PRINCIPLES OF

MARKETING
Chapter
Three
The Marketing Environment

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Learning Objectives

Describe the environmental forces that affect the

company’s ability to serve its customers

Explain how changes in the demographic and

economic environments affect marketing decisions

Identify the major trends in the firm’s natural and

technological environments

Explain the key changes in the political and cultural

environments

Discuss how companies can react to the marketing environment

 I
Marketing Environment

Chapter II The Company’s Microenvironment

Outline III The Company’s Macroenvironemnt

IV Responding to the Marketing Environment

 I. 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.

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 I. The Marketing Environment

The macroenvironment consists of the larger societal forces that affect the
microenvironment.

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 I. The Marketing Environment
The 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.

Marketing

Microenvironment
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 II. The Company Microenvironment

The Company
Internal environment includes:
• Top management
• Finance
• R&D
• Purchasing
• Operations
• Accounting

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 II. The Company Microenvironment

Suppliers
Provide the resources to produce goods and services
Treated as partners to provide customer value

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 II. The Company Microenvironment

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

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 II. The Company Microenvironment

Marketing Intermediaries

Resellers are the distribution channel firms that help the company find customers
or make sales to them. These include:
 Wholesalers

 Retailers

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 II. The Company Microenvironment

Marketing Intermediaries

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.

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 II. The Company Microenvironment

Marketing Intermediaries

- Marketing service agencies are the marketing - Financial intermediaries include banks,

research firms, advertising agencies, media firms, credit companies, insurance companies, and

and marketing consulting firms that help the other businesses that help finance transactions

company target and promote its products to the or insure against the risks associated with the

right markets. buying and selling of goods.

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 II. The Company Microenvironment

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.

- 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.
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 II. The Company Microenvironment

Competitors

- Firms must gain strategic advantage by positioning their offerings against

competitors’ offerings.

- Each firm should consider its own size and industry position compared to those

of its competitors.

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 II. The Company 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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 II. The Company Microenvironment

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.

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 II. The Company Microenvironment

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

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 III. The Company Macroenvironment

• Demographic environment

• Economic environment

• Natural environment

• Technological environment

• Political environment

• Cultural environment

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 III. The Company 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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 III. The Company Macroenvironment
Demographic Environment

Changing Age Structure of the Population

• Generational marketing is important in segmenting people by lifestyle of life

state instead of age.

• Baby boomers include people born between 1946 and 1964. Includes most
affluent Asians

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 III. The Company Macroenvironment

Demographic Environment

Changing Age Structure of the Population

• Generation X includes people born between 1965 and 1976. They tend to:
 Have high divorce rates

 Are concerned about the environment

 Respond to socially responsible companies

 Are less materialistic

 Emphasize quality of life

 Consumer organizations, environment groups, and minority groups

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 III. The Company Macroenvironment

Demographic Environment

Changing Age Structure of the Population

• Generation Y includes people born between 1977 and 1994: The Internet
generation, comfortable with technology

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 III. The Company Macroenvironment

Demographic Environment

Changing Age Structure of the Population

• Generation Z includes people born between 1997 and 2010: known as zoomers

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 III. The Company Macroenvironment
Demographic Environment

The Changing Asian Family

More people are:

• Divorcing or separating

• Choosing not to marry

• Choosing to marry later

• Marrying without intending to have children

• Higher divorce rates

• Increased number of working women

• More stay-at-home dads 24

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 III. The Company Macroenvironment

Demographic Environment

Increasing Diversity

Markets are becoming more diverse

• International

• National

Trends include:

• Ethnicity

• Gay and lesbian

• Disabled
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 III. The Company Macroenvironment

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.

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 III. The Company 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.

Income distribution

• Upper-class consumers

• Middle-class consumers

• Working-class consumers

• Underclass consumers
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 III. The Company Macroenvironment

Economic Environment

Changes in Consumer Spending Patterns

Ernst Engel—Engel’s Law

As income rises:

• Percentage spent on food declines

• Percentage spent on housing remains constant

• Percentage spent on savings increases

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 III. The Company 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
• Increased government intervention
• Environmentally sustainable strategies
• Green marketing

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 III. The Company Macroenvironment

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
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 III. The Company 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.

• 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 to:

 Protect companies

 Protect consumers

 Protect the interests of society

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 III. The Company Macroenvironment

Political Environment

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

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 III. The Company Macroenvironment

Cultural Environment

The cultural environment consists of institutions and other forces that affect a
society’s basic values, perceptions, and behaviors.

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 III. The Company Macroenvironment

Cultural Environment

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.

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 III. The Company Macroenvironment

Cultural Environment

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

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 III. The Company Macroenvironment

Cultural Environment

Shifts in Secondary Cultural Values

• People’s view of themselves

Yankelovich Monitor’s consumer segments:

 Do-It-Yourselfers—recent movers

 Adventurers

• People’s view of others

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 III. The Company Macroenvironment
Cultural Environment

Shifts in Secondary Cultural Values

• People’s view of organizations

• People’s view of society

 Patriots defend it

 Reformers want to change it

 Malcontents want to leave it

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 III. The Company Macroenvironment

Cultural Environment

Shifts in Secondary Cultural Values

• 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

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 IV. 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

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