Chapter 3: The marketing environment

The marketing environment consists of the actors and forces outside marketing that affect
marketing managements ability to build and maintain successful relationships with target customers. It
consists both of the micro and macro environment.

The microenvironment

The microenvironment consists of the actors close to the company that affect its ability to serve its
customers, such as: the company itself and its subdivisions and suppliers that provide the resources the
firm needs to produce its products.
But also of marketing intermediaries, which are firms that help the company to promote, sell and
distribute its goods to final buyers. Resellers are distribution channel firms. Physical distribution firms help
the company stock goods, while marketing service agencies are marketing research firms. Financial
intermediaries include banks and credit companies.
Other factors are competitors that operate in the same markets as the firm.
The public: any group that has an actual or potential interest in or impact on an organisations ability to
achieve its objectives. These can be:
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Financial publics. This group influences the companys ability to obtain funds. Banks, investment
analysts, and stockholders are the major financial publics.
Media publics. This group carries news, features, and editorial opinion. It includes newspapers,
magazines, television stations, and blogs and other Internet media.
Government publics. Management must take government developments into account. Marketers must
often consult the companys lawyers on issues of product safety, truth in advertising, and other
matters.
Citizen-action publics. A companys marketing decisions may be questioned by consumer
organizations, environmental groups, minority groups, and others. Its public relations department can
help it stay in touch with consumer and citizen groups.
Local publics. This group includes neighborhood residents and community organizations. Large
companies usually create departments and programs that deal with local community issues and
provide community support.
General public. A company needs to be concerned about the general publics attitude toward its
products and activities. The publics image of the company affects its buying.

Internal publics. This group includes workers, managers, volunteers, and the board of directors. Large
companies use newsletters and other means to inform and motivate their internal publics. When
employees feel good about the companies they work for, this positive attitude spills over to the
external publics.

Finally, customers are the most important actors.

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Consumers markets consist of individuals that buy goods for personal consumption.

Business markets buy goods for usage in production processes

Reseller markets buy to resell at a profit.

Government markets consist of buyers who use the product for public service.

International markets consist of these buyers in other countries, including consumers, producers,
resellers, and governments.

The macroenvironment

The macroenvironment consists of the larger societal forces that affect the microenvironment and
consists of multiple factors.
Demography: the study of human populations in terms of size, density, location, age, gender, face,
occupational and other statistics. Changes in demographics result in changes in markets. There are some
important demographic trends in todays world, such as the world population growth and the changing age
structure of the world population, where some parts of the world are aging and others have younger
populations.
In the developed world, there are often generational differences to be found. Baby boomers are the
78 million people born during the years following the Second World War and lasting until 1964 (from 19461964). Generation X are the 45 million people born between 1965 and 1976 in the birth death following
the baby boom. Generation Y or the Millennials or the Echo boomers are the 83 million children of the
baby boomers born between 1977 and 2000. They are characterized by a high comfort in technology.
Changes can also be found in the family structure. The traditional western household (husband, wife
and children) is no longer typical. People marry later and divorce more. There is an increased number of

working women and youngsters tend to stay at home longer. The workforce is also aging, because people
need to work beyond the previous retirement age. There are also geographic shifts, such as migration. These
movements in population lead to opportunities for marketing niche products and services. There are also
migration movements within countries, namely from the rural to urban areas, also called urbanisation.
The economic environment consists of economic factors that affect consumer purchasing power and
spending patterns. Countries vary in characteristics, some can be considered industrial economies, while
others can be subsistence economies, consuming most of their own output. In between are developing
economies that offer marketing opportunities. The BRIC (Brazil, Russia, India, China) countries are a leading
group of fast expanding nations.
There are also changes in customer spending patterns, such as the recent recessions, which can lead
to lifestyle changes. Marketers should also pay attention to income distribution and income levels.
The natural environment involves natural resources that are needed as inputs by marketers or that
are affected by marketing activities. Changes in this environment involve an increase in shortage of raw
materials, increased pollution and increased governmental intervention. Environmental
sustainability involves developing strategies and practices that create a world economy that the planet can
support indefinitely.
The technological environment consists of forces that create new technologies, creating new
product and market opportunities. It can provide great opportunities, but also comes with certain dangers.
The political environment consists of laws, government agencies and pressure groups that influence
and limit various organisation and individuals in a given society. Current trends in our world today are
increasing legislation affecting businesses globally and thus an increase in governmental influence over
businesses. There is also an increase in emphasis on ethics and operating socially responsible. Cause-related
marketing refers to companies linking themselves to meaningful causes, to improve company image.
The cultural environment involves instructions and other forces that affect societys basic values,
perceptions, preference and behaviour. Cultural factors influence how people think and consume. Core
beliefs are fundamental and passed on by parents and reinforced by the environment. Secondary beliefs are
more open to change. People can vary in their views of themselves, of others, of organisation, but also in
their views of society, nature and the universe.
In conclusion, firms should be pro-active rather than observing in respect to the marketing
environment.