CHAPTER TWO

THE MARKETING ENVIRONMENT

• Marketing environment is the actors and
forces outside marketing that affect
marketing management’s ability to build and
maintain successful relationships with target
customers.
• Various environmental forces influence
organization’s marketing system. Some are
external to the firm and thus are largely
uncontrollable by the organization. Other
forces are within the firm and generally
controllable by management .
2.2 Aspects of the marketing environment:
1.Microenvironment:
• Actors close to the company
2. Macroenvironment
• Larger societal forces
 1. Actors in the
Microenvironment
 The Microenvironment

a) Departments within the company impact marketing planning

 The Microenvironment

. Suppliers help to create and deliver customer

value.
– Treat suppliers as partners.
• Suppliers’ prices and services have
significant influence on a company’s
marketing system.
• At the same time these prices and services can
very often be influenced by careful planning
on the part of the buying organization.
 The Microenvironment

c. Marketing intermediaries are independent business

organizations that directly aid in the flow of goods
and services between a marketing organization and
its markets.
Marketing intermediaries help to sell, promote, and
distribute goods.
– Intermediaries take
many forms.
• Resellers (grocery stores, department stores
• Physical distribution firms ( order processing ,inventory control, logistics, packaging, and
warehousing transportation
• Financial intermediaries ( commercial bank, investment bank, pension fund)
• Marketing services agencies (marketing research agencies, advertising agencies,
marketing consultants)
d. Competitors--are businesses that try to share
the market.
• The success/failure of a company mostly
depends on the ability of the firm to serve
customers better than competitors.
e. Customers- Users of products and services.
• Successful companies provide better customer

value than the competition.

• f. Various publics must also
be considered. Publics are groups that
have an actual or potential interest/impact
on the company’s ability to achieve its
objectives.
– Government publics at Local and federal level set laws and regulations
– Media publics ( carry news on the goodness or badness of the firm’s product
– Financial public report on financial status ( banks, credit institutions.)
– Citizen action groups – associations established to protect the interest of the society
– Local public– neighbor, residents, community
2. Major Macro environmental forces
 a) The demographic environment

• DEMOGRAPHY– is the statistical study of human

population and it's distribution.
• It is of special interest to marketing executives
because people constitute markets. Popn of Usa – 330
• 65-70% of Ethiopian pop-- less than 24 Chinese smokers - 350

• Marketers are interested in the size, growth rate,

gender, density, age, ethnicity, culture of population
in different cities, regions, and nations ;age
distribution and ethnic mix, educational levels, house
hold patterns; and regional characteristics and
movements etc.
b. The Economic Environment
– Affects consumer purchasing power and spending
patterns.
– People alone do not make a market. They must have money to
spend and be willing to spend it.
– The available purchasing power in an economy depends on current
income, savings, debt, and credit availability.
– Marketers must pay close attention to major trends in income and
consumer spending patterns.
– A marketing program is affected especially by such economic factors
as the current and anticipated stage of the business cycle (Economic
boom, decline,slump), as well as inflation and interest rate.)
 C. The Natural Environment
– Concern for the natural environment has
grown steadily, increasing the importance of
these trends:
 The growing Shortage of raw materials(depletion of
resources
 Increased pollution
 Government interference in natural resource management
 Uncontrollable natural disasters eg earth quake, drought
 Many companies use recycling to help protect natural resources
—Reasons for that is – Cost saving
-- Environmental concerns
-- Environmental regulations
 D. The Technological Environment

• This involves the advancement in technology

• The technological environment is characterized by
rapid change.
• New technologies create new opportunities and
markets but make old technologies obsolete. (eg.
Floppy disk CD, Camera with negatives Digital camera)

• The advancement in technology affects markets in many ways (it creates

new opportunities(new markets) eg online markets around the world
• The way we market changes eg. Online marketing/Emarketing (Digital
marketing)
 e. The Political/legal Environment

• Includes laws and regulation, governmental

agencies, and pressure groups that impact/affects
organizations and marketing activities .
• Every company’s conduct is influenced more and
more by the political and legal process on the
society.
 The purpose is: --
• To protect consumers from unfair business practices ( eg .the case of
Tylenol)
• To protect companies from unfair competition
• To protect the interest of the society at large
• The political and legal forces on marketing can
be the following:
i) level of government spending, interest rate, taxation
system
ii) Social legislation and regulation– Anti pollution laws,
labor laws,
iii) Government relationship with industries –Tariffs and
import quotas, subsidies
 f. The socio-cultural environment

• The society in which people grow up shapes

their values and norms. people absorb, almost
unconsciously, a worldview that defines their
relationship to themselves, to others, to
nature, and to the universe
• People in a given society hold many core
beliefs and values that tend to persist. Thus
most Ethiopians believe in patriotism, in getting married,
in giving alms to the poor .
• Core beliefs and values pass from parents to children and are
reinforced by major institutions of the society– schools,
churches, business and government.
• Social and cultural environmental factors that affect marketing
are:
 Attitude towards income distribution( Who owns the wealth, men or
women)
 Attitudes towards environmental pollution (Europeans do not buy from a
company who pollutes the environment)
 Attitude towards quality of life (Ethiopians belief in heaven does not
encourage materialistic society)
 Women in work force