Principles of Marketing

Eighteenth Edition

Chapter 2
Analyzing the Marketing
Environment

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Learning Objectives
3.1 Describe the environmental forces that affect the
company’s ability to serve its customers.
3.2 Explain how changes in the demographic and economic
environments affect marketing decisions.
3.3 Identify the major trends in the firm’s natural and
technological environments.
3.4 Explain the key changes in the political and cultural
environments.
3.5 Discuss how companies can react to the marketing
environment.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

MICROSOFT: Adapting to the Fast-
Changing Marketing Environment
“Microsoft has undergone a
dramatic transformation to better
align itself with the new digital
world. More than just making the
software that makes PCs run,
Microsoft now wants to empower
every person and every
organization on the planet to
achieve more, regardless of what
device or operating system they
use.”

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

A Company’s Marketing Environment
The marketing environment includes the actors and forces
outside marketing that affect marketing management’s ability
to build and maintain successful relationships with target
customers.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Microenvironment and
Macroenvironment
Microenvironment consists of the actors close to the
company that affect its ability to serve its customers—the
company, suppliers, marketing intermediaries, customer
markets, competitors, and publics.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Microenvironment and
Macroenvironment
Macroenvironment consists of the larger societal forces
that affect the microenvironment—demographic, economic,
natural, technological, political, and cultural forces.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Microenvironment
Figure 3.1 Actors in the Microenvironment

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Microenvironment
The Company

In designing marketing plans, marketing management takes

other company groups into account.
• Top management
• Finance
• Research and development (R&D)
• Information technology
• Purchasing
• Operations
• Human resources
• Accounting

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Microenvironment
Suppliers

• Provide the resources to produce goods and services

• are an important link in the “value delivery system”.
Suppliers: Giant furniture
retailer IKEA doesn’t just buy
from its suppliers. It involves
them deeply in the process of
delivering the trendy but
simple and affordable home
furnishings to create a better
everyday life for its
customers.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

 The Microenvironment
Marketing intermediaries are firms that help the
company to promote, sell, and distribute its goods to final
buyers.

Partnering with
intermediaries: Coca-Cola
provides its retail partners
with much more than just soft
drinks. It also pledges
powerful marketing support.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Microenvironment
Competitors

• those who serve a target market with similar products and

services against whom a company must gain strategic
advantage.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Microenvironment
Publics
Any group that has an actual or potential interest in or impact on an
organization’s ability to achieve its objectives

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

 The Microenvironment
Customers
Types of customer markets
• Consumer markets
• Business markets
• Reseller markets
• Government markets
• International markets

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Macroenvironment
Figure 3.2 Major Forces in the Company’s
Macroenvironment

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Demographic and Economic
Environments
The Demographic Environment
• Demography is the study of human populations—size,
density, location, age, gender, race, occupation, and other
statistics.
• Demographic trends include changing age and family
structures, geographic population shifts, educational
characteristics, and population diversity.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Demographic and Economic
Environments (2 of 6)
The Demographic Environment

• Baby Boomers – born 1946 to 1964

• Generation X – born between 1965 and 1980

• Millennials – born between 1981 and 1996

• Generation Z – born between 1997 and 2012

• Generation Alpha – born after 2012

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

 3-17

Many products
are targeted to
Baby boomers’
growing health
issues and
concerns

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

 3-18

• Discussion Question
• Do marketers need to create separate products
and marketing programs for each generation?

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Demographic and Economic
Environments
The Demographic Environment
Generational marketing is important in segmenting people
by lifestyle or life stage instead of age.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

 3-20

Demographic Environment
– The nuclear family vs extended families
– Delayed marriages
– Common-law arrangements
– Fewer children
– High divorce rate
– Single-parent families
– Alternative arrangements
– Working women
– More dual-income families
– Geographic shifts in population
– Increasing diversity

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Demographic Environments
The Demographic Environment

Working remotely: Apps like Slack let

people working remotely collaborate
anywhere and everywhere through the
internet and mobile devices.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

 3-22

Economic Environment
• Factors that affect consumer buying power and
spending patterns
• Types of economy will influence resources to work
with

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

 3-23

Economic Environment
• Changes in Income
• Marketers should pay attention to income
distribution as well as average income.
– Upper class, middle class, working class, and
underclass
• The distribution of income has created a two-
tiered market: the affluent and the less affluent

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Economic Environment

Economic environment: Consumers adopted a new back-to-

basics sensibility in their lifestyles and spending patterns. To
serve the tastes of these more financially frugal buyers,
companies like Target are emphasizing the “pay less” side of
their value propositions.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

 3-25

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

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Natural Environments
The Natural Environment
Trends in the Natural Environment
• Growing shortages of raw materials
• Increased pollution
• Increased government intervention
• Developing strategies that support environmental
sustainability

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Natural and Technological
Environments
The Natural Environment The natural environment:
Environmental sustainability Walmart has emerged in recent
involves developing strategies years as the world’s super “eco-
and practices that create a world nanny” through its own
economy that the planet can sustainability practices and its
support indefinitely. impact on the actions of its
huge network of suppliers.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Technological Environments
The Technological
Environment
• Most dramatic force in
changing the marketplace Disney
• New products, opportunities
• Concern for the safety of new
products

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

 3-29

• Discussion Question
• what important changes have you seen in
technology in the past four years including
medical products, communications, and media?

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

 3-30
Technological Environment

Rapid Pace of Unlimited

Change Opportunities

Issues in the Technological

Environment

Increased Practical, Affordable

Regulation Products

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

 3-31

Political and social Environment

Legislation regulating business is intended to protect

• companies from each other
• consumers from unfair business practices
• the interests of society against unrestrained business
behavior

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

The Political and Social Environment
The Political and Social Environment
• Increased emphasis on ethics Cause-related marketing: Ben &
and socially responsible Jerry’s three-part “linked
actions prosperity” mission drives it to
• Cause-related marketing make fantastic ice cream
(product mission), manage the
company for sustainable
financial growth (economic
mission), and use the company
“in innovative ways to make the
world a better place” (social
mission). Both Ben & Jerry’s
and its products are “Made of
Something Better.”
Copyright © 2021, 2018, 2016 Pearson Education, Inc.
Cultural Environment
The Cultural Environment
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.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Cultural Environment
The Cultural Environment Catering to the natural, organic, and
Shifts in Secondary Cultural Values ethical products trend: Unilever’s
Love Beauty and Planet brand has
• People’s views of themselves one goal: “To make you more
beautiful and give a little love to our
• People’s views of others
planet.”
• People’s views of organizations
• People’s views of society
• People’s views of nature
• People’s views of the universe

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

 3-35

Cultural Environment

Of
Oneself

Of Of
the Universe Cultural Values Others
of a
Of Society Of
Nature Organizations

Of
Society

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

 3-36

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 happened.”

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Responding to the Marketing Environment
Views on Responding

• Uncontrollable
– React and adapt to forces in the environment
• Proactive
– Take aggressive actions to affect forces in the
environment
• Reactive
– Watch and react to forces in the environment

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Real Marketing 3.2: In the Social Media
Age: When the Dialogue Gets Nasty
Today’s empowered consumers: Whole Foods Market’s
decision to put single pre-peeled oranges in individual plastic
containers caused a viral storm of #OrangeGate tweets.
However, the retailer averted the potential PR disaster by
responding within hours with its own humorous, self-critical
social media posts admitting its mistake.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.