Chapter 3

By MARIUM SHABBIR

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 Topic Outline

• The Company’s Microenvironment

• The Company’s Macroenvironemnt
• Responding to the Marketing Environment

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

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 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

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

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 Suppliers
• Provide the resources to produce goods and services
• Treated as partners to provide customer value

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 Marketing Intermediaries

• Help the company to promote, sell and distribute its products

to final buyers

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 Types of Marketing Intermediaries

Physical Marketing
Resellers distribution services
firms agencies

Financial
intermediaries

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 Competitors

• Firms must gain strategic advantage by positioning their offerings

against competitors’ offerings

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 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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 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 important because it involves people,
and people make up markets
• Demographic trends include age, family structure, geographic
population shifts, educational characteristics, and population
diversity

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 Demographic Environment

• Changing age structure of the population

• Baby boomers include people born between 1946 and 1964
• Most affluent Americans

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 Demographic Environment

• Generation X includes people born between 1965 and 1976

• High parental divorce rates
• Cautious economic outlook
• Less materialistic
• Family comes first
• Lag behind on retirement savings

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 Demographic Environment
• Millennials (gen Y or echo boomers) include those born between
1977 and 2000
• Comfortable with technology
• Includes:
• Tweens (ages 8–12)
• Teens (13–19)
• Young adults (20’s)

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 Demographic Environment

Generational marketing is important in segmenting people by lifestyle of

life state instead of age

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 Demographic Environment
More people are:
• Divorcing or separating
• Choosing not to marry
• Choosing to marrying later
• Marrying without intending to have children
• Increased number of working women
• Stay-at-home dads

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 Demographic Environment
• Moving from rural to metropolitan areas
• Changes in where people work
• Telecommuting
• Home office
• Divorcing or separating

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 Demographic Environment

• Changes in the workforce

• More educated
• More white collar

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 Demographic Environment
Increased Diversity
Markets are becoming more diverse
• International
• National
• Includes:
• Ethnicity
• Gay and lesbian
• Disabled

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 Economic Environment
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

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 Economic Environment
• Changes in income
• Value marketing involves ways to offer financially cautious buyers
greater value—the right combination of quality and service at a
fair price

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 Economic Environment
Changes in Consumer Spending Patterns

• Ernst Engel—Engel’s Law

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

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 Natural Environment
Natural environment involves the natural resources that are needed
as inputs by marketers or that are affected by marketing activities
• Trends
• Shortages of raw materials
• Increased pollution
• Increase government intervention
• Environmentally sustainable strategies

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 Technological Environment

• Most dramatic force in changing the marketplace

• Creates new products and opportunities
• Safety of new product always a concern

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 Political Environment

Political environment consists of laws, government agencies, and

pressure groups that influence or limit various organizations and
individuals in a given society

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 Political Environment
• Legislation regulating business
• Increased legislation
• Changing government agency enforcement
• Increased emphasis on ethics
• Socially responsible behavior
• Cause-related marketing

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 Cultural Environment

Cultural environment consists of institutions and other forces that

affect a society’s basic values, perceptions, and behaviors

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 Cultural Environment
Persistence of Cultural Values

Core beliefs and values are persistent and are passed on

from parents to children and are reinforced by schools,
churches, businesses, and government
Secondary beliefs and values are more open to change and
include people’s views of themselves, others, organizations,
society, nature, and the universe

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 Cultural Environment
Shifts in Secondary Cultural Values
• People’s view of themselves
• Yankelovich Monitor’s consumer segments:
• Do-It-Yourselfers—recent movers
• Adventurers
• People’s view of others
• More “cocooning”

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 Cultural Environment
Shifts in Secondary Cultural Values
• People’s view of organizations
• People’s view of society
• Patriots defend it
• Reformers want to change it
• Malcontents want to leave it

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 Cultural Environment
Shifts in Secondary Cultural Values

• People’s view of nature

• Some feel ruled by it
• Some feel in harmony with it
• Some seek to master it
• People’s view of the universe
• Renewed interest in spirituality

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 Views on Responding

Uncontrollable Proactive Reactive

• React and • Aggressive • Watching

adapt to actions to and reacting
forces in the affect forces to forces in
environment in the the
environment environment
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