Marketing

Chapter 3
The Marketing
Environment

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Learning Objectives
After studying this chapter, you should be able to:

3.1 Analyze the microenvironment

3.2 Analyze the macroenvironment

This chapter will provide insight into how the controllables and
uncontrollables of the environment in which the marketers is
operating impacts marketing activities.

Included in this are all of the aspects of the

Macroenvironment that provide significant inputs to the
Marketing Mix.

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 Marketing Environment
•The marketing environment of a company is composed of
the people, institutions, and forces outside marketing that
influencer marketing management’s ability to develop and
maintain a successful relationship with its target customers.

•Constantly watching and adapting to the changing marketing

environment is important because the marketing environment
offers both opportunities and threats.

•Ex: An alliance with the supplier and distributor may help an

organization to get a competitive edge over its rivals.

•On the other hand, entry of many competitors poses a threat

to the organization as some of their customers may shift to a
new seller. Copyright © 2021 Pearson Canada, Inc.
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 Marketing Environment
•The marketing environment is a set of diverse, dynamic and
uncontrollable forces that impinge on an organization’s
marketing operations and opportunities.

•The marketing environment is the combination of the

microenvironment and macro environment.

• A company’s marketing environment consists of the internal

factors & forces, which affect the company’s ability to
develop & maintain successful transactions & relationships
with the company’s target customers”.
• The marketing environment consists of external forces that
directly or indirectly influence an organization’s acquisition
of inputs and generation of outputs.
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The Microenvironment

Some aspects of every organization’s

operations have significant impact on their
results.
What is a Microenvironment?
Factors that are closet to and have direct
impact on the organization’s functioning.

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 The Microenvironment (1 of 6)
Figure 3.1 The Outline of the Microenvironment

These are the factors

which are close to
and controlled by the
organization, which
can have an impact
on Marketing
activities

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 The Microenvironment (2 of 6)
• Define the function of the organization in the
microenvironment
There are 3 keyways the organization itself impacts the Marketing
activities/efforts:
1. Capabilities – What is the organization good at? (Is it a risk
taker?, Is it innovative?, Is it service-focused?)
2. Shortcomings – What areas is the organization not good at
that would limit its ability to be successful in its Marketing
efforts? (Does it not have sufficient funds for Marketing
efforts?, Proper training?)
3. Organizational stakeholders – Who else within the
organization, other than the Marketing department would
have an interest and impact on the Marketing efforts?
(Sales, Finance, Manufacturing, Executives, Shareholders)
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The Microenvironment (3 of 6)
Figure 3.2 Organizational Stakeholders
Role Organization Responsibility
President/CEO Leads all corporate activities
Responsible to shareholders/owners
Legal Department Ensures adherence to all legal
guidelines
Assesses legal risk of all corporate
activities
Sales Responsible for relationship between
organization and retail customers
Finance/ Responsible for ensuring the financial
Accounting health of the organization
Manufacturing Production of organization’s product
Managing production timelines,
inventories, and supply chain
Impact on Marketing
Ensures that marketing activities represent the company
in a positive light
Hires/trains senior marketing executives
Responsible for ensuring that corporate image and
standards are maintained
Protects company from any legal exposure due to
marketing efforts
Negotiates all contracts with vendors, suppliers,
endorsers, sponsors, etc.
Provides legal opinions on marketing activities
Introduces new products to retailers
Manages any retail-level marketing efforts
Ensures that all marketing activities contribute to the
financial goals of the organization
Reviews and monitors marketing budget spending
Ensures product is produced to specifications
Ensures sufficient inventory of product
Manages timelines
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 The Microenvironment (4 of 6)
• Define the function of competition in the Microenvironment

How does competition impact Marketing efforts? Are they part

of the Microenvironment?
– Organizations do not control their competitors, but to a
certain extent they do control who they choose to compete
with – based on the product lines, geography and
positioning.
– Failures and Limitations (such as the example in the
textbook with Taxi vs Uber) can create competition.
Competitors may not be entirely in control of the Marketer, but
they are considered Microenvironment because the factors which
impact the Macroenvironment affect all organizations, while those
in the Microenvironment are selective to a specific few.
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 The Microenvironment (5 of 6)
• Define the function of third parties in the Microenvironment
What is a Third Party? Agents and contractors and partners
with whom the organization engages to accomplish its goals.
Ex. providing raw materials, equipment, services,
transportation
Although not technically part of the organization, third parties
are part of our microenvironment because:

1. Control - Are chosen by the organizations, who directs

their activities.
2. Organizations have the option of making this an integrated
role within larger organization who can afford it or as an
alternative for companies that can not afford it as it
reduces costs and increases flexibility.
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The Microenvironment (6 of 6)
Figure 3.3 Key Third Party Players and Their Impact on the
Marketing Efforts in the Microenvironment
Role Relationship to Organization
Suppliers Provide and often maintain equipment
Supply of ingredients
Vendors Distribute the product to consumers
Professional Many organizations lack the size,
Services capability, or need to have internal
organizational functions such as
accounting, bookkeeping, legal.
Others consciously prefer to “farm out”
key aspects of the marketing function
(e.g., agencies, packaging).
Impact on Marketing
Cost of inputs can impact ultimate price that
consumer pays
Availability of exclusive, rare, or unique
ingredients can be key to product
competitiveness
Availability of willing vendors can impact
product availability
Costs associated with vendors can have impact
on final consumer price
Impact is similar to that of similar roles that
could be part of the organization e.g., external
legal team would still be responsible for
ensuring adherence to all regulations and
assessing risk
The impact is felt in that the organization is
required to rely on the expertise of individuals
beyond their direct control.
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The Macroenvironment
All organizations are impacted with by external factors. While
an organization can amend the Microenvironment, the
Macroenvironment can’t be controlled.
What is a Macroenvironment?
Refers to all of the uncontrollable things that surround an
organization, impact its efforts and, in some cases, provide
opportunities.
As an uncontrollable, they must be anticipated, prepared for
and dealt with, not controlled.

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The Macroenvironment (1 of 14)
Describe the characteristics of the Macroenvironment

– All of the uncontrollable factors outside of the

organization:

1. Largely outside of the organization’s control

2. Often impacting entire industries, not just one
organization
3. Generally long-term, rather than short-term impacts
4. Being either predictable and anticipated, allowing
time for preparation or sudden and shocking,
requiring reaction

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 The Macroenvironment (2 of 14)
Figure 3.4 Macroeconomic Factors in relation to the Organization

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 The Macroenvironment (3 of 14)
Explain consumer dynamic factors in the Macroenvironment
The consumer is at the core of all marketing efforts, understanding
shifts in consumer trends is critical.
• Consumer Dynamics: The collection of statistics, trends, and
attitudes that help us to identify, segment, and target specific
groups of consumers and that tend to change over time and
affect large groups of the consumer population in similar ways
– The two challenges presented by consumer dynamics are:
measurability(the extent to which the dynamic can be
reliably assessed) and responsiveness (the extent to which
organizations adjust their plans based on this assessment)
Many consumers dynamics are so large and impactful that
responding, even when prepared, can be challenging.
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The Macroenvironment (4 of 14)
Figure 3.5 Three Key Areas of Consumer Dynamics and
Their Impact on Marketing
Dynamic Definition and Examples
Demographics • Statistics and facts about a particular
population group
• Examples: age, income, level of
education, family composition
Social and • These characteristics define who we are
Behavioural as a society and how consumers interact
Trends with one another.
• Examples: Popularity of online
commerce; “sharing” of personal
information via social media
Attitudes • Attitudes can be defined as “learned
predispositions”—opinions and
perspectives that take time to form and
are slow to adjust.
• Examples: Changing perspectives on
males being primary stay-at-home
caregivers; popular opinion on cannabis
legalization
Impact on Marketing
• Demographic shifts impact everything from the
types of products consumers seek (or will seek in
the future) to whom their marketing efforts are
targeted.
• While harder to measure, these trends have much
of the same impact on marketing as demographics,
but also impact media choices (how to reach
consumers), choice of key influencers (popular
celebrities), as well as present opportunities for
new products and services.
• Like social and behavioural trends, attitudes can be
hard to track and predict, but can have a powerful
influence on consumer choices.
• A great weathervane of attitudes, which impacts
and is impacted by marketing efforts, is voters’
choices. How do the importance of key issues, and
voters’ preferences, change over time?
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The Macroenvironment (5 of 14)
Demographics
The facts and figures about quantifiable aspects that
define our identify, they are clear-cut and should be
consistent from one source of measurement to another.
Demographic segmentation is market segmentation
according to age, race, religion, gender, family size,
ethnicity, income, and education. 
Demographics can be segmented into several markets to
help an organization target its consumers more accurately.

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The Macroenvironment (6 of 14)

Demographics

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The Macroenvironment (7 of 14)
Consumer Demographics – Age Grouping

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The Macroenvironment (8 of 14)
Explain global events in the
Macroenvironment
Weather, natural disasters,
and international political
conflict are all examples of
worldwide events that
impact the
Macroenvironment over
which the organization has
no control and often finds it
difficult to prepare for

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 The Macroenvironment ( 9 of 14)
Explain human advancement factors in the
Macroenvironment

Areas of Human Advancement cover 4 major areas:

1. Advances in technology
2. Science
3. Engineering
4. Medicine

All impact the products we buy, how we live, and sometimes

replace and change both.

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The Macroenvironment (10 of 14)
Figure 3.6 Areas of Human Advancement that positively
impacted society
Area of
Advancement
Examples Impact
Technology • Digital photography • Virtual elimination of film
• Ability to produce, reproduce, modify, edit,
and share images more easily

Science • Improvements in • Ability to produce food in previously arid

fertilizers, plant areas
supplements • Higher yields per acre

Medicine • Improved disease • Consumers living longer, healthier lives

detection • Lower mortality rates

Engineering • 3D printing • Customizability

• Ability to produce more products any time,
any place

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The Macroenvironment (11 of 14)
Explain governmental
control factors in the
Macroenvironment

All aspects of the

Macroenvironment that are
impacted by political
authority. It includes laws,
regulations, bureaucracy,
enforcement, and regime
change.

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The Macroenvironment (12 of 14)
Figure 3.7 Examples of Areas of Governmental Control
Area How Does Government Impact? Example
Product Safety • Standards and controls • The process for getting new
• Licensing prescription medications
• Regulations • approved is long and rigorous to
protect consumers
• from products that might do more
harm than good.

Distribution • Certain products, while legal, have restrictions on • In most Canadian provinces, the
where they can be distributed provincial government controls how
alcohol is sold.

Promotion • Restrictions on advertising claims • Products that claim to be a

• Regulations regarding advertising targeted to “source/good source/excellent
children source” of a particular vitamin or
nutrient have strict governmental
guidelines on the use of those terms.

Pricing Pricing is overseen by government control in several • Many provinces set minimum “floor
ways: prices” for beer to discourage
• Price Fixing: Government laws preclude competitors overconsumption.18
from colluding to establish pricing for an industry. • When Bell Canada had a monopoly
• Price Controls: Governments set certain price limits on phone service in Canada (prior to
and price increase limits in certain industries. the 1980s), any price increase
• Price Discrimination: Governments ensure that needed to be approved by the
different prices are offered to different customers. government

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The Macroenvironment (13 of 14)
Area How Does Government Impact? Example
Industry Certain industries require operators to have special • In order to sell real estate or financial
Regulation licences, training, and/or government sanction to investment services, most provinces require
operate. individuals to be trained and licensed.

Privacy Limitations and restrictions on access to and use of • Organizations that wish to email offers or
personal information marketing information to consumers require
them to “opt in.”

Labelling Government regulations cover many aspects of product • The Canadian Consumer Packaging and
labelling including: Labelling Act prescribes what ingredients
• Safety warnings must be declared as allergens on food
• Allergen notifications labels, as well as standardizes nutritional
• Usage instructions formats, product claims, and even minimum
• Food ingredients font sizes in some cases.19
In addition, in Canada, there are legal requirements
regarding use of French and English in labelling

Consumer Various government agencies and ministries have • In Canada, certain areas relating to
Protection responsibility for investigation, enforcement, and advertising claims fall under the Criminal
penalization of violators Code, meaning that violators can be
prosecuted and fined or jailed.

Intellectual A variety of laws, rules. and guidelines cover:
Property • Patents: The right to own a particular idea or method
• Trademarks: Symbols or images that identify a
product or company
• Copyright: Protection of ownership of a written or
visual work
• One of the most common illegally
reproduced products in Canada is knock-off
versions of the Canada Goose line of
winterwear. Knock-offs are inexpensively
made replicas that imitate the style, logo,
and even brand name, without permission
of or payment to, Canada Goose. 20

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 The Macroenvironment (14 of 14)
Explain economic force factors in the Macroenvironment
Canadians are as subject to the impacts of Global Economic
forces as any consumer in the world.
Some of these are Global in nature, others are more specific to
Canada but impact all aspects of the Canadian economy.
These include: Unemployment, Inflation, Interest rates, Cost
of Housing
Canadians have a much stronger tie to the value of the US dollar
and the value of the Canadian’s dollar to it, because the
extensive amount of trade between Canada and the USA. Not
only are we each other’s largest trading partners when you
combine imports and exports, many Canadian Consumers have
personal, family and economic ties to our closest geographic
neighbor. Copyright © 2021 Pearson Canada, Inc.
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Summary
• The concept of the microenvironment has been introduced
• Key elements of the microenvironment: the organization,
the competition, and third parties have been explained
• The concept of the macroenvironment has been introduced
• The key elements have been explained:
– Consumer dynamics
– Global events
– Human advancement
– Governmental controls
– Economic forces

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Applied Learning Mini Case Studies

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Mini Case: Did the taxi industry create its
biggest competition?
Page 47 & 48 in your textbook
1. What is your personal
experience with taxis and
ride share programs?
2. Is the claim that “the
success of Uber is a direct
result of controllable
actions and inaction on the
part of the taxi industry?”
WHY?
3. What could the taxi
industry have done to
eliminate competition?
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 Mini Case: Global disruptive events – Page 53 & 54 in your textbook
1. The 2020 C O VI D -19 pandemic
impacted every country in the
world – whether they had large
or small outbreaks, whether they
took intervening action. What
are some of the ways the
outbreak impacted the
marketing world temporarily?

2. Were there any changes that

you see as being permanent?

3. Can we look back to other global

crises to find examples of how
the world changed forever?
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Mini Case: Global luxury goods market.
Page 57 in your textbook
1. The Luxury Market must be
impacted by Global
Economic forces in the long
run? But with the apparent
stability and strength of the
luxury goods market, it calls
into question whether this
market segment is shielded
and unaffected by fluctuations
in market conditions. What
are your thoughts on this?.
Hint: Think about supply and
demand

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 Citation
• Marketing Textbook/Michel Shekter/Pearson Canadas Inc.

• https://unsplash.com/photos

• https://unsplash.com/photos/kARZuSYMfrA

• https://unsplash.com/s/photos/covid-19

• https://unsplash.com/photos/_3Q3tsJ01nc

• https://unsplash.com/photos/-iretlQZEU4

• https://unsplash.com/photos/mxY2r31hLx4

• https://cxl.com/blog/psychographics/

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