The Marketing Environment

The Marketing Environment

Learning Objectives

3
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 elements in macro environment affect

marketing decisions

3. Identify the influences of microenviroment on company’s

marketing activities.

1. Discuss how companies can react to the marketing environment

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The Marketing Environment The Marketing Environment

Chapter structure
Marketing Environment
• A company’s marketing environment consists of the
1. The marketing environment
actors and forces outside marketing that affect
2. The marketing macroenronment marketing management’s ability to build and maintain
3. The marketing microenvironment
successful relationships with target customers.
• The microenvironment consists of the actors close to
4. Company's response to the marketing environment
the company that affect its ability to service its
customers.
• The macroenvironment consists of larger societal
forces that affect the microenvironment.

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The Marketing Environment 3.1 The Company’s Macroenvironment

The company and all of the other actors operate in a larger

macroenvironment of forces that shape opportunities and
pose threats to the company.
Macroenvironment
NATURAL
DEMOGRAPHIC
ENVIRONMENT
Negative ENVIRONMENT
Company’s
marketing
activities ECONOMIC Macro POLITICAL/LEGAL
ENVIRONMENT
Positive
ENVIRONMENT
Environment
Microenvironment
TECHNOLOGICAL CULTURAL
ENVIRONMENT ENVIRONMENT

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 3.1 The Company’s Macroenvironment 3.1 The Company’s Macroenvironment

Discuss the following with your team: Demographics

1. Who are the main target customers of each of these
products? • Demography is the study of
2. What are their ages? human populations

3. What is their nationality or ethnic group? • Demographic trends include

age, family structure,
4. What language do they speak?
geographic population shifts,
educational characteristics,
and population diversity.

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3.1 The Company’s Macroenvironment 3.1 The Company’s Macroenvironment

The Demographic Environment Demographics and Business

Chinese regulations limiting

families to one child have
resulted in what’s been known
as the “six-pocket syndrome.”
Chinese children are being
showered with attention and
luxuries, creating
opportunities for marketers.

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3.1 The Company’s Macroenvironment 3.1 The Company’s Macroenvironment

Geographic Shifts in Population

Generational marketing is
important in grouping people by
lifestyle of life state instead of age. • In 2008, the world had, for the first time, more of its
population living in towns and cities than in the rural
areas.
Question: Do marketers need to
create separate products and • In Asia, there is a migration from rural to urban cities.
marketing programs for each • A major trend emerging from this urban migration is a
generation? growing number of single-person households.

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 3.1 The Company’s Macroenvironment 3.1 The Company’s Macroenvironment

Increasing Diversity
A Better-Educated, More
White-Collar More • Countries vary in their ethnic and racial makeup.
Professional Population • At one extreme is Japan, where almost everyone is
Japanese.
• At the other extreme is the U.S., with people from virtually
• The world population is all nations.
becoming better educated. • Marketers are facing increasingly diverse markets, both at
• The workforce also is becoming home and abroad, as their operations become more
more white-collar international in scope.

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3.1 The Company’s Macroenvironment 3.1 The Company’s Macroenvironment

Islamic banking Economic Environment

Increasing Consists of factors that affect
diversity – The consumer purchasing power and
growth in Islamic spending patterns:
banking caters to
the Muslim market • Changes in consumer spending
where the notion of • Income distribution
interest, earned and
charged, is • Income, cost of living, interest
considered rates, savings and borrowing
incongruent with patterns
their faith.

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3.1 The Company’s Macroenvironment 3.1 The Company’s Macroenvironment

Changes in Income Targeting at Different Income Segments

• Marketers should pay attention to income distribution AND

average income.
• Upper-class - spending patterns are not affected by
current economic events
• Middle class - somehow careful about spending but can
still afford the good life some of the time.
• Working class - stick close to the basics of food, clothing,
and shelter and must try hard to save.
• Underclass - must count their pennies when making even
the most basic purchases.
Different companies appeal to different income segments.

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 3.1 The Company’s Macroenvironment 3.1 The Company’s Macroenvironment

Natural environment Natural environment

Shortage of Raw
The natural environment involves
Materials
the physical environment and the
natural resources that are
needed as inputs by marketers or
that are affected by marketing Factors
activities. Anti-Pollution affecting the Increased
Pressure Natural Energy Costs
• Basic level: weather, natural Environment
disasters,…
• Broader level: environmental
sustainable concerns
Government
Protections
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3.1 The Company’s Macroenvironment 3.1 The Company’s Macroenvironment

Natural environment Natural environment

In response to ecological
concerns, Levi Strauss
and Co. designed the
Levi’s© Eco jeans made
Singapore’s Changi Airport
of 100 percent organic
embarks on a green movement
cotton. The product tag
is made of 100 percent by having recycling points
throughout the airport
recycled paper.

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3.1 The Company’s Macroenvironment

Natural environment

Wal-Mart is committed to
sustainable development by
reducing its use of plastic
bags and donating food that
otherwise would be
discarded.

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 3.1 The Company’s Macroenvironment 3.1 The Company’s Macroenvironment

Technological Environment Technological Environment

• Most dramatic force in

changing the
marketplace
• Creates new markets
and opportunities
• Challenge to make
practical, affordable
products
• Safety of new product
always a concern

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3.1 The Company’s Macroenvironment 3.1 The Company’s Macroenvironment

How has the video game industry changed? Political/Legal Environment

Political environment
laws, government
agencies, and pressure
groups that influence or
limit various
organizations and
individuals in a given
society

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3.1 The Company’s Macroenvironment 3.1 The Company’s Macroenvironment

Political/ Legal Environment Political/ Legal Environment

v Increase in business regulation
• protect companies from each other.
• protect consumers from unfair business practices
• protect the interests of society against unrestrained
business behavior
v Increased emphasis on ethics and social responsible
actions

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 3.1 The Company’s Macroenvironment 3.1 The Company’s Macroenvironment

Counterfeit Products Socially Responsible Behavior

•Enlightened companies encourage their managers to

look beyond what the regulatory system allows and
simply “do the right thing.”
•These socially responsible firms actively seek out ways
to protect the long-run interests of their consumers and
the environment.
The popularity of counterfeit
brands in Asia has proven to
be a growing problem for
companies. Purses and bags
like these are easily
available in markets in Asia.

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3.1 The Company’s Macroenvironment 3.1 The Company’s Macroenvironment

Cultural Environment Cultural Environment

•Cultural environment consists of institutions and other
forces that affect a society’s basic values, perceptions, and
behaviors
•People grow up in a particular society that shapes their basic
beliefs and values.
•They absorb a world view that defines their relationships
with others

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3.1 The Company’s Macroenvironment 3.1 The Company’s Macroenvironment

Persistence of Cultural Values

• Core beliefs and values persist because they 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.
• Marketers want to predict cultural shifts in order to spot
new opportunities or threats.

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 3.1 The Company’s Macroenvironment Example - Cultural reflections

Shifts in Secondary Core Values

Previously a communist country,

Christmas is celebrated commercially in
many Asian countries even though
Christianity is not one of the country’s
main religions.

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3.2 The Company’s Microenvironment

Actors in the Microenvironment

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3.2 The Company’s Microenvironment 3.2 The Company’s Microenvironment

The Company Suppliers

Suppliers provide the resources

• Top management All the interrelated needed by the company to produce its
• Finance groups form the goods and services.
internal
• R&D
environment. All
• Purchasing groups should work Things to consider:
in harmony to - Supply availability—supply
• Operations
provide superior shortages or delays, labor strikes,
• Accounting customer value and and other events may harm
relationships thecompany.
- Price trends of their key inputs.

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 3.2 The Company’s Microenvironment 3.2 The Company’s Microenvironment
Marketing Intermediaries Types of Marketing Intermediaries

Marketing intermediaries Resellers • find customers or make sales to them

help the company to (Wholesalers, Retailers)
promote, sell, and distribute
its products to final buyers. Physical • stock and move goods from their points of origin
distribution firms to their destinations

Functions:
Marketing • research firms, advertising agencies, media
• Transportation services agencies firms, and marketing consulting firms
• Storage
Financial • banks, credit companies, insurance companies,
• Sales and other businesses that help finance
intermediaries transactions
• Advertising

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3.2 The Company’s Microenvironment 3.2 The Company’s Microenvironment

Partnering with marketing

Lotte Mart opened outlets in HCMC and
Hanoi. It is big reseller in Vietnam.
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intermediaries – Coca-Cola
provides Subway with much more
than just soft drinks. It also
pledges powerful marketing
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support.

3.2 The Company’s Microenvironment 3.2 The Company’s Microenvironment

Think - Pair - Share Customers

• Customers are the most important

Name some marketing intermediaries in Vietnam.
actors in the company’s
What do they do?
microenvironment
• The aim of the entire value delivery
network is to serve target customers
and create strong relationships with
them.
• The company might target any or all
five types of customer markets

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 3.2 The Company’s Microenvironment 3.2 The Company’s Microenvironment

Five types of customer markets: Competitors

• Consumer markets: individuals and households that buy goods • Marketers must gain strategic advantage by positioning
and services for personal consumption.
their offerings strongly against competitors’ offerings in
• Business markets: buy goods and services for further
the minds of consumers.
processing or for use in their production process.
• Reseller markets: buy goods and services to resell at a profit. • No single competitive marketing strategy is best for all
• Government markets: made up of government agencies that companies.
buy goods and services to produce public services.
• International markets: buyers in other countries, including
consumers, producers, resellers, and governments.

49 © 2012 Princ ip les of Marketing: An As ian Perspective 50 © 2012 Princ ip les of Marketing: An As ian Perspective

3.2 The Company’s Microenvironment 3.2 The Company’s Microenvironment

Types of competitors Competitors

2 main sources:
• Who are our competitors?
• Brand (from manufacturers of
• What do they want?
similar products)
• What are their strategies?
• Substitute products (dissimilar
• What make them differentiated
products that satisfy the same
need) • What will they do?

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3.2 The Company’s Microenvironment 3.2 The Company’s Microenvironment

Competitors Publics

Financial publics General public

• Number of competitors?
• Direct/ indirect/ potential/ … competitors? Media publics Internal publics
• Target market
Government publics
• Market share
• Their strengths, weaknesses Citizen-action publics

Local publics

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 3.2 The Company’s Microenvironment 3.2 The Company’s Microenvironment

Publics - any group that has an actual or potential interest in or

impact on an organization’s ability to achieve its objectives.
Think - Pair - Share
• Financial publics influence the company’s ability to obtain funds.
• Media publics carry news, features, and editorial opinions. How many publics can you name for UFM?
• Government publics. Management must take government developments into
account.

• Local publics include neighborhood residents and community organizations.

• Citizen-action publics include consumer organizations, environment groups,
and minority groups
• General public. The general public’s image of the company affects its buying.
• Internal publics include workers, managers, volunteers, and the board of
directors.

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3.3 Responding to the Marketing Environment SWOT

Many companies think the marketing environment is an
uncontrollable element to which they have to adapt.

Other companies take an environmental management

perspective to affect the publics and forces in their
environment.

Marketing managers should take a proactive rather than

reactive approach to the marketing environment.

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3.4 Practice Questions 3.4 Practice Questions

Your advertising agency is currently researching the You are directed to study the factors that are larger
gender, education, location, age, and occupations of societal forces that affect your company (demographic,
your target market. What is this environment called? economic, natural, technological, political, and cultural).
What are you studying?
a. demographic
b. psychographic a. the macroenvironment
c. geographic b. the microenvironment
d. product-use c. the marketing environment
d. the marketing mix
e. the global environment

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3.4 Practice Questions

In what way(s) might Vinamilk rely on marketing

intermediaries?

a. to provide speed in delivery to consumers

b. to package the milk
c. to assist with promotional efforts
d. to create a TV advertising campaign
e. all of the above

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