unit 2 marketing

Chapter 2
MARKETING ENVIRONMENT
1

MARKETING ENVIRONMENT
Definition:
The actors and forces outside marketing that affect marketing
management’s ability to build and maintain successful
relationships with target customers.
2

Features of Marketing Environment
• External in nature
• Uncontrollable
• Changeable in nature
• Create constraint and threats
• Strong source of opportunities
3

Trends of marketing environment
• Booming global economy
• Increasing power of dollar
• Increasing pressure of open economy and
globalization
• Increased competition
• Increased political unrest
• Increasing role of women in society and politics
• Advent of new technology and ICT
4

THE COMPANY’S
MICROENVIRONMENT
Microenvironment can be defined
as “ the actors close to the
company that affect its ability to
serve its customers – the company,
suppliers, marketing
intermediaries, customer markets,
competitors and publics.
5

THE COMPANY’S MICROENVIRONMENT
Micro
environment
Company
Suppliers
Intermediaries
Competitors
Publics
Customers
6

The SIX (6) elements of a company’s microenvironment:
1. The Company
- In designing marketing plans, marketing management takes
other company group into account.
- They are top management, finance, R&D, purchasing,
operation and accounting.
- All of these interrelated groups from the internal environment.
- Top management sets the company’s mission, objectives,
broad strategies and policies for the company.
- Then, marketing managers make decisions within the
strategies and plans made by top management.
- Marketing managers must work closely with other company’s
departments.
- All the department must works together in order to achieve
the company objective – to provide superior customer value &
relationships.
7

2. Suppliers
- Suppliers provide the resources needed in
producing goods and services.
- Marketing managers must watch supply
availability and costs.
- Supply shortages or delays, will seriously
affect marketing.
- Most marketers nowadays treat their
suppliers as partners in creating & delivering
customer value.
8

3. Marketing Intermediaries
- Intermediaries are firms that help the company
to promote, sell and distribute its goods to final
buyers.
- They include:
a) Resellers
- They are distribution channel firms that help
the company find customers & make sales to
them.
- These include wholesalers and retailers who
buy and resell merchandise.
9

b) Physical Distribution Firms
- Help the company to stock and move
goods from their points of origin to their
destinations.
- E.g. warehouses.
c) Marketing Services Agencies
- Marketing research firms, advertising
agencies, media firms & marketing
consulting firms that help the company
target & promote its products to the
right markets. 10

d) Financial Intermediaries
- Financial intermediaries are
institutions such as bank, credit
companies and insurance
companies.
- These institutions helps finance
transactions or insure against the
risks associated with the buying
and selling of goods.
11

4. Competitors
- Competitors are companies with similar
offerings in the same marketplace.
- To be successful, a company must provide
greater customer value and satisfaction
than its competitors do.
- Company must gain strategic advantage by
positioning their offerings strongly against
competitors’ offerings in the minds of
consumers.
12

5. Publics
- Public is any group that has an actual or potential
interest in or impact in an organization’s ability to
achieve its objectives.
a) Financial public
- Influence the company’s ability to obtain fund.
- E.g. banks, investment houses.
b) Government public
- Affect the company by passing legislations and
laws that put restriction on the company’s actions.
- Public municipality, FINAS, and other government
bodies.
13

c) Media public
- This group carries news, feature and editorial opinion that may
influence customers’ opinion towards the business.
- E.g. Newspapers, magazines and television station
d) Citizen-action public
- Include environmental group and minority group that can
questioned the actions of the company and put them in the
public spotlight.
- E.g. Consumer organizations.
e) Local public
- neighborhood and community organizations that will question
a company impact on the local area and the level of
responsibility of their action.
14

f) General public
- Can greatly affect the company as any changes in their attitude
will affect the company.
- Its consists population at large
g) Internal public
- Consists of those who employed within the organization and
deal with the organization and construction of the company’s
product.
- When employees feel good about their company, this positive
attitude spills over to external public.
15

6. Customers
- Customers are the most important factor in the
microenvironment because they made up markets.
- There are FIVE (5) types of customer market:
a) Consumer markets
- Consist of individuals and households that buy goods and
services for personal consumption
- e.g. End user
b) Business markets
- Buy goods and services for further processing to produce their
own product
- Restaurants, tailors, etc.
16

c) Reseller markets
- buys goods and services to resell at a profit.
- E.g. wholesalers, retailers, etc.
d) Government markets
- Consists of government agencies that buy goods to
produce public goods or transfer the goods and services
to others who need them
- E.g. hospitals, bus-stops, etc.
e) International market
- Buyers in other countries, including consumers,
producers, resellers & governments.
17

Macroenvironment is “a larger
societal forces that affect the
microenvironment – demographic,
economic, natural, technological,
political and cultural forces.
THE COMPANY’S MACROENVIRONMENT
18

Demographic
Economic
Natural
Technological
Political
Cultural
19

1. Demographic Environment
- The study of human populations in terms of
size, density, location, age, gender, race,
occupation and other statistics.
- Demographic is one of the most important
elements in marketing macro-enviroments
because it involves people and people make-
up markets.
- Marketers will depend on this factors to
produce or improve the products as these
factors will influence the buying behaviors
20

2. Economic Environment
- Factors that affect consumer buying power and
spending patters.
- Changing in income poses influences on how
consumers spend their money.
- E.g.if consumer’s income increases, they will buy
luxurious goods more, spending on convenience
products will decrease at the same time.
- Changing in consumer spending pattern also
influences on how consumers spends their money.
- E.g. With the increase awareness on healthy living,
consumers tend to spend more on health products
and services than other things.
21

3. Natural Environment
- Natural resources are the elements that are needed as input
by the marketers or the elements that are affected by
marketing activities.
- Marketers should be aware of several trends in the natural
environment.
- The trends are:
a) Shortages of mineral
- Shortages of mineral resources will affect the prices of
the products.
- E.g. shortages of oil will increase its price and demand for
motor vehicles may drop as well/
22

b) Increased pollution
- Government will intervene if the production activities
endangered the environment.
- Example, government promotes no plastics bags days
because plastic is known as a non-biodegradable material
which can be hardly be disposed.
c) Increased government intervention
- Happens in natural resource management.
- E.g. Limiting logging activities may reduce timber supply.
23

4. Technological Environment
- Forces that create new technologies , creating new product
and market opportunities.
- The R&D used in production activities can be considered as
one of the technological effort as the process will improvise
the product.
- Technology may help a company to increase its productivity,
thus company should pay a close attention to the technology
as this elements will help them to flourish.
- If a business doesn’t pay a close attention to technology, they
may be left behind.
24

5. Political & Social Environment
- Includes laws, government agencies & pressure groups that
influence and limit various organizations & individuals in a
given society.
- Marketers should be aware of the law and legislation
imposed by the government, agencies and regulating bodies.
- This element could give good or bad influences to the
marketers.
- E.g. Government imposes the usage of helmets. This
regularity increased the demand for helmets.
25

6. Cultural Environment
- Institutions & other forces that affect society’s basic values,
perceptions, preferences, and behaviors.
- Marketers should be aware with the cultural values of their
target market.
- Some persistent values like core values cannot be changed
while secondary can be changed.
- Core beliefs are passed on from parents to children. E.g.
everyone should get married.
- Secondary beliefs are more open to changes. E.g. everyone
should get married in early age tend to change nowadays,
people are no longer engaged in marriage at younger age.
26

COMPANY’S REACTIONS TOWARDS MARKETING
ENVIRONMENT
Company/organizations react to marketing environment in two
ways:
1) Proactive approach
2) Reactive approach
27

ENVIRONMENT
Proactive approach
- Company takes aggressive actions to affects the publics and
forces in their marketing environment.
- Such companies even hire lobbyist to influence legislation
affecting their industries & stage media events to gain
favorable press coverage.
- Example would be Air Asia operates as low cost carrier even
though there s economic downturn.
28

ENVIRONMENT
Reactive approach
- Companies that view the marketing environment as
uncontrollable elements to which they must react and adapt.
- They passively accept the marketing environment and do not
try to change it.
- They analyze the forces and design the strategies to avoid
the threats and taking the advantages of the opportunities
the environment provides.
29

unit 2 marketing

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