Chapter 3.ppt

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Copyright © 2012 Pearson Education,
Inc. Publishing as Prentice Hall
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Chapter Three
Analyzing the Marketing
Environment

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Copyright © 2012Pearson Education, Inc.
Publishing as Prentice Hall
Analyzing the Marketing
Environment
• The Company’s Microenvironment
• The Company’s Macroenvironemnt
• The Demographic Marketing Environment
• The Economic Environment
• The Natural Environment
• The Technological Environment
• The Political and Social Environment
• The Cultural Environment
• Responding to the Marketing Environment
Topic Outline

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Environmental Monitoring
Environmental monitoring –also called environmental
scanning- is the process of (1) gathering information,
(2)analyzing it, and (3)forecasting the effects indicated by
trend analysis.
An organization operates within an external environment
that it generally cannot control.
At the same time, marketing and nonmarketing resources
exist within the organization that generally can be
controlled.

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The Marketing Environment
The marketing environment includes the
actors and forces outside marketing that
affect marketing management’s ability to
build and maintain successful relationships
with customers

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Levels of External Forces
There are two levels of external forces:
• 1. Macro influences
• 2. Micro influences
Macro Level
Influences that affect all firms
Micro Level
Influences that affect a particular firm

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The Marketing Environment
• Microenvironment consists of the actors close to
the company that affect its ability to serve its
customers, the company, suppliers, marketing
intermediaries, customer markets, competitors, and
publics
• The macroenvironment consists of larger societal
forces that affect the microenvironment.

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Successful marketing depends largely on a
company’s ability to manage its marketing programs
within its environment.
To do this, a firm’s marketing executives must
determine what makes up the firm’s environment
and then monitor it in a systematic ongoing fashion.

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• External forces largely beyond the control of a firm
that influence the marketing opportunities and
activities of all firms.
• Firms can influence this environment but have no
direct control over it.
• A change in any one of them can cause changes in
one or more of the others. Hence, they are
interrelated.
• They are dynamic forces – that is they are subject to
change and at an increasing rate.

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The Company’s
Microenvironment
Actors in the Microenvironment

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The Company’s
Microenvironment
• Top management
• Finance
• R&D
• Purchasing
• Operations
• Accounting
The Company

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The Company
• All the interrelated groups form the
internal environment. All groups must work
in harmony to provide superior customer
value and relationships.

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The Company’s
Microenvironment
• Provide the resources to produce goods
and services
• Treat as partners to provide customer
value
Suppliers

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• Marketing managers must watch supply
availability—supply shortages or delays,
labor strikes, and other events can cost
sales in the short run and damage
customer satisfaction in the long run.
• Marketing managers also monitor the price
trends of their key inputs.

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The Company’s
Microenvironment
Help the company to
promote, sell and
distribute its
products to final
buyers
Marketing Intermediaries

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• The text explains how Coke delivers value
for their marketing intermediaries:
– They understand each retailer partner’s
business
– The conduct consumer research and share
with partners
– They develop marketing programs and
merchandising for partners

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The Company’s
Microenvironment
Resellers
Physical
distribution
firms
Marketing
services
agencies
Financial
intermediaries
Types of Marketing Intermediaries

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• Resellers are distribution channel firms that help
the company find customers or make sales to
them. These include wholesalers and retailers.
• Physical distribution firms help the company to
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.

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• Financial intermediaries include 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.
• Today’s marketers recognize the
importance of working with their
intermediaries as partners rather than
simply as channels through which they sell
their products.

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The Company’s
Microenvironment
• Firms must gain strategic advantage by
positioning their offerings against
competitors’ offerings
Competitors

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The Company’s
Microenvironment
Publics
• Any group that has an actual or
potential interest in or impact on
an organization’s ability to
achieve its objectives
– Financial publics
– Media publics
– Government publics
– Citizen-action publics
– Local publics
– General public
– Internal publics

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• Financial publics influence the company’s
ability to obtain funds.
• Media publics carry news, features, and
editorial opinion.
• Government publics. Management must
take government developments into
account.
• Citizen-action publics. A company’s
marketing decisions may be questioned by
consumer organizations, environmental
groups, and others.

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• Local publics include neighborhood
residents and community organizations.
• General public. The general public’s image
of the company that affects its buying.
• Internal publics include workers, managers,
volunteers, and the board of directors.

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The Company’s
Microenvironment
• Consumer markets
• Business markets
• Government markets
• International markets
Customers

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Customers
• There are five types of customer markets. The company
may target any or all of these:
• Consumer markets: individuals and households that buy
goods and services for personal consumption.
• Business markets: buy goods and services for further
processing or for use in their production process.
• Reseller markets: buy goods and services to resell at a
profit.
• Government markets: composed of government agencies
that buy goods and services to produce public services.
• International markets: buyers in other countries, including
consumers, producers, resellers, and governments.

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The Company’s
Macroenvironment

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The Company’s
Macroenvironment
Demography: the study of human populations--
size, density, location, age, gender, race,
occupation, and other statistics
• Demographic environment: involves people,
and people make up markets
• Demographic trends: shifts in age, family
structure, geographic population, educational
characteristics, and population diversity
Demographic Environment

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• Changes in the world demographic
environment have major implications for
business.
• Thus, marketers keep close track of
demographic trends and developments in
their markets, both at home and abroad.

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The Company’s
Macroenvironment
Economic environment consists of factors
that affect consumer purchasing power and
spending patterns
• Industrial economies are richer markets
• Subsistence economies consume most of
their own agriculture and industrial output
Economic Environment

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Economic Environment
• The economic environment consists of factors
that affect consumer purchasing power and
spending patterns.
• Industrial economies constitute rich markets for
many different kinds of goods.
• Subsistence economies consume most of their
own agricultural and industrial output, and offer
few marketing opportunities.
• In between are developing countries, which can
offer outstanding marketing opportunities.

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Economic Factors
People with
Money to Spend
and Willing to
Spend it
Inflation
Interest
Rates
Stage of the
Business
Cycle

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Economic conditions:
• People alone do not make a market. They must have
money to spend and a willingness to spend it.
• The economic environment is a significant force that
affects the marketing activities of any organization.
• A marketing program is affected especially by such
factors as stage of the business cycle, inflation, and
interest rates.

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1.The stage of the business cycle
The business cycle goes through four stages —prosperity,
recession, depression, and recovery, then returns full
cycle to prosperity.
Marketing executives need to know which stage of the
business cycle the economy is currently in, because a
company’s marketing program usually must be changed
from one stage of the business cycle to another.

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Prosperity is a period of economic growth. During this
period organizations tend to add new products and enter
new markets.
Recession is a period of retrenchment for consumers and
businesses- we tighten our economic belts. (For example,
some consumers cut back on eating out and
entertainment outside the home)

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Recovery is a period when the economy is moving
from recession to prosperity- unemployment
declines, disposable income increase. (companies
expand their marketing efforts to improve sales and
profits.)

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2. Inflation a rise in the prices of goods and services
represent inflation. When prices rise at a faster rate
than personal incomes, consumer buying power
declines.
3.Interest rates —affecting expensive and long-term
purchases. When interest rates are high, consumers
tent not to make long term purchases such as
housing.

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The Natural Environment
• The natural environment involves the natural
resources that are needed as inputs by
marketers, or that are affected by marketing
activities.
• Trends in the natural environment:
• Growing shortages of raw materials.
• Increased pollution.
• Increased government intervention.
• Companies are developing strategies and
practices that support environmental
sustainability.

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The Company’s
Macroenvironment
Technological Environment
• Most dramatic force
in changing the
marketplace
• New products,
opportunities
• Concern for the
safety of new
products

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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.
• These new technologies can offer exciting
opportunities for marketers.
• The United States leads the world in research and
development spending.

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Technology
Affects How
Marketing is
Carried Out
Altering
Existing
Industries
Impacts lifestyles,
consumption patterns,
economic well-being
Starting
New
Industries
Stimulates
Markets
and
Other Industries

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Technology—has a significant impact on our life-
styles, consumptions habits, economic well-being.
• Affects the start of new industries.( airplane,
computers, robots, laser…etc.)
• Radically alters or destroys existing industries.
(typewriter- computer)

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• Stimulates industries and markets not directly
related to the new technology. (microwavable
foods- give people additional time in which they
engage in other activities)
• Affects the execution of marketing activities.
(Internet)
• Improves some areas of our lives while creating
problems in others. ( ex: cars – air pollution, TV-
reducing reading by children)

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The Company’s
Macroenvironment
Political environment
laws, government agencies, and pressure
groups that influence or limit various
organizations and individuals in a given
society
Political and Social Environment

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The Company’s
Macroenvironment
• Legislation regulating
business
– Increased legislation
– Changing government
agency enforcement
• Increased emphasis on ethics
– Socially responsible
behavior
– Cause-related marketing
Political and Social Environment

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The Political and Social Environment
• Marketing decisions are strongly affected by
developments in the political environment. This consists
of laws, government agencies, and various pressure
groups.
• Legislation Regulating Business
• Governments develop public policy to guide commerce.
Increasing Legislation. Legislation affecting business around
the world has increased steadily over the years.
• Business legislation has been enacted for a number of
reasons:
• To protect companies from each other.
• To protect consumers from unfair business practices.
• To protect the interests of society against unrestrained
business behavior.

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Changing Government Agency Enforcement. Because
government agencies have discretion in enforcing laws,
they can have an impact on a company’s marketing
performance.
Increased Emphasis on Ethics and Socially Responsible
Actions
• Socially Responsible Behavior. Enlightened companies
encourage their managers to “do the right thing.”
• The boom in Internet marketing has created a new set of
social and ethical issues.
• Cause-Related Marketing. To exercise their social
responsibility and build more positive images, many
companies are now linking themselves to worthwhile
causes.

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The Company’s
Macroenvironment
Cultural environment consists of institutions
and other forces that affect a society’s
basic values, perceptions, and behaviors
Cultural Environment

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Social and Cultural Forces
People Make
Markets
Beliefs
Socio-cultural
Patterns
Changing Quickly
Values
Lifestyles

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Social and Cultural Changes
Concern for
Natural Environment
Quality not
Quantity
Changing Gender Roles
Two Incomes
and Balance
Physical Fitness and
Health
Exercise and Diet
Premium on Time Convenience

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Social and cultural forces:
The task facing marketing executives is becoming more
complex because our socio cultural patterns-lifestyles,
values, and beliefs are changing much more quickly than
they used to be.
• 1.Concern about the natural environment—increasing
concern and consciousness about the quality of life and
the natural environment.( concerns about air and water
pollution, holes in the ozone layer…etc.)

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Ex: - Procter & Gamble introduced Tide Coldwater, a new
detergent that is designed to clean clothes in cold water
and thus save energy.
- Environmentally friendly products
• 2. Changing gender roles: male –female roles related to
families, jobs, and buying behavior are changing dramatically.
Ex: - Growing number of “house husbands” are staying at
home and assuming primary responsibility for child care
and homemaking while their wives work full time.
- changing role of women; most of the women
working outside the home today.

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• 3.A premium on time—long work hours, a desire
for more leisure time, and convenience as a
priority attribute in products.
-Time-short people and two income households are
more willing to pay for convenience.
-Goods and services that help consumers save time
or make full use of it are increasingly popular. (
big shopping malls, frozen foods, Internet…etc.)

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4.Physical fitness and health- increased interest in
physical activity as well as dietary habits.
- Large number of consumers have become more
interested in diet for weight loss, foods low in
salt, fat, additives, and cholesterol, and foods
high in vitamins, minerals, and fiber content.

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Responding to the Marketing
Environment
Uncontrollable
• React and
adapt to
forces in the
environment
Proactive
• Aggressive
actions to
affect forces
in the
environment
Reactive
• Watching
and reacting
to forces in
the
environment
Views on Responding

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• Rather than simply watching and reacting,
companies should take proactive steps with respect
to the marketing environment.
RESPONDING TO THE MARKETING ENVIRONMENT
• Many companies think the marketing environment is an
uncontrollable element to which they must react and
adapt.
• Other companies take a proactive stance toward the
marketing environment.
• Rather than assuming that strategic options are bounded
by the current environment, these firms develop
strategies to change the environment.
• By taking action, companies can often overcome
seemingly uncontrollable environmental events.

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All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
Copyright © 2012 Pearson Education, Inc.

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