The marketing environment

Learning Objectives
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Describe the environmental forces that affect the companys ability to serve its
customers.
Explain how changes in the demographic and economic environments affect
marketing decisions.
Identify the major trends in the firms natural and technological environments.
Explain the key changes in the political and cultural environments.
Discuss how companies can react to the marketing environment.

Introduction
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A companys marketing environment consists of the factors and forces outside

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

The marketing environment consists of a microenvironment and a macroenvironment.

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Microenvironment includes those actors close to the company that affect its
ability to serve its customers. It includes the company, its suppliers, marketing
intermediaries, customer markets, competitors, and publics.
The macroenvironment is the larger societal forces that affect the whole
microenvironment demographic, economic, natural, technological, political,
and cultural forces.

The companys microenvironment

The major actors in the marketers microenvironment:
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The company
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Suppliers
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In designing marketing plans, marketing management takes other company

groups into account. These interrelated groups form the internal environment

Suppliers are those firms and individuals that provide the resources needed
by the company and its competitors to produce goods and service.
Suppliers form an important link in the companys overall customer value
delivery system.

Customers
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The company needs to study the customer markets closely.

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Competitors
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Marketers must gain strategic advantage by positioning their offers strongly

against competitors offerings in the minds of consumers.
No single competitive marketing strategy is best for all companies. Each firm
should consider its own size and industry position compared to those of its
competitors.

Publics
1 A public is any group that has an actual or potential interest in or impact on an
organisations ability to achieve its objectives.
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Financial publics influence the companys ability to obtain funds.
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Media publics carry news, features, and editorial opinion.
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Government publics regulate public safety, truth in advertising, and
other matters.
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Citizen-action publics include consumer organisations, environmental
groups, minority groups, and others.
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Local publics include neighborhood residents and community
organisations.
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The general public may be concerned about the companys products
and activities.
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Internal publics include workers, managers, volunteers, and the board
of directors.
2 A company can prepare marketing plans for these publics as well as for customer
markets.

The Companys Macroenvironment

The major forces in the companys macroenvironment are:
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Demographic environment
1 Demography is the study of human populations in terms of size, density, location,
age, gender, race, occupation, and other statistics.
2 The major demographic trends that have implications for marketing include
population growth, changing age and household structure, pressures for
migration, and increasing diversity of population.
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Population growth trends
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Changing age structure of the population
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The changing household
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Pressures for migration
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Increasing diversity

Economic environment
1 The economic environment consists of factors that affect consumer purchasing
power and spending patterns.
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Nations vary greatly in their levels of distribution of income.

Subsistence economies are ones in which the population consumes
most of their own agricultural and industrial output.
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Industrial economies are those with rich markets for many different
kinds of goods.
2 European Union enlargement and integration
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A goal of European unification is the achievement of economic
integration among member states.
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The single market has several implications including improved
efficiency of firms, economies of scale, increased competitiveness,
lower costs, profitability, and the ability to better compete globally.
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Consumers gain cheaper products, more efficient providers, increased
choice, and business innovation.
3 Income distribution and changes in purchasing power
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Where consumer purchasing power is reduced, financially squeezed
consumers adjust by spending more carefully.
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They seek greater value in the products they buy and marketers
respond with value marketing.
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Marketers should pay attention to income distribution as well as
average income.
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The upper economic strata of society become primary
targets for expensive luxury goods.
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The middle income groups are more careful about
spending but can afford the some of the good life.
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The lower strata will stick close to the basics of food,
clothing, and shelter needs.
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The underclass people permanently on welfare and/or
living below the poverty line.
4 Changing consumer spending patterns
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Consumers at different income levels have different spending
patterns.
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Engels laws are differences in how people shift their spending across
food, housing, transportation, healthcare, and other goods and
services categories as family income rises.
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Natural environment
1 The natural environment involves the natural resources that are needed as inputs
by marketers or that are affected by marketing activities.
2 Marketers should be aware of several trends in the natural environment.
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The first involves growing shortages of raw materials. Air and water
may seem to be infinite resources, but some groups see long-run
dangers.
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A second environmental trend is the increased cost of energy.
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A third trend is increased pollution and climate change.
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A fourth trend is increased government intervention in natural
resource management.

Technological environment

1 The technological environment includes those forces that create new technologies,
creating new product and market opportunities.
2 There are several trends affecting the technological environment including fast
pace of technological change and increased regulation.
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Political environment
1 The political environment consists of laws, government agencies, and pressure
groups that influence or limit various organisations and individuals in a given
society.
2 Legislation has increased steadily over the years and understanding the public
policy implications of legislation can be complicated.
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There are many laws created at different levels.
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The regulations change often.
3 Business legislation has been enacted for a number of reasons.
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The first is to protect companies from each other.
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The second purpose of government regulation is to protect consumers
from unfair business practices.
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The third is to protect the interests of society against unrestrained
business behaviour.
4 There is an increased emphasis on ethics and socially responsible actions.
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Business is also governed by social codes and rules of professional
ethics.
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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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Cause-related marketing has become a primary form of corporate
giving as companies link purchases of the companys product with
charitable organisations.

Cultural environment
1 The cultural environment is made up of institutions and other forces that affect a
societys basic values, perceptions, preferences, and behaviours.
2 There are several characteristics that affect marketing decision making.
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Persistence of cultural values
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Core beliefs and values are passed on from parents to
children and are reinforced by schools, churches, business,
and government.
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Secondary beliefs and values are more open to change.
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The major cultural values of a society are expressed in peoples views
of themselves and others, organisations, society, nature, and the
universe.

Responding to the marketing environment

Many companies view the marketing environment as an uncontrollable element in

which they must react and adapt. They passively accept the marketing environment
and do not try to change it.

Other companies take a proactive stance toward the marketing environment. Such
companies hire lobbyists to influence legislation affecting their industries and stage
media events to gain favorable press coverage. They press lawsuits and file
complaints with regulators to keep competitors in line, and they form contractual
agreements to better control their distribution channels.