THE MARKETING

ENVIRONMENT
Chapter 1
Marketing environment consists of the actors and forces outside
marketing that affect marketing management’s ability to develop
and maintain successful relationships with its target customers.
The marketing environment offers both opportunities
and threats.
The marketing environment consists
of a microenvironment and a
macroenvironment.

WHAT IS MARKETING
ENVIRONMENT?
WHAT IS MICROENVIRONMENT AND
MACROENVIRONMENT?
The microenvironment consists of the forces close to the company
that affect its ability to serve its customers – the company,
suppliers, marketing channel firms, customer markets, competitors
and publics.

The macroenvironment consists of the larger societal forces that

affect the whole microenvironment – demographic, economic,
natural, technological, political and cultural forces. We look first at
the company’s microenvironment.
 THE COMPANY’S
MICROENVIRONMENT

Marketing management’s job is to attract

and build relationships with customers by
creating customer value and satisfaction.
However, marketing managers cannot
accomplish this task alone. Their success
will depend on other actors in the
company’s microenvironment – other
company departments, suppliers, marketing
intermediaries, customers, competitors and
various publics, which combine to make up
the company’s value delivery network
 THE COMPANY’S
The Supplier
MICROENVIRONMENT
Suppliers are an important link in the
company’s overall customer value
delivery system. They provide the
resources needed by the company to
produce its goods and services.
Supplier developments can seriously
affect marketing.
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.
 THE COMPANY’S
The Supplier
MICROENVIRONMENT

Marketing managers also monitor the

price trends of their key inputs. Rising
supply costs may force price increases
that can harm the company’s sales
volume. Increasingly, today’s marketers
are treating their suppliers as partners
in creating and delivering customer
value.
The Company THE COMPANY’S
MICROENVIRONMENT
Marketing management’s job is to
attract In designing marketing plans,
marketing management should take
other company groups, such as top
management, finance, research and
development (R&D), purchasing,
manufacturing and accounting, into
consideration.
Marketing managers make decisions
within the plans made by top
management.
 THE COMPANIES DEPARTMENT AND
RESPONSIBILITY
Top Management FINANCE
Top management sets the Finance is concerned with
company’s mission, finding and using funds to
objectives, broad strategies carry out the marketing plan.
and policies.

R&D DEPARTMENT
The R&D department
focuses on the
problems of
designing safe and
attractive products.
 THE COMPANIES DEPARTMENT AND
RESPONSIBILITY
PURCHASING MANUFACTURING
Purchasing worries about Manufacturing or Operations
getting supplies and is responsible for producing
materials, the desired quality and
quantity of products..

ACCOUNTING
Accounting has to
measure revenues
and costs to help
marketing know
how well it is
achieving its
objectives.
 THE COMPANY’S
The Competitors
MICROENVIRONMENT
The marketing concept states that, to
be successful, a company must 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 must also gain
strategic advantage by positioning their
offerings strongly against competitors’
offerings in the minds of consumers.
 THE COMPANY’S
MICROENVIRONMENT
The Marketing
Intermediaries
Marketing intermediaries are 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.
 MARKETING
INTERMEDIARIES
Reseller
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.
 MARKETING
INTERMEDIARIES
Physical distribution
firms
Physical distribution firms help the
company to stock and move goods from
their points of origin to their destinations.
Working with warehouse and
transportation firms, a company must
determine the best ways to store and ship
goods, balancing such factors as cost,
delivery, speed and safety.
 MARKETING
INTERMEDIARIES
Marketing Services
Agencies
Marketing services agencies are the marketing
research firms, advertising agencies, media firms
and marketing consultancies that help the
company target and promote its products to the
right markets. When the company decides to use
one of these agencies, it must choose carefully
because the firms vary in creativity, quality,
service and price.
 MARKETING
INTERMEDIARIES
Financial
intermediaries
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.
 THE COMPANY’S
MICROENVIRONMENT
The Customers
The company must study its customer
markets closely.
A customer is a person or business that
buys goods or services from another
business. Customers are crucial
because they generate revenue.
Without them, businesses would go out
of business.
Six Types of Customer
Market
1. CONSUMER MARKETS

Consumer markets consist of individuals

and households that buy goods and
services for personal consumption.

2. BUSINESS MARKETS

Business markets buy goods and

services for further processing or for use
in their production process,
Six Types of Customer
Market
1. RESELLER MARKETS

reseller markets buy goods and services

to resell at a profit.

2. INSTITUTIONAL MARKETS

Institutional markets are made up of

schools, hospitals, nursing homes,
prisons and other institutions that
provide goods and services to people in
their care.
 Six Types of Customer
Market
1. GOVERNMENT MARKETS

Government markets are made up of government

agencies that buy goods and services in order to
produce public services or transfer the goods and
services to others who need them.

2. INTERNATIONAL MARKETS

International markets consist of buyers in other

countries, including consumers, producers,
resellers and governments. Each market type has
special characteristics that call for careful study
by the seller.
 THE COMPANY’S
MICROENVIRONMENT
The Publics

The company’s marketing environment

also includes various publics.
A public is any group that has an actual
or potential interest in or impact on an
organization's ability to achieve its
objectives.
 7 TYPES OF PUBLIC
1. Financial publics. Financial publics influence the company’s ability to
obtain funds. Banks, investment houses and stockholders are the principal
financial publics.

2. Media publics. Media publics include newspapers, magazines and radio and
television stations that carry news, features and editorial opinion.

3. Government publics. Management must take government developments

into account. Marketers must often consult the company’s lawyers on issues
of product safety, truth in advertising and to her matters.

4. Citizen action publics. A company’s marketing decisions may be

questioned by consumer organisations, environmental groups, minority
groups and other pressure groups (see Marketing Insights
 7 TYPES OF PUBLIC
5. Local publics. Every company has local publics, such as neighbourhood
residents and community organizations. Large companies usually appoint a
community-relations officer to deal with the community, attend meetings,
answer questions and contribute to worthwhile causes.

6. General public. A company needs to be concerned about the general

public’s attitude towards its products and activities. The public’s image of
the company affects its buying. Thus, many large corporations invest huge
sums of money to promote and build a healthy corporate image.

7. Internal publics. These include its 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
their company, this positive attitude spills over to their external publics.
 THE COMPANY’S
MACROENVIRONMENT

The company and all the other actors

operate in a larger macroenvironment of
forces that shape opportunities and pose
threats to the company.
 THE SIX
MOST INFLUENTIAL FORCES IN
THE COMPANY’S
MACROENVIRONMENT
1. DEMOGRAPHIC FORCE
Demography is the study of human populations in
terms of size, density, location, age, gender, race,
occupation and other statistics.

2. ECONOMIC FORCE
Markets require buying power as well as people.
The economic environment consists of factors
that affect consumer purchasing power and
spending patterns.
3. NATURAL FORCE
The natural environment involves the natural
resources that are needed as inputs by marketers
or that are affected by marketing activities.

4. TECHNOLOGICAL FORCE
Technological environment Forces that create new
technologies, creating new product and market
opportunities.
5. POLITICAL FORCE
Marketing decisions are strongly affected by
developments in the political environment. The
political environment consists of laws,
government agencies and pressure groups that
influence and limit various organizations and
individuals in a given society.
6. CULTURAL FORCE
The cultural environment is made up of
institutions and other forces that affect
society’s basic values, perceptions,
preferences and behaviours. People grow up
in a particular society that shapes their basic
beliefs and values. They absorb a world-view
that defines their relationships with others.
The following cultural characteristics can
affect marketing decision making.