Chapter 03 - Marketing Environment

3
Principles of Marketing
The
Marketing Environment
Learning Objectives
After studying this chapter, you should be able to:
1. Describe the environmental forces that affect the
company’s ability to serve its customers
2. Explain how changes in the demographic and
economic environments affect marketing decisions
3. Identify the major trends in the firm’s natural and
technological environments
4. Explain the key changes in the political and cultural
environments
5. Discuss how companies can react to the marketing
environment
3-2
Chapter Outline
1. The Company’s Microenvironment

2. The Company’s Macroenvironemnt
3. Responding to the Marketing
Environment
3-3
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
3-4
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
3-5
The Company’s Microenvironment
Macroenvironment consists of the larger societal

forces that affect the microenvironment
• Demographic
• Economic
• Natural
• Technological
• Political
• Cultural
3-6
• The Company
• Suppliers
• Marketing intermediaries
• Customers
• Competitors
• Publics
3-7
The Company
Internal environment includes:

• Top management
• Finance
• R&D
• Purchasing
• Operations
• Accounting
3-8
Suppliers
• Provide the resources to produce goods and

services
• Treated as partners to provide customer
value
3-9
Marketing Intermediaries
• Help the company to promote, sell,
and distribute its products to final
buyers
• Include:
• Resellers
• Physical distribution firms
• Marketing services agencies
• Financial intermediaries
3-10
Resellers are the distribution channel firms

that help the company find customers or
make sales to them
• Include:
• Wholesalers
• Retailers
3-11
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
3-12
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
3-13
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
3-14
Customers
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
3-15
Customers
Reseller markets buy goods and services to resell at

a profit
Government markets buy goods and services to

produce public services or transfer goods and
services to others who need them
International markets consist of buyers in other

countries including consumers, producers, resellers,
and governments
3-16
Competitors
Firms must gain strategic advantage by

positioning their offerings against
competitors’ offerings
3-17
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
3-18
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
3-19
Publics
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
3-20
The Company’s Macroenvironment
• Demographic environment
• Economic environment
• Natural environment
• Technological environment
• Political environment
• Cultural environment
3-21
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
3-22
Changing Age Structure of the Population
Generational marketing is important in

segmenting people by lifestyle of life state
instead of age
3-23
Baby boomers include people born

between 1946 and 1964
• Most affluent Americans
3-24
Generation X includes people born between 1965 and

1976
• High divorce rates
• Concerned about the environment
• Respond to socially responsible companies
• Less materialistic
• Quality of life
• Consumer organizations, environment groups, and minority
groups
3-25
• Generation Y includes people born

between 1977 and 2000
• Internet generation
3-26
The Changing American Family
More people are:

• Divorcing or separating
• Choosing not to marry
• Choosing to marrying later
• Marrying without intending to have children
• Higher divorce rates
• Increased number of working women
• Stay-at-home dads
3-27
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
3-28
Changes in the Workforce
Trends include:
• More educated
• More white collar
• More professional
3-29
Increasing Diversity
• Markets are becoming more diverse

• International
• National
• Trends Include:
• Ethnicity
• Gay and lesbian
• Disabled
3-30
Economic Environment
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

3-31
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
3-32
Changes in Income
• Income distribution
• Upper-class consumers
• Middle-class consumers
• Working-class consumers
• Underclass consumers
3-33
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
3-34
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
3-35
Technological Environment
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
3-37
Political Environment
Political environment consists of laws,

government agencies, and pressure groups
that influence or limit various organizations
and individuals in a given society
3-38
• 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
3-39
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
3-40
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
3-41
Cultural Environment
Cultural environment consists of institutions

and other forces that affect a society’s basic
values, perceptions, and behaviors
3-42
Persistence of Cultural Values
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
3-43
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
3-44
• People’s view of themselves

• Yankelovich Monitor’s consumer segments:
• Do-It-Yourselfers—recent movers
• Adventurers
• People’s view of others
3-45
• People’s view of organizations

• People’s view of society
• Patriots defend it
• Reformers want to change it
• Malcontents want to leave it
3-46
• People’s view of nature

• Some feel ruled by it
• Some feel in harmony with it
• Some seek to master it
• People’s view of the universe
• Renewed interest in spirituality
3-47
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
3-48
PowerPoint created by:
Ronald Heimler
 Dowling College, MBA
 Georgetown University, BS Business
Administration
 Adjunct Professor, LIM College, NY
 Adjunct Professor, Long Island University,
NY
 Lecturer, California Polytechnic State
University, Pomona, CA
 President, Walter Heimler, Inc.

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3

1. The Company’s Microenvironment

The marketing environment includes the

Microenvironment consists of the actors

Macroenvironment consists of the larger societal

Internal environment includes:

• Provide the resources to produce goods and

Resellers are the distribution channel firms

Physical distribution firms are the

Marketing service agencies are the

Financial intermediaries include banks,

Customer markets consist of individuals and

Business markets buy goods and services for

Reseller markets buy goods and services to resell at

Government markets buy goods and services to

International markets consist of buyers in other

Firms must gain strategic advantage by

Any group that has an actual or potential interest

Financial publics influence the company’s

Citizen-action publics include consumer

Demography is the study of human populations in

Generational marketing is important in

Baby boomers include people born

Generation X includes people born between 1965 and

• Generation Y includes people born

More people are:

• Markets are becoming more diverse

Economic environment consists of factors that

• Subsistence economies consume most of their

• Industrial economies are richer markets

Value marketing involves ways to offer

Ernst Engel—Engel’s Law

Natural environment involves the natural resources

Most dramatic force in changing the marketplace with

Political environment consists of laws,

• Legislation regulating business

• Federal Trade Commission

Socially responsible behavior occurs when

Cultural environment consists of institutions

Core beliefs and values have a high degree

Major cultural values of a society are expressed in

• People’s view of themselves

• People’s view of organizations

• People’s view of nature

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