Chapter Two

Marketing
Environment
PART ONE: Marketing Environment
 Marketing Environment
The marketing environment consists of internal and external environment.
External environment consists of actors and forces outside the organization that affect
management’s ability to build and maintain relationships with target customers.
 It involves both opportunities and threats.
Marketing intelligence and research are used to collect information about the
environment.
External environmental forces:
◦ Micro-environment: actors are close to the company and therefore directly affect its
ability to serve its customers.
◦ Macro-environment: larger societal forces that can directly affect microenvironment.
◦ it can indirectly affect the operation of business organization.
◦ Considered to be beyond the control of the organization.

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 The Company’s Microenvironment

Company’s Internal Environment:

◦ Areas inside a company.
◦ Affects the marketing department’s planning strategies.
◦ All departments must think “consumer” and work together to
provide superior customer value and satisfaction.

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Actors in the Microenvironment

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 The Company’s Microenvironment

Suppliers:
◦ Provide resources needed to produce goods and services.
◦ Important link in the “value delivery system.”
◦ Most marketers treat suppliers like partners.
 The Company’s Microenvironment

Marketing Intermediaries:
◦ Help the company to promote, sell, and distribute its goods to
final buyers:
◦ Resellers
◦ Physical distribution firms
◦ Marketing services agencies
◦ Financial intermediaries

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 The Company’s Microenvironment

Customers:
◦ Five types of markets that purchase a company’s goods and services
◦ suspects: who aren’t even aware of your product or service.
◦ Prospects: prospects are known and by this point are typically either in contact with a
sales representative of the company or in some other way have reached out to learn more
about your brand and products.
◦ New customers: Individuals who have bought the product for the first time.
◦ Repeat customers: they are continuing to purchase your product and maybe by this time
they have tried other products
◦ Advocates: These customers have an emotional connection with the brand, trust in the
company’s products and employees to support them and will personally recommend you
to others. 
Consumer markets
Business markets
reseller markets
Government markets
international markets
 The Company’s Microenvironment

Competitors:
◦ Those who serve a target market with products and services that are viewed by
consumers as being reasonable substitutes
◦ Company must gain strategic advantage against these organizations

Publics:
◦ Group that has an interest in or impact on an organization's ability to achieve its
objectives

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7 Types of Publics

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 The Macro-environment
Macro-environment is located beyond micro-environment.
It involves all forces such as:
economic environment,
demographic env’t,
socio-cultural env’t,
legal-political env’t, and others.

As an external env’t, it consists of opportunities and threats.

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The Company’s Macroenvironment

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 The Company’s Macroenvironment
Demographic:
◦ The study of human populations in terms of size, density,
location, age, gender, race, occupation, and other statistics.
◦ Marketers track changing age and family structures, geographic
population shifts, educational characteristics, and population
diversity.

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 Economic Environment

Consists of factors that affect consumer purchasing power and

spending patterns.
Income Distribution
◦ Upper class: upper- upper, upper-middle, upper-lower
◦ Middle class: middle upper, middle-middle, middle -lower
◦ Lower class: Lower upper, lower middle, lower-lower

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 Natural Environment
Involves the natural resources that are needed as inputs by marketers
or that are affected by marketing activities.
Factors Impacting the Natural
Environment

Shortages of Raw Materials

Increased Pollution

Increased Government Intervention

Environmentally Sustainable Strategies

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 Technological Environment

Most dramatic force now shaping our destiny.

Changes rapidly.
Creates new markets and opportunities.
Challenge is to make practical, affordable products.
Safety regulations result in higher research costs and
longer time between conceptualization and introduction
of product
 Political Environment

Includes Laws,
Increasing Legislation
Government
Agencies, and
Pressure Groups
Changing Government
that Influence or Agency Enforcement
Limit Various
Organizations and
Individuals In a Increased Emphasis on Ethics
Given Society. & Socially Responsible Actions

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 Cultural Environment

The institutions and other forces that affect a society’s basic values,
perceptions, preference, and behaviors.
Core beliefs and values are passed on from parents to children and are
reinforced by schools, churches, business, and government.
Secondary beliefs and values are more open to change.
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The
The Universe
Universe
Nature
Nature
Society
Society
Organizations
Organizations
People’s Views of:
Expressed in Others
Others
Cultural Views Are
Society’s Major
Themselves
Themselves
Cultural Environment
 Responding to the Marketing Environment
Environmental Management Perspective
◦ Taking a proactive approach to managing the environment
by taking aggressive (rather than reactive) actions to affect the
publics and forces in the marketing environment.
◦ This can be done by:
◦ Hiring lobbyists
◦ Running “advertorials”
◦ Pressing lawsuits
◦ Filing complaints
◦ Forming agreements to control channels

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PART TWO : MARKETING
SRATAGIES
 Marketing Strategy

The selection of a course of action from among several

alternatives that involves specific customer groups,
communication methods, distribution channels, and pricing
structures.
It is a combination of target markets and marketing mixes.

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 Target Market
A target market is a market segment selected by an
organization for marketing attention.
Market segmentation involves dividing customers
into groups (market segments) with common
characteristics.
 Geographic
 Demographic
 Psychographics-social class, personality, lifestile.
 Behavioral-occasion, usage rate,….

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 Marketing Mix

 A marketing mix includes those controllable factors that have been chosen to
satisfy customer needs.
 The eight controllable factors are:
 product,
 price,
 place,
 promotion,
 packaging,
 programming,
 partnership, and
 people.
 These are also know as the 8 Ps.
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 Relationship Marketing and
Strategic Alliances
Relationship Marketing
Placing an emphasis on building, maintaining, and enhancing
long-term relationships with customers, suppliers, travel trade
intermediaries, and perhaps even competitors.

Strategic Alliances
Special long-term marketing relationships formed between two
or more organizations.

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 Marketing Objective

A marketing objective is a measurable goal that

an organization attempts to achieve for a target
market within a specific time period, typically
one year.

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 Segmented Marketing Strategies
The three alternative segmented strategies are:
1. Single-target-market strategy (micro marketing)
2. Concentrated marketing strategy (differentiated marketing)
3. Full-coverage marketing strategy(mass marketing)

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 Alternative Strategies for
Product Life Cycle Stages
g Introduction Stage
a. Rapid-skimming strategy (high price/high promotion).
b. Slow-skimming strategy (high price/low promotion).
c. Rapid-penetration strategy (low price/high promotion).
d. Slow-penetration strategy (low price/low promotion).

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 Alternative Strategies for
Product Life Cycle Stages

g Growth Stage
a. Improve service quality and add new service features and elements
b. Pursue new target markets
c. Use new channels of distribution
d. Lower prices to attract more price-sensitive customers
e. Shift some advertising emphasis away from building awareness to creating
desire and action

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 Alternative Strategies for
Product Life Cycle Stages

g Maturity Stage
a. Market-modification strategy
b. Product-modification strategy
c. Marketing-mix modification strategy
g Decline Stage
a. Reduce costs and milk the company
b. Sell off or get out of the business

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 Alternative Strategies by Industry Position

g A ranking of a brand, product, or company, in terms of its sales volume relative to the sales volume of

its competitors in the same market or industry.
g Market Leaders
a. Expand the size of the total market
b. Protect market share
c. Expand market share
g Market Challengers
a. Take on or attack the market leader
g Market Followers
a. Shy away from any attacks on market leaders
g Market Nichers
a. Specialize in a particular market segment

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 Positioning

Positioning is the development of a service and a marketing mix

to occupy a specific place in the minds of customers within
target markets.

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Reasons for Increased Importance of Positioning

1. Perceptual processes of customers

They screen out most information
2. Greater competition
More organizations competing for share of mind
3. Growing volume of commercial messages
Advertising and promotion clutter

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Steps Required for Effective Positioning (the
five Ds)

gDocumenting
gDeciding
gDifferentiating
gDesigning
gDelivering

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 The 5 Ds of Positioning

gDocumenting gDifferentiation
What benefits are the most Which competitors do you want to
important to your current and appear different from, and what are
potential customers? the factors that you will use to make
your organization different from
them?
gDeciding
What image do you want your
current and potential customers to
have of your organization?

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 The 5 Ds of Positioning

gDesigning
How will you develop and
communicate these differences?

gDelivering
How will you make good on what
you’ve promised, and how do you
make sure that you have “delivered?”

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 Positioning Approaches:
Six Major Alternatives
gSpecific product features
gBenefits, problem solution, or needs
gSpecific usage occasions
gUser category
gAgainst another “product”
g“Product class” dissociation

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 END OF
CHAPTER TWO