flying cars, 3D TV and space colonies.
• The Challenge in each case is not only technical but also
commercial-to develop affordable versions of these
products.
4.Varying R&D Budgets
• The USA, for instance, leads the world in annual R&D
expenditures ($74billion), but nearly 60 % of these
funds are still allotted/earmarked for defense.
• This is a need to transfer more of this money into
research on material science, biotechnology, and
micro mechanics.
• Japan, has increased its R&D expenditures much faster
than has the USA and is spending it mostly on non-
defense related research:
1. Physical,
2. Bio-physics, &
3. Computer Science.
2.5.Political Environment

• Marketing decisions are strongly affected by

developments in the political and legal
environment.
• Political environment
–composed of laws, government agencies, and
pressure groups that influence and limit
various organizations and individuals.

• Trends in Political Environment

1. Legislation regulating business:
2. Growth of special interest groups
1.Legislation Regulating Business:

• Three Purposes of Business legislation to protect :-

i. Companies form unfair competition,
ii.Consumers form unfair business practices,
iii.Society interest form unbridled business
behavior.

• A major purpose of business legislation and

enforcement is to charge businesses with the
social costs created by their products or production
processes.
• Several countries have been active in establishing
a new framework of laws covering :-
–Competitive behavior,
–Product standards,
–Product reliability and
–Commercial transactions.

• Other countries are passing laws

–to promote and regulate an open market economy.
• Still others have many laws covering such issues
as
–Competition,
–Product safety and liability,
–Fair trade and credit practices, and
–Packaging and labeling.
• Marketers must have a good working knowledge
of the major laws protecting
–Competition,
–Consumers, and
–Society.
• Companies generally establish legal review
procedures and promulgate ethical standards to
guide their marketing managers.

• As more and more business takes place in

cyberspace, marketers must establish new
parameters for dong business ethically
2.Growth of Special Interest Groups
• The number and power of special interest groups
have increased over the past three decades.
• Political action committees
– lobby government officials and
– pressure business executives to pay more
attention to the rights of
– Consumer,
– Senior citizen,
– Women’s and
– Minority.
• An important force affecting business is the
consumerist movement-
– an organized movement of citizens and government
to strengthen the rights and powers of buyers in
relation to sellers.
• Consumerists have advocated and win the right to know
 The true interest cost of a loan,
 The cost per standard unit of competing brands (unit
pricing),
 The basic ingredients in a product,
 The nutritional quality of food,
 The freshness of products, and
 The true benefits of a product.
• Currently, new laws and growing numbers of
pressure groups have put more restraints on
marketers.
• Therefore, marketers have to clear their plans
with the company’s
– Legal,
– Public relations,
– Public affairs and
– Consumer- affairs departments.
2.6.Cultural Environment

• The cultural environment is made up of institutions and

other forces that affect a society’s basic
1.Values,
2.Perceptions,
3.Preferences, and
4.Behaviors.
• People grow up in a particular society that shapes their
basic beliefs and values.
• They absorb a worldview that defines their relationships
with others.
• Marketers must be aware of these cultural influences and
how they might vary across societies within the markets
served by the firm.
1. Persistence of Cultural Values
• People in a given society hold many beliefs and values.
• Their core beliefs and values have a high degree of
persistence.
• These beliefs shape more specific attitudes and
behaviors found in everyday life.
• Core beliefs and values are passed on from parents to
children and are reinforced by schools, religious
organization, business, and government.
• Secondary beliefs and values are more open to change.
• Believing in marriage is a core belief;
• Believing that people should married early in life is
secondary belief.
• Marketers have some chance of changing secondary
values but little chance of changing core values.
• For example, family- planning marketers could argue
more effectively that people should get married later
than that they should not get married at all.
2. Shifts In Secondary Cultural Values
• Although core values are fairly persistent, cultural
changes/swings do take place.
• Consider the impact of popular celebrities on young
people’s hair styling, clothing and sexual norms.
• Marketers want to predict cultural shifts in order to
spot new opportunities or threats.
• Such information helps marketers furnish to trends
with appropriate products and communication
appeals.
• The principal cultural values of a society are
expressed in the following views.
1.Views Of Themselves:
• People vary in the emphasis they place on self gratification.
• “Pleasure seekers". Sought fun, change and escape.
• “Self-realization”. People bought products, brands and services
as a means of self-expression and that match their views of
themselves
• Personal ambition and materialism increased dramatically, with
significant marketing implications.
• In a ‘me-society’, people buy their ‘dream cars’ and take their
‘dream vacations’. They tend to spend to the limit on self-
indulgent goods and services.
• Today, people are adopting more conservative behaviours and
ambitions.
• They are more careful in their spending patterns and more
value-driven in their purchases.
2. Views of Others:
• Some observers have pointed to counter movement from a “me
society” to "we society”.
• People are concerned about the homeless; crime and victims, and
other social problems. They would like to live in amore human
society like- charity, volunteer work and social service activities.
• People hunger for serious and long-lasting relationships with a few
others.
• These trends suggest greater demand for ‘social support’ products and
services that improve direct communication between people, such as
health clubs, family vacations and games.
• They also suggest a growing market for “ social surrogates “ things
that allow who are alone to feel that they are not alone such as
television, home video games, and chat rooms on the Internet.
3. Views of Organizations:
• People vary in their attitudes toward corporations, government
agencies, trade unions and other organizations.
• Most people are willing to work for big organizations and
expect them, in turn, to carry out society’s work.
• Currently , there has been a decrease in confidence in, and
loyalty towards, business and political organizations and
institutions.
• Recent high-profile corporate scandals surrounding companies.
• In the workplace, there has been an overall decline in
organizational loyalty.
• Many people today see work not as a source of satisfaction,
but as a necessary task/chore to earn money to enjoy non-
work hours.
• This trend suggests that organizations need to find new ways to
win consumer and employee confidence.
• They need to review their advertising communications to make
sure their messages are honest.
• Also, they need to review their various activities to make sure
that they are coming across as ‘good corporate citizens’.
• More companies are turning to social audits and public
relations to improve their image with publics.
• Social audits, which evaluate decisions and management
practices in terms of the organization’s code of ethics, increase
that likelihood.
• It can be regular evaluations or they can occur randomly with
no prior announcement. To maintain integrity, auditors should
be responsible to the company’s BOD and present their
findings directly to the board.
4. Views of Society:
• People vary in their attitudes toward their society.
1. Some defend it (preservers),
2. Some run it (makers),
3. Some take what they can from it (takers), and
4. Some want to leave it (escapers).
• People’s orientation to their society influences their
consumption patterns, levels of savings and attitudes
towards the marketplace.
• The consumption patterns reflect changers usually live
more economically/carefully/ frugally, driving smaller
cars and wearing simpler clothes.
• Escapers and seekers are a major market for movies,
music, surfing and camping.
5. Views of Nature:
• People vary in their attitude toward nature.
1. Some feel ruled/subjugated by it,
2. Others feel harmony with it and
3. Still others seek mastery over it.
• A long-term trend has been people’s growing mastery over nature
through technology and the belief that nature is
abundant/bountiful.
• More recently, however, people have recognized that nature is
finite and fragile – that it can be destroyed or spoiled by human
activities.
• Love of nature is leading to more camping, boating,
climbing/hiking, fishing and other outdoor activities.
• Therefore, business has responded by offering more products and
services catering to these interests.
1. Tour operators are offering more tours to wilderness
areas,
2. Retailers are offering more fitness gear and apparel,
3. Food producers have found growing markets for
‘natural’ products like natural cereal, natural ice-
cream, organically farmed produce and a variety of
health foods.
4. Marketing communicators are using appealing
natural backgrounds in advertising their products.
• Yet others have succeeded in building their fortunes by
emphasizing simplicity and inspiration drawn from
nature.
2.3.Responding to the Marketing Environment
• Someone observed “there are three kinds of companies:
1.Those who make things happen,
2.Those who watch things happen, and
3.Those who wonder what has happened.”
1. Reactive Companies
• Many companies view the marketing environment as an
uncontrollable element to which they must react and adapt.
• They passively accept and do not try to change the marketing
environment .
• They analyze the environmental forces and design strategies
that will help the company :-
– To avoid the threats and
– To take advantage of the opportunities
2. Proactive Companies
• Others take an environmental management perspective- in
which the firm takes a proactive stance toward the
marketing environment, to affect the publics and forces
rather than simply watching and reacting to it.
• Such companies:-
– Hire lobbyists to influence legislation affecting their industries,
– Stage media events to gain favorable press coverage.
– They run advertorials (ads expressing editorial points of view) to
shape public opinion.
– They press law suits and file complaints with regulators to keep
competitors in line, and
– They form contractual agreements to better control their
distribution channels.
• Marketing management cannot always control
environmental forces.
• In many cases, it must settle for simply watching and
reacting to the environment.
• For example would have little success trying to
influence
1.Geographic population shifts,
2.The economic environment or
3.Major cultural values.
• But whenever possible, smart marketing mangers will
take a proactive rather than reactive approach to the
marketing environment.