3 MARKETING AN INTRODUCTION

Armstrong/Kotler

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 Chapter Outline
A. The Microenvironment
B. The Macroenvironment
1. Demographic Environment
2. Economic Environment
3. Natural Environment
4. Technological Environment
5. Political and Social Environment
6. Cultural Environment
C. Responding to the Marketing Environment
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 A. The Microenvironment

The microenvironment consists of the actors close to the company

that affect its ability to service its customers.

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 1. The Company

All the interrelated groups form the internal

environment.

Departments share the responsibility for

understanding customer needs and creating
customer value.

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 2. Suppliers
Suppliers form an important link in
the company’s overall customer value
delivery network.
Suppliers provide the resources
needed by the company to produce
its goods and services.
Supplier problems seriously affect marketing

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 3. Marketing Intermediaries
Help company to promote, sell, and distribute its products to final buyers

Resellers

Physical Distribution Firms

Marketing services agencies

Financial intermediaries
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 4. Competitors

The market concept states that to be

successful, a company must provide greater
customer value and satisfaction than its
competitors do.
A company must gain strategic advantage by offering more value
and positioning their offerings strongly against competitor offerings.

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 5. 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.
7 types of publics:
• Financial publics influence the company’s ability to obtain funds.
• Media publics carry news, features, and editorial opinions.
• 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.
• Internal publics include workers, managers, volunteers, and the board of
directors.
• General public. The general public’s image of the company affects its
buying.
• Local publics include neighborhood residents and community organizations.

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 6. Customers
5 types of customer markets:
• Consumer markets (individuals & households that buy
goods/services for personal consumption)
• Business markets (buy goods/services for further
processing or for use in their production process)
• Reseller markets (buy goods/services resell at a
profit)
• Government markets (made up of government
agencies that buy goods/ services to produce public
services)
• International markets (buyers in other countries)
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 B. The Macroenvironment

The macroenvironment consists of larger societal forces that affect the

microenvironment.
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 1. Demographic Environment

Demography: Study of human populations in

terms of size, density, location, age, gender,
race, occupation, and other statistics

Marketers analyze:
– Changing age and family structures
– Geographic population shifts
– Educational characteristics
– Population diversity
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 Changing Age Structure of the Population

Baby Generation Generatio Generatio Generation

Boomers X nY nZ Alpha

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 Changing Age Structure of the Population

The Baby Boomers

• Born between 1946 and 1964, post
WW2.
• Account for about 21% of the U.S.
population but control an estimated
53% of the spending power.

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 Changing Age Structure of the Population

Generation X
• Born between 1965-1980.
• They are more skeptical bunch.
• They are the most educated generation to date
and they possess hefty annual purchasing power.
Less materialistic and family comes first – both
children and their aging parents – and career
second.

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 Changing Age Structure of the Population

Generation Y
• Born between 1981 and 1996. Also called Millennials or
echo boomers.
• They do not just embrace technology; it is a way of life.
• The Gen-Y were the first generation to grow up in a world
filled with computers, mobile phone, satellite TV, iPods
and iPads, and online social media. As a result, they
engage with brands in an entirely new way, such as
mobile or social media.

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 Changing Age Structure of the Population

Generation Z
• born between 1997 and 2012, totals approximately
80 million, which makes them 26% of the
population.
• They are the most ethnically and culturally diverse
generation.
• They spend an estimated $43 billion to $143 billion
annually of their own money and influence up to
$333 billion of family spending.
• They have digital in their DNA.
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 Changing Age Structure of the Population

Generation Alpha
• Generation Alpha, born after 2012, will grow larger
than millennials by 2025.
• They will be the most formally educated generation
ever, the most technology-supplied generation ever,
and globally wealthiest generation ever.
• Gen Alphas are important future consumers who are
just beginning to establish brand preferences.

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 The Changing Family Structure

The changing family from

traditional family to…..
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 The Changing American family

In the US:
• Married couples with children under 18 make up 19% of
the households
• Married couples without children make up 30%.
• Single parents comprise 8%.
• Nonfamily households make up 35% (single living alone or
unrelated adults of one or both sexes).
• Dual income household 62%.
• Only the husband works 28%, more man stay home
(fulltime dad).
• Number of working women has increased greatly.

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 Geographic Shifts in Population
• Moving from rural to metropolitan areas and
also migration toward suburban area (Increase of
telecommute – work at home or remote office).
• Population shifts interest marketers because
people in different region buy differently.

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 A Better‑Educated, More White‑Collar,
More Professional Population
• The population is becoming better educated.
• The rising number affects not just what people
buy but also how they buy.

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 Increasing Diversity

• The United States has become more of a “salad

bowl” in which various groups have mixed
together but have maintained their diversity by
retaining important ethnic and cultural
differences.
• Another attractive diversity segment is the one in
four US adults has a disability.
• Many major companies also target lesbian, gay,
bisexual, transgender, or queer (LGBTQ).

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 2. Economic Environment

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

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 Changes in consumer spending

• However, the free spending and high

expectations of those days were dashed by the
global economic crisis.
• However, consumers have now adopted a back-to-
basics sensibility in their lifestyles and spending
patterns.
• Value marketing – Marketers offer just the right
combination of product quality and good
service at a fair price.
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 3. Natural Environment
• The natural environment involves the natural
resources that are needed as inputs by
marketers or that are affected by marketing
activities.
• Trends in natural environment – Shortages of
raw materials; Increased pollution and
Increased government intervention.
• Companies are developing strategies and
practices that support environmental
sustainability.
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 4. Technological Environment

The technological environment includes

forces that create new technologies,
creating new product and market
opportunities.

The technological environment is the most

dramatic force now shaping our destiny.

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 The Technological Environment
• Technology has released such wonders as
antibiotics, robotic surgery, miniaturized
electronics, smartphones and the Internet.
• Digital Technology and IoT
• Radio-frequency identification (RFID) is technology
to track products through various points in the
distribution channel.

• Government agencies investigate and ban potentially

unsafe products.

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 5. The Political and Social
Environment

Increased legislation Social responsibility

and cause-related
marketing
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 The Political and Social Environment

• The political environment consists of laws,

government agencies and pressure groups that
influence or limit various organizations and
individuals in a given society.
• Governments develop public policy to guide
commerce – sets of laws and regulations that
limit business for the good of society as a
whole.

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 The Political and Social Environment

• Business also governed by social code and

rules of professional ethics.
• Socially responsible behavior - Companies
are encouraging their managers to “do the
right thing.” The boom in online, mobile, and
social media marketing has created a new set
of social and ethical issues.
• Cause-related marketing - Many companies
are now linking themselves to worthwhile
causes.
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 6. The Cultural Environment

The cultural environment is made up of

institutions and
other forces that
affect a society’s
basic values,
perceptions,
preferences and
behaviors.
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 The Cultural Environment
The persistence of cultural values
• 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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 C. Responding to the Marketing
Environment
• Many companies view the marketing
environment as an uncontrollable
element to which they must react and
adapt.
 Proactive: Attempting to influence and shape
them
 Passive: Accepting them as uncontrollable

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 Looking Ahead to Chapter 5
Understanding Consumer and Business

Buyer Behavior

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