Principles of Marketing

Seventeenth Edition

Chapter 3
Analyzing the
Marketing
Environment

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.
 • marketing operates in a complex and changing
environment.
• Other actors in this environment(suppliers,
intermediaries, customers, competitors, publics,
and others) may work with or against the
Major
company. environmentalforces (demographic,
economic, natural, technological, political,and
cultural)shape marketing opportunities, pose
threats, and affect the company’s ability to engage
customers and build customer relationships.
❖ To develop effective marketing strategies, a
company must first understand the environment in
which marketing operates.
 A Company’s Marketing Environment

Marketing Environment: the actors and

forces outside marketing that affect
marketing management’s ability to build
and maintain successful relationships with
target customers.
 The Microenvironment
and
Macroenvironment
Microenvironment:
• The actors close to the company that affect its ability to
serve its customers—the company suppliers,
marketing intermediaries, , markets
competitors, and publics. customer ,
Macroenvironment:
• The larger societal forces that affect the
microenvironment—demographic, economic,
natural, technological, political, and cultural forces.
 ❖ The Microenvironment
• What is marketing management job?

• Marketing management’s job is to build relationships

with customers by creating customer value and
satisfaction. marketing managers cannot do this alone.
Marketing success requires building relationships with
other company departments, suppliers,
intermediaries, marketing competitors, various
customers, whichpublics,
combineand
to make up the
company’s
value delivery network.
 The Microenvironment
Figure 3.1 Actors in the
Microenvironment
❑ The Company:
• In designing marketing plans, marketing management
takes other company groups into account—groups such
as top management, finance, research and development
(R&D), purchasing, operations, human resources, and
accounting. All of these interrelated groups form the
internal environment.
• Top management sets the company’s mission,
objectives, broad strategies, and policies. Marketing
managers make decisions within these broader strategies
and plans. Then, marketing managers must work
closely with other company departments. With
marketing taking the lead, all departments—from
manufacturing and finance to legal and human
resources—share the responsibility for understanding
customer needs and creating customer value.
❑ Suppliers :-
• Suppliers form an important link in the
company’s overall customer value delivery
network.
• 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. Supply shortages or delays,
can cost sales in the short run and damage
customer satisfaction in the long run.
• Rising supply costs may force price increases that
can harm the company’s sales volume.
❑ Marketing Intermediaries:
• Firms that 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
that buy and resell goods.
• Physical distribution firms: help the company
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.
• 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.
❑ Competitors:
• The concept state that: to be
successful, a company must
marketing s provide greater
customer value and satisfaction than its
competitors do. Thus, marketers must do more
than simply adapt to the needs of target
consumers. They also must gain strategic
advantage by positioning their offerings strongly
against competitors’ offerings in the minds of
consumers.
• No single competitive marketing strategy is best
for all companies. Each firm should consider its
own size and industry position compared with
those of its competitors
❑ Publics :
• Any group has an actual or potential interest in or
impact on an organization’s ability to achieve
objectives. We can identify seventypes of
its
publics:
• Financial publics: This groupinfluences
company’s the ability to obtain funds.
investment analyst
Banks, , and stockholders are the
major financial publics.
• Media publics: This group carries news, features,
editorial opinions, and other content. It includes
television stations, newspapers, magazines, and
blogs and other social media.
• Government publics: Management must take
government developments into
Marketers must often consult account. the
lawyers on issues of product safety, truth in
company’s
advertising, and other
• matters.
Citizen-action publics: A company’s marketin
decisions may be questioned g by
organizations, environmentalgroups, consumer
minority
groups, and others. Its public relations department
can help it stay in touch with consumer and citizen
groups.
• Internal publics: This group includes workers, managers,
volunteers, and the board of directors. Large companies
use newsletters and other means to inform and motivate
their internal publics. When employees feel good about
the companies they work for, this positive attitude spills
over to the external publics.
• General public: A company needs to be concerned
about the general public’s attitude toward its products
and activities. The public’s image of the company affects
its buying behavior.
• Local publics: This group includes local community
residents and organizations. Large companies usually
work to become responsible members of the local
communities in which they operate.
❑ Customers
• Customers are the most important actors in the company’s
microenvironment. The aim of the entire value delivery
network is to engage target customers and create strong
relationships with them.
• The company might target any or all of five types of customer
markets.
1. Consumer markets: consist of individuals and households that
buy goods and services for personal consumption.
2. Business markets: buy goods and services for
further processing or use in their production processes.
3. reseller markets: buy goods and services to resell at a profit.
4. Government markets: consist of government agencies that
buy goods and services to produce public services or transfer
the goods and services to others who need them.
5. international markets: consist of these buyers in other
countries, including consumers, producers, resellers, and
 ❖ The Macroenvironment
• The company and all of the other actors
operate in a larger macroenvironment of
forces that shape opportunities and pose
threats to the company.
 The Macroenvironment (1 of
18)
Figure 3.2 Major Forces in the Company’s
Macroenvironment
❑ Demographic Environment
• Demography is the study of human populations in
terms of size, density, location, age, gender, race,
occupation, and other statistics.
• Changes in the world demographic environment
have major implications for business. Thus marketers
keep a close eye on demographic trends
developments in their andmarkets. They analyz
changing age and familystructures, geographic e
population shifts, educational characteristics, and
population diversity.
❑ The Economic Environment
• The economic environment consists of economic
factors that affect consumer purchasing power and
spending patterns.
• consumers have now adopted a back-to-basics in
their lifestyles and spending patterns that will likely
persist for years to come. They are buying less and
looking for greater value in the things they do buy.
• value marketing has become the watchword for
many marketers. Marketers in all industries are
looking for ways to offer more financially frugal
buyers greater value—just the right combination of
product quality and good service at a fair price.
 ❑ The Natural and
Technological Environments
❑ The Natural Environment
• The natural environment involves the physical
environment and the natural resources that are
needed as inputs by marketers or that are affected by
marketing activities, unexpected happenings in the
physical environment (anything from weather to
natural disasters) can affect companies and their
marketing strategies.
✔ Natural environment:
• The physical environment and the natural resources
that are needed as inputs by marketers or that are
affected by marketing activities.
• Concern for the natural environment has
generate an environmental sustainability
movement.
d Today, enlightened companies go
beyond what government regulations dictate.
They are developing strategies and practices that
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.
• environmental sustainability :
Developing strategies and practices that create a
world economy that the planet can support
indefinitely.
 ❑ The Technological Environment
✔ technological environment:
• Forces that create new technologies, creating
new product and market opportunities.
• The technological environment changes rapidly,
creating new markets and opportunities. However,
every new technology replaces an older technology.
marketers should watch the technological
environment closely. Companies that do not keep up
will soon find their products outdated. If that
happens, they will miss new product and market
opportunities.
❑ The Political–Social and Cultural Environments
✔ The Political and Social Environment:
• The political environment : consists of laws,
government agencies, and pressure groups that
influence or limit various organizations and
individuals in a given society.
• Legislation regulating business is intended to protect:
1. companies from each other
2. consumers from unfair business practices
3. the interests of society against
unrestrained business behaviour
❑ The Cultural Environment:
• A cultural environment is a set of beliefs , value,
practices, customs and behaviors that are found to be
common to everyone that is living within a certain
population. that people use to understand and explain
their physical and social environment.
• Institutions and other forcesthat affect society’s
basic values, perceptions, preferences, and behaviors.
• People grow up in a particular society that shapes their
basic beliefs and values.
• Thefollowing cultural characteristics can affect
marketing decision making :-
❖ The Persistence of Cultural Values:
o People in a given society hold many beliefs and

values :
1 core beliefs and values have a high degree of
persistence. These beliefs shape more specific
attitudes and behaviors found in everyday life.
• Core beliefs and values are passed on from
parents to children and are reinforced by
schools, businesses, religious institutions,
and government.
• For example, most Americans believe in individual
freedom, hard work, getting married, and achievement
and success.
2- Secondary beliefs and values: are more open
to change.
• Believing in marriage is a core belief,

believing that people should get married early

in life is a secondary belief.
Marketers have some chance of changing
secondary values but little chance of changing
core values.
❖ Shifts in Secondary Cultural Values
• Although core values are fairly persistent,
cultural swings do take place. Consider the
impact of popular music groups, movie
personalities, and other celebrities on young
people’s hairstyle and clothing norms.
• Marketers want to predict cultural shifts to

spot new opportunities or threats.

 ❖ Responding to the
Marketing Environment
❑ There are three kinds of companies.
1. Those who make things happen.
2. Those who watch things happen.
3. Those who wonder what’s happened.
❑ Many companies view the marketing
environment as an uncontrollable element to
which they must react and adapt. They
passively accept the marketing environment
and do not try to change it. They analyze
environmental forces and design strategies
that will help the company avoid the threats
and take advantage of the opportunities the
environment provides.
❑ Other companiestake a proactive stance
towar the marketing environment. these
d firms developstrategies to change the
environment. Proactive firms take aggressive
actions to affect the publics and forces in their
marketing environment.
• Marketing management cannot always control
environmental forces. In many cases, it must
simply watching and reacting to the
environment. For example, a company would
have little success trying to influence geographic
population shifts, the economic environment, or
major cultural values. But whenever possible,
smart marketing managers take a proactive
rather than reactive approach to the marketing
environment