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The Marketing Environment
Chapter 5
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I nstructor name
Course name
School name
Date
Principles of Marketing, Sixth Canadian Edition
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Principles of Marketing, Sixth Canadian Edition
5.2
Learning Objectives
After studying this chapter, you should be able to:
Describe the environmental forces that affect the companys
ability to serve its customers
Explain how changes in the demographic and economic
environments affect marketing decisions
Identify the major trends in the
firms natural and technological
environments
Explain the key changes in the
political and cultural environments
Discuss how companies can react to
the marketing environment
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Principles of Marketing, Sixth Canadian Edition
5.3
The Marketing Environment
Marketing environment:
Factors and forces outside of marketings direct control
Affect managements ability to develop and maintain
Successful transactions with target customers
Microenviroment:
Forces close to the company
That affect its ability to serve
customers
Macroenvironment:
Larger, societal forces that affect the
organizations microenvironment
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Principles of Marketing, Sixth Canadian Edition
5.4
The Companys Microenvironment
The company:
Management, finance, research & development, purchasing,
manufacturing, accounting, and human resources
Suppliers
Marketing intermediaries:
Resellers
Physical distribution
firms
Marketing service
agencies
Financial
intermediaries
Figure 5.1
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Principles of Marketing, Sixth Canadian Edition
5.5
The Companys Microenvironment
Customers:
Consumer, business, reseller, government, and international
markets
Competitors
Publics:
Financial
Media
Government
Citizen-action groups
Local
General
Internal
Figure 5.1
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Principles of Marketing, Sixth Canadian Edition
5.6
The Companys Macroenvironment
Demographic environment:
Study of human population
Size, density, location, age, race, sex, occupation, and education
Trends of interest:
World population
growth
Increased diversity
Changing age
structure within
Canada
Changing households
Higher education
Geographic shifts
Figure 5.2
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Principles of Marketing, Sixth Canadian Edition
5.7
The Companys Macroenvironment
Economic environment:
Factors that affect consumer buying power and spending patterns
Trends of interest:
Changes in income, continued spending by consumers
Consumer debt levels
rising, savings down
Changing spending
patterns
Engels laws: amount
spent on various
categories changes as
income rises
Figure 5.2
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Principles of Marketing, Sixth Canadian Edition
5.8
The Companys Macroenvironment
Natural environment:
Growing shortages of raw materials
Increased pollution
Increased government intervention
Canadian federal law:
Environmental
Protection Act (1989)
Green movement
Focus on
environmental
sustainability
strategies
Figure 5.2
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Principles of Marketing, Sixth Canadian Edition
5.9
The Companys Macroenvironment
Technological environment:
New technology creates new markets and opportunities
Replaces existing products and services
Research and development activity drives this sector
Canadian spending on
R&D is low, ranked
15th in the world
Government programs
to encourage more
Government agencies
to regulate new
product safety
Figure 5.2
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Principles of Marketing, Sixth Canadian Edition
5.10
The Companys Macroenvironment
Political environment:
Laws, government agencies, and pressure groups
Influence and limit organizations and individuals within a society
Increasing legislation
Increased emphasis on
ethics and social
responsibility
Cause-related
marketing
Business legislation is
used to protect
consumers, businesses,
and the interests of
society
Figure 5.2
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Principles of Marketing, Sixth Canadian Edition
5.11
The Companys Macroenvironment
Cultural environment:
Institutions and other forces that influence
Societys basic values, perceptions, preferences, and behaviours
Core beliefs passed on through family, reinforced by institutions
Secondary beliefs are
more open to change
Peoples views of:
Themselves
Others
Organizations
Society
Nature
The universe

Figure 5.2
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Principles of Marketing, Sixth Canadian Edition
5.12
Responding to the Marketing Environment
Passive approach:
Companies react to uncontrollable factors within their
environments
Environmental management
perspective:
Proactive approach to influence and
affect forces within their environment
Use lobbyists to influence legislation
Media events, advertorials to shape
public opinion
Use contractual agreements and legal
action when necessary
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Principles of Marketing, Sixth Canadian Edition
5.13
In Conclusion
The learning objectives for this chapter were:
Describe the environmental forces that affect the companys
ability to serve its customers
Explain how changes in the demographic and economic
environments affect marketing decisions
Identify the major trends in the
firms natural and technological
environments
Explain the key changes in the
political and cultural environments
Discuss how companies can react to
the marketing environment