PM101

Principles of Marketing
Chapter 2
Marketing Environment
Objectives
o Describe the environmental forces that affect the company’s
ability to serve its customers.
o Explain how changes in the demographic and economic
environments affect marketing decisions.
o Identify the major trends in the firm’s natural and technological
environments.
o Explain the key changes in the political and cultural
environments.
o Discuss how companies can react to the marketing environment.
Marketing
Environment
o A company’s marketing
environment consists of the
actors and forces outside
marketing that affect
marketing management’s
ability to develop and
maintain successful
relationships with its target
customers.
Marketing Environment

o Microenvironment.
o Actors close to the
company that affect
its ability to serve its
customers.
o Unique to the
company.
o Macroenvironment.
o Larger societal forces
that affect the
microenvironment.
o Considered to be
beyond the control of
the organization.
Marketing Environment
Actors in the
Microenvironment
The Company
o Company’s internal environment.
o Areas inside a company.
o Affects the marketing department’s planning strategies.
o Marketing must consider other parts of the organization including finance,
R&D, purchasing, operations and accounting
o All departments must “think consumer” and work together to provide
superior customer value and satisfaction.
o Marketing decisions must relate to broader company goals and strategies
Suppliers

o Provide resources
needed to produce
goods and services.
o Important link in the
“value delivery
system.”
o Most marketers treat
suppliers like partners.
o Marketers must watch
supply availability and
pricing
o Effective partnership
relationship
management with
suppliers is essential
Marketing Intermediaries

o Help the company to

promote, sell and
distribute its goods to
final buyers.
o Resellers.
o Physical distribution
firms.
o Marketing services
agencies.
o Financial intermediaries.
o Help to promote, sell
and distribute goods to
final buyers
o Effective partner
relationship
management is
essential
Customers
o Types of customers.
o Consumer markets : consist of individuals and households that
buy goods and services for personal consumption.
o Business markets: buy goods and services for further
processing or for use in their production process.
o Reseller markets : Buy goods and services to resell at a profit
o Government markets are made up of government agencies that
buy goods and services to produce public services or transfer
the goods and services to other who need them
o International markets consist of these buyers in other countries,
including consumers, producers, resellers, and governments.
Competitors
o Those who serve a target market with
products and services that are viewed
by consumers as being reasonable
substitutes.
o Company must gain strategic
advantage against these
organizations.
o Company size and industry position
determines best competitive strategy.
o Conducting competitor analysis is
critical for success of the firm
o A marketer must monitor its
competitors’ offerings to create
strategic advantage
Publics
o Local publics.
o General publics.
o Internal publics.

o Group that has an interest in or impact

on an organization's ability to achieve
its objectives.
o Financial publics.
o Media publics.
o Government publics.
o Citizen action publics.
Major Macro environmental Forces
Demographics

The study of Marketers track The demographic

human changing age and environment is of
populations in family structures, major interest to
terms of size, geographic marketers
density, location, population shifts, because it
age, gender, race, educational involves people,
occupation and characteristics and people make
other statistics. and population up markets.
diversity.
Natural Environment
o Involves the natural resources
that are needed as inputs by
marketers or that are affected
by marketing activities.
Natural Environment
Trends
o Shortage of raw materials.
o Limited quantities of non-
renewable resources.
o Increased pollution.
o Waste disposal, air/water
pollutants.
o Increased government
intervention.
o Kyoto and other initiatives.
o Environmentally sustainable
strategies.
o G.R.E.E.N. movement.
Technological Environment

Most dramatic force now The technological

shaping our world. environment changes rapidly.
• Creates new technology,
new product and market
opportunities but also
turns many existing
products extinct
Technological Environment

Involves the Challenge is to Safety regulations

natural resources make practical, result in higher
that are needed affordable research costs
as inputs by products. and longer time
marketers or that between
are affected by conceptualization
marketing and introduction
activities of product.
Economic
Environment
o All those factors that affect
consumer buying power and
spending patterns.
o Income levels and distribution.
o The “necessity” of products.
o Changes in trends and
consumer spending patterns.
o Economies of different nations.
Political Environment
o Marketing decisions are strongly
affected by developments in the
political environment.
o Includes laws, government
agencies and pressure groups that
influence or limit various
organizations and individuals in a
given society.
o Increasing legislation.
o Changing government agency
enforcement.
o More emphasis on ethics and socially
responsible actions.
Cultural Environment
o The institutions
and other forces
that affect a
society’s basic
values,
perceptions,
preference and
behaviours.
o Cultural values
are highly
persistent.
o Learned from
family and
community.
Cultural Environment
o The cultural environment is
made up of institutions and
other forces that affect a
society’s basic values,
perceptions, preferences, and
behaviors.
o People grow up in a particular
society that shapes their basic
beliefs and values. They
absorb a worldview that
defines their relationships with
others.
Cultural Environment

Core beliefs and values are passed on from parents to children and are
reinforced by schools, churches, business and government.

Secondary beliefs and values are more open to change.

Cultural Environment
o Culture is
expressed
through people’s
views of:
o Themselves.
o Others.
o Organizations.
o Society.
o Nature.
o The Universe.
Exercise
Explain the way that the companies
can react
to the marketing environment :-
o Proactive approach
o Reactive approach
Looking Back
o Describe the environmental forces
that affect the company’s ability to
serve its customers.
o Explain how changes in the
demographic and economic
environments affect marketing
decisions.
o Identify the major trends in the
natural and technological
environments.
o Explain the key changes in the
political and cultural environments.
o Discuss how companies can react to
the marketing environment.