Chapter 2:
“Environment of Marketing”
Joel R. Evans & Barry Berman
Marketing, 10e: Marketing in the 21st Century
Copyright Atomic Dog Publishing, 2007
Chapter Objectives
• To examine the environment within which marketing
decisions are made and marketing activities are
undertaken
• To differentiate between those elements controlled by
a firm’s top management and those controlled by
marketing, and to enumerate the controllable
elements of a marketing plan
• To enumerate the uncontrollable environmental
elements that can affect a marketing plan and study
their potential ramifications
• To explain why feedback about company performance
and the uncontrollable aspects of its environment and
the subsequent adaptation of the marketing plan are
essential for a firm to a attain its objectives
Copyright Atomic Dog Publishing, 2007
Environment of Marketing
5 Parts of Environment
Controllable
Factors
Uncontrollable
Factors
Organization’s
Level of
Success
Feedback
Adaptation
• Controllable Factors
• Uncontrollable
Factors
• Organization’s Level
of Success/Failure in
Reaching Objectives
• Feedback
• Adaptation
Copyright Atomic Dog Publishing, 2007
Environment of Marketing
(2)
Uncontrollable Factors
(3)
Consumers
(1)
Controllable Factors
By Top Management
A
Organization’s
Level of
B
Success or
Failure in
Reaching Its
Objectives
(5)
By Marketing
Competition
Suppliers & Distributors
Government
Economy
Technology
Independent Media
Adaptation
(4) Feedback
A - Total offering of the organization
B - Impact of uncontrollable factors
Copyright Atomic Dog Publishing, 2007
Types of Environments
• Macroenvironment refers to the broad
demographic, societal, economic, political, and
technological forces that an organization faces.
• Microenvironment refers to the forces close to
an organization that have a direct impact on its
ability to serve its customers
Copyright Atomic Dog Publishing, 2007
Top Management Controls
1. Line of Business
5. Corporate Culture
• General category
• Customer-service
orientation
• Functions
• Geographic coverage
• Type of ownership
• Specific business
• Finance
• Flexibility
• Accounting
• Risk/innovativeness
• Engineering
• Centralized/
decentralized
• Purchasing
• Interpersonal contact
• Sales
• Promotions from
within
• Long-run existence
• Consumer acceptance
Copyright Atomic Dog Publishing, 2007
• Production
• Time orientation
2. Overall Objectives
• Profit
4. Role of Other Business
Functions
•R&D
3. Role of Marketing
• Importance in company
• Functions
• Integration
Marketing Directs
1. Selection of
Target Market
• Size
• Characteristics
• Desires
2. Marketing Objectives
• Image
• Sales
• Profit
• Differential advantages
Copyright Atomic Dog Publishing, 2007
3. Marketing
Organizations
• Functions
• Types
5. Performance
Assessment
• Day-to-day
• Periodic
4. Marketing Mix
• Product
• Distribution
• Promotion
• Price
Factors Controlled by Marketers: The
Target Market
• The target market is
the customer group to
which an organization
appeals.
• Market segmentation
involves subdividing a
market into clear
subsets of customers
with similar needs. It
is often used in
choosing a target
market.
Copyright Atomic Dog Publishing, 2007
Functional Organizations
Vice-President of Marketing
Product
Planning
Manager
Physical
Distribution
Manager
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Marketing
Research
Manager
Promotion
Manager
Sales
Manager
Other
Functional
Managers
Product-Oriented Organizations
Vice-President of Marketing
Product Planning
Manager
Other Functional
Managers
Manager
Product
A
Brand
Manager
1
Manager
Product
B
Brand
Manager
2
Copyright Atomic Dog Publishing, 2007
Brand
Manager
1
Brand
Manager
2
Market-Oriented Organizations
Vice-President of Marketing
Sales Manager
Other Functional
Managers
Regional
Sales
Manager
East
Sales
Manager
Final
Consumers
Regional
Sales
Manager
North
Sales
Manager
Organizational
Consumers
Sales
Manager
Final
Consumers
Copyright Atomic Dog Publishing, 2007
Sales
Manager
Organizational
Consumers
Regional
Sales
Manager
West
Sales
Manager
Final
Consumers
Sales
Manager
Organizational
Consumers
Regional
Sales
Manager
South
Sales
Manager
Final
Consumers
Sales
Manager
Organizational
Consumers
Differential Advantages
Differential advantages consist of the firm’s unique
features that attract consumers and include:
 A distinctive image
 New products or features
 Product quality
 Customer service
 Low prices
 Availability
Copyright Atomic Dog Publishing, 2007
Marketing Mix
Price
Product
• The marketing mix
consists of four
elements: product,
distribution,
promotion, and
price.
Marketing
Mix
Distribution
Copyright Atomic Dog Publishing, 2007
Promotion
Uncontrollable Factors
Consumers
• Changing characteristics
• Interpersonal influences
• Decision process
• Organizations
Competition
•
•
•
•
•
•
Structure
Marketing strategies
Domestic/foreign
Company size
Generic
Channel
Copyright Atomic Dog Publishing, 2007
Independent Media
• Print
• Television
• Radio
• News organizations
Technology
• Advances
• Compatibility
• Acceptance
Factors Not Controlled by Top
Management or Marketers
Suppliers &
Distributors
• Characteristics
• Practices
• Resource
shortages
Government
• Federal
• State & local
• Politics
Economy
•
•
•
•
Rate of growth
Costs
Inflation rate
Unemployment
Types of Competition
• Monopoly: When one firms sells a good or service
and has a lot of control over its marketing plan.
• Oligopoly: When a few firms, usually large ones,
account for most industry sales and would like to
engage in nonprice competition.
• Monopolistic Competition: If there are several
firms in an industry, each trying to offer a unique
marketing mix-based on price.
• Pure Competition: When many firms sell virtually
identical goods or services and they are unable to
create differential advantages. It occurs rarely.
Copyright Atomic Dog Publishing, 2007
Gross Domestic Product (GDP)
A country’s economic growth
is reflected by changes in its
GDP. GDP is the total
annual value of goods and
services produced in a
country less net foreign
investment.
Copyright Atomic Dog Publishing, 2007
Real Income
• Real Income is the amount earned in a year
adjusted by the rate of inflation.
• Both inflation and unemployment affect
purchases.
Copyright Atomic Dog Publishing, 2007
Marketing Myopia
• It is an ineffective marketing approach.
• It is a shortsighted, narrow-minded view of
marketing and its environment
• Avoid myopia by thoroughly studying and
adapting to the environment.
Copyright Atomic Dog Publishing, 2007
Chapter Summary
• This chapter examines the environment within which
marketing decisions are made and enacted.
• It differentiates between those elements controlled by a
firm’s top management and those controlled by
marketing, and it enumerates the controllable elements
of a marketing plan.
• The chapter also notes the uncontrollable environmental
elements that can affect a marketing plan and studies
their potential ramifications
• It explains why feedback about company performance
and the uncontrollable aspects of its environment and
the subsequent adaptation of the marketing plan are
essential for a firm to attain objectives.
Copyright Atomic Dog Publishing, 2007