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Summary Chapter 3- Analyzing the Marketing Environment
Marketing (Universiteit Utrecht)
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Chapter 3: Analyzing the Marketing Environment.
A company marketing environment consists of the actors and forces outside marketing that affect
marketing management’s abilities to build and maintain successful relationships with target customers.
Companies must constantly watch and adapt to changing environment.
By carefully studying the environment, marketers can adapt strategies to meet new marketplace
challenges and opportunities.
I-
The Microenvironment and Microenvironment:
A. The Microenvironment:
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 delivery network.
The Company:
In designing marketing plans, marketing management takes other company groups into account
( finance, R&D…). These groups form the internal environment. The top management sets the
company’s mission, objectives, broad strategies and policies . Marketing managers make
decisions with this broader strategies and plans.
Suppliers:
Marketing managers must watch supply availability and costs. Most marketers today treat their
suppliers as partners in creating and delivering customers value
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Marketing Intermediaries:
They are the firms that help the firm to promote, sell, and distribute its good to final buyers.
Like suppliers, marketing intermediaries form an important component of the company’s overall
value delivery network.
Competitors:
The marketing concept states that, to be successful, a company must provide greater customer
value and satisfaction than its competitors do. They must gain strategic advantage by
positioning their offerings strongly against competitors’ offering in the minds of consumers.
Large firms can use strategies that smaller companies can’t afford, on the opposite, smaller
firms can develop strategies that give them better rates of return than large firms enjoy.
Publics:
Public: Any group that has an actual or potential interest in or impact on an organization’s ability
to achieve its objective.
There are seven types of publics:
 Financial publics. This group influences the company’s ability to obtain funds. Banks,
investment analysts, and stockholders are the major financial publics.
 Media publics. This group carries news, features, editorial opinions, and other content.
It includes television stations, newspapers, magazines, and blogs and other social
media.
 Government publics. Management must take government developments into account.
Marketers must often consult the company’s lawyers on issues of product safety, truth
in advertising, and other matters.
 Citizen-action publics. A company’s marketing decisions may be questioned by consumer
organizations, environmental groups, minority groups, and others. Its public
relations department can help it stay in touch with consumer and citizen groups.
 Internal publics. This group includes workers, managers, volunteers, and the board of
directors. Large companies use newsletters and other means to inform and motivate
their internal publics. When employees feel good about the companies they work for,
this positive attitude spills over to the external publics.
 General public. A company needs to be concerned about the general public’s attitude
toward its products and activities. The public’s image of the company affects its buying
behavior.
 Local publics. This group includes local community residents and organizations. Large
companies usually work to become responsible members of the local communities in
which they operate.
Customers:
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Customers 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:
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Consumers markets: individual and households buying goods and services for personal
consumptions.
Business market: Buy goods and services for further processing or use in their
production processes.
Reseller markets: Buy goods and services to resell at a profit.
Government markets: Government agencies that buy goods and services to produce
public services or transfer the good and service to others who need them.
International market: Buyers from other countries including consumers, businesses,
resellers, and governments.
B. The Macro environment:
The company and all other actors operate in a larger macro environment of forces that shape
opportunities and pose threats to the company. Some forces are unpredictable and
uncontrollable.
II- The Demographic and Economic Environment
A. The Demographic environment:
The demographic environment is of major interest to marketers because it involves people, and
people make up markets. The world’s large and highly diverse population poses both
opportunities and challenges. Marketers must keep a close look on demographic trends in their
markets.
Baby boomers: The 78 million people born during the years following the World War II and
lasting until 1964.
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Generation X: The 49 people born between 1965 and 1976 in the “birth dearth” following the
baby boom.
-seek success, less materialist and prize experience. Connected generation
- They prefer quality to quantity and compare products before buying them.
- Most educated generation
Millennials or Generation Y: The 83 million children of the baby boomers born between 1977
and 2000.
- Most financially strapped generation (higher unemployment, more dept)
- Make up a huge and attractive market.
- Comfort with digital technology.
- More frugal, practical, connected, mobile, and impatient.
- Seek opportunities and authenticity.
Generation Z: People born after 2000 who make up kids, tweens, and teens markets.
-Represent tomorrow market.
-Make research before buying a product or ask their parents to buy it for them.
- Social media will play a crucial marketing role as the kids and tweens grow into their teens and
early twenties.
Companies in almost all industries market products and services aimed at generation Z.
Generational Marketing:
Marketers need to form more precise age-specific segments within each group. Defining people
by their birth date may be less effective than segmenting them by lifestyle, life stage, or the
common values they seek in the products they buy.
B. The Economic Environment:
Economic Environment: Economic factors that affect consumer purchasing power and spending
patterns.
Before the 2008-2009 crisis, people were spending without caution having more and more debt.
After the crisis people adopted a back-to-basics sensibility in their lifestyles and spending
patterns that is likely to last for the coming years. Value marketing has become the watchword
for many marketers.
Marketers should pay attention to income distribution as well as income levels. The distribution
of market has created a tiered market. As a result, they are buying less and looking for greater
value in the things they do buy.
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Changes in major economic variables, such as income, cost of living, interest rates, and savings
and borrowing patterns, have a large impact on the marketplace. With adequate warning,
companies can take advantages of changes in the economic environment.
III- The Natural and Technological Environments.
A. The Natural environment:
Natural Environment: The physical environment and the natural resources that are needed as
inputs by marketers or that are affected by marketing activities.
Natural disasters are a good example like the polar vortex that hit America recently. They can
have disastrous effect on sales on a company such as airlines, florists. They can also be good for
other companies such as car repair store.
These events cannot be predicted by any company, they should prepare dealing with them.
Marketers should be aware of several trends in the natural environment.
Shortage of raw Materials: Firms making products that require these scarce resources face large
cost increase even if the materials remains available.
Increased Pollution
Increased Government Intervention in the natural resource management. The government of
different countries vary in their concern and efforts to promote a clean environment. In the
future, companies doing business in the US can expect continued strong controls from
government and pressure groups.
Environment sustainability: Developing strategies and practices that create a world economy
that the planet can support indefinitely.
Many companies are responding to consumer demands with more environmentally responsible
products and some of them are making environmental sustainability a part of their core
missions.
B. The Technological Environment:
Technological environment: Forces that create new technologies, creating new products and
market opportunities.
New technologies can offer exciting opportunities to marketers. Technologies can provide mane
advantages to both buyers and sellers but they also can be scary. Many companies are already
using RFID technology to track products and customers at various point in the distribution
channel.
The technological environment changes rapidly, creating new markets and opportunities.
However, new technology replaces older technologies. When old industries fight or ignore new
technologies, their business decline.
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IV- The Political-Social and Cultural Environments:
A. The Political and Social Environment:
Marketing decisions are strongly affected by development in the political environment.
Political Environment: Laws, government agencies, and pressure groups that influence and limit
various organizations and individuals in a given society. It consists of laws, government agencies,
and pressure groups that influence and limit various organizations and individuals in a given
society.
Government develop public policy to guide commerce, they are a set of laws and regulation
that limit business for the good of society as a whole. The U.S and many other countries have
many laws covering issues such as competitions, fair trade practices, environmental protection,
product safety, truth in advertising…
Regulations are constantly changing, marketers must work hard to keep up with changes in
regulations and their interpretations
Business legislation have been enacted for numbers of reasons:
- Protect consumers
- Protect the interest of society
- Protect companies
B. The Cultural Environment:
Cultural Environment: Institutions and other forces that affect society’s basic values,
perceptions, preferences, and behaviors.
People grow up in a particular society that shapes their beliefs and values.
The following cultural characteristics can affect marketing decision making:
The Persistence of Cultural Values:
People core values and beliefs have a high degree of persistence. They are values that are
taught by parents and that are reinforced by schools, businesses, religious institutions, and
government.
Secondary values and beliefs are more open to change. Marketers have some chance of
changing secondary values but little chance of changing core values
Shifts in Secondary Cultural Values:
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Although core values are fairly persistent, cultural swings do take place. Marketer want to
predict cultural shifts to spot new opportunities or threats.
People’s Views of Themselves: People vary in their emphasis on serving themselves versus
serving others. People use products, brands, and services as a means of self-expression, and
they buy products and services that match their view of themselves.
People’s Views of Others: People’s attitudes towards and interactions with others shift over
time. Rather than interacting less, people are using social media and mobile communication to
connect more than ever.
This new way of interacting strongly affect how companies market their brands and
communicate with customers. It is fundamental for companies to be participate in these
networks too
People’s Views of Organizations: People vary in their attitudes toward corporations,
government agencies, trade unions, universities, and other organizations. The past two decades
have seen a sharp decline in confidence in and loyalty towards America’s business and political
organizations and institutions.
This trend suggests that organizations need to find new ways to win consumer and employee
confidence.
People’s Views of Society: People vary in their attitudes toward society. People’s orientation to
their society influences their consumption patterns and attitudes toward the marketplace. Flagwaving promotions can be viewed as corny or as token attempts to cash in on the nation’s
emotions.
People’s Views of Nature.
People’s Views of the Universe.
V- Responding to the Marketing Environment:
“There are three kinds of companies: those who make things happen, those who watch things
happen, and those who wonder what’s happened”
Many companies view the marketing environment as an uncontrollable element to which they
must react and adapt. Other companies take a proactive stance toward the marketing
environment, rather than assuming that strategic options are bounded by the current
environment, these firms develop strategies to change the environment. Such companies hire
lobbyist to influence legislation affecting their industries, they take the social media and run
blogs to shape public opinion. But whenever possible, smart marketing managers take a
proactive rather than reactive approach to the marketing environment.
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