MKW 1120

MARKETING
THEORY AND
PRACTICE
LECTURE 3: THE MACRO & MICRO
ENVIRONMENT
 UNIT SCHEDULE
Week Scope

1 Introduction to marketing Defining marketing and

2 Creating, delivering and capturing value the marketing process
3 Analysing the marketing environment
Understanding the
4 Consumer market and buyer behaviour marketplace and
5 Segmentation, targeting and positioning consumer value
6 Product, services and brands
New product development and product life cycle strategies
7 Advertising, public relations, personal selling, sales promotion, direct
and digital marketing
8 Pricing and pricing strategies Designing a consumer
Communicating customer value value driven strategy
9 Marketing channels and retailing
and mix

10 Business-to business markets

11 Revision
LEARNING OUTCOMES:

1.Understand the nature of the marketing

environment and why it is important to
marketers.
2.Describe the major components of the
micro environment and how trends in the
micro environment affect marketing.
3.Describe the major components of the
macro environment and how trends in the
macro environment affect marketing.
MARKETING ENVIRONMENT
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.
MARKETING ENVIRONMENT
Macro/External
Environment: consists of
the larger societal forces
that affect the
microenvironment

Customers Company

Public
Marketing Suppliers

Competitors Marketing
intermediaries Micro/Internal
Environment: consists
of the actors close to
the company that
affect its ability to
serve its customers
 MARKETING ENVIRONMENT
Why do firms engage in environmental scanning?: Many firms scan the
marketing environment to identify important trends and determine whether they
represent present or future market opportunities or threats.
 MARKETING ENVIRONMENT

ACTORS IN MICRO ENVIRONMENT

The Company Suppliers Marketing Competitors Publics Customers

Intermediaries

ACTORS IN MACRO ENVIRONMENT

Demographic Economics Natural Technological Political Cultural

The Micro Environment

THECOMPANY

Top Research and

management Finance Development

Purchasing Operations Accounting

The Micro Environment

THECOMPANY
▪ Company must set objectives that shape the direction and
operation of whole business.
▪ Senior management sets the organisation’s mission, objectives,
broad strategies and policies.
▪ The marketing manager should be heard when company is
setting objectives.
▪ Marketing managers must make decisions within the plans
made by senior management.
▪ In designing marketing plans, marketing management takes
other organisation groups into account such as: top
management, finance, research and development (R&D),
purchasing, manufacturing and accounting.
▪ Organisations that adopt the marketing concept must ‘think
customer,’and work together to exceed customers’ expectations
 The Micro Environment

SUPPLIERS
▪ Suppliers form an important link in the
company’s overall customer value
delivery network.
▪ Suppliers provide the resources needed
by the company to produce its goods
and services.
▪ Supplier problems such as delay or
supply shortage, rising supply cost,
changes in the quality of resources can
seriously affect marketing
▪ Most marketers today treat suppliers as
partners in creating and delivering
customer value.
The Micro Environment

MARKETING INTERMEDIARIES

PHYSICAL
RESELLERS DISTRIBUTION
FIRMS

MARKETING FINANCIAL
SERVICES AGENCIES INTERMEDIARIES
The Micro Environment

MARKETING INTERMEDIARIES
Marketing intermediaries help an organisation to promote, sell and distribute its goods
to final buyers. Theyinclude:
▪ Resellers
Distribution channel firms that help the organisation find customers or make
sales to them such as wholesalers and retailers.

▪ Physical distributionfirms
Help the organisation stock and move goods from their points of origin
to their destinations such as transportation firms.
▪ Marketing services agencies
The facilitating agencies—marketing research companies, advertising
agencies, media firms, export consulting agencies and marketing consulting
firms that help the organisation target and promote its products to the right
markets.
▪ Financial intermediaries
Include banks, credit organisations, insurance organisations and other
businesses that help to finance transactions or insure against the risks
associated with the buying and selling of goods.
The Micro Environment

CUSTOMERS
Consumer markets
Business markets
Reseller markets
Government markets
International markets
The Micro Environment

COMPETITORS
▪ Every organisation faces a wide range of competitors. The
marketing concept states that, to be successful, an
organisation must provide greater customer value and
satisfaction than its competitors.
▪ No single competitive marketing strategy is best for all
organisations. Each marketer should consider its own size
and industry position compared with those of its
competitors.
▪ Organisations are facing competition from international
competitors as well as opportunities in international
markets.
 The Micro Environment

COMPETITORS
Competitors can be identified from:
(a) An industry point of view
All firms with the same product or class of products.
Pepsi vs Coca-Cola and Dr Pepper Snapple Group
(b) A market point of view
Companies that are trying to satisfy the same customer
need or build relationships with the same customer group.
“Thirst quenching”, e.g., bottled water, energy drinks, fruit
juice, iced tea, and many other fluids.
The Micro Environment
PUBLICS

The organisation’s marketing environment also includes various

publics. A public is any group that has an actual or potential
interest in, or impact on, an organisation’s ability to achieve its
objectives. Every organisation is involved with seven types of
publics:

Financial Government Citizen-

action

Local General Internal

Media
Financial publics:

• Influence the organisation’s ability to obtain funds. Banks, investment housesand shareholders are the major financial
publics.

Media publics:

• Those that carry news, features and editorial opinion. They include newspapers, magazines and radio and television
stations

Government publics:

• Management must take government development into account. Marketing management often needs to consult the
organisation’s lawyers on issues of product safety, truthful advertising or resellers’ rights.

Citizen-action publics:

• Consumer groups, environmental groups, minority groups and other public interest groups may question an
organisation’s marketing decisions

Local publics:

• Every organisation has local publics such as neighbourhood residents and community protection organisations.

General publics:

• A marketing organisation needs to be concerned about the general public’s attitude toward its products, services and
activities. The public’s image of the organisation affects its buying.

Internal publics:

• An organisation’s internal publics include its wage earners, salaried and commission employees, volunteers, managers
and the board of directors. When employees feel good about their organisation, this positive attitude spills over to
external publics
 Macro Marketing Environment

The larger societal forces that affect the whole micro-

environment:
• Shape opportunities and pose threats to the company
• Some of these forces are unforeseeable and
uncontrollable

ACTORS IN MACRO ENVIRONMENT

Demographic Economics Natural Technological Political Cultural

The Macro Environment

DEMOGRAPHIC ENVIRONMENT

Demography is the study of human populations--

size, density, location, age, gender, race, occupation,
and other statistics. It involves people, and people
make upmarkets.
 DEMOGRAPHIC – CHANGING AGE
STRUCTURE

Generation X - Generation Y
Baby Boomers - (Millennials) - Generation Z –
born 1946 to born between born between born after 2000
1964 1965 and 1976
1977 and 2000

Generational marketing is important in segmenting people by lifestyle or

life stage instead of age.
 DEMOGRAPHIC – CHANGING FAMILY
STRUCTURE

More couples More people More people

choosing not to marrying without
are divorcing or marry or intending to have
separating marrying later children

Increasing Increasing
number of stay-
number of at-home dads
working women (changing roles)
 DEMOGRAPHIC – GEOGRAPHICAL
SHIFT, EDUCATION

A better educated
Movement between and more white-collar
states, from rural to population affect not
urban, city to suburb. just what people buy
but also how they buy.
 Demographic – Increasing ethnicity

Marketers now face

increasingly diverse
markets;.
- International
- National
Diversity also includes:
- Ethnicity
- Gay and lesbian
- Disabled
 The Macro Environment

ECONOMIC ENVIRONMENT
▪ The economic environment ‘consists
of factors that affect consumer-
buying power and spending Changes inincome
patterns.’
▪ Markets require buying power as
well as people. Total buying power
depends on current income, prices, Changing
savings and credit. consumer
▪ Marketers should be aware of spending
major trends in income and of patterns
changing consumer spending
patterns.
The Macro Environment

NATURAL ENVIRONMENT
The natural environment is the physical
environment and the natural resources that
are needed as inputs by marketers or that
are affected by marketing activities.

Shortages of raw Increased cost of Increased

materials energy pollution

Government
intervention in
natural resources
management
The Macro Environment

NATURAL ENVIRONMENT
Shortages of raw materials:
Air and water, which may seem to be infinite resources, are
becoming polluted. Many parts of the world are facing
water shortages. Renewable sources need to be used wisely.
The food supply can also be a major problem because the
amount of farmable land is limited and because more and
more of it is being developed. Non-renewable resources such
as oil, coal and various minerals pose a serious problem.
Increased pollution
Industry will almost always damage the natural environment.
However, this can create opportunities for products to help
save the environment: smoke-stack scrubbers, recycling
centres, high-temperature incinerators, and landfill systems.
The Macro Environment

NATURAL ENVIRONMENT
Increased cost of energy:
One non-renewable resource, oil, has created the most
serious problem for future economic growth. The major
industrial economies of the world depend heavily on oil
and, until economical energy substitutes can be developed,
oil will continue to dominate the world political and
economic picture.
Government intervention in natural resource management:
Governments of different countries vary in their concern and
efforts to promote a clean environment.
NATURAL ENVIRONMENT AND ITS
EFFECTS ON COMPANIES
MARKETING
Social entrepreneurship
Single-used plastics
Packaging
BYOC
The Macro Environment

TECHNOLOGICAL ENVIRONMENT

•Most dramatic force

in changing the
marketplace
•New products,
opportunities
•Concern for the
safety of new
products
 The Macro Environment

TECHNOLOGICAL ENVIRONMENT
The technological environment is perhaps the most dramatic force
now shaping our destiny. Technology has released medical
wonders and advanced communication; however, it has also
created the means of mass destruction. New technologies replace
older technologies, creating new markets and new opportunities.
▪ Fast pace of technological change: Many of the world’s
greatest inventions and innovations have occurred in the last
century: cars, planes, computers, light globes, radio and
television, for example. Even now, many computers are
considered obsolete a little more than two years after being
made.
The Macro Environment

TECHNOLOGICAL ENVIRONMENT
▪ High R&D budgets: The largest spending on R&D by any
country occurs in the United States. The American
government has traditionally supplied almost half of those
R&D funds that provide a rich source of new product and
service ideas. The Australian Government has recently
encouraged research in areas such as bio-technology
through increased funding in these areas and sharing
commercial benefits with private organisations.
▪ Increased regulation: As products become more complex,
the public needs to know that they are safe. Thus,
government agencies investigate and ban potentially
unsafe products. Such regulations have resulted in much
higher research costs and in longer time periods between
new product ideas and their introduction.
The Macro Environment

POLITICAL ENVIRONMENT

Legislation
regulating business
Insert photo of Page
133 in here

Increased
emphasis on ethics
and socially
responsible actions
The Macro Environment

POLITICAL ENVIRONMENT
Marketing decisions are strongly
affected by developments in the political
environment which ‘consists of laws,
government agencies and pressure
groups that influence and limit
organisations and individuals in a given
society.’
▪ Legislation affecting business has
increased steadily over the years to
protect organisations from each other
and to protect consumers from
unscrupulous businesses.
▪ There is increased emphasis on ethics
and socially responsible actions.
The Macro Environment

CULTURAL ENVIRONMENT

• Includes set of values, ideas, and

attitudes that are learned and
shared among members of a group.

• 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 to themselves and others.
 The Macro Environment

CULTURAL ENVIRONMENT

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 theuniverse.
 The Macro Environment

CULTURAL ENVIRONMENT
Shifts in Secondary Cultural Values of People’s Views

Themselves
Others
Organizations
Society
Nature
Universe
IN SUMMARY: RESPONDING TO THE
MARKETING ENVIRONMENT

Uncontrollable Proactive Reactive

• React and • Take • Watch and

adapt to aggressive react to
forces in the actions to forces in the
environment affect forces environment
in the
environment

✓ Macro environment: Opportunity and threats

✓ Micro environment: Strength and weaknesses
✓ Both environments are interrelated.
 1. Micro environmental forces:
• Describe the micro environmental forces
that affect the company’s ability to serve
its customers.
• Explain how the company, suppliers,
marketing intermediaries, competitors,
KEY the public and customers affect
marketing decisions.
TAKEAWAYS
2. Macro environmental forces:
FOR • Describe the macro environmental forces
that affect the company’s ability to serve
LECTURE 3 its customers.
• Explain how changes in the demographic,
economic, natural, technological and
cultural environments affect marketing
decisions.
END

MACRO AND MICRO ENVIRONMENT