Company’s Micro Environment and Macro Environment

Marketing Environment consists of the factors and forces outside marketing that affects
marketing management’s ability to develop and maintain successful relationship with
its target customers.

Factors of Marketing Environment:

1. Internal Environment – The internal marketing environment of a firm comprises all
those factors which are inside firm marketing activities, including the firm’s employees,
firm’s policies, firm’s capital assets, firm’s organizational structure and its products and
services.
- the firm can control these factors.
2. Micro Environment – small forces external the company that affect its ability to serve
its customers.
- refers to the environment which is in direct contact to the company and
affects the routine activities of business straight away.

i. Company
o Various groups in an organization like the top management, finance,
operations, human resourcing, research and development (R&D),
accounting etc. needs to be taken into account by marketing
management for designing the marketing plans.
ii. Suppliers
o are firms and individuals that provide the resources needed by the
company and its competitors to produce goods and services.
o they are the ones who provide inputs to business like raw materials,
parts, cutting tools, equipments etc.
iii. Customers
o an individual or business that purchases another company’s goods or
services.
o The most important actors in the company’s micro environment are its
customers.
o There are five types of customer markets that companies might try to
target. These include consumer markets, business markets, government
markets, resellers markets, and the international markets
iv. Public
o A public is described as any society that has a definite and hidden
interest in or impacts on an organization’s capability to accomplish its
objectives

There are seven types of public; they are as follows:

1. Media Public –it include TV, magazines, newspaper, radio,

etc.
2. Financial Public – it includes investment houses, bank and
shareholders.
3. Local Public - it includes community groups, surrounding
residents.
4. Government Public – it includes government
developments.
5. Citizen Public – it includes minority groups,
environmental groups, and consumer organizations.
6. Internal Public - it include managers, workers, the board
of directors.
7. General Public – it includes public attitude and public
opinions.

v. Marketing Intermediaries
o These are the firms that benefit the organization to advertise, sell and
distribute goods to the absolute buyers. They involve physical
 distribution firms, middlemen, financial intermediaries, marketing
services agencies. Wholesalers and retailers are the middlemen who
support the enterprise to search for customers and make sales to them.
vi. Competitors
a. Direct Competitors – a company that offers the same primary services to
the same customer base.
b. Indirect Competitors – a company that offers the same or similar services
as part of a wider offering, or that offers a goods or service that can serve a
viable substitute.

3. Macro Environment - larger societal forces that affect the microenvironment.

is the external environment factors greatly influenced the
business success, strategies and decision making.

Macro Environment Factors:

i. Demography – is the study of human population in terms of size,

density, location, age, sex, race, occupation, and other statistic.
Population – is a broad statistic that is particularly useful when broken
into smaller increments.

Age Group:
Tweens – ages 8 to 12 (bedding, furniture, and wall art)
Teens – 25M teens in U.S spend approximately 72 hrs/wk tuned in
electronically. This includes television, internet, music, video games
and cell phones.
Generation Y – also called millennial generation, born between 1979
and 1994. Gen Years (1979)-computers, MP3 players, cellphones
tablet computers and sneakers.
Generation X - people born between 1965 and 1978 (Gen Xers are the
biggest spenders mass merchandisers such as Wal-Mart and at a
drugstores. They spend the most money on baby food, cereal and
laundry detergent
Baby Boomers - persons born between 1946 and 1964 Boomers
purchase iPods, redecorate, go on vacation, and postpone retirement.
In U.S. 80% - personal wealth/ $50B – grandchildren/1.8T annually –
foods, cares and personal products
ii. Natural Environment – involves natural resources that are needed as
inputs by marketers or that are affected by marketing activities.
Specific areas of concern were:
 1. Shortages of raw materials
2. Increase pollution is a worldwide problem
3. Government intervention in natural resource management has
caused environmental concerns to be more practical and
necessary in business and industry.
iii. Technological Environment
o includes forces that creates new technologies, as well as new product and
market opportunities.
o technology has reshaped in a major way how people communicate, consume
information, shop, socialize, and work.
o marketers must watch the technological environment closely and adapt in
order to keep up. Otherwise, the products will soon be outdated, and the company will
miss new product and market opportunities.

Top Ten Most Innovative Companies:

1. Apple(U.S)
2. Google(U.S)
3. Microsoft(U.S)
4. IBM(U.S)
5. Toyota Motor(Japan)
6. Amazon.com(U.S)
7. LG Electronics (South Korea)
8. BYD(China)
9. General Electronic (U.S)
10. Sony (Japan)

iv. Political Environment

o includes laws, government agencies, and pressure groups that
influence and limit various organization and individual in a given
society.
o current considerations in the market that may impact planning
include factors, e.g. a potential change of government, unstable
government due to the balance of power, taw law, changing
superannuation policies, labor laws, and trade restrictions.
v. Cultural Environment – is made up of institution and other forces
that affect society’s basic values, perceptions, ad behaviors.
Culture - set of patterns of human activity within a community or
social group and the symbolic structures that give significance to such
activity. Customs, laws, dress, architectural style, social standards.
religious beliefs, and traditions are example of cultural elements.
 vi. Economic Environment – the total of economic factors, such as
employment, income, inflation, interest rates, productivity, and wealth,
that influence the buying behavior of consumers and institutions.

Take away lesson

-Micro and macro environment have a significant impact on the
success of marketing activities, and therefore such environmental
factors must be considered in-depth during the process of creating a
strategic marketing plan. Considering these factors will improve the
success of your organization’s marketing campaign and the
reputation of the brand in the long term.

Consumer Behavior and the Buying Decision Process

Understanding Consumer Behavior

o Consumers’ product and service preferences are constantly changing.

o Marketing managers must understand these desires in order to create a proper marketing
mix for a well defined market.
o Consumer behavior describes how consumers make purchase decisions and how they
use and dispose of the purchased goods or services.
o Consumer behavior also includes factors that influence purchase decisions and product
use

5 Stages of Buying Decision Process

Buying Decision Process is the decision-making used by consumers regarding the market
transactions before, during, and after

1. Need or Problem Recognition

 Recognition of a need or problem is oftentimes recognized as the first and most
crucial step in the process.
 A need can be triggered by internal or external stimuli.
 Internal stimuli refer to a personal perception experienced by the consumer, such
as hunger or thirst.
 External stimuli include outside influences such as advertising or word-of-mouth.
 Recognize what the problem or need is, and identify the product or type of
product that is required.
2. Information Search

o During this stage, a consumer who recognizes a specific problem or need will
likely be persuaded to search for information, whether internally or externally.
o An internal search refers to a consumer’s memory or recollection of a product,
oftentimes triggered or guided by personal experience.
o An external search is conducted when a person who has no prior knowledge about
a product seeks information from personal sources (e.g., word of mouth from
friends or family) and/or public sources (e.g., online forums, consumer reports) or
marketer-dominated sources (e.g., salespersons, advertising).
 3. Evaluation or Alternative
 During this stage, consumers evaluate all of their product or brand options on a
scale of attributes that have the ability to deliver the benefit that they are seeking.
Example:
Hotels - Location, cleanliness, atmosphere, price
Mouthwash - Color, effectiveness, germ-killing capacity, taste/flavor, price
Tires - Safety, tread life, ride quality, price
4. Purchase Decision
 During this time, the consumer may form an intention to buy the most
preferred brand because he has evaluated all the alternatives and identified
the value that it will bring him.
 During this stage, the consumer must decide the following: 1. from whom he
should buy, 2. when to buy, and 3. whether to buy.
5. Purpose Behavior
 These stages are important to keeping customers.
 Customers match products with their experiences on whether they are either
content or discontent with the product.
 This affects the decision process for resembling purchases from the same
company in the future

Personal Factors

1. Age is a major factor that influences buying behavior. The buying choices of youth
differ from those of middle-aged people. Elderly people have significantly different
buying behaviors. Teenagers will be more interested in buying colorful clothes and
beauty products. Middle-aged people are focused on the house, property, and vehicle
for the family.
 2. Income/Occupation has the ability to influence a person's buying behavior. Higher
income gives higher purchasing power to consumers. When a consumer has a higher
disposable income, it gives them more opportunity to spend on luxurious products.
Whereas low- or middle-income consumers spend most of their income on basic needs
such as groceries and clothes.
3. Life Style is an attitude and a way in which an individual stays in society. The buying
behavior of a consumer is highly influenced by their lifestyle of a consumer. For
example, when a consumer leads a healthy lifestyle, the products he buys will be
healthy alternatives to junk food.
4. Personality is usually described in terms of such traits as self-confidence, dominance,
autonomy, deference, sociability, defensiveness, and adaptability. Personality can be
useful in analyzing consumer behavior, provided that personality types can be classified
accurately and that strong correlations exist between certain personality types and
product or brand choices.

Psychological Factors

1. Motivation speaks to the needs of the consumer, such as social needs, basic needs,
security needs, esteem needs, and self-actualization needs. Out of these needs, the basic
needs and security needs take a position above all other needs. Hence, basic needs and
security needs have the power to motivate a consumer to buy products and services.
2. Perception Customer perception is a process where a customer collects information
about a product and interprets the information to make a meaningful
image about a particular product. When a customer sees advertisements or promotions,
customer reviews, social media feedback, etc. relating to a product, they develop an
impression about the product.

Three Perceptual Processes

a. Selective Attention It's estimated that the average person may be exposed to
over 1,500 ads or brand communications per day. Because we cannot
possibly attend to all these, we screen most stimuli out—a process called
selective attention. Selective attention means that
Marketers must work hard to attract consumers' attention.
b. Selective Distortion Selective distortion is the tendency to interpret
information in a way that fits our preconceptions. Consumers will often
distort information to be consistent with prior brand and product beliefs and
expectations.
c. Selective Retention Most of us don't remember much of the information to
which we're exposed, but we do retain information that supports our
attitudes and beliefs. Because of with selective retention, we're likely to
 remember good points about a product we like and forget good points about
competing products. Selective retention again works to the advantage of
strong brands.

3. Learning In conditional learning, the consumer is exposed to a situation repeatedly,

thereby developing a response towards it. Whereas in cognitive learning, the consumer
will apply his knowledge and skills to find satisfaction and a solution in the product that
he buys
4. Beliefs and Attitude Consumers have certain attitudes and beliefs, which influence their
buying decisions. Based on this attitude, the consumer behaves in a particular way
toward a product. This attitude plays a significant role in defining the brand image of a
product. Hence, marketers try hard to understand the attitude of a consumer to design
their marketing campaigns.

Cultural Factors

a. Culture Cultural factors include the basic values, needs, wants, preferences,
perceptions and behaviors that are observed and learned by a consumer from their near
family members and other important people around them.
b. Sub-culture Within a cultural group, there are many subcultures. These subcultural
groups share the same set of beliefs and values. Subcultures can consist of
people from different religions, castes, geographies, and nationalities. These subcultures
by themselves
form a customer segment.
c. Social Class The social class is not just determined by the
income, but also other factors such as occupation, family background,
education and residence location. Social class is important to predict the
consumer behavior.
Social Factors

a. Family plays a significant role in shaping a person's buying behavior. A person

develops preferences from his childhood by watching his family buy products and
continues to buy the same products even when they grow up.
b. Reference Group includes individuals or groups that influence our opinions,
beliefs,
attitudes and behaviors. They often serve as our role models and inspiration.
Marketers view reference groups as important because they influence how
consumers interpret information and make purchasing decisions. Reference
groups can be divided into two major types

i. A normative reference group influences your norms, attitudes, and

values through direct interaction. Examples of your normative
reference groups include your parents, siblings, teachers, peers,
associates and friends.
ii. A comparative reference group is a group of individuals whom you
compare yourself against and may strive to be like. Examples include
celebrities and heroes.

c. Role and Status A person is influenced by the role that he holds in society. If a
person is in a high position, his buying behavior will be largely influenced by his
status. A person who is the Chief Executive Officer of a company will according
to his status, while a staff member or an employee of the same company will have
a different buying pattern.
 MARKET SEGMENTATION

 Market Group of people with sufficient purchasing power, authority, and willingness
to buy.

 Target market Specific group of people to whom a firm decides to direct its marketing
efforts and ultimately its goods and services.

Example:

1. Market – Students of Mabalacat City College

Target Market – All IBE Students

2. Market – Females in Mabalacat City

Target Market – Working Females in Mabalacat City

3. Market – Employees in NCR

Target Market – Employees with body odor in NCR

Target Market - Employees with private car in NCR

THE ROLE OF MARKET SEGMENTATION

• With 7.4 billion people in the world and 102 million in the Philippines, there are too many
potential customers to attract with a single marketing mix.

Market segmentation Division of the total market into smaller, relatively homogenous
groups.

Market segmentation is a marketing strategy which involves dividing a broad target

market into subsets of consumers, businesses, or countries that have, or are perceived to
have, common needs, interests, and priorities, and then designing and implementing
strategies to target them

CRITERIA FOR EFFECTIVE SEGMENTATION

• Segment must have measurable size and purchasing power.

• Marketers must find a way to promote effectively to and serve the market segment.

• Segment must be sufficiently large to offer good profit potential.

• Firm must aim for segments that match its marketing capabilities.
SEGMENTING CONSUMER MARKETS

• Geographic segmentation.

• Demographic segmentation.

• Psychographic segmentation.

• Behavioral Segmentation

GEOGRAPHIC SEGMENTATION

Geographic segmentation calls for dividing the market into different geographical units
such as nations, states, regions, countries, cities, or neighbourhoods.

The company can operate in one or a few areas, or operate in all, but pay attention to
local variations.

Example : Disney

DEMOGRAPHIC SEGMENTATION

In demographic segmentation, we divide the market into groups on the basis of

variables such as:

Age Education

Gender Nationality

Family Size Generation

Family Life Cycle Race

Income Religion

Occupation
PSYCHOGRAPHIC SEGMENTATION

In psychographic segmentation, buyers are divided into different groups on the basis
of psychological/personality traits, lifestyle, or values.

• Social Class : Class A, Class E

• Lifestyle: Achievers, Strivers, Strugglers

• Personality: Compulsive, Gregarious,

Authoritarian, Ambitious

BEHAVIORAL SEGMENTATION

In behavioural segmentation, marketers divide buyers into groups on the basis of their
knowledge of, attitude toward, use of, or response to a product.

Occasions Attitude

Benefits Loyalty Status

User Status Usage Rate

Buyer Readiness Stage

TARGET MARKETING

It involves three major steps:

1. Market Segmentation which is dividing a market into distinct groups of buyers with
different needs, characteristics, or behaviours who might require separate products or
marketing mixes.

2. Market Targeting which is evaluating each market segment’s attractiveness and

selecting one or more of the market segments to enter.

3. Market Positioning which is setting the competitive positioning for a product and
creating a detailed marketing mix

Niche Marketing

• A niche is a more narrowly defined customer group seeking a distinctive mix of

benefits.

• Example: There are only 50 who uses double bass instrument in the country.

Individual Marketing

 The ultimate level of segmentation leads to "segments of one," "customized marketing,"

or "one-to-one marketing."

 A company is customized when it is able to respond to individual customers by

customizing its products, services, and messages on a one-to-one basis.

Example: Individual Marketing