MN3141

MARKETING MANAGEMENT
Ch 3 THE MARKETING ENVIRONMENT

Mabel Tan

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Aims
This topic aims to:
q identify the different elements of the marketing environment
q describe and distinguish between the marketing environment’s elements
q distinguish between the terms customer, client and consumer and
highlight the implications for marketers
q provide a framework for assessing stakeholders.

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Learning Outcomes
By the end of this chapter, and having completed the Essential reading and
activities, you should be able to:
q explain the difference between the micro and macro-environment of a
firm
q describe how the different elements of the micro and macro-environment
affect firms’ marketing activities
q explain the difference between the terms consumer, client and customer
and understand the debate surrounding the use of these terms in certain
professions
q outline the basis on which marketers prioritise certain stakeholders over
others.

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Pre-Class Reading
Kotler, P. and G. Armstrong Principles of marketing. (Harlow: Pearson,
2015)

Chapter 3, ‘Analyzing the Marketing Environment’, especially focused on

the sections under ‘The Microenvironment and Macroenvironment’.

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The Marketing Environment
q All the actors and forces influencing the company’s ability to
transact business effectively with its target market.
Includes:
q Microenvironment - forces close to the company that affect its
ability to serve its customers.
q Macroenvironment - larger societal forces that affect the
whole microenvironment; ie., uncontrollable, pervasive.

(Kotler & Armstrong 2018, p.92)

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 Competitors Employees
Micro

Intermediaries Publics

Macro
 Macroenvironment

Forces that shape opportunities or pose threats to the company

Environmental Forces
Forces that shape opportunities or pose threats to the company
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Which
macroenvironmental
force / trend?

Economic

https://www.channelnewsasia
.com/singapore/recession-
fears-businesses-singapore-
bracing-troubled-times-ahead-
2708631
Demographic
Which
macroenvironmental
force / trend?

What key trends in SG

/ developed world?

The study of human

populations in terms of size,
density, location, age, gender,
race, occupation and other
statistics

Reasons:
• People make up
markets
• The major demographic
characteristics and
trends affect the market. https://www.fytconsultants.com/single-post/singapore-in-numbers-the-
singapore-population-census-2020-population-size-trends
Which macroenvironmental
force / trend?

THE

CLIMATE

CHALLENGE

Sources:
Above: Euromonitor
Top right: https://foreignpolicy.com/2019/04/10/the-kids-are-taking-charge-of-climate-change/
Bottom right: https://www.theguardian.com/environment/2019/feb/21/belongs-in-a-museum-greta-
thunberg-condemns-politician-against-school-strike
Which
macroenvironmental
force / trend?

What other key trends

in SG / developed
world?

https://www.channelnewsasia.com/singapore/freshly-prepared-drinks-nutri-
grade-nutrition-label-2023-sugar-fat-content-2873951
Which
macroenvironmental
force / trend?

What other key trends

in SG / developed
world?

https://www.businessinsider.com/chatgpt-jobs-at-risk-replacement-artificial-
intelligence-ai-labor-trends-2023-02
Microenvironment

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

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The Company
q Marketing management
needs to take other company
groups into account in designing
marketing plans.
q All interrelated groups within
company form its internal
environment.

(Kotler & Armstrong 2018, p.93)

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 The Company’s
Microenvironment

How do we determine competitors?

Concept of product category (Ch 8) –
substitutability / as viable alternatives

(Kotler & Armstrong 2018, p.93-95)

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 * Marketing Intermediaries are inter-
changeable / synonymous with
Distribution Channels / Partners

(Kotler & Armstrong 2018, p.93-95)

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
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Microenvironment - Publics

(Kotler & Armstrong 2018, p.95)

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
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Applying Concepts to Real-World Contexts (PYP) – for discussion ONLY
2018 Zone A
Camera manufacturer A considers smartphones among its competitors. Camera
manufacturer B does not do this. Both A and B make digital cameras, which compete with
each other. Which of the following approaches may be more consistent with marketing
concept? You should state any assumptions in your answer. (10 marks)

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Customers, Consumers
or Clients?
THE DISTINCTIONS BETWEEN THEM

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Customers, Consumers or
Clients?
Consumers
For own use

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 Customers, Consumers or
Clients?
Consumers VS Business Buyers
Type of
Purchase For own use For purpose of them selling to
consumer markets

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 Customers, Consumers or
Clients?
Consumers VS Business Buyers
Type of
Purchase For own use For purpose of them selling to
consumer markets
VS

Customers
Power to
decide on Who actually pays for purchases
Purchase High bargaining power – decides
what they need / want
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 Customers, Consumers or
Clients?
PURPOSE Consumers Business Buyers
VS
For own use For purpose of them selling to
consumer markets

VS

Customers Clients
BARGAINING VS Who pays for professional services
POWER Who actually pays for purchases
High bargaining power – decides Low bargaining power due to need
what they need / want for specialised knowledge

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Stakeholders
Definition: by R. Edward Freeman, 1984, p.46

Stakeholders is defined as “any group or individual who can affect or is

affected by the achievement of an organisation’s objectives”.

What is the connection between stakeholders and the concept of

microenvironment we have just covered?

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Stakeholder Attributes

How to identify the important stakeholders (Attributes):

by Ronald Mitchell et al. (1997)

They suggested that stakeholders should be classified based on whether

they have or perceived to have any of the following attributes:

1. Power
- The stakeholder’s ability to influence the focal firm’s behaviour.
- The stakeholder can get another party to do something that this
party would not have otherwise done so.

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 Stakeholder Attributes
2. Legitimacy of their claim
q The stakeholder’s social standing or acceptability of its claims – socially
constructed based on wide societal norms or expectations.
q It represents the belief that the actions of a stakeholder is desirable or
appropriate within the company’s accepted level.

3. Urgency of their claim

q It represents the degree to which stakeholder claims are time
sensitive and are important to the stakeholder.
q It may involve criticality and marketer’s delayed response may not be
acceptable.

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Salience – the degree of priority given

Four Categories of stakeholders: by Mitchell et al. (1997)

1. Latent stakeholders

q It involves only one of any of the three attributes (power, legitimacy or

urgency).
q Marketers’ response to this group of stakeholders: They may not be
aware of the existence of this group or the latent power / influence of
this group. Given that, marketers may ignore this group of
stakeholders.

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Salience

2. Discretionary stakeholders

q Stakeholders who only has legitimacy (specifically).

q They have no power to influence the marketers and they also do not
have any urgent claims.
q Though marketers can choose to actively engage in the relationship
with these stakeholders, they do not feel any need to do so.
q E.g. charitable or arts organizations

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Salience

3. Expectant stakeholders
q Stakeholders have two of the three attributes.
q They tend to take an active approach and may expect something from
marketers.
q Types of stakeholders with two attributes:

a. Dominant stakeholders
§ They have power and legitimate standing, but no urgent claims; eg,
share investors
§ Marketers tend to use public relations as a mean to build relationship
with these stakeholders.
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Salience

b. Dependent stakeholders
§ They are legitimate and have urgent claims, but have no power to
enforce their will.
§ They rely on other groups to help them execute their claims. For
example, the use of media or pressure group.

c. Dangerous stakeholders
§ They have power and urgent claims, but no legitimate standing.
§ For example, some aggressive groups may use force to push
companies to discontinue the sale of their products or services.

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Salience

4. Definitive stakeholders

q Stakeholders have all the three attributes.

q Some of these stakeholders were dominant stakeholders (with
two attributes) and they are now the definitive stakeholders (with
three attributes).

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 Stakeholders - Summary
Attributes Salience (Priority)
1) Power 1 of 3 attributes: (a) Latent stakeholders

2) Legitimacy Only Legitimacy: (b) Discretionary stakeholders

2 of 3 attributes: (c) Expectant stakeholders

3) Urgency i) Dominant: Power + Legitimacy
ii) Dependent: Legitimacy + Urgency
iii) Dangerous: Power + Urgency

All 3 attributes: (d) Definitive stakeholders

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Applying Concepts to Real-World Contexts (PYP) – for discussion ONLY
2021 Zone A Question 3
Bristol Myers Squibb is a global biopharmaceutical business. They say the following
about their promotions:
“We promote the appropriate use of our products directly to healthcare professionals
and organizations such as doctors, nurse practitioners, physician assistants, pharmacists,
technologists [and] hospitals … We also provide information about the appropriate use
of our products to consumers in the U.S. through direct-to-consumer print, radio,
television and digital advertising and promotion. In addition, we sponsor general
advertising to educate the public about our innovative medical research and corporate
mission.”
Source: Bristol Myers Squibb. Accounts for the fiscal year ended December 31, 2017
Can you identify the different elements of the microenvironment/stakeholders
mentioned in the above question?
What exchanges do you think they are involved in with Bristol Myers Squibb?
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Applying Concepts to Real-World Contexts (PYP) – Revise; Discussion and Essay
Assignment in class
2022 Zone B
Question 7

Energy companies in some countries are under pressure to sell businesses they own
which are involved in the extraction, refining and sale of oil and gas products.

a) Identify and describe four different stakeholders whose interests the energy companies
may need to address. (10 marks)

b) For three of these stakeholders analyse how power, legitimacy and urgency could be used to assess
their salience to the energy companies. (15 marks)

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Process Skill – The Steps
Step 1: identify the question focus – key words and requirements of
the question – highlight the key words / what is the question focus?

Step 2: identify the key topics / concepts for the terms involved –
which topic / concepts does this include?

Step 3: structure your essay to link the question focus through the
key concepts - how will you structure your response?
*good to use paragraphs and headers

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Planning – Questions to Consider
WHAT is the concept – state / explain concept (understanding) as part of,
HOW is it relevant / important - explain directly how concept is applied to
the question or case scenario
WHY is it important to marketers – (your analysis / advantages); what does
this mean for marketers (whenever relevant / important)

Critical analysis / thinking:

** What are the possible disadvantages and/or pitfalls?

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Compare / Contrast
2019 Zone B
A private oil company which drills for oil in the sea has an accident. The oil spillage reaches the shore of a
nearby country and damages the local ecosystem as well as the fishing stocks of the local fishermen.
a) Identify the stakeholders (members of the micro-environment) who will be affected by this event and
give reasons for your selection. (10 marks)
b) Evaluate how the marketer should respond to one group of stakeholders affected by the above
accident, using the following concepts. State any assumptions you make.
i. Power (5 marks)
Ii. Legitimacy (5 marks)
Iii. Urgency (5 marks)

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