Lecture 3:

The Marketing Environment

 Learning Objectives

1 Describe the environmental forces that affect the company’s ability to serve
its customers.
2 Explain how changes in the demographic and economic
environments affect marketing decisions.
3 Identify the major trends in the firm’s natural and technological
environments.
4 Explain the key changes in the political and cultural environments.
5 Discuss how companies can react to the marketing environment.
 A
Company’s 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.
 Learning Objective 1

Describe the environmental forces that affect the

company’s ability to serve its customers.
 The Microenvironment and
Macroenvironment

Microenvironment consists of the actors close to the company that affect its
ability to serve its customers—the company, suppliers, marketing intermediaries,
customer markets, competitors, and publics.

Macroenvironment consists of the larger societal forces that

affect the microenvironment—demographic, economic, natural,
technological, political, and cultural forces.
 The Microenvironment

Figure 3.1 Actors in the Microenvironment

 The Microenvironment
The Company
In designing marketing plans, marketing management
takes other company groups into account.
• Top management
• Finance
• Research and development (R&D)
• Information technology
• Purchasing
• Operations
• Human resources
• Accounting
 The Microenvironment
Suppliers

• Provide the resources to produce goods and services

• Treat as partners to provide customer value

Suppliers: Giant furniture retailer IKEA doesn’t

just buy from its suppliers. It involves them
deeply in the process of delivering the trendy but
simple and affordable home furnishings to create
a better everyday life for its customers.
 The Microenvironment

Marketing Intermediaries

Marketing intermediaries are firms that help the company to promote,

sell, and distribute its goods to final buyers.

Partnering with
intermediaries: Coca-Cola
provides its retail partners
with much more than just soft
drinks. It also pledges
powerful marketing support.
 The Microenvironment

Marketing Intermediaries

• Resellers
• Physical distribution firms
• Marketing services agencies
• Financial intermediaries
 The Microenvironment

Competitors

Firms must gain strategic advantage by positioning their offerings strongly

against competitors’ offerings in the minds of consumers.
 The Microenvironment

Publics Publics: P&G has a long history of

giving back to its local publics. The Tide
Loads of Hope program brings “hope not
Any group that has an actual or potential just soap” in the form of free mobile
interest in or impact on an organization’s laundry services to people in
ability to achieve its objectives communities facing natural disasters.

» Financial publics
» Media publics
» Government publics
» Citizen-action publics
» Local publics
» General public
» Internal publics
 The Microenvironment

Customers

• Consumer markets
• Business markets
• Reseller markets
• Government markets
• International markets
 The Macroenvironment

Figure 3.2 Major Forces in the Company’s Macroenvironment

 Learning Objective 2

Explain how changes in the demographic and economic

environments affect marketing decisions.
 The Demographic and
Economic Environments

The Demographic Environment

• Demography is the study of human populations—size,

density, location, age, gender, race, occupation, and other
statistics.
• Demographic environment involves people, and people
make up markets.
• Demographic trends include changing age and family
structures, geographic population shifts, educational
characteristics, and population diversity.
 The Demographic and
Economic Environments
The Demographic Environment

• Baby Boomers – born 1946 to 1964

• Generation X – born between 1965 and 1980
• Millennials – born between 1981 and 1996
• Generation Z – born between 1997 and 2012
• Generation Alpha – born after 2012
 The Demographic and
Economic Environments
The Demographic Environment
Generational marketing is important in segmenting people by
lifestyle or life stage instead of age.
Generational
marketing: Baby
boomers and millennials
are now moving over to
make room for younger
Generation Alpha.
 The Demographic and
Economic Environments
The Demographic Environment
• The changing family structure
• Geographic shifts in population
• A better-educated, more white-collar, more
professional population
• Increasing diversity
 The Demographic and
Economic Environments
The Economic Environment
Economic environment: Consumers adopted a new back-to-basics sensibility in their
lifestyles and spending patterns. To serve the tastes of these more financially frugal
buyers, companies like Target are emphasizing the “pay less” side of their value
propositions.
 Learning Objective 3

Identify the major trends in the firm’s natural and

technological environments.
 The Natural and
Technological
The Natural Environment Environments
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.
 The Natural and
Technological
The Natural Environment
Environments
Trends in the Natural Environment
• Growing shortages of raw materials
• Increased pollution
• Increased government intervention
• Developing strategies that support environmental
sustainability
 The Natural and
Technological
The Natural Environment
Environments
Environmental sustainability involves developing strategies and practices that create a
world economy that the planet can support indefinitely.

The natural environment: Walmart has emerged in

recent years as the world’s super “eco-nanny” through
its own sustainability practices and its impact on the
actions of its huge network of suppliers.
 The Natural and
Technological
Environments
The Technological Environment Marketing technology: Disney
takes full advantage of digital
technology in creating magical
• Most dramatic force in customer experiences at its Walt
changing the Disney World Resort.
marketplace
• New products,
opportunities
• Concern for the safety
of new products
 Learning Objective 4

Explain the key changes in the political and cultural

environments.
 The Political-Social and
Cultural Environments
The Political and Social Environment
Legislation regulating business is intended to protect
• companies from each other
• consumers from unfair business practices
• the interests of society against unrestrained business
behavior
 The Political-Social and
Cultural Environments
The Political and Social Environment
• Increased emphasis on ethics and socially responsible actions
• Cause-related marketing

Cause-related marketing: Ben & Jerry’s three-part “linked prosperity”

mission drives it to make fantastic ice cream (product mission), manage
the company for sustainable financial growth (economic mission), and
use the company “in innovative ways to make the world a better place”
(social mission). Both Ben & Jerry’s and its products are “Made of
Something Better.”
 The Political-Social and
Cultural Environments
The Cultural Environment
The cultural environment consists of institutions and other forces that
affect a society’s basic values, perceptions, and behaviors.

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 the universe.
 The Political-Social and
Cultural Environments
The Cultural Environment Catering to the natural, organic, and
ethical products trend: Unilever’s Love
Shifts in Secondary Cultural Values Beauty and Planet brand has one goal:
“To make you more beautiful and give a
• People’s views of themselves little love to our planet.”
• People’s views of others
• People’s views of organizations
• People’s views of society
• People’s views of nature
• People’s views of the universe
 Learning Objective 5

Discuss how companies can react to the

marketing environment.
 Responding
to the Marketing
Views on Responding Environment
• Uncontrollable
– React and adapt to forces in the environment
• Proactive
– Take aggressive actions to affect forces in the
environment
• Reactive
– Watch and react to forces in the environment
References

KOTLER, P. and ARMSTRONG, G. (2018) Principles of Marketing, 17th edition. London:

Prentice Hall.