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Fundamentals of Marketing
Dr. Do Khac Xuan Diem
Email: xkdo@swin.edu.au
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Topic 3
The Marketing Environment
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Learning objectives
• Objective 1: Describe the environmental forces that affect the company’s ability to
serve its customers.
• Objective 2: Explain how changes in the demographic and economic environments
affect marketing decisions.
• Objective 3: Identify the major trends in the firm’s natural and technological
environments.
• Objective 4: Explain the key changes in the political and cultural environments.
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Learning objective 1:
Describe the environmental forces
that affect the company’s ability to
serve its customers.
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The marketing environment
Elements of a modern marketing system
Company
Suppliers
Marketing
Intermediaries
Final
consumers
Competitors
Major environmental forces
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The marketing environment
The Marketing Environment
Actors and forces outside of
marketing that affect marketing
management’s ability to build and
maintain successful relationships
with target customers.
Microenvironment
Macroenvironment
Actors close to the company that
affect its ability to serve its
customers – the company,
suppliers, marketing
intermediaries, customer markets,
competitors and publics.
The larger societal forces that
affect the microenvironment –
demographic, economic, natural,
technological, political and
cultural forces.
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The company’s microenvironment
The value delivery network/system
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The company
Top management
Understand customer needs
Create customer value
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Suppliers
Resources
→ How does suppliers influence marke ng to serve customers?
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Marketing intermediaries
Marketing intermediaries
Businesses that help the
company to promote, sell
and distribute its products
to final buyers.
- Resellers
- Physical distribution
firms
- Marketing services
agencies
- Financial intermediaries
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Marketing intermediaries
Resellers are distribution channel firms that help the company find
customers or make sales to them. They are retailers or wholesalers.
Physical distribution firms help the company stock and move goods from
their points of origin to their destinations.
Marketing services agencies are the marketing research firms, advertising
agencies, media firms, and marketing consulting firms that help the
company target and promote its products to the right markets.
Financial intermediaries include banks, credit companies, insurance
companies, and other businesses that help finance transactions or insure
against the risks associated with the buying and selling of goods.
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Competitors
• Firms provide greater customer value and satisfaction then competitors do.
• Firms must gain strategic advantage by positioning their offerings strongly against
competitors’ offerings in the minds of consumers.
• Competitive marketing strategies depend on company size and industry position.
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Publics
Any group that has an actual or potential interest in or impact on an organization’s ability
to achieve its objectives.
- Financial publics: influence the company’s ability to obtain funds (banks, investment
houses, shareholders).
- Media publics: carry news, features, editorial opinion (newspapers, television, radio,
blogs, social media).
- Government publics: management must take government developments into account
(legal requirements regarding product safety, truth in advertising)
- Local publics: local residents and community organisations
- General publics: general public’s attitudes towards the company’s products or
activities.
- Internal publics: workers, managers, board of directors, volunteers.
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Customers
Consumer markets: individuals and households that buy goods or services for
personal consumption.
Business markets: buy goods and services for further processing or for use in
their production process.
Reseller markets: buy goods and services to resell at a profit.
Government markets: government agencies buy goods and services to produce public
services or transfer the goods and services to others who need them.
International markets: consist of these buyers in other countries.
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Learning objective 2:
Explain how changes in the demographic and
economic environments affect marketing decisions.
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The macroenvironment
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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.
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Demographic environment
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Baby Boomers - born 1946 to 1964
Generation X - born between 1965 and 1976
Millennials - born between 1977 and 2000
Generation Z – born after 2000
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Demographic environment
• The changing family
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More couples and divorcing or separating
More people choosing not to marry or marrying later
More people marrying without intending to have children
Increasing number of working women
Increasing number of stay-at-home dads
• Geographic shifts in population
• Changes in the workforce
• Increasing diversity
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Economic environment
The economic environment consists of factors that affect consumer
purchasing power and spending patterns.
• Income levels
• Income distribution
• Interest rates
How does Covid-19 pandemic influence consumer
purchase power and spending pattern?
• Inflation
• Recession
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Learning objective 3:
Identify the major trends in the firm’s natural and
technological environments.
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Natural environment
The natural environment involves natural resources that are needed as inputs by
marketers or that are affected by marketing activities.
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Natural environment
Trends in the Natural Environment
• Growing shortages of raw materials
• Increased pollution
• Increased government intervention
• Developing strategies that support environmental sustainability
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Natural environment
Environmental sustainability
involves developing strategies and
practices that create a world
economy that the planet can support
indefinitely.
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Technological environment
Forces that create new technologies, creating new products and market opportunities
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Technological environment
• Most dramatic force in
changing the marketplace
• New product opportunities
• Concern for the safety of
new products
What recent change in the technological environment has had an impact on
marketing? How has it affected buyer behavior and how has it changed marketing?
Do you know how AI applied in marketing? Does it have any drawback?
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Political and social environment
• The political environment consists of laws, government agencies and
pressure groups that influence or limit various organisations or individuals
in a given society.
 Product safety
 Truth in advertising
 Pricing
 Packaging and labelling
E-commercial law
 Consumer privacy
 Fair trade practices
 Environmental protection
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Political and social environment
Legislation regulating business is intended to protect
• companies from unfair competition
• consumers from unfair business practices
• the interests of society against unrestrained business behavior
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Political and social environment
• Increased emphasis on ethics
• Socially responsible behavior
• Cause-related marketing
Do the right thing
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Cultural environment
The cultural environment consists of institutions and other
forces that affect a society’s basic values, perceptions,
preferences and behaviours.
• 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.
Reflect on your view of yourself, others, nature, society. How are
they shaping your purchase decision?
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Cultural environment
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Cultural environment
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References
Kotler, P., & Armstrong, G. (2016). Principles Of Marketing (16th ed.), Pearson.
Amstrong et al. (2020). Principles of Marketing Ebook, Pearson Education
Australia.
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Tutorials
• Assignment 1
 Avoid plagiarism by paraphrasing, citing and referencing.
 Submitting your draft to check plagiarism.
 Analysing and justifying your responses.
 Due date: Sunday 23/01/2022 (23:59)
• Group formation
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