BA (HONS) BUSINESS AND

MANAGEMENT
FROM UNIVERSITY OF
NORTHAMPTON- UK

PRINCIPLES OF MARKETING
SESSION 4
ANALYZING THE MARKETING
ENVIRONMENT

Marketing
Environment

Macroenvironment Microenvironment
MARKETING ENVIRONMENT
 Marketing Environment—
The actors and forces outside marketing that affect marketing
management's ability to build and maintain successful
relationships with target customers

Ex: as technology changes, competitors come out with radical

innovations, customer needs and preferences evolve, and other
fundamental changes occur, companies must evolve and change as
well or risk being left behind
MARKETING ENVIRONMENT
 Microenvironment —The actors close to the
company that affect its ability to serve its
customers — the company itself, suppliers,
marketing intermediaries, customer markets,
competitors and publics

 Macroenvironment—The larger societal

forces that affect the microenvironment —
demographic, economic, natural,
technological, political and cultural forces.
MICROENVIRONMENT

Company

Competitors Publics

Marketing

Marketing
intermedi Customers
aries

Suppliers
MICROENVIRONMENT
 The company
 Groups such as top management, finance, research and development (R&D),
purchasing, operations and accounting
 Top management sets the company’s mission, objectives, broad strategies
and policies. Marketing managers make decisions within the strategies and
plans created by top management
 Inter – departmental relationships are very important, since the functions of
other departments impact on marketing department and its operations
MICROENVIRONMENT
 Suppliers
 Most marketers today treat their suppliers as partners in
creating and delivering customer value
 L’Oréalknows the importance of building close relationships with
its extensive network of suppliers, which supply everything from
polymers and fats to spray cans and packaging to production
equipment and office supplies
MICROENVIRONMENT
 Marketing Intermediaries
 Help the company promote, sell and distribute its products to final buyers
 Resellers - help the company promote, sell and distribute its products to final buyers

 Physical distribution - Firms help the company stock and move goods from their points of

origin to their destinations

 Marketing services agencies - are the marketing research firms, advertising agencies, media

firms and marketing consulting firms that help the company target and promote its products

to the right markets

 Financial intermediaries - banks, credit companies, insurance companies, and other

businesses that help finance transactions or insure against the risks associated with the

buying and selling of goods

MICROENVIRONMENT
 Competitors
 Each firm should consider its own size and industry position
compared to those of its competitors
 A company needs to offer greater customer value and satisfaction
than its competitors
 Thus addressing the needs and wants of target customers is a must
for marketing
MICROENVIRONMENT
 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. This group influences the company’s ability to

obtain funds. Banks, investment analysts and shareholders are the
major financial publics.
 Media publics. This group carries news, features and editorial
opinion. It includes newspapers, magazines, television and radio
stations, and blogs and other social media.
 Government publics. Management must take government
developments in a country into account, as well as regulatory
bodies within international groupings of countries like the European
Union.
MICROENVIRONMENT
 Citizen-action publics. Consumer organisations, environmental groups, minority groups, and
others may question a company’s marketing decisions. Its public relations department can
help it stay in touch with consumer and citizen groups.
 Local publics. This group includes neighborhood residents and community organizations.
Large companies usually create departments and programmes that deal with local community
issues and provide community support.
 General public. A company needs to be concerned about the general public’s attitude toward
its products and activities. The public’s image of the company affects its buying.
 Internal publics. This group includes workers, managers, volunteers and the board of
directors. Large companies use newsletters, social media, blogs, and other means to inform
and motivate their internal publics. When employees feel good about the companies they
work for, this positive attitude spills over to the external publics.
MICROENVIRONMENT
 Customers
 Most important actors of a company
 Consumer markets consist of individuals and households that buy goods
and services for personal consumption.
 Business markets buy goods and services for further processing or use in
their production processes, whereas reseller markets buy goods and
services to resell at a profit.
 Government markets consist of government agencies that buy goods
and services to produce public services or transfer the goods and
services to others who need them.
 International markets consist of these buyers in other countries,
including consumers, producers, resellers and governments
MACROENVIRONMENT
 Demographic
 Economic
 Natural
 Technological
 Political
 Cultural
MACROENVIRONMENT
 Demographic Environment
Study of human populations in terms of size, density,
location, age, gender, race, occupation, and other
statistics
Analyze changing age and family structures, geographic
population shifts, educational characteristics and
population diversity
MACROENVIRONMENT
 Demographic Environment
World population growth
The changing ages structure of the world’s population

For example, India has one of the youngest population profiles in the world – more than 70%
of the population is under 35. In 2020, the median age in India is 29, compared to 38 in
China, 38 in the United States, 44 in western Europe and 48 in Japan
MACROENVIRONMENT
 Demographic Environment
Generational differences in the developed world
 Baby boomers - People born in the years following World War II
until 1964
 Generation X - People born between 1965 and 1975 in the ‘birth

dearth’ following the post-War baby boom

 Millennials (Generation Y) - The children of the baby boomers

born between 1977 and 2000

 Generation Z - People born 2000 (although many analysts

include people born after 1995) who make up the ‘kids, tweens
and teens’ markets.
MACROENVIRONMENT
 Demographic Environment
Changing family structure
 New household formats
 Singletons – people living alone
 Starting Out Singletons – younger People who own or rent and are reasonably
affluent
 Struggling singletons: 18 – 25 years old, the least affluent and unlikely to own
home or car
 Suddenly Singletons – affluent executives in their early 40s with high incomes,
probably divorced, who eat out regularly and have a busy lifestyle
 Solus Singletons – mainly elderly people living on private pensions, who have
downsized to live in small flats
MACROENVIRONMENT
 Demographic Environment
Changing family structure
 Working women
 The youth market – “lost generation”
 Older consumer and workers

“ by 2050 the percentage of population aged over 60 will be 27% in the US,
35 % in the UK, and 43 % in Japan, reflecting longer life expectancy and
falling birth rates – those over 65 will outnumber children under 5 years of
age. This demographic shift is creating a new and powerful consumer class,
already being called ‘the silver economy’, with spending power already
reaching $15 trillion”
MACROENVIRONMENT
 Geographic shifts in population and market diversity
 Migration
 3% of population live outside the country of their birth
 Ethnicdiversity
 Recognizing other aspects of diversity in markets
 Marketers such as McDonald’s, Nike and Honda have all featured people
with disabilities in their mainstream advertising
 Urbanization of population
MACROENVIRONMENT
 Economic Environment
Economic factors that affect consumer purchasing power and spending
patterns
 Changing world order
 Industrial economies, which constitute rich markets for many different kinds
of goods
 Subsistence economies; they consume most of their own agricultural and
industrial output and may offer few immediate market opportunities
 Developing economies that can offer outstanding marketing opportunities for
the right kinds of products
 BRIC countries
 MINTs (Mexico, Indonesia, Nigeria and Turkey)
MACROENVIRONMENT
 Economic Environment
 Changing consumer spending
 Back to basics – buy less and looking for a greater value
 “value marketing” - Marketers in all industries are looking for ways to offer
today’s more financially cautious buyers greater value – just the right
combination of product quality and good service at a fair price
 Income distribution
 Emerging markets also have the largest income gap between rich and poor –
it appears that with high economic growth, the rich are getting richer faster
than the poor, increasing income inequality
MACROENVIRONMENT
 Natural Environment
The natural environment involves the natural resources that are
needed as inputs by marketers or that are affected by marketing
activities
MACROENVIRONMENT
 The Technological Environment
 The technological environment is perhaps the most dramatic force
now shaping our destiny.
 Technology has released such wonders as antibiotics, robotic
surgery, miniaturized electronics, smartphones and the Internet
MACROENVIRONMENT
 The Political and Social Environment
 Laws, government and transnational agencies, and pressure groups
that influence and limit various organisations and individuals in a
given society.
MACROENVIRONMENT
 The Cultural Environment
 Institutions and other forces that affect society's basic values,
perceptions, preferences and behaviours