Marketing

Environment
Micro environment

Marketing environment
A companys marketing environment
consists of all the actors and forces
outside marketing that affect
marketings managements ability to
build and maintain successful
relationships with target customers
Environment offers both opportunities
and threats.
Marketing intelligence and research is
used to collect information about the
environment

 Marketing environment consists of:

Microenvironment: actors close
to the company that affect its
ability to serve its customers,
Macro environment: larger
societal forces that affect the
microenvironment. Considered to
be beyond the control of the
organization.

Microenvironment

Actors in the
Microenvironment

The company
In designing marketing plans, marketing management
takes other company groups into account such as top
management, finance, research and development
(R&D), purchasing, manufacturing , and
accounting.
Top management set the company's mission, objectives,
broad strategies and policies
Marketing managers make decisions within the broader
strategies made by to management
Marketing has to work with the other departments to try
and understand customer needs and create customer
value
All these interrelated groups form the internal
environment

Suppliers
Are an important link in the companys
overall customer value delivery system
They provide the resources needed by the
company to produce its goods and services.
Supplier problems can seriously affect
marketing.
Marketing managers must watch supply
availability and costs
How can supplier problems affect
marketing ?

Marketing intermediaries
Help the company to promote, sell and
distribute its goods to final buyers
They include resellers, physical
distribution firms, marketing services
agencies, and financial intermediaries
Resellers are distribution channel firms
that help the company find customers
or make sales to them. These include
wholesalers and retailers, who buy and
resell merchandise.
Physical distribution firms help the
company stock and move goods from

 Marketing services firms are the

marketing research firms , advertising
agencies, media firms and marketing
consulting firms that help the company
target and promote its product to the
right markets
Financial intermediaries include banks,
credit companies, insurance companies,
and other businesses that help finance
transactions or insure against the risk
associated with buying and selling goods
Like suppliers, marketing intermediaries
form an important component of the
companys overall value delivery system

Customers
Customers are the most important actors
in the companys micro environment. The
aim of the whole value delivery system is
to serve target customers and create
strong relationships with them .
There are five types of customer markets
and a company can choose to target one or
all of these markets, these include:
Consumer markets
Business markets
Reseller markets
Government markets

Customers
Customer markets consist of
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

Customers
Government markets buy goods and
services to produce public services or
transfer goods and services to others
who need them
International markets consist of
buyers in other countries including
consumers, producers, resellers, and
governments

Competitors
Those who serve a target market with
products and services that are viewed by
consumers as being reasonable
substitutes
The marketing concept states that to be
successful, a company must provide
greater customer value and satisfaction
than its competitors do.
They must gain strategic advantage by
positioning their offerings strongly
against competitors offerings in the
minds of consumers

Publics
A public is any group that has an actual or
potential interest in or impact on an
organizations ability to achieve its
objectives

Publics
Financial publics influence the
companys ability to obtain funds
banks, investment houses, and
stockholders
Media publics carry news, features, and
editorial opinionnewspapers,
magazines, and radio and television
stations
Government publics influence product
safety and truth in advertising

Publics
Citizen-action publics include
consumer organizations, environment
groups, and minority groups
Local publics include neighborhood
residents and community
organizations
General publics influence the
companys public image
Internal publics include workers,
managers, volunteers, and directors

3-20

Macro environment

Macro environment
The company and all of the other actors
operate in a larger macro environment of
forces that shape opportunities and pose
threats to the company
Even the most dominant companies can be
vulnerable to the often turbulent and
changing forces in the macro environment
For a company to thrive it must understand
and adapt itself to its macro environment

Macro environmental
Forces

The demographic
environment
Demography is the study of human populations in
terms of size, density, location, age, gender, race
occupation and other statistics.
Demographic environment is of great importance
to marketers.
Changes in the world demographic environment
have major implications for businesses.
Marketers have to keep an eye on demographic
trends and developments in their market by
analysing changes in age and family structures,
geographic population shifts, educational
characteristics and population diversity

The Macroenvironment
Key Demographic Trends
Changing age structure
Changing households
Geographic population shifts
Better-educated, more white-collar
workforce
Increasing Diversity

The changing age

structure of the
population
Populations contains several generational
groups , with baby boomers, Generation X
and Millenials being the largest groups.
These groups have been found to have a
great influence on marketing

The Macroenvironment
Key
Generations
Baby
Boomers
Generation
X
Generation Y

Born between 1946 and

1964
Represent 28% of the
population; earn 50% of
personal income
Many mini-segments
exist within the boomer
group
Entering peak earning
years as they mature
Lucrative market for
travel, entertainment,
housing, and more

The Macroenvironment
Key
Generations
Baby
Boomers
Generation
X
Generation Y

Born between 1965

and 1976
First latchkey children
Maintain a cautious
economic outlook
Share new cultural
concerns
Represent $125 billion
in annual purchasing
power
Will be primary buyers
of most goods by 2010

The Macroenvironment
Key
Generations
Baby
Boomers
Generation
X
Generation Y

Born between 1977 and 2000

72 million strong; almost as
large a group as their baby
boomer parents
All have a common fluency and
comfort with digital technology
Its become their way of life
Engage with brands through
social media
New products, services, and
media cater for GenY
Computer, Internet and digitally
saavy
Challenging target for
marketers

Economic environment
Consists of economic factors that affect consumer
purchasing power and spending patterns
Marketers must pay close attention to major
trends and consumer spending patterns both
across and within their world markets
Consumers nowadays spend carefully and desire
great value

The Economic
Environment
Three types
of national
economies:
Subsistence
Industrial
Developing
economies

Key Economic Trends

Income distribution
Marketers must pay close attention to income
distribution as well as income levels
Over the past decades the rich have become
richer, middle class has shrunk, and the poor have
remained poor
This distribution of income has created a tiered
market with some companies targeting the
affluent, while you have some companies targeting
those with low incomes e.g. rise of dollar stores
Some companies still target consumers across
markets e.g. A company can be producing low
priced products as well as luxury products targeted
to its low income customers and its affluent
customers

Changes in consumer
spending
Economic factors can have a dramatic
effect on consumer spending ad buying
behaviours
Due to recent economic downturns now
most consumers are buying less and
looking for greater value in the things
they do buy
This has led to marketers
concerntrating on Value marketing .
Marketers in all industries are looking
for ways to offer todays more financial
frugal customers greater value: right

 Ernst EngelEngels Law

As income rises:
The percentage spent on food
declines
The percentage spent on
housing remains constant
The percentage spent on savings
increases

The natural environment

Involves the natural resources that are
needed as inputs by marketers or that
are affected by marketing activities.
At a most basic level unexpected
happenings in the physical
environment anything from weather to
natural disasters can affect companies
and their marketing strategies
Marketers should always be aware of
trends and (or) factors affecting their
natural environment.

Factors Impacting the Natural

Environment
Shortages of Raw Materials
Increased Pollution
Increased Government Intervention
Environmentally Sustainable Strategies

 Concern for the environment has spawned

the so called green environment.
Enlingtened Companies are now developing
strategies and practices that support
environmental sustainability- an effort
to create a world economy that the planet
can support indefinitely
Environmental sustainability means meeting
present needs without compromising the
ability of future generations to meet their
needs
Many companies are now responding to
consumer demands with more
environmentally responsible products e.e .

Technological
environment

Is perhaps the most dramatic force now shaping

our destiny
Technology has released so may wonders from
medicines to smart phones, and our attitudes
towards technology depends on whether we are
impressed by what has been produced or not
new technologies can offer exciting
opportunities for marketers
The technological environment changes
rapidly , new technologies create new
markets however those new technologies
replace older technology thereby hurting
those industries based on that technology e. g
mp3 technology has but almost wiped out the

 Its important for marketers in that

regard to constantly be aware of new
technologies coming up to avoid being
left behind
With new technologies constantly
coming up, strict control measures are
being taken for some products e.g
medicine to ensure the safety of those
products
These control measures have resulted
in much higher research costs and
longer times between new product
ideas and their introduction

Discussion questions
Within the last ten years, which technological
force has had the greatest impact on
marketing? In what areas of marketing has
this impact been seen?
What technological force has impacted you
the most? In what ways has this occurred?

Political environment
Political environment consists of laws , government
agencies and pressure groups that influence or limit
various organisations and individuals in a given society
Legislation regulating business
Well conceived regulations help create competition and
ensure fair markets for goods and services
For that to happen Governments develop Public Policy
to guide commerce
Legislation affecting businesses has been growing over
the years and many countries now have laws covering
issues such as competition, fair trade, environmental
protection, product safety , consume privacy etc
These business legislations have been made for a
number of reasons:
1. to protect companies from each other

2. to protect consumers from unfair business practises

3. to protect the interests of society against
unrestrained business behaviour
New laws and enforcement will continue to increase .
Businesses must be aware of these developments
when planning their products and marketing
programs
Marketers need to know about laws protecting
competition, consumers and society and understand
the laws at local and international levels
Outside of the written laws and regulations
businesses are also governed by social codes and
rules of professional ethics
Almost every aspect of marketing involves ethics and
social responsibility issues
This has led to what is referred to as Cause Related
Marketing

Cause related marketing

To exercise their social responsibility and
build more positive images many companies
are now linking themselves to worthwhile
causes
These days every product seems to be tied to
some cause
Cause related marketing ha become a
primary form of corporate giving
If handled well it can greatly benefit both the
company and the cause
E. gs

Cultural environment
Consists of institutions and other forces that
affect a societys basic values, perceptions,
preference, and behaviors.
People grow up in societies that shape their
basic beliefs and values, and these can either
be core or secondary
Core beliefs and values are passed on from
parents to children and reinforced by schools,
churches, business and government
Secondary belief and values are more open to
change and marketers have a chance in
changing secondary beliefs and values but
little chance of changing core values

 Although core values are fairly

consistent , cultural swings do take
place .
Marketers want to predict cultural shifts
to spot new opportunities or threats
The major cultural values of a society
are expressed in peoples views of
themselves and others as well as I their
views of organisations , society, nature
and the universe

The
The Universe
Universe
Nature
Nature
Society
Society
Organizations
Organizations

Societys Major
Cultural Views Are
Expressed in
Peoples Views of:

Others
Others
Themselves
Themselves

Shifts in secondary cultural

values

Responding to the marketing

environment
The passive approach.
Monitor and analyze.
Adapt strategies to avoid threats and take advantage
of opportunities.
Environmental Management Perspective
Taking a proactive approach to managing the
environment by taking aggressive (rather
than reactive) actions to affect the publics
and forces in the marketing environment.

This can be done by:

Hiring lobbyists
Running advertorials
Pressing lawsuits
Filing complaints
Forming agreements to control
channels