Analyzing the Marketing

Environment

Chapter 03
● Digging deeper into the first step of the marketing process—understanding
the marketplace and customer needs and wants.

● Marketing operates in a complex and changing environment.

● Other actors in this environment are—suppliers, intermediaries, customers,
competitors, publics, and others—may work with or against the company at
different times.
Major environmental forces—including demographic, economic, natural and
physical, technological, political, and cultural (PESTEL) —shape marketing
opportunities, pose threats, and affect the company’s ability to engage customers
and build customer relationships
The Microenvironment and Macroenvironment
The marketing environment consists of a microenvironment and a
macroenvironment.

The microenvironment consists of the actors close to the company that affect its
ability to engage and serve its customers—the company, suppliers, marketing
intermediaries, competitors, publics, and customers.

The macroenvironment consists of the larger societal forces that affect the
microenvironment—demographic, economic, natural, technological, political, and
cultural forces
 The Microenvironment
● Marketing builds profitable 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, marketing intermediaries, competitors, various
publics, and customers, which combine to make up the company’s value
creation and delivery network.
● The Company
○ In designing marketing plans, marketing management takes other company groups into
account—groups such as top management, finance, (R&D), IT, procurement, operations, HR,
and accounting. All of these interrelated groups form the internal environment.

■ Top management—including the company’s top marketers—sets the company’s

mission, objectives, broad strategies, and policies. Marketing managers make decisions
within these broader strategies and plans.
Suppliers
● Suppliers provide the resources needed to produce its goods and services. Marketing
managers must watch supply availability and costs.

● Supply shortages or delays, natural disasters, and other events can cost sales in the
short run and damage customer satisfaction in the long run.

● L’Oréal builds close relationships with its extensive network of more than 70,000
suppliers. Being respected also means being respected by our suppliers.
Marketing intermediaries
● They help the company promote, sell, and distribute its products to final
buyers. They include resellers, physical distribution firms, marketing
services agencies, and financial intermediaries.

○ For example, Coca-Cola signs on as the exclusive beverage provider for a fast-food chain,
such as McDonald’s, Wendy’s,or Subway, it provides much more than just soft drinks. It also
pledges powerful marketing support
Competitors

The marketing concept states that, to be successful, a company must provide

greater customer value and satisfaction than its competitors do.

Beyond simply adapting to the needs of target consumers, marketers must gain
strategic advantage by positioning their offerings strongly against competitors’
offerings in the minds of consumers
Publics

Any group that has an actual or potential interest in or impact on an organization’s

ability to achieve its objectives. We can identify seven types of publics:
● Financial publics.
● Media publics.
● Government publics.
● Citizen-action publics (environmental groups)
● Internal publics
● General public
● Local publics
 Customers
● They 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.
○ Consumer markets Consumer markets consist of individuals that buy to consume
○ Business markets buy goods and services for further processing
○ Reller markets buy goods and services to resell at a profit.
○ Government markets consist of government agencies that buy goods and services.
○ International markets consist of buyers in other countries
The Macroenvironment
● “The macroenvironment consists of broader forces that affect the actors in the
microenvironment”.
● Companies that understand and adapt well to their environments can thrive.
Those that don’t can face difficult times
○ Once-dominant market leaders such as Xerox, Sears, Sony, Blockbuster, and Kodak have
learned this lesson the hard way
The Demographic and Economic Environments
Demography is the study of human populations in terms of size, density, location,
age, gender, race, occupation, and other characteristics.
● Demographic trends in the United States;
○ The Changing Age Structure of the Population
■ The U.S. population contains several generational groups.
■ There are five major groups—the baby boomers, Generation X, the millennials,
Generation Z, Generation Alpha—and they impact on today’s marketing strategies.
The Baby Boomers. There are nearly 71 million U.S. baby boomers, people born
during the post–World War II baby boom from 1946 to 1964. Over the years, the
baby boomers have been one of the most powerful forces shaping the marketing
environment.

The youngest boomers are now in their late 50s; the oldest are in their 70s and
well into retirement

82% of boomers are open to new brands. Many boomers are also digitally active
and increasingly social media savvy.
Generation X.

The 65 million people born between 1965 and 1980 in the “birth dearth” following
the baby boom.

From a marketing standpoint, the Gen Xers can be skeptical. They research
products heavily, prefer quality to quantity, and are less receptive to overt
marketing pitches.
Millennials.

Both the baby boomers and Gen Xers will one day be passing the reins to the
millennials (also called Generation Y or the echo boomers).

Born between 1981 and 1996, these children of the baby boomers number 73
million or more, far outnumbering the Gen Xers.

The millennials were the first generation to come of age in a world of digital
technology, filled with computers, mobile phones, satellite TV, iPods and iPads,
and online social media
Compared with previous generational groups, they tend to be frugal, practical,
connected, mobile, and impatient.

Generation Z.

Hard on the heels of the millennials is Generation Z—young people born between
1997 and 2012. This tweens to mid-20-somethings group is now the largest
generation alive in the United States—80 million strong, making up 26% of the
population.

Characteristic of Gen Zers is their utter fluency and comfort with digital
technologies. As a result, this group is highly mobile, connected, and social.
More than 50% citing price comparisons as a top online shopping benefit.
Companies in almost all industries market products and services aimed at
Generation Z.

Generation Alpha.

The latest generational group is Generation Alpha, kids born after 2012. Although
still a relatively small market, by 2025 this group will grow larger even than the
millennials.
The Alphas hold great promise for marketers. “Generation Alpha will be the most
formally educated generation ever, the most technology-supplied generation ever,
and globally the wealthiest generation ever,” claims the social researcher who
gave the group its name.
● Increasing Diversity
○ many brands explicitly target the LGBTQ
○ 21 percent of Generation Z adults identify as LGBTQ+
■ Starbucks, Best Buy, P&G, OREO

● Individuals with disabilities

○ Xbox Adaptive Controller, a customizable device that lets gamers with disabilities play using
whatever abilities they possess
○ Marketers such as McDonald’s, Verizon Wireless, Nike, Samsung, Nordstrom, Apple, and
Toyota have
The Economic Environment
Overview

● Markets require both buying power and people.

● The economic environment consists of factors affecting consumer purchasing power and spending patterns.
● Historical impacts:
○ Great Recession (2008-2009)
○ COVID-19 pandemic

Current Trends

● Rise in consumer spending.

● Consumers maintain frugality and rethink buying priorities.
● Different generational financial challenges:
○ Boomers: Retirement accounts
○ Gen X: Supporting children and parents
○ Millennials: Student loans and home buying
Marketing Strategies in the Economic Environment

Opportunities and Threats

● The economic environment offers both opportunities and threats, emphasizing “value” in marketing.
Consumer Behavior Changes
● Back-to-basics sensibility persists.
● Consumers indulge more sensibly, seeking greater value.
Brand Strategies
● Target: Shift focus to practical price and savings appeals (e.g., "What we value most shouldn’t cost more").
● Armani: Stretching offerings to include affordable luxury while protecting brand image.
Marketing Approaches
● Companies may be tempted to cut marketing budgets and prices, but this can harm long-term brand
equity.
● Marketers should balance value propositions with current economic conditions and forecast key economic
variables.
The Natural and Technological Environments
The Natural Environment

Developing strategies and practices that create a world economy that the planet

can support indefinitely.

Northface Mission: “We believe the success of our business is fundamentally

linked to having a healthy planet.”
The Technological Environment
Forces that create new technologies, leading to new product and market
opportunities.

Technology has enabled such wonders as antibiotics, air travel, the internet,
smartphones, artificial intelligence, and driverless cars.

“Dan Brown’s novel (Origin) in which a futurist predicts that humans will eventually
evolve into beings that are half human and half artificial intelligence–fueled
machines”
The Political–Social and Cultural Environments
The Political Environment

Laws, government agencies, and pressure groups that influence and limit various
organizations and individuals in a given society.
The Political Environment
The Political Environment (cont.)

Influences: Laws, government agencies, and pressure groups affect marketing decisions.

Legislation: Regulations ensure fair competition, protect consumers, and safeguard societal interests.

Key Objectives:

1. Protect Companies – Maintain competitive markets.

2. Protect Consumers – Ensure informed decisions and fairness.
3. Protect Society – Environmental and national interest protections.

U.S. Regulatory Agencies: FTC, FDA, EPA, etc.

Importance: Marketers must stay informed and compliant with laws at local, national, and international
levels.
Increased Emphasis on Ethics and Socially Responsible Actions

Beyond Regulations: Marketing practices are governed not just by laws but also
by social codes and professional ethics.

Social Responsibility: Companies are encouraged to "do the right thing" by

protecting consumers and the environment for long-term benefits.

Cause-Related Marketing: Brands link themselves to causes (e.g., Ben & Jerry's
social justice campaigns) to build a positive image while contributing to societal
well-being.
Digital Privacy Issues: Online marketing raises ethical concerns, especially
around consumer data privacy.

Cause Marketing Controversies: Critics argue that some companies exploit

causes for profit. Authenticity and genuine commitment are essential to avoid
negative perceptions.

Balancing Profit & Purpose: Successful brands find ways to do good while being
profitable (e.g., Warby Parker).
The Cultural Environment
Cultural Environment: Institutions and forces shaping societal values,
perceptions, preferences, and behaviors.

Core Values: Persistent beliefs (e.g., freedom, hard work). Shaped by parents,
schools, and institutions.

Secondary Values: More flexible beliefs (e.g., marriage timing), open to influence
by marketers.

Marketing Implication: Marketers have limited influence on core values but can
affect secondary beliefs and behaviors (e.g., family planning and marriage timing).
Changing Secondary Values: Influenced by pop culture, media, and technology.

People’s Views of Themselves: Products as self-expression (e.g., Red Bull for

risk-takers).

Views of Society and Nature: Growing patriotism affects consumption patterns;

increasing demand for organic, ethical, and eco-friendly products (e.g., Love
Beauty and Planet, Planet Kind).
Responding to the Marketing Environment
Three Types of Companies:
Make Things Happen: Proactive firms that shape the environment.

Watch Things Happen: Reactive firms that adapt but do not influence.

Wonder What Happened: Companies that fail to engage with the environment.

Proactive vs. Reactive Approaches:

Reactive Firms: Analyze environmental forces to avoid threats and leverage opportunities.

Proactive Firms:
● Develop strategies to influence the environment.
● Create and shape new industries (e.g., Ford, Apple, Google).
● Engage in lobbying, public opinion shaping, and legal actions.
How Food Ads Trigger Our Appetite

https://www.brandsynario.com/how-colors-shape-our-food-choice/

Creative AI Campaigns By Major Brands

https://www.brandsynario.com/most-creative-ai-campaigns-by-major-brands/