B250F

Introduction to Marketing

Week 3:
Chapter 3The Marketing Environment

The Marketing Environment

2012 Principles of Marketing: An Asian Perspective

Chapter 3 Outline
3.1
3.2
3.3

The Companys Microenvironment

The Companys Macroenvironment
Responding to the Marketing Environment

2012 Principles of Marketing: An Asian Perspective

Objectives
Know the environmental actors and forces that affect the
companys ability to serve its customers.
Realize how changes in the demographic and economic
environments affect marketing decisions.
Identify the major trends in the firms natural and
technological environments.
Know the key changes in the political and cultural
environments.
Understand how companies can react to the marketing
environment.
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3.1
The Companys Microenvironment

3.1

2012 Principles of Marketing: An Asian Perspective

3.1 The Companys Microenvironment

Marketing Environment
A

companys marketing environment consists of the actors and

forces outside marketing that affect marketing managements ability
to build and maintain successful relationships with target customers.
The

microenvironment consists of the actors close to the company

that affect its ability to service its customers.
The

macroenvironment consists of larger societal forces that affect

the microenvironment.

2012 Principles of Marketing: An Asian Perspective

3.1 The Companys Microenvironment

Actors in the Microenvironment

2012 Principles of Marketing: An Asian Perspective

3.1 The Companys Microenvironment

The Company
Top management
Finance
R&D
Purchasing

All the interrelated

groups form the
internal environment.
All groups should work
in harmony to provide
superior customer
value and relationships

Operations
Accounting
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2012 Principles of Marketing: An Asian Perspective

3.1 The Companys Microenvironment

Suppliers
Suppliers provide the
resources needed by the
company to produce its goods
and services.
Marketing managers must
watch supply availability
supply shortages or delays,
labor strikes, and other events
that can cost sales in the short
run and damage customer
satisfaction in the long run.
Marketing managers also
monitor the price trends of their
key inputs.
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2012 Principles of Marketing: An Asian Perspective

3.1 The Companys Microenvironment

Marketing Intermediaries
Marketing intermediaries
help the company to
promote, sell, and distribute
its products to final buyers.
Marketers recognize the
importance of working with
their intermediaries as
partners rather than simply
as channels through which
they sell their products.

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3.1 The Companys Microenvironment

Types of Marketing Intermediaries

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3.1 The Companys Microenvironment

Customers
Consumer markets
Business markets
Reseller markets
Government markets
International markets
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3.1 The Companys Microenvironment

Competitors
Marketers 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.

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3.1 The Companys Microenvironment

Publics
Financial publics

General public

Media publics

Internal publics

Government publics
Citizen-action publics
Local publics

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3.2
The Companys Macroenvironment

3.2

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3.2 The Companys Macroenvironment

Major Forces in the Companys 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.

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3.2 The Companys Macroenvironment

Demographics
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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3.2 The Companys Macroenvironment

The Demographic Environment

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3.2 The Companys Macroenvironment

Changing Age Structure of the Population
In general, the three largest age groups are the baby boomers,
Generation X, and Millennials.
The Baby Boomers
Baby boomers are people born postWorld War II between 1946 and
1964.
Generation X
This is the generation of people born between 1965 and 1976. They are
called Generation X because they lie in the shadow of the boomers.
Generation Y (or The Millennials)
They are born between 1977 and 2000. These are children of the baby
boomers. The echo boom has created a large teen and young adult
market.
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Analysis - Population (HK)

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Population (HK)

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3.2 The Companys Macroenvironment

A Better-Educated, More White-Collar More Professional

Population
The

world population is becoming better educated.

The

rising number of educated people will increase the demand for

quality products, books, magazines, travel, personal computers, and
Internet services.
The

workforce also is becoming more white-collar

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3.2 The Companys Macroenvironment

Increasing Diversity
Countries
At

vary in their ethnic and racial makeup.

one extreme is Japan, where almost everyone is Japanese.

At the other extreme is the U.S., with people from virtually all
nations.

Marketers are facing increasingly diverse markets, both at home and

abroad, as their operations become more international in scope.

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3.2 The Companys Macroenvironment

Economic Environment
Consists of factors that affect consumer purchasing power and spending
patterns.

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3.2 The Companys Macroenvironment

Changes in Income
Marketers

should pay attention to income distribution as well as

average income.
At

the top are upper-class consumers whose spending patterns are

not affected by current economic events and who are a major market
for luxury goods.
There

is a comfortable middle class that is somewhat careful about

its spending but can still afford the good life some of the time.

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3.2 The Companys Macroenvironment

Changes in Income

The working class must stick close to the basics of food, clothing, and
shelter and must try hard to save.

Finally, the underclass (persons on welfare and many retirees) must

count their pennies when making even the most basic purchases.

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3.2 The Companys Macroenvironment

Changing Consumer Spending Patterns

Food, housing, and transportation take up the bulk of household

incomes.

However, consumers at different income levels have different

spending patterns.

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3.2 The Companys Macroenvironment

Natural environment
Involves the natural resources that are needed as inputs by marketers or
that are affected by marketing activities.
Trends include shortages of raw materials, increased pollution, increased
government intervention and a greater attention to environmentally
sustainable strategies.

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3.2 The Companys Macroenvironment

The Natural environment

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3.2 The Companys Macroenvironment

The Natural environment

Companies are recognizing the link between a healthy ecology and a

healthy economy.

They are learning that environmentally responsible actions can also

be good for business.

Indeed, a new measure consumers use to evaluate businesses is

their commitment to environmental sustainability.

Essentially, companies should not take away more than what they
add to the worlds resources and environment.

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3.2 The Companys Macroenvironment

Technological Environment
Technology is the most dramatic force in changing the
marketplace. It creates new products and opportunities, and
kills off older products.

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3.2 The Companys Macroenvironment

The Technological Environment

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3.2 The Companys Macroenvironment

Political/Legal Environment
Political environment
laws, government agencies, and pressure groups that influence or limit
various organizations and individuals in a given society

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3.2 The Companys Macroenvironment

The Political Environment

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3.2 The Companys Macroenvironment

Legislation Regulating Businesses

Business legislation has three main purposes:
a)to

protect companies from unfair competition

b)to

protect consumers from unfair business practices, and

c)to

protect the interests of society from unbridled business behaviour

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3.2 The Companys Macroenvironment

Counterfeit Products

The popularity of counterfeit brands in Asia has proven to be a growing problem for companies.
Purses and bags like these are easily available in markets in Asia.

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3.2 The Companys Macroenvironment

Socially Responsible Behaviour

Enlightened companies encourage their managers to look

beyond what the regulatory system allows and simply do the
right thing.

These socially responsible firms actively seek out ways to

protect the long-run interests of their consumers and the
environment.

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3.2 The Companys Macroenvironment

Cause Related Marketing

To exercise their social responsibility and build more positive images,
companies are linking themselves to worthwhile causes.

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3.2 The Companys Macroenvironment

Cultural Environment

Cultural environment consists of institutions and other forces that

affect a societys basic values, perceptions, and behaviors

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

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3.2 The Companys Macroenvironment

The Cultural Environment

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3.2 The Companys Macroenvironment

Persistence of Cultural Values

Core beliefs and values persist because they are passed on from
parents to children and are reinforced by schools, churches,
business, and government.
Secondary beliefs and values are more open to change.
Marketers want to predict cultural shifts in order to spot new
opportunities or threats.
Shifts in Secondary Core Values

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3.3
Responding to the Marketing Environment

3.3

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3.3 Responding to the Marketing Environment

Many companies think the marketing environment is an uncontrollable

element to which they have to adapt.
Other companies take an environmental management perspective
to affect the publics and forces in their environment.
Marketing managers should take a proactive rather than reactive
approach to the marketing environment.

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3.3 Responding to the Marketing Environment

UNCONTROLLABLE

PROACTIVE

React and adapt

to forces in the
environment

Aggressive
actions to affect
forces in the
environment

46 2012 Principles of Marketing: An Asian Perspective

REACTIVE

Watching and
reacting to forces
in the environment

The End
Thank you