CHAPTER 3

MARKETING
ENVIRONMENT
Prepared by: Kristel Anne P. Juliano
BSHM 1-2N
MICRO
ENVIRONMENT
THE COMPANY
The company plays a crucial role in the microenvironment, exerting a
profound influence on the other factors within its vicinity. Its objectives,
tactics, and resources shape its interactions with suppliers, distributors, and
customers, ultimately determining its level of competitiveness amidst other
market players.

EXAMPLE: Procter and Gamble (P&G)

Procter & Gamble is one of the world’s

leading markers of consumer products. With
billion in sales, P&G has a reputation for
excellence in marketing. It is a company
whose leaders have assured its enduring
success by continually reaffirming and
communicating its core values.
SUPPLIERS
A supplier, whether an entity or an individual, is of utmost importance in the
realm of business operations as they provide the necessary goods or services required by a
company. It is crucial to establish a strong and harmonious relationship between a
company and its suppliers to ensure seamless and efficient business operations. The
selection of suppliers holds substantial influence over critical factors such as product
quality, pricing, and overall market competitiveness.

EXAMPLE: Nippon Shokubai Company Ltd.

P&G works with a wide range of suppliers to source materials for its diverse product portfolio. Among P&G's
more than 80,000 suppliers, six received the honor of being named "Supplier of the Year", including Nippon
Shokubai Company Ltd. It manufactures and sells basic and fine chemicals, synthetic resins, and catalysts.
The Company's products include acrylic acid, super absorbent polymers, and automobile catalysts. Nippon
Shokubai exports to Germany, US, and Singapore.
 MARKETING
INTERMEDIARIES
Marketing Intermediaries play a crucial role in the marketing industry by
connecting producers and consumers through their third-party services.
These intermediaries, such as wholesalers, retailers, and distributors, are
responsible for presenting products to the end consumer and ensuring
the smooth distribution of goods.
EXAMPLE: Wholesalers and Retailers

P&G typically works with various marketing intermediaries such as retailers and distributors to bring its
products to consumers. For example, major retail chains like Walmart or online platforms like Amazon may
serve as key marketing intermediaries for P&G, helping distribute and sell a wide range of their consumer
goods.

COMPETITORS
Johnson &
Johnson
Johnson & Johnson is a diversified
healthcare and consumer goods
company that competes with P&G,
particularly in areas such as baby
care, skincare, and over-the-
counter pharmaceuticals.
Competitors in the marketing environment are other
businesses or organizations that provide similar
products or services and compete for the same group
of customers as a particular company.
Unilever Colgate-
Unilever is a multinational Palmolive
consumer goods company
Colgate-Palmolive is a major
that competes with P&G in
competitor for P&G in the oral
various product categories
care and personal care segments.
such as personal care,
Colgate competes with P&G's oral
home care, and food
care brands, such as Crest, and
products.
personal care products.
Publics are groups or audiences that have a strong

PUBLICS
interest or influence on a company's ability to achieve
its goals. These publics can consist of customers,
employees, investors, government organizations, and
the media.

FINANCIAL PUBLICS
Financial publics are individuals or groups who are directly invested in a company's
financial success, such as shareholders, investors, analysts, and creditors.
EXAMPLE: The Vanguard Group, Inc.
The Vanguard Group, Inc. provides investment management and advisory services.
Vanguard owns the most shares of Procter & Gamble (PG), with 9.109 % shares.

MEDIA PUBLICS
Media publics in the marketing environment are the different communication channels,
such as newspapers, television, and online platforms.

EXAMPLE: Twitter, Facebook, and Youtube

While P&G has produced 20 soap operas for radio and TV over the years, the ratings for
these daytime dramas have been steadily falling. P&G is following its audience to YouTube,
Twitter and Facebook and discovering that social media is a more efficient way to promote
its products and connect with consumers.
GOVERNMENT PUBLICS
Government publics in the marketing environment are entities such as regulatory bodies,
legislative institutions, and government agencies that have the power to influence and
control a company's business activities and marketing strategies.

EXAMPLE: Susan Street Whaley

Susan Street Whaley leads P&G's global legal organization of approximately 500 people who
are responsible for a broad scope of legal, compliance, government relations, public policy and
brand protection functions for all of P&G and its employees, globally.

CITIZEN ACTION PUBLICS

Citizen-action publics in the marketing environment represent groups or individuals who

actively seek to influence a company's actions and decisions through advocacy, activism, or
public pressure.

EXAMPLE: Environmental Advocacy Groups or Organizations

Environmental advocacy groups or organizations focusing on sustainability, which may

actively engage with P&G to influence and encourage environmentally responsible practices in
the production and packaging of its products.
LOCAL PUBLICS

Local publics in the marketing environment are individuals and groups that are located near
a company, like local communities and neighborhoods. These people's interests and
concerns can affect the company's operations and reputation within the local area.

EXAMPLE: Residents and Community Organizations

The residents and community organizations in the vicinity of one of P&G's manufacturing
facilities, where local environmental concerns or employment practices may directly
impact the company's relationship with the community.
 CUSTOMERS
Customers are the individuals or groups
who buy and use a company's products EXAMPLE: Individuals and Households
or services. They have a significant
impact on market demand and the Customers for Procter & Gamble (P&G) include
individuals and households worldwide who
success of a business. It is important for
purchase and use P&G's diverse range of
companies to understand their consumer goods. This encompasses products
customers' needs, preferences, and such as personal care items, cleaning products,
behavior in order to create successful and other household goods under various well-
known brands like Pampers, Tide, and Crest.
marketing strategies and stay ahead of
competitors.
MACRO
ENVIRONMENT
DEMOGRAPHIC
ENVIRONMENT
Demographic Environment involves studying population characteristics like
age, gender, income, education, and family structure, which have a significant
impact on consumer behavior and market trends. Businesses must
understand these factors to customize their marketing strategies for different
consumer groups.

EXAMPLE: Women aged 18 to 35

P&G has credited a shift from “generic demographics” to “smart audiences” with helping
improve the effectiveness of its marketing and its innovation pipeline. According to CEO David
Taylor of P&G, they are going from generic demographic targeting, like women aged 18 to 35, to
more than 350 precise smart audiences, like first-time mums, millennial professionals or first-
time washing machine owners, to help them reach the right people at the right time, in the right
place.
 ECONOMIC
ENVIRONMENT
The Economic Environment refers to the overall economic conditions and factors
that affect consumer spending, purchasing power, and market dynamics. This
includes inflation, employment, interest rates, and economic growth, which greatly
influence businesses' strategies and market performance.

EXAMPLE: Economic Growth

The Procter & Gamble Company’s performance in the consumer goods industry is based on the
economies where the business operates. The opportunity linked to the high growth rate of
developing markets supports Procter & Gamble’s potential growth. For example, increasing
penetration into developing countries can drive the company’s overall global growth.
Economic Factors in the marketing environment are the economic
conditions and forces that can affect a business's operations,
performance, and consumer behavior. These factors include things like
inflation rates, interest rates, exchange rates, economic growth or
recession, and employment levels.

EXAMPLE: Consumer’s Behavior

Procter and Gamble’s business gets affected when the market

changes be it anywhere across the world. Higher the disposable
CHANGES IN
income, the better it is for the company since more of its product will
be sold. Majority of its income comes from North America. With any CUSTOMER
SPENDING
changes in the policies relating to income, there will be a sharp
change in consumption of necessity goods. It may be higher or lower
depending upon the new policy. The second largest contributor is
Europe, followed by Asia, both of which are a mixture of developed
and developing countries, which shows the effect of disposable
income increase helps boost sales.
INCOME
DISTRIBUTION
Income Distribution refers to how a country's total income is split among
its people, showing the proportion of earnings received by different
groups or individuals. It reveals the economic disparities and inequalities
within a society, demonstrating how wealth is spread across different
income levels.

EXAMPLE: Consumer’s Behavior

Procter & Gamble's operating income worldwide from 2012 to 2023. In 2023, its global operating
income reached about 18.1 billion U.S. dollars. P&G effectively uses the channels of distribution
to run its operations, and it established powerful distribution network, which includes
manufacturing firms, distributors, retailers, consumers, and so on. However, (P&G) income
distribution among its employees or stakeholders are not readily available in public sources.
 NATURAL
ENVIRONMENT
The Natural Environment includes the climate, weather, resources, and ecological
factors that surround a company. It is important for businesses to understand and
adjust to the natural environment since it can impact product creation, sourcing, and
the overall sustainability of operations.

EXAMPLE: Company’s Sustainability Efforts

1. Sustainable Sourcing: P&G may consider the environmental impact of raw material sourcing,
aiming for sustainable and responsible practices.
2. Product Packaging: The company may be working on reducing its environmental footprint
through eco-friendly packaging materials and designs.
3. Energy Efficiency: P&G likely invests in energy-efficient technologies and practices to minimize
its environmental impact during manufacturing and distribution processes.
4. Waste Reduction: P&G may have initiatives to reduce waste generation and increase recycling
efforts within its operations.
 TECHNOLOGICAL
ENVIRONMENT
The Technological Environment in business refers to the external factors, such as
advancements and innovations in technology, that can affect how an organization
operates and strategizes. This environment includes factors like the speed of
technological change, research and development, automation, and the adoption
of new technologies by the industry and society.

EXAMPLE: Technological Trends

P&G is likely to be influenced by ongoing technological trends and innovations in the

consumer goods industry. Potential aspects of P&G's technological environment could
include investments in research and development, the adoption of automation in
manufacturing processes, advancements in packaging technology, and the integration of
digital technologies in marketing and distribution.
 POLITICAL AND SOCIAL
ENVIRONMENT
The Political and Social Environment in
a business context includes the impact
of government policies, regulations,
and stability, as well as societal and
cultural factors that shape consumer
attitudes and behaviors. Both political
and social factors play significant roles
in shaping the business landscape and
influencing strategic decision-making.
EXAMPLE: Trade Policies and Cultural Trends
P&G operates globally, and political regulations
and policies in different countries can affect its
business activities. Changes in international trade
agreements and tariffs may also impact P&G's
supply chain and distribution. In social factors,
P&G may consider cultural preferences and trends
when marketing its products globally. Increasing
consumer awareness and demand for socially
responsible practices may also influence P&G's
sustainability efforts.
 CULTURAL
ENVIRONMENT
The Cultural Environment in business means the way people and
communities think, act, and make choices about things they buy.
It includes things like what people believe, how they live, what language
they speak, and the overall culture that affects how people buy things
and how companies market to them.

EXAMPLE: Dynamic Cultural Environment

Being a large and successful consumer goods company, P&G likely recognizes and adapts to the dynamic
cultural environment in the various regions where it operates. Companies of this scale typically strive to
understand and embrace cultural diversity to effectively market their products and connect with
consumers.