PRINCIPLES OF

MARKETING
Chapter 3
The Marketing Environment

NMKT 102
 Learning Objectives
• After going through this chapter, you should be
able to:
Describe the Marketing Environment.
Describe the environmental forces that affect
the company’s ability to serve its customers.
Explain how changes in the different
environments affect marketing decisions.
Explain the key changes in the political and
cultural environments.
Discuss how companies can interact with their
marketing environment.
 Introduction
• It is important for all mangers to know
that all organizations operate within a
complex business environment,
consisting of uncontrollable forces to
which the organization must adapt or try
to control/ influence.
• A company’s environment consists of the
actors and forces outside the organization
that affect its ability to develop, and
maintain successful relationships with the
customer.
 Introduction
• Within the environment, the manager can
identify strengths and weaknesses.
• The same environment also produces both
threats and opportunities. (SWOT
Analysis).

• Managerial implications:
• The manager must carefully and constantly
analyze the environment, so that he/she
can avoid the threats and at the same
time, taking advantage of the
opportunities.
 The Marketing Manager
• Within a typical organization, the Marketing
manager must take the major responsibility for
identifying significant changes in the
environment.
• More than any other department in the
organization, marketers must be the trend
trackers and opportunity seekers.
• Through conducting systematic Environmental
scanning, Marketing intelligence and
Marketing research, marketers are able to
analyze, and understand the environment.
• .
 Discussion

• Most marketers were caught off-guard/

unprepared, by the Covid-19 pandemic
and its impact on demand, and business
operations. (True/ False)
The Marketing Environment
 The Marketing Environment
• In order to correctly identify strengths, weaknesses,
opportunities and threats caused by forces in the
marketing environment, the company must begin with
a thorough understanding of the marketing
environment in which it operates in.
• Though these factors and forces may vary depending
on the specific company and industrial group, they are
generally divided into:
Internal environment
External environment.
• The external environment is further divided into
two:
Task environment
General environment (societal environment).
 The Marketing Environment
• As marketers collect and process data on these
environments, they must be ever vigilant in
their efforts, to apply what they learn to
developing/emerging opportunities and
dealing with threats.
• Studies have shown that excellent companies
not only have a keen sense of customers but
an appreciation of the environmental forces
swirling around them.
 The Marketing Environment
• By constantly looking at the dynamic changes
that are occurring in the environment,
companies are better prepared to:
adapt to change,
prepare long-range strategies,
meet the needs of today’s and tomorrow’s
customers, and
compete with the intense rivalry present in the
global marketplace.
• i.e. All firms are encouraged to adopt an
environmental management perspective in
the new millennium.
Forces in the Marketing
Environment
General
Environment

Task
Socio-cultural
Environment
Economic forces
forces Internal
environment
Customers Competitors

Marketing
Department

Other departments Demographic

forces
Global forces Suppliers Distributors

Political- Legal forces

 Internal Environment
• The internal marketing environment
looks at other departments of the
organization.
• Marketing managers must work closely with
other company departments for the
achievement of organizational goals. These
interrelated departments form the internal
environment.
• These departments include: Finance and
accounting, R&D, Purchasing,
Manufacturing, Operations, Human
Resources, Transport and Logistics, IT, etc.
 Internal Environment
• The marketing department relies on these
other departments for its successful
implementation of the marketing process.
• Each of these departments has an impact on
marketing as a department.
• E.g.
Research & Development has input as to the
features a product can contain,
Accounting approves the financial side of
marketing plans and budgets. etc
 Discuss how the other
functional departments of
the organization affect
marketing?
 The Marketing Environment
• The external marketing environment, i.e. task
environment and the general environment are
sometimes referred to as the: Micro External-
environment & Macro External- environment,
respectively.
Task Environment: These are forces close to the
company that affect its ability to serve its
customers: Suppliers, Marketing distribution
channels, Competitors or rivals, Customers,
and the general Publics.
General Environment: These are larger societal
forces that affect the task environment: e.g.
Demographic, Economic, Political, Legal,
Technological, Social, and Cultural forces.
 The Task Environment

• Actors that make up the company’s

Task environment are:

Suppliers
Marketing intermediaries
Customers
Competitors
Various publics (stakeholders).
 The Task Environment
Suppliers- suppliers provide the resources
needed by the company to produce its
goods and services.
• They are an important link in the
company’s overall customer “value
delivery system.”
• Marketing managers must always monitor
supplier availability and behavior so as to
avoid things like shortages, delays in
supply, poor quality raw materials,
unjustified price increases, etc, because all
these factors can result in customer
dissatisfaction.
 The Task Environment
• Marketing intermediaries- these help the
company to promote, sell and distribute the
company’s products to customers. They
include:
Resellers,
Physical distribution firms,
Marketing agencies, and
Financial intermediaries.
 Marketing Intermediaries
Resellers: these are organizations that hold and
resell the company’s products.(retailers, wholesalers,
etc) E.g. Metro-Peech, Pick and Pay, Shoprite, Spar,
TM, OK, etc
Physical distribution firms: these are organizations
with places such as warehouses, & trucks that store
and transport the company’s products. (E.g Swift,
Unifreight)
Marketing agencies: these are companies that offer
services such as conducting marketing research,
advertising and consulting. (e.g. Advertising agencies)
Financial intermediaries: these are institutions
such as banks, credit companies, insurance, etc.(e.g
Ecocash, Visa, etc)
 The Task Environment
 Customers- This is the group at the centre of the whole
marketing process. The company needs to study its
customers closely.
• There are five types of customer markets:
a) Consumer market- it consists of individuals and
households that buy goods or services for personal
consumption.
b) Business market- it consists of businesses or companies
that buy goods or services for further processing or for
use in their production processes.
c) Reseller markets- it consists of businesses that buy
goods or services for resell at a profit.
d) Government markets- these are made up of government
agencies that buy goods or services to produce public
services or transfer the goods and services to those who
need them.
e) International markets- these consists of buyers in other
countries.
 The Task Environment
Competitors- these are companies
with similar or substitute offerings of
products/ services.
• The marketing philosophy states that to
be successful, a company must satisfy its
customers better than its competitors.
• This means that, marketers must
constantly gain a strategic competitive
advantage over their competitors by
positioning their products better than
competitors.
 The Task Environment
• Publics- A public (stakeholder) is any
group that has an actual or potential
interest in or impact on an organization’s
ability to achieve its objectives. E.g.
the general public,
financial publics,
government publics,
Media publics,
Local publics. etc
 The General Environment
• The company and all other actors operate in a larger
general environment of forces.
• The general environment is less controllable, it
consists of much larger all-encompassing influences
from the broader global society.
• This general environment creates opportunities and
pose threats for the company.
• The six major forces in the company’s general
environment are:
Demographic forces
Economic forces
Natural forces
Technological forces
Political forces
 The General Environment
Demographic environment- Demography is the
study of human populations in terms of size, density,
location, age, sex, race, occupation & other statistics.
• The demographic environment is of major interest to
marketers because it involves people, and people
make up markets.
• Demography is an important factor to study because it
also helps marketers to divide population to come up
with market segments and target markets.
• Issues of interest include: Changing family sizes,
Changing age structures, Geographic shifts in
population, Level of education of the population, Race
diversity, etc.
• Identify any events to do with demographics, that
have affected marketing as one of the functions of
business?
 The General Environment
Economic environment- Markets require buying
power.
• The economic environment consists of factors that
affect consumer’s purchasing power and spending
patterns.
• Nations vary greatly in their levels and distribution of
income (wealth).
• Issues of interest include: Changing spending
patterns, Changes in income, Economic growth, etc
• Identify an example of events to do with economic
factors that have affected marketing as one of the
functions of business?
 The General Environment
Natural Environment- it involves the natural resources
that are needed or used as inputs by marketers.
• Environmental concerns have grown steadily over the
last two decades.
• Issues of interest include: Shortage of raw materials,
Increased pollution, Increased government intervention,
sustainability issues, recycling, Depletion of natural
resources, etc
• As raw materials become more scarce, the ability to
create a company’s product is getting much harder.
• Also, pollution can go as far as negatively affecting a
company’s reputation if the company is known, for
damaging the environment.
• Identify any events to do with natural (environmental)
issues that have affected marketing as one of the
functions of business?
 The General Environment
Technological environment- this is the
most dramatic force now shaping our
world.
• New technology creates new products,
new markets, new methods of advertising,
new distribution channels, new players,
etc. In short technology creates new
opportunities/threats for the organization.
• Identify examples of technological events
or factors that have affected marketing as
one of the functions of business?
 The General Environment
Political environment- marketing decisions
are strongly affected by developments in
politics.
• The political environment consists of
government policies, laws, government
agencies, pressure groups, regulatory
agencies, etc, that influence and limit various
organization’s operations.
• Identify any political events or factors that
have affected marketing as one of the
functions of business?
 The General Environment
Cultural environment- It consists of
institutions that affect a society’s basic values,
perceptions, preferences, wants and
behaviors.
• People grow up in societies that shape their
basic values and beliefs.
• Cultures shape human wants, and also
spending patterns.
• Identify any events to do with culture that
have affected marketing as one of the
functions of business?
 Responding to the Marketing
Environment
• Many companies view the marketing
environment as an “uncontrollable” element to
which they must adapt.
• Such companies passively accept the marketing
environment as it is, and do not try to change
it.
• These companies simply analyze the
environmental forces and then design
strategies that will help them avoid the threats
and take advantage of the opportunities the
environment provides.
• These companies follow what is known as the
reactive approach.
 Responding to the
Marketing Environment
• On the other hand, some companies use
the pro-active approach.
• Rather than simply watching and reacting,
these companies take aggressive actions
to affect/shape the publics and the forces
in their marketing environment.
• These companies take an environmental
management perspective.
 Responding to the Marketing
Environment
• Such companies hire lobbyists to influence
legislation governing their industries and also
stage media events to gain favorable press
or media coverage.
• They also run advertisements to shape
public opinion. Examples: Petroleum
companies (green energy concept, green
marketing)
Conclusion: When ever possible,
marketing managers should always take a
pro-active approach rather than the
reactive approach to the marketing
environment.
 Conclusion
• Keeping ahead of competition in a fast-
changing environment is both an art
and a science.
• To keep customers satisfied, companies
must possess comprehensive, up-to-
date information about important
trends that will be taking place in the
environment.
THE
END