C H A P T E R
3
All organizations are influenced by the environments in which they operate.
Learning Objective 1
Marketing managers must adjust an organization’s marketing mix to cope with the domestic environment and often foreign environments as well. In both cases, the marketing environment consists of uncontrollable forces that provide both opportunities and constraints. We can divide the environment into two categories: the macroenvironment and the microenvironment. The macroenvironment includes the physical environment, sociocultural forces, demographic forces, economic forces, science and technology, and political and legal forces. The microenvironment consists of forces directly influencing the marketer, such as customers. Correct environmental assessment makes marketing decisions more successful.
Learning Objective 2
The physical environment contains natural resources, such as oil, climate, smog, pollution. Climate, for example, influences not only the types of products sold, but the timing of the distribution of these products in the marketplace.
Learning Objective 3

46 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment
A social value embodies the goals a society views as important and expresses a culture’s shared ideas of preferred ways of acting. A belief is a conviction concerning something’s existence or characteristics. It is the marketer’s job to “read“ the social environment and reflect the surrounding culture’s values and beliefs in a marketing strategy.
Learning Objective 4
Important demographic trends include the aging of the population, a general trend toward having fewer children, an increase in the number of households, and greater cultural diversity. These and other demographic factors not only affect the demand for goods and services but also lead to variations in pricing, distribution, and promotion.
Learning Objective 5
Scientific and technological advances can revolutionize an industry or destroy one. Information technology has reshaped the way business is conducted around the world. The Internet has been of particular significance because it has influenced so many organizations. The Internet is a worldwide network of computers that gives users access to information and documents from distant sources.
Learning Objective 6
The competitive market structure describes the number of competing firms in some segment of an economy and the proportion of the market held by each competitor. Pure competition, monopolistic competition, oligopoly, and monopoly are the four basic market structures, and they have different influences on pricing strategies and barriers to competition. The business cycle--prosperity, recession, depression, and recovery--reflects recurrent fluctuations in general economic activity. The various booms and busts in the economy influence unemployment, inflation, and consumer spending and savings patterns, which in turn influence marketing activity.
Learning Objective 7
Federal laws control many business activities, such as pricing and advertising by manufacturers, wholesalers, and retailers. The FTC, in particular, affects almost all marketers. State laws also deal with many areas, including foods, manufactured goods, lending, real estate, banking, and insurance.
Local laws affect zoning and licensing, among other things. Laws that govern the marketing of products in foreign countries and in multinational marketing groups are subject to tremendous variation and will affect any organization that engages in international marketing.

Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment 47
Learning Objective 8
Changes in any aspect of the environment usually bring about changes elsewhere in the environment.
Several environmental forces may combine to encourage changes in consumer behavior or marketing mixes.

48 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment
The purpose of this quiz is to determine how familiar you are with the key concepts in this chapter.
From the list of vocabulary, select the one that most accurately describes the definitions of the concept or marketing term. Write the letter in the space provided.
A. Domestic environment
B. Macroenvironment
AA.
BB.
Foreign environment
Microenvironment
C. Physical environment
D. Legal environment
E. Culture
F. Belief
CC.
DD.
EE.
FF.
Science
Business cycle
Social value
Demography
G. Internet
H. Pure competition
I.
J.
Oligopoly
Ethnocentrism
K. export
GG. Economic system
HH. Monopolistic competition
II. Monopoly
JJ. Antitrust legislation
KK. Technology
L. Federal Trade Commission (FTC)
M.
Multinational marketing group
N.
World Wide Web
O. Import
_____1.
LL. Political environment
Environmental forces, such as customers, that directly and regularly influence a m marketer’s activity.
_____2. The application of knowledge to practical purposes.
_____3. A conviction concerning the existence or the characteristics of physical and social phenomena.
_____4.
_____5.
Laws and regulations and their interpretations.
The tendency to consider one’s own culture and way of life as the natural and normal one.
_____6.
_____7.
A domestically produced product sold in a foreign market.
A market structure characterized by a small number of sellers who control the market.
The environment in an organization’s home country.
_____8.
_____9. The system whereby a society allocates its scarce resources.

_____ 10.
Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment
The practices and policies of governments.
_____11. A group of countries, aligned to form a unified market with minimal trade tariff barriers among participating member countries.
_____12. A value that embodies the goals a society views as important and expresses a culture’s shared ideas of preferred ways of acting.
_____13.
49
Broad societal forces that shape the activities of every business and nonprofit marketer. The physical environment, sociocultural forces, demographic factors, economic factors, scientific and technical knowledge, and political and legal factors.
_____14. A market structure characterized by a single seller in a market in which there are no suitable substitute products.
_____15. A market structure characterized by free entry, a homogeneous product, and many sellers and buyers, none of whom can control price.
_____16. Federal agency established to investigate and put an end to unfair methods of competition.
_____17.
_____18.
The environment outside an organization’s home country.
Natural resources and other aspects of the natural world that influence marketing activities.
_____19. Federal laws meant to prohibit behavior that tends to lessen competition in U.S. markets.
_____20.
_____ 21.
A worldwide network of private, corporate, and government computers that gives users access to information and documents from distant sources .
_____22.
The institutions, values, beliefs, and behaviors of a society; everything we learn, as opposed to that with which we are born.
The study of the size, composition, and distribution of the human population in relation to social factors.
_____23. A market structure characterized by a large number of sellers offering slightly differentiated products and exerting some control over their own prices.
_____24.
_____25.
_____26.
Recurrent fluctuations in general economic activity.
The accumulation of knowledge about humans and the environment.
A foreign product purchased domestically.

50
_____27.
Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment
A portion of the Internet; a system of Internet servers that support specially formatted documents.

Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment
Learning Objective 1
1. The world is getting smaller, and the external environment is taking on a more ____________ character. (global)
2.
3.
In today’s global economy, most corporations must anticipate and respond to
__________________ and ________________in foreign environments.
(opportunities, threats)
Both ___________ and __________ organizations can be influenced by forces shaped thousands of miles away from their home __________.
(large, small, countries)
5.
Learning Objective 2
4.
The physical environment consists of ____________ resources and their availability can have a __________ effect on marketing activities. (natural, far-reaching)
Climate affects the ________ of marketing activities. (timing)
Learning Objective 3
6. The broad societal forces that shape every business and nonprofit marketer comprise the
7.
__________________________. (macroenvironment)
Every company is more directly influenced by a ______________________ consisting of its customers and the economic institutions that shape its marketing practices. (microenvironment)
8. The __________________________ consists of the physical environment, sociocultural forces, demographic factors, economic factors, scientific and technical knowledge, and
51

52 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment political and legal factors. (macroenvironment)
9. Every society has a ___________ that guides its everyday life. (culture)
10. A ____________ is a conviction concerning the existence of the characteristics of physical and social phenomena. (belief)
11.
It is the marketer’s job to “read” the social environment and reflect the surrounding culture’s ________and beliefs in a marketing strategy.
( values)
12. A _____________ value embodies the goals that society views as important and expresses a culture’s __________ ideas or preferred ways of acting.
(social, shared)
Learning Objective 4
13. The study of the size, composition, and distribution of the human population is any geographic market in relation to social factors is known as __________________.
(demography)
14. The most dramatic growth in the past decade has been in the _______________.
(suburbs)
15. Between 1980 and 1990 most of the net gain in population occurred in the
_______ and __________. (South, West)
16. A _______________ is a dwelling unit occupied by a group of related people, a single person or several _____________ people who share living quarters. (household, unrelated)
17. The United States represents a small portion of the _____________ population of
(world, six) at least _________ billion.
Learning Objective 5

Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment
18. Although the two terms are sometimes used interchangeably, ___________ is the accumulation of knowledge about human beings and the environment, while
_______________ is the application of such knowledge to practical purposes.
(science, technology)
19. Like other changes in the environment of marketing, science and technological
53
_______________ can __________________ an industry or destroy it.
(advance, revolutionize)
20. Digital _________________ is having such a profound impact on marketing and society that it deserves special attention. (technology)
21. The ______________ is a worldwide network of computers that gives users
_________ and _________________ from distant sources.
(Internet, information, documents)
22. A _______________ engine is a computerized search and retrieval system that allows anyone to search the _________ __________ __________ for information in a particular way. (search, World Wide Web)
23.
The Internet can be thought of as the world’s _________ public ___________.
(largest, library)
Learning Objective 6
24. _________________ and ______________ forces strongly influence marketing activity at all levels. (Economics, competitive)
25. A society’s economic ____________ determines how it will allocate its scarce resources.
In general the Western world’s economies can be classified as __________ _____________ systems. (system, modified capitalist)
26. The system defined as __________ competition exists when there are no barriers to

54 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment competition.
27. The fast food industry is a good example of ________________ competition.
(pure)
(monopolistic)
28. An _________________ exists where a small number of sellers dominate the market. (oligopoly)
29. A _______________ exists in a market when there are no suitable substitutes.
(monopoly)
30. The business ___________ reflects recurrent fluctuations in general economic activity.
(cycle)
Learning Objective 7
31. The _________________ environment and the _____________ environment affect marketing activity in several ways. They can limit actions marketers are allowed to take.
(political, legal)
32. Legislation intended to _____________ a _____________ business environment, to ___________ consumers from dangerous products or _____________ practices, and to preserve the ______________ environment can be found at the federal, state, and local levels. (maintain, competitive, protect, unethical, natural)
33. ____________ __________,which prohibits acts such as restraint of trade and monopoly, price fixing, price discrimination, deceptive practices, misrepresentation in the labeling of products, and other behavior that tends to ___________ competition.
(Antitrust legislation, lessen)
34. Most states created __________ and ______________ that parallel those at the federal level.
(laws, agencies)
35. Cities, townships, villages and counties are all ____________________ to pass laws and ordinances and create regulatory agencies. (empowered)
36. Companies operating their businesses in ________ markets must pay attention to
_______________ laws and the laws of ______________ lands.

Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment
(global, international, foreign)
37. Multinational marketing groups are groups of countries aligned to form a _________ market with ___________ trade and tariff ___________ among participating countries.
(unified, minimal, barriers)
Learning Objective 8
55
38. Effective marketers must consider the whole of marketing’s __________.
(macroenvironment)
39. There are many examples of _________________ between changes in the _____________,
__________________ and ____________ environments.
(interactions, economic, technological, social)

5.
4.
6.
3.
1.
2.
56 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment
The environment consisting of natural resources is the _________ environment.
A. macroenvironment
B. foreign
C. physical
D. domestic
Work ethic is a part of:
A. the culture.
B. a belief.
C. the microenvironment.
D. social values.
Climate is an aspect of which type of the macroenvironment?
A. Scientific and technical knowledge
B. Demographic forces
C. Physical environment
D.
Sociocultural forces
Which is NOT a social value of the U.S.?
A. Nepotism
B. Equality
C. Freedom
D. Individual responsibility
Which is NOT an element of demography?
A. Population composition
B. Population intensity
C. Population distribution
D. Population size
Which statement is FALSE?
A. The U.S. population if growing in size.

Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment
7.
B.
C.
D.
The U.S. population is aging.
The U.S. population is becoming more urbanized.
The U.S. population is moving towards the northeastern U.S.
The U.S. household data contains significant changes in:
A. a reduction in the total number of households.
B. the increasing size of the households.
C. the number of single-parent households.
D. none of the above.
9.
8. The total U.S. work force was estimated at _______ in 1998.
A. 137 million.
B. 114 million.
C. 124 million.
D. 164 million.
In the 1990 census, about what percentage of the net gain in the U.S. population between
1980 and 1990 was in the South and the West?
A.
B.
C.
40 percent
50 percent
70 percent
D. 85 percent
10.
The ‘baby boom” is the term used for people born in the U.S. between:
A. 1950 and 1960.
B. 1940 and 1950.
C. 1946 and 1965.
D. 1960 and 1972.
11. In 1998, the three major minorities represented approximately what percentage of the U.S. population?
A.
B.
9
16
57

58 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment
C.
D.
28
None of the above
12. The world population is estimated to grow at about __________ each hour:
A. 10,000
B.
C.
13,000
16,000
D. 21,000
13. The world population is estimated to increase by 50 percent from the year 2000 to the year
_______.
A. 2050
B. 2175
C. 2160
D. none of the above
14. By the year 2011, it is estimated that the U.S. population will be about:
A. 200 million.
B. 250 million.
C. 300 million.
D. none of the above.
15. Which is the most populous state in the U.S.?
A. New York
B. California
C Texas
D. Florida

Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment
_____12.
_____13.
_____14.
_____15.
_____1.
_____2.
_____3.
_____4.
_____5.
_____6.
_____7.
_____8.
_____9.
_____10.
_____11.
The fast-food industry in the U.S. is a good example of an oligopoly.
Freedom is a social value in the U.S.
A town’s local electric utility is often an example of monopolistic competition.
An example of pure competition is the soft drink market in the U.S..
The fifth phase of the business cycle is resurrection.
The Internet is the most important communication medium to be invented since television.
The median age of people who live in the U.S. is about 33 years.
The average age of the U.S. population grows older every year.
By the year 2000, all “baby boomers” were at least 35 years of age.
Single-person households represent about 25 percent of U.S. households.
An industry example of oligopoly in the world market would be the commercial aircraft industry.
Service occupation represent only about 25 percent of jobs in the U.S.
In the U.S. where “chocolate chip cookies” are required to contain real chocolate chips, this is an example of the legal environment.
The World Wide Web refers to a system of Internet servers which organize information into Hypertext documents called Web pages.
The opening computer screen of a Web site is called the home base.
59

60 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment
1.
Compare and contrast the U.S. “baby boomers” with the “Generation Yers.” What do these terms mean? How are these groups different? How are they similar? What will be the likely impact on the U.S. economy and its marketing activities as these two groups grow older?
2.
Discuss the growth of the “single-person” and the “single-parent” households in the U.S. over the last decade. How have these two groups changed? What percentage of U.S. households do these two groups represent? What is the likely impact of these two groups on the U.S. economy and marketing activities as these two groups grow older?

Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment 61
3. Amazon.com offers 2.5 million books, but only stocks about 200,000 titles in its Seattle warehouse. Amazon works with 12 wholesalers who forward shipments to customers. Visit the company’s Web site at: www.amazon.com
(a)
Find John Grisham’s most recent book. (Hint: Just type his name in the search box and hit the Go! Key)
(b) How much would you save off the list price if you purchased this book over the Web instead of in a bookstore?
(c) Is this a good distribution channel for amazon.com? Why? What are the advantages of this type of channel over the more traditional bookstore?
4.
Now, visit Amazon’s major competitor at its Web site: www.barnesandnoble.com
(a) Repeat steps a,b,c above
(b) Which of these two Web sites do you prefer? Why do you feel that way?

62 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment
1.
2.
3.
BB
KK
F
4.
5.
6.
7.
D
J
K
I
8.
9.
A
GG
10. LL
11. M
12. EE
13.
B
14.
II
15.
H
1.
2.
3.
4.
5.
C
D
C
A
B
6. D
7.
8.
C
A
9. D
10. C
16. L
17. AA
18. C
19. JJ
20. E
21. G
22. FF
23. HH
24. DD
25. CC
26. O
27. N
2.
3.
4.
5.
1. F
T
F
F
F
6. T
7.
8.
T
T
9. T
10. T
11. C
12. C
13. A
14. C
15. B
11. T
12. F
13. T
14. T
15. F

Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment
63

64 Chapter 3 Environment Forces in an e-commerce World: The Macroenvironment