CHAPTER 2:

UNDERSTANDING THE
MARKETPLACE AND CONSUMER

Marliza Omar
 Learning Objectives

• Discuss how companies can react to the marketing environment.

• Define Marketing information and Marketing research process.

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 The Marketing Environment
Consists of the actors and forces outside marketing.
Affect marketing management’s ability to build and maintain
successful relationships with target customers.
Companies must constantly watch and adapt to the changing
environment
Marketers must be environmental trend trackers and opportunity
seekers.
 The Company’s Microenvironment

Microenvironments refer to actors close to the company

that affect its ability to serve its customers
 FIGURE 2.1
Actors in the microenvironment
The company
It includes the different departments like finance, accounting, R&D,
purchasing, and top management.
Top management sets the company’s mission, objectives, broad
strategies and policies.
Marketing managers make decisions within these broader strategies
and plans.
Marketing managers must work closely with other company
departments.
Supplier
They provide the resources needed by the
company to produce its goods and services.
Supplier problems can seriously affect
marketing.
Marketing managers must watch supply
availability and costs.
Most marketers today treat their suppliers as
partners in creating and delivering customer
value.
Marketing intermediaries
Help the company promote, sell and
distribute its products to final buyers.
They include resellers, physical
distribution firms, marketing services
agencies and financial intermediaries.
Competitors
A company must provide greater customer value and satisfaction than its
competitors do.
No single competitive marketing strategy is best for all companies.
Each firm should consider its own size and industry position compared with
those of its competitors.
Publics
A public is 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
Customers
Consumer Business
Customers are the most important market market
actors in the company’s
microenvironment. Government
Resellers
market
The aim is to engage target
customers and create strong
relationships with them. International
market
 The Company's Macro environment

The macro environment consists of the larger societal forces that affect
the microenvironment
 The Company's Macro environment
Demographic
Study of human populations in terms of size, density, location, age,
gender, race, occupation and other statistics.
It involves people, and people make up markets.
Thus, marketers keep a close eye on demographic trends and
developments in their markets.
They analyze changing age and family structures, geographic
population shifts, educational characteristics and population
diversity.
Generational differences in the developed world
Baby Boomers
Born 1946 to 1964
One of the most powerful forces shaping the marketing
environment.
Constitute a lucrative market for financial services, new
housing and home remodeling, new cars, travel and
entertainment, eating out, health and fitness products,
and just about everything else.
Boomers are also digitally active and increasingly social
media savvy.
 Generation X
Born between 1965 and 1976 .
They are less materialistic than the other groups
They are sensible shoppers who research products
heavily before they consider a purchase, prefer quality
to quantity, and tend to be less receptive to overt
marketing pitches.
Many brands and organizations focus on Gen Xers as
a prime target segment.

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Millennials
Born between 1977 and 2000
Facing higher unemployment and saddled with more debt,
many of these young consumers have near-empty piggy
banks.
First generation to grow up in a world filled with computers,
mobile phones, satellite TV, iPods and iPads, and online
social media.
Millennials seek authenticity and opportunities to shape
their own brand experiences and share them with others.
Generation Z
Young people born after 2000 (although many
analysts include people born after 1995 in this
group).
The Gen Zers make up the important ‘kids, tweens
and teens’ markets.
They are now forming brand relationships that will
affect their buying well into the future.
Gen Zers blend the online and offline worlds
seamlessly as they socialize and shop.
Changing family structures
The traditional household consisted of husband, wife and children (and
sometimes grandparents).
Non-family households – singles living alone or adults of one or both sexes
living together. More people are divorcing or separating, choosing not to marry,
marrying later, or marrying without intending to have children.
Singletons - Euro monitor estimates that the number of people living alone
worldwide is increasing dramatically
Increased number of women in the workforce has spawned the childcare
business and increased the consumption of career-oriented women’s clothing,
financial services, and convenience foods and services.
Economic environment
Markets require buying power as well as people.
Consists of economic factors that affect consumer purchasing power and
spending patterns.
Economic factors can have a dramatic effect on consumer spending and buying
behavior.
Changes in consumer spending - Importantly, economic factors can have a
dramatic effect on consumer spending and buying behavior.
Income distribution - Marketers should pay attention to income distribution as well
as income levels.
Natural Environment
• The natural environment involves the physical
environment and the natural resources that are
needed as inputs by marketers or that are affected
by marketing activities.
• Trends
• Increased shortages of raw materials
• Increased pollution
• Increased government intervention
Technological Environment
Most dramatic force in changing the marketplace.
Technology has released such wonders as antibiotics, robotic surgery,
smartphones and the internet.
Creating new markets and opportunities.
Every new technology replaces an older technology.
Public needs to know that these items are safe.
Marketers should be aware of these regulations when applying new
technologies and developing new products.
Political

Political environment Laws, government agencies and pressure groups that

influence and limit various organizations and individuals in a given society.

Governments develop public policy to guide commerce.

Business legislation has been enacted for a number of reasons.

to protect companies from each other

to protect consumers from unfair business practices.
to protect the interests of society against unrestrained business behavior.
Cultural environment
Consists of institutions and other forces that affect a society’s basic values,
perceptions, preferences and behaviors.
Persistence of Cultural Values
• Core beliefs and values are passed on from parents to children and are
reinforced by schools, businesses, religious institutions and government.
• Secondary beliefs and values are more open to change. Believing in
marriage is a core belief; believing that people should get married early in
life is a secondary belief.
Marketing information
Good products and marketing programs begin with good customer information.
Companies also need an abundance of information on competitors, resellers,
and other actors and marketplace forces.
But more than just gathering information, marketers must use the information to
gain powerful customer and market insights.
With the recent explosion of information technologies, companies can now
generate and find marketing information in great quantities.
The marketing world is filled to the brim with information from innumerable
sources.
 FIGURE 2.3
Marketing Information System
Managing marketing information
Companies must design effective marketing information systems
that give managers the right information, in the right form, at the
right time and help them to use this information to create customer
value, engagement and stronger customer relationships.
Customer insights
Marketing information system (MIS)
Developing marketing information
Marketers can obtain the needed information from internal data, marketing
intelligence and marketing research.
Internal databases refers to collections of consumer and market information
obtained from data sources within the company’s network.
Competitive marketing intelligence is the systematic monitoring, collection
and analysis of publicly available information about consumers, competitors
and developments in the marketplace.
Marketing research is the systematic design, collection, analysis and
reporting of data relevant to a specific marketing situation facing an
organization.
 FIGURE 2.4
4 steps of Marketing research process
Step 1: Defining the problem and research objectives.
Marketing managers and researchers must work together closely to define the problem
and agree on research objectives.
The manager best understands the decision for which information is needed, whereas
the researcher best understands marketing research and how to obtain the information.
A marketing research project might have one of three types of objectives.
exploratory research is to gather preliminary information that will help define the
problem and suggest hypotheses.
descriptive research is to describe things, such as the market potential for a product or
the demographics and attitudes of consumers who buy the product.
causal research is to test hypotheses about cause-and-effect relationships.
Step 2: Developing the research plan
They must determine the exact information needed, develop a plan for
gathering it efficiently and present the plan to management.
The research plan outlines sources of existing data and spells out the
specific research approaches, contact methods, sampling plans and
instruments that researchers will use to gather new data.
The research plan should be presented in a written proposal.
Secondary data consist of information that already exists somewhere,
having been collected for another purpose.
Primary data consist of information collected for the specific purpose at
hand.
Planning primary data collection
Step 3: Implementing the research plan
The researcher next puts the marketing research plan into action.
This involves collecting, processing and analyzing the information. Data
collection can be carried out by the company’s marketing research staff or
outside firms.
Researchers should watch closely to make sure that the plan is implemented
correctly.
They must guard against problems with data collection techniques and
technologies, data quality and timeliness.
They need to check data for accuracy and completeness and code them for
analysis. The researchers then tabulate the results and compute statistical
measures.
Step 4: Interpreting and reporting the findings
• The market researcher must now interpret the findings, draw conclusions and
report them to management.
• Interpretation should not be left only to researchers. The marketing manager
knows more about the problem and the decisions that must be made.
• In many cases, findings can be interpreted in different ways, and discussions
between researchers and managers will help point to the best interpretations.