CHAPTER 3

Environmental Forces in an
e-commerce World:
The Macroenvironment

CHAPTER SUMMARY
All organizations are influenced by the environments in which they operate.

Learning Objective 1
Describe the domestic and foreign environments in which marketers operate and
their effects on organizations.
Marketing managers must adjust an organization’s marketing mix to cope with the domestic
environment and often foreign environments as well. In both cases, the marketing environment
consists of uncontrollable forces that provide both opportunities and constraints. We can divide the
environment into two categories: the macroenvironment and the microenvironment. The
macroenvironment includes the physical environment, sociocultural forces, demographic forces,
economic forces, science and technology, and political and legal forces. The microenvironment
consists of forces directly influencing the marketer, such as customers. Correct environmental
assessment makes marketing decisions more successful.

Learning Objective 2
Understand that the physical environment influences marketing activity.
The physical environment contains natural resources, such as oil, climate, smog, pollution. Climate,
for example, influences not only the types of products sold, but the timing of the distribution of
these products in the marketplace.

Learning Objective 3
46 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment

Understand that social values and beliefs are important cultural forces.
A social value embodies the goals a society views as important and expresses a culture’s shared
ideas of preferred ways of acting. A belief is a conviction concerning something’s existence or
characteristics. It is the marketer’s job to “read“ the social environment and reflect the surrounding
culture’s values and beliefs in a marketing strategy.

Learning Objective 4
Explain how demographic trends, such as changes that have occurred in the
American family, influence marketers.
Important demographic trends include the aging of the population, a general trend toward having
fewer children, an increase in the number of households, and greater cultural diversity. These and
other demographic factors not only affect the demand for goods and services but also lead to
variations in pricing, distribution, and promotion.

Learning Objective 5
Understand that technology, especially digital technology and the Internet, are
having a significant impact on marketing and society.
Scientific and technological advances can revolutionize an industry or destroy one. Information
technology has reshaped the way business is conducted around the world. The Internet has been of
particular significance because it has influenced so many organizations. The Internet is a worldwide
network of computers that gives users access to information and documents from distant sources.

Learning Objective 6
Explain the various ways in which economic conditions influence marketers.
The competitive market structure describes the number of competing firms in some segment of an
economy and the proportion of the market held by each competitor. Pure competition, monopolistic
competition, oligopoly, and monopoly are the four basic market structures, and they have different
influences on pricing strategies and barriers to competition. The business cycle--prosperity,
recession, depression, and recovery--reflects recurrent fluctuations in general economic activity.
The various booms and busts in the economy influence unemployment, inflation, and consumer
spending and savings patterns, which in turn influence marketing activity.

Learning Objective 7
Appreciate how the three levels of U. S. law and the laws of other nations can
influence marketing activity.
Federal laws control many business activities, such as pricing and advertising by manufacturers,
wholesalers, and retailers. The FTC, in particular, affects almost all marketers. State laws also deal
with many areas, including foods, manufactured goods, lending, real estate, banking, and insurance.
Local laws affect zoning and licensing, among other things. Laws that govern the marketing of
products in foreign countries and in multinational marketing groups are subject to tremendous
variation and will affect any organization that engages in international marketing.
 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment 47

Learning Objective 8
Explain how the various elements of the marketing environment interact.
Changes in any aspect of the environment usually bring about changes elsewhere in the
environment. Several environmental forces may combine to encourage changes in consumer
behavior or marketing mixes.
48 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment

VOCABULARY QUIZ

The purpose of this quiz is to determine how familiar you are with the key concepts in this chapter.
From the list of vocabulary, select the one that most accurately describes the definitions of the
concept or marketing term. Write the letter in the space provided.

A. Domestic environment AA. Foreign environment

B. Macroenvironment BB. Microenvironment
C. Physical environment CC. Science
D. Legal environment DD. Business cycle
E. Culture EE. Social value
F. Belief FF. Demography
G. Internet GG. Economic system
H. Pure competition HH. Monopolistic competition
I. Oligopoly II. Monopoly
J. Ethnocentrism JJ. Antitrust legislation
K. export KK. Technology
L. Federal Trade Commission (FTC) LL. Political environment
M. Multinational marketing group
N. World Wide Web
O. Import

_____1. Environmental forces, such as customers, that directly and regularly influence a m
marketer’s activity.

_____2. The application of knowledge to practical purposes.

_____3. A conviction concerning the existence or the characteristics of physical and social
phenomena.

_____4. Laws and regulations and their interpretations.

_____5. The tendency to consider one’s own culture and way of life as the natural and normal
one.

_____6. A domestically produced product sold in a foreign market.

_____7. A market structure characterized by a small number of sellers who control the
market.

_____8. The environment in an organization’s home country.

_____9. The system whereby a society allocates its scarce resources.

 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment 49

_____10. The practices and policies of governments.

_____11. A group of countries, aligned to form a unified market with minimal trade tariff
barriers among participating member countries.

_____12. A value that embodies the goals a society views as important and expresses a
culture’s shared ideas of preferred ways of acting.

_____13. Broad societal forces that shape the activities of every business and nonprofit
marketer. The physical environment, sociocultural forces, demographic factors,
economic factors, scientific and technical knowledge, and political and legal factors.

_____14. A market structure characterized by a single seller in a market in which there are no
suitable substitute products.

_____15. A market structure characterized by free entry, a homogeneous product, and many
sellers and buyers, none of whom can control price.

_____16. Federal agency established to investigate and put an end to unfair methods of
competition.

_____17. The environment outside an organization’s home country.

_____18. Natural resources and other aspects of the natural world that influence marketing
activities.

_____19. Federal laws meant to prohibit behavior that tends to lessen competition in U.S.
markets.

_____20. The institutions, values, beliefs, and behaviors of a society; everything we learn, as
opposed to that with which we are born.

_____21. A worldwide network of private, corporate, and government computers that gives
users access to information and documents from distant sources.

_____22. The study of the size, composition, and distribution of the human population in
relation to social factors.

_____23. A market structure characterized by a large number of sellers offering slightly

differentiated products and exerting some control over their own prices.

_____24. Recurrent fluctuations in general economic activity.

_____25. The accumulation of knowledge about humans and the environment.

50 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment

_____26. A foreign product purchased domestically.

_____27. A portion of the Internet; a system of Internet servers that support specially formatted
documents.
 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment 51

LEARNING OBJECTIVES QUIZ

Learning Objective 1
Describe the domestic and foreign environments in which marketers operate and
their effects on organizations.

1. The world is getting smaller, and the external environment is taking on a

more ____________ character. (global)

2. In today’s global economy, most corporations must anticipate and respond to

__________________ and ________________in foreign environments.

(opportunities, threats)

3. Both ___________ and __________ organizations can be influenced by forces

shaped thousands of miles away from their home __________.(large, small, countries)

Learning Objective 2
Understand that the physical environment influences marketing activity.

4. The physical environment consists of ____________ resources and their availability can

have a __________ effect on marketing activities. (natural, far-reaching)

5. Climate affects the ________ of marketing activities. (timing)

Learning Objective 3
Understand that social values and beliefs are important cultural forces.

6. The broad societal forces that shape every business and nonprofit marketer comprise the

__________________________. (macroenvironment)

7. Every company is more directly influenced by a ______________________

consisting of its customers and the economic institutions that shape its marketing
practices. (microenvironment)

8. The __________________________ consists of the physical environment, sociocultural

forces, demographic factors, economic factors, scientific and technical knowledge, and
52 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment

political and legal factors. (macroenvironment)

9. Every society has a ___________ that guides its everyday life. (culture)

10. A ____________ is a conviction concerning the existence of the characteristics of physical

and social phenomena. (belief)

11. It is the marketer’s job to “read” the social environment and reflect the surrounding

culture’s ________and beliefs in a marketing strategy. (values)

12. A _____________ value embodies the goals that society views as important and

expresses a culture’s __________ ideas or preferred ways of acting.

(social, shared)

Learning Objective 4
Explain how demographic trends, such as changes that have occurred in the
American family, influence marketers

13. The study of the size, composition, and distribution of the human population is any

geographic market in relation to social factors is known as __________________.

(demography)

14. The most dramatic growth in the past decade has been in the _______________.
(suburbs)

15. Between 1980 and 1990 most of the net gain in population occurred in the

_______ and __________. (South, West)

16. A _______________ is a dwelling unit occupied by a group of related people, a single

person

or several _____________ people who share living quarters. (household, unrelated)

17. The United States represents a small portion of the _____________ population of

at least _________ billion. (world, six)

Learning Objective 5
 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment 53

Understand that technology, especially digital technology and the Internet, are
having a significant impact on marketing and society.

18. Although the two terms are sometimes used interchangeably, ___________ is the
accumulation of knowledge about human beings and the environment, while

_______________ is the application of such knowledge to practical purposes.

(science, technology)

19. Like other changes in the environment of marketing, science and technological

_______________ can __________________ an industry or destroy it.

(advance, revolutionize)

20. Digital _________________ is having such a profound impact on marketing and society that
it deserves special attention. (technology)

21. The ______________ is a worldwide network of computers that gives users

_________ and _________________ from distant sources.

(Internet, information, documents)

22. A _______________ engine is a computerized search and retrieval system that

allows anyone to search the _________ __________ __________ for information in a

particular way. (search, World Wide

Web)

23. The Internet can be thought of as the world’s _________ public ___________.
(largest, library)

Learning Objective 6
Explain the various ways in which economic conditions influence marketers.

24. _________________ and ______________ forces strongly influence marketing activity

at all levels. (Economics, competitive)

25. A society’s economic ____________ determines how it will allocate its scarce resources.

In general the Western world’s economies can be classified as __________ _____________

systems. (system, modified capitalist)

26. The system defined as __________ competition exists when there are no barriers to
54 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment

competition. (pure)

27. The fast food industry is a good example of ________________ competition.

(monopolistic)

28. An _________________ exists where a small number of sellers dominate the

market. (oligopoly)

29. A _______________ exists in a market when there are no suitable substitutes.

(monopoly)

30. The business ___________ reflects recurrent fluctuations in general economic

activity.
(cycle)

Learning Objective 7
Appreciate how the three levels of U. S. law and the laws of other nations can
influence marketing activity.

31. The _________________ environment and the _____________ environment affect

marketing activity in several ways. They can limit actions marketers are allowed to take.
(political, legal)

32. Legislation intended to _____________ a _____________ business environment,

to ___________ consumers from dangerous products or _____________ practices, and to

preserve the ______________ environment can be found at the federal, state, and local
levels. (maintain, competitive, protect, unethical, natural)

33. ____________ __________,which prohibits acts such as restraint of trade and monopoly,
price fixing, price discrimination, deceptive practices, misrepresentation in the labeling of

products, and other behavior that tends to ___________ competition.

(Antitrust legislation, lessen)

34. Most states created __________ and ______________ that parallel those at the federal level.
(laws, agencies)

35. Cities, townships, villages and counties are all ____________________ to pass laws and
ordinances and create regulatory agencies. (empowered)

36. Companies operating their businesses in ________ markets must pay attention to
 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment 55

_______________ laws and the laws of ______________ lands.

(global, international, foreign)

37. Multinational marketing groups are groups of countries aligned to form a _________

market with ___________ trade and tariff ___________ among participating countries.
(unified, minimal, barriers)

Learning Objective 8
Explain how the various elements of the marketing environment interact.

38. Effective marketers must consider the whole of marketing’s __________.

(macroenvironment)

39. There are many examples of _________________ between changes in the _____________,

__________________ and ____________ environments.

(interactions, economic, technological, social)
56 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment

Multiple Choice Quiz

1. The environment consisting of natural resources is the _________ environment.

A. macroenvironment
B. foreign
C. physical
D. domestic

2. Work ethic is a part of:

A. the culture.
B. a belief.
C. the microenvironment.
D. social values.

3. Climate is an aspect of which type of the macroenvironment?

A. Scientific and technical knowledge
B. Demographic forces
C. Physical environment
D. Sociocultural forces

4. Which is NOT a social value of the U.S.?

A. Nepotism
B. Equality
C. Freedom
D. Individual responsibility

5. Which is NOT an element of demography?

A. Population composition
B. Population intensity
C. Population distribution
D. Population size

6. Which statement is FALSE?

 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment 57

A. The U.S. population if growing in size.

B. The U.S. population is aging.
C. The U.S. population is becoming more urbanized.
D. The U.S. population is moving towards the northeastern U.S.

7. The U.S. household data contains significant changes in:

A. a reduction in the total number of households.
B. the increasing size of the households.
C. the number of single-parent households.
D. none of the above.

8. The total U.S. work force was estimated at _______ in 1998.

A. 137 million.
B. 114 million.
C. 124 million.
D. 164 million.

9. In the 1990 census, about what percentage of the net gain in the U.S. population between
1980 and 1990 was in the South and the West?
A. 40 percent
B. 50 percent
C. 70 percent
D. 85 percent

10. The ‘baby boom” is the term used for people born in the U.S. between:
A. 1950 and 1960.
B. 1940 and 1950.
C. 1946 and 1965.
D. 1960 and 1972.

11. In 1998, the three major minorities represented approximately what percentage of the U.S.
population?
A. 9
58 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment

B. 16
C. 28
D. None of the above

12. The world population is estimated to grow at about __________ each hour:
A. 10,000
B. 13,000
C. 16,000
D. 21,000

13. The world population is estimated to increase by 50 percent from the year 2000 to the year
_______.
A. 2050
B. 2175
C. 2160
D. none of the above

14. By the year 2011, it is estimated that the U.S. population will be about:
A. 200 million.
B. 250 million.
C. 300 million.
D. none of the above.

15. Which is the most populous state in the U.S.?

A. New York
B. California
C Texas
D. Florida
 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment 59

True/False Quiz

_____1. The fast-food industry in the U.S. is a good example of an oligopoly.

_____2. Freedom is a social value in the U.S.

_____3. A town’s local electric utility is often an example of monopolistic competition.

_____4. An example of pure competition is the soft drink market in the U.S..

_____5. The fifth phase of the business cycle is resurrection.

_____6. The Internet is the most important communication medium to be invented since
television.

_____7. The median age of people who live in the U.S. is about 33 years.

_____8. The average age of the U.S. population grows older every year.

_____9. By the year 2000, all “baby boomers” were at least 35 years of age.

_____10. Single-person households represent about 25 percent of U.S. households.

_____11. An industry example of oligopoly in the world market would be the commercial
aircraft industry.

_____12. Service occupation represent only about 25 percent of jobs in the U.S.

_____13. In the U.S. where “chocolate chip cookies” are required to contain real chocolate
chips, this is an example of the legal environment.

_____14. The World Wide Web refers to a system of Internet servers which organize
information into Hypertext documents called Web pages.

_____15. The opening computer screen of a Web site is called the home base.
60 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment

Critical Thinking and Writing Activities

1. Compare and contrast the U.S. “baby boomers” with the “Generation Yers.” What do these
terms mean? How are these groups different? How are they similar? What will be the
likely impact on the U.S. economy and its marketing activities as these two groups grow
older?

2. Discuss the growth of the “single-person” and the “single-parent” households in the U.S.
over the last decade. How have these two groups changed? What percentage of U.S.
households do these two groups represent? What is the likely impact of these two groups on
the U.S. economy and marketing activities as these two groups grow older?
 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment 61

3. Amazon.com offers 2.5 million books, but only stocks about 200,000 titles in its Seattle
warehouse. Amazon works with 12 wholesalers who forward shipments to customers. Visit
the company’s Web site at: www.amazon.com

(a) Find John Grisham’s most recent book. (Hint: Just type his name in the search box and
hit the Go! Key)

(b) How much would you save off the list price if you purchased this book over the Web
instead of in a bookstore?

(c) Is this a good distribution channel for amazon.com? Why? What are the advantages of
this type of channel over the more traditional bookstore?

4. Now, visit Amazon’s major competitor at its Web site: www.barnesandnoble.com

(a) Repeat steps a,b,c above

(b) Which of these two Web sites do you prefer? Why do you feel that way?
62 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment

CHAPTER THREE QUIZ ANSWERS:

Vocabulary Quiz
1. BB 16. L
2. KK 17. AA
3. F 18. C
4. D 19. JJ
5. J 20. E
6. K 21. G
7. I 22. FF
8. A 23. HH
9. GG 24. DD
10. LL 25. CC
11. M 26. O
12. EE 27. N
13. B
14. II
15. H

Multiple Choice Quiz

1. C 6. D 11. C
2. D 7. C 12. C
3. C 8. A 13. A
4. A 9. D 14. C
5. B 10. C 15. B

True/False Quiz
1. F 6. T 11. T
2. T 7. T 12. F
3. F 8. T 13. T
4. F 9. T 14. T
5. F 10. T 15. F
Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment 63

Chapter 3 Cross Word Puzzle

64 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment

Chapter 3 Cross Word Puzzle Solution