Chapter 5:

THE MARKETING ENVIRONMENT

Assistant Professor: Mr. Ahmad Nabi “Nayel”
LEARNING OBJECTIVES
• Micro environment
• The company itself
• Suppliers, Marketing channel firms (intermediaries), Customer markets, Business
Markets and Competitors.
• Macro-environment
a. Demographic.
b. Economic.
c. Natural.
d. Cultural
f. Political.
e. Technological
The Micro-Environment
• The micro-environment refers to the forces that are close to the
company and affect its ability to serve its customers. It influences the
organization directly. It includes the company itself, its suppliers,
marketing intermediaries, customer markets, competitors, and the public.
 Micro environment
The company:
•The microenvironment consists of five components.
The first force is the company itself and the role it plays
in the micro environment.
•Top level managers are responsible for plans and
strategies making…

•All the level of mangers must co-operate with in the

organization so that to achieve the desired result.
•All the managers and all the departments are
combining together to make internal environment.
 Micro Environment Cont’d
b. Suppliers
Suppliers are firms and individuals that provide the resources
needed by the company and its competitors to produce goods
and services.
• They can effects marketing very seriously in the way when,
supply shortages or delays occurs, and other problem can
suffer sales in short run but customer satisfaction in long run.
c. Competitors
Are the firms selling the same products or services that are sold
by you.
To compete with your competitor, you must use competitive
advantage and you have to use differentiation.
 Micro Environment Cont’d

d. Marketing Intermediaries
Marketing intermediaries are firms that help the company to promote, sell,
and distribute its goods to final buyers.

• Physical distribution is the set of activities concerned with efficient

movement of finished goods from the end of the production operation to
the consumer.

• Marketing service agencies (such as marketing research firms,

advertising agencies, marketing consultants etc.) help the company target
and promote its products.

• Financial intermediaries (such as banks, insurance companies, etc.)

help finance transactions and insure against risks.
 Micro Environment Cont’d
e. Customers
The company must study its customer markets closely since each
market has its own special characteristics. These markets normally
include:
1). Consumer markets (individuals and households that buy goods and
services for personal consumption).

2). Business markets (buy goods and services for further processing or
for use in their production process).

3). Reseller markets (buy goods and services in order to resell them at a
profit).

4). Government markets agencies that buy goods and services in order
to produce and provide public services or transfer them to those that
need them.

5). International markets (buyers of all types in foreign countries).

 Macro Environment
Within the rapidly changing global picture, the firm must monitor six major
forces:
- Demographic
- Economic
- Natural
- Technological
- Political-Legal
- Socio-Cultural

Marketers must pay attention to their interactions, because these will lead
to new opportunities and threats.
E.g. Explosive population growth (demographic) leads to more resource depletion
and pollution (natural), which leads consumers to call for more laws (political-
legal), which stimulate new technological solutions and products
(technological), which, if they are affordable (economic), may actually change
attitudes and behavior (socio-cultural).
 DEMOGRAPHIC ENVIRONMENT
The first macro-environmental force that marketers monitor is population,
because people make up markets.

Marketers are keenly interested in the size and growth rate of population in cities,
regions, and nations; age distribution and ethnic mix; educational levels;
household patterns; and regional characteristics.

WORLDWIDE POPULATION GROWTH

The world population is showing explosive growth: the current world population is
7.9 billion( 2022) and will exceed to 8 billion according to UN by the year 2023.

It has been a source of major concern for two reasons:

- Fact that certain resources needed to support this much human life (fuel, foods,
and minerals) are limited and may run out at some point of time. It would
eventually result in insufficient food supply, depletion of key minerals,
overcrowding, pollution, and overall deterioration in quality of life.
 POPULATION AGE MIX
National populations vary in their age mix.

E.g. At one extreme is Mexico, a country with a very young population and
rapid population growth. At the other extreme is Japan, a country with one
of the world’s oldest population.

Milk, diapers, school supplies, and toys would be important products in

Mexico; whereas Japan’s population would consume many more adult
products.

A population can be subdivided into six age groups: pre-school, school-age

children, teens, young adults age 25 to 40, middle-age adults age 40 to 65,
and older adults age 65 and up.
For marketers, the most populous age group shape the marketing
environment.
ETHNIC AND OTHER MARKETS

Countries also vary in ethnic makeup.

E.g. At one extreme is Japan, where almost everyone is Japanese and the
other extreme is U.S.A. where people have virtually come from all nations.

Japan, where one ethnicity rules; USA is called as the Salad Bowl with
different ethnic groups maintaining their ethnic differences, neighborhoods
and cultures.

Each group has certain specific wants and buying habits. Several food,
clothing and furniture companies have directed their products and
promotions to one or more of these groups. Within each ethnic group are
consumers who are quiet different from each other.
EDUCATIONAL GROUPS

The population in any society falls into different educational groups:

illiterates, high school dropouts, high school certificates, college degrees
and university degrees.
E.g. In Japan, 99% of the population is literate, whereas in the USA 10 to
15% of the population is functionally illiterate.
High population of literate demand more quality books, magazines,
travel and a high supply of skills.

HOUSEHOLD PATTERNS

The traditional household consists of a husband, wife and children (and

sometimes Grandparents). Yet, in the USA today, one out of eight
households is diverse or non- traditional and include single live-alones, adult
live-togethers, single parent families, childless married couples.
 ECONOMIC ENVIRONMENT

The markets require people as well as

purchasing power. Marketers must pay a close
attention to major trends in income and
consumer-spending patterns.

The available purchasing power in an economy

depends on current income, prices, Savings
etc.
 ECONOMIC ENVIRONMENT Cont’d

E.g. Market for Lamborghinis, an automobile costing more than $150,000.

The market would be very small in countries with very low income.
But, one of the largest single market for Lamborghinis turns out to be
Portugal (income pattern 3); one of the poorer countries in Western
Europe, but one with enough wealthy families to afford expensive cars.
 NATURAL ENVIRONMENT

The deterioration of the natural environment is a major global concern. In

many worlds cities, air and water pollution have reached dangerous levels.

New regulations have hit certain industries very hard.

- Steel companies have to invest billions of dollars in pollution control

equipment and more environment friendly fuels.
- Auto industry has to introduce expensive emission controls in cars.
- Other industries have to increase its products’ biodegradability.
 TECHNOLOGICAL ENVIRONMENT

One of the most dramatic forces shaping people’s lives is technology.

Even though technology has released wonders as open-heart surgery etc. It

has also released horrors as the hydrogen bomb, nerve gas and the
submachine gun.

ACCELERATING PACE OF CHANGE

Many of todays common products were not available 50 years ago like
personal computers, digital wristwatches, video recorders and scanners etc.
Technology is fast pacing into the world with its finest creations.
 POLITICAL-LEGAL ENVIRONMENT
LEGISLATION REGULATING BUSINESS
Business legislations has three main purposes:
- To protect companies from unfair competition.
- To protect consumers from unfair business practices.
- To protect the interests of society from unethical business behavior.
E.g. The European Commission has been active in establishing a new
framework of laws covering competitive behaviour, product standards,
product liability, And commercial transactions for the 15 member nations of
the European Union.
 SOCIAL-CULTURAL ENVIRONMENT

Society shapes our beliefs, values, and norms.

The socio-cultural environment may be defined as all the social

surroundings that affect the growth and operation of a business. It is
made up of social institutions, social class, beliefs, values, accepted patterns
of behavior, customs of the people, and their expectations.).
Thank You