ANALYZING THE MARKETING ENVIRONMENT

Chapter 3

Environmental Forces:

A company’s marketing environment consists of the actors and forces outside marketing that
affect marketing management’s ability to build and maintain successful relationships with target
customers.

The microenvironment consists of the actors close to the company that affect its ability to
service its customers.

The macroenvironment consists of larger societal forces that affect the microenvironment.

THE COMPANY’S MICROENVIRONMENT

Marketing management’s job is to build relationships with customers by creating customer

value and satisfaction.

The Company
All the interrelated groups (top management, finance, R&D, purchasing, operations, human
resource and accounting) form the internal environment. All groups should work in harmony to
provide superior customer value and relationships.

Suppliers

Suppliers provide the resources needed by the company to produce its goods and services.

Marketing managers must watch supply availability—supply shortages or delays, labor strikes,
and other events can cost sales in the short run and damage customer satisfaction in the long
run.

Marketing managers monitor the price trends of their key inputs.

Marketing Intermediaries

Marketing intermediaries help the company to promote, sell, and distribute its products to final
buyers.
 Resellers are distribution channel firms that help the company find customers or make
sales to them. These include wholesalers and retailers.
 Physical distribution firms help the company to 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.

Marketers recognize the importance of working with their intermediaries as partners rather
than simply as channels through which they sell their products.

Competitors

Marketers must gain strategic advantage by positioning their offerings strongly against
competitors’ offerings in the minds of consumers.

No single competitive marketing strategy is best for all companies.

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Publics

A public is 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.

 Media publics carry news, features, and editorial opinion.
 Government publics. Management must take government developments into
account.
 Citizen-action publics. A company’s marketing decisions may be questioned by
consumer organizations, environmental groups, etc.
 Local publics include neighborhood residents and community organizations.
 General public. The general public’s image of the company affects its buying.
 Internal publics include workers, managers, volunteers, and the board of directors.

Customers

There are 5 types of customer markets. The company may target any or all of these 5 markets.

1. Consumer markets: individuals and households that buy goods and services for personal
consumption.
2. Business markets: buy goods and services for further processing or for use in their
production process.
3. Reseller markets: buy goods and services to resell at a profit.
4. Government markets: made up of government agencies that buy goods and services to
produce public services.
5. International markets: buyers in other countries, including consumers, producers,
resellers, and governments.

THE COMPANY’S MACROENVIRONMENT

Demographic Environment
Demography is the study of human populations in terms of size, density, location, age, gender,
race, occupation, and other statistics.

Changes in the world demographic environment have major implications for business.

Thus, marketers keep close track of demographic trends and developments in their markets,
both at home and abroad.

Changing Age Structure of the Population

Age structure:
0-14 years: 33.39% (male 17,764,826/female 17,050,168)
15-24 years: 19.16% (male 10,199,389/female 9,780,025)
25-54 years: 36.99% (male 19,597,675/female 18,964,900)
55-64 years: 5.97% (male 2,844,739/female 3,375,139)
65 years and over: 4.49% (male 1,930,273/female 2,748,942) (2017 est.)

Baby Boomers – include people born between 1946 and 1964

 Baby boomers “think young” no matter how old they are
 Baby boomers are retiring later and working more after retirement

Generation X - includes people born between 1965 and 1976. This generation tends to display
the following traits:
 Skepticism
 Cautious economic outlook

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  Less materialistic
 Family comes first
 Research products before considering a purchase

Millennials (also called Generation Y or the echo boomers). Born between 1977 and 2000.
 Comfortable with technology

Generation Z – includes people born after 2000. This group includes several age cohorts:
 kids
 teens
 Tweens

Fluency and comfort with digital technologies.

The Changing Filipino Family

 Global and Urban Migration (seasonal orphans/nuclear families have become smaller)
 Changing role of Women (househusband, OFW, parenting from a distance)
 Political Instability (role models of adults in high position)
 Violence
 Power of Media

Geographic Shifts in Population

The population density of the Philippines is high, but the distribution of the population is
uneven. Parts of Metro Manila have a population density that is more than 100 times that of
some outlying areas such as the mountainous area of northern Luzon.

A Better-Educated, More White-Collar, More Professional Population

The Philippine population is becoming better educated.

Increasing Diversity

Markets are becoming more diverse

International
National

Includes:
Ethnicity
Language

Economic Environment
The economic environment consists of factors that affect consumer purchasing power and
spending patterns.

Subsistence economies – consume most of their own agricultural and industrial output.

Industrial economies – constitute rich markets for many different kinds of goods.

Value marketing - just the right combination of product quality and service at a fair price.

Income distribution in the United States is very skewed. This is also true with Philippines. The
rich have gotten richer, the middle class has shrunk, and the poor have stayed poor.

Natural Environment
The natural environment involves the natural resources that are needed as inputs by marketers

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or that are affected by marketing activities.

Trends in the natural environment:

1. Shortage of raw materials.
2. Increased pollution.
3. Increased government intervention.

Companies are developing strategies and practices that support environmental sustainability.

Technological Environment

The technological environment is the most dramatic force in changing the marketplace.

 It creates new products and opportunities.

 Safety of new product always a concern.

Political and Social Environment

The political government consists of laws, government agencies, and pressure groups that
influence or limit various organizations and individuals in a given society.

Legislation Regulating Business

Governments develop public policy to guide commerce.

Increasing Legislation. Legislation affecting business around the world has increased steadily
over the years.

Business legislation has been enacted for a number of reasons.

1. To protect companies from each other.
2. To protect consumers from unfair business practices.
3. To protect the interests of society against unrestrained business behavior.

Changing Government Agency Enforcement. Because government agencies have discretion in

enforcing laws, they can have an impact on a company’s marketing performance.

Increased Emphasis on Ethics and Socially Responsible Actions

Socially Responsible Behavior. Enlightened companies encourage their managers to “do the
right thing.”

The boom in Internet marketing has created a new set of social and ethical issues.

Cause-Related Marketing. Many companies are now linking themselves to worthwhile causes.
But, cause-related marketing has stirred some controversy.

Cultural Environment
The cultural environment is made up of institutions and other forces that affect a society’s basic
values, perceptions, preferences, and behaviors.

Persistence of Cultural Values

Core beliefs and values are passed on from parents to children and are reinforced by schools,
places of religious worship, business, and government.

Secondary beliefs and values are more open to change.

Shifts in Secondary Cultural Values

Marketers want to predict cultural shifts in order to spot new opportunities or threats.

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People’s Views of Themselves. People vary in their emphasis on serving themselves versus
serving others.

The Yankelovich Monitor identifies consumer segments whose purchases are motivated by self-
views. Two examples:
 Do-It-Yourselfers—Recent Movers.
 Adventurers.
People’s Views of Others. Shifts in people’s attitudes toward others has been noted.
Trend trackers see a new wave of “cocooning.”

People’s Views of Organizations. People are willing to work for major organizations and expect
them to carry out society’s work.
Many people see work as a required chore to earn money to enjoy their non-work hours.

People’s Views of Society. People vary in their attitudes toward their society.

People’s Views of Nature. Recently, people have recognized that nature is finite and fragile, that
it can be destroyed by human activities. This renewed love of things natural has created a 41-
million-person “lifestyles of health and sustainability” (LOHAS) market.

People’s Views of the Universe. Religious conviction and practice have been dropping off
gradually through the years, in many parts of the world.

RESPONDING TO THE MARKETING ENVIRONMENT

Companies can passively accept the marketing environment as an uncontrollable element to

which they must adapt, avoiding threats and taking advantage of opportunities as they arise. Or
they can take a proactive stance, working to change the environment rather than simply
reacting to it. Whenever possible, companies should try to be proactive rather than reactive.

Prepared by:
Agnes C. Ampo