Chapter 3

The Marketing
Environment
Chapter 3
Objectives
Know the environmental forces

that affect the company’s ability
to serve its customers.
Realize how changes in the
demographic and economic
environments affect marketing
decisions.
Objectives
Identify the major trends in the

firm’s natural and technological
environments.
Know the key changes in the
political & cultural environments.
Understand how companies can
react to the marketing
environment.
Volkswagen
c
“Millennial fever” set The new VW beetle

the stage to bring enjoyed cross-
back the VW Beetle generational appeal
VW’s investment: Earned many awards
$ 560 million VW’s Beetle now
Demand quickly accounts for over 25%
outstripped supply of company sales
Discussion: Is VW’s next nostalgia venture, the “flower-power”

Microbus, as likely to succeed?
Key Environments
Marketing Environment
▪ The actors and forces that
affect a firm’s ability to
build and maintain
successful relationships
with customers.
Key Environments
Aspects of the marketing

environment:
▪ Microenvironment:
❖ Actors close to the company
▪ Macroenvironment
❖ Larger societal forces
The Microenvironment
Departments within the company

impact marketing planning.
Suppliers help to create and deliver

customer value.
▪ Treat suppliers as partners.
Marketing intermediaries help to sell,

promote, and distribute goods.
▪ Intermediaries take
many forms.
❖ Resellers
❖ Physical
distribution firms
❖ Marketing services
agencies
❖ Financial
intermediaries
The Macroenvironment
Customer markets must be studied.

Market types
▪ Consumer
▪ Business
▪ Government
▪ Reseller
▪ International
Successful companies
provide better customer
value than the competition
▪ Size and industry position
help to determine the
competitive strategy.
Various publics must also

be considered.
▪ Government ▪ Local
▪ Media ▪ General
▪ Financial ▪ Internal
▪ Citizen Action Groups
Figure 3-1:
Actors in the
Microenvironment
Figure 3-2:
Major Macroenvironmental
Forces
Key Demographic Trends

▪ World population
growth
❖ Now 6.2 billion
❖ Projected to
reach 7.9 billion
by 2025

▪ Changing age structure
❖ The U.S. population consists
of seven generational groups.
• Baby boomers, Generation X
and Generation Y are key
groups.
❖ Distinct segments typically
exist within these generational
groups.
Born between 1946
Key and 1964
Generations Represent 28% of the
population; earn 50%
of personal income
Baby boomers Many mini-segments
exist within the
Generation X boomer group
Generation Y Entering peak earning
years as they mature
Lucrative market for
travel, entertainment,
housing and more
Discussion Question
The “graying of America”

refers to the fact that as baby
boomers get older, the
average age of the U.S.
population increases.
Today, baby boomers are a
great target for exotic travel.
Think ahead to 20 years in
the future. For what types of
products and services will
baby boomers represent a
prime target?
Born between 1965
Key and 1976
Generations First latchkey children
Maintain a cautious
economic outlook
Baby boomers
Share new cultural
Generation X concerns
Represent $125 billion
Generation Y in annual purchasing
power
Will be primary buyers
of most goods by 2010
Discussion Question
Generation X has been

described in the past as
“working to live” rather
than “living to work.”
Do you think that this
statement reflects
Generation X’s true
priorities in life?
Why or why not?
Born between 1977 and
Key 1994
Generations 72 million strong;
almost as large a group
as their baby boomer
Baby boomers parents
New products,
Generation X services, and media
cater to Generation Y
Generation Y Computer, Internet and
digitally saavy
Challenging target for
marketers
Figure 3-3:
Seven U.S. Generations

▪ Changing American
household
▪ Geographic population
shifts
▪ Better-educated, more
white-collar workforce
▪ Increasing Diversity
BusinessNow
Zoots Video Clip
Working women
value products and
services that are
convenient to use
or that save time.
Click the picture above to play video
The Economic Environment

▪ Affects consumer
purchasing power
and spending
patterns.
▪ U.S. consumers
now spend carefully
and desire greater
value.
The Economic Environment
▪ Two types
of national
economies:
❖ subsistence
❖ industrial
Key Economic Trends

▪ U.S. income distribution
is skewed.
❖ Upper class, middle class,
working class, underclass
❖ Rich: getting richer
Middle class: shrinking
Underclass: still poor
▪ Consumer spending
patterns are changing.
The Natural Environment

▪ Concern for the natural
environment has grown
steadily, increasing the
importance of these trends:
❖ Shortage of raw materials
❖ Increased pollution
❖ Increased governmental
intervention
Many companies use recycling to help

protect natural resources
Key Technological Trends

▪ The technological environment
is characterized by rapid
change.
▪ New technologies create new
opportunities and markets but
make old technologies obsolete.
▪ The U.S. leads the world in
research and development
spending.
The Political Environment

▪ Includes laws,
governmental
agencies, and
pressure groups
that impact
organizations and
individuals.
The Political Environment

▪ Key trends include:
❖ Increased legislation to protect
businesses as well as consumers.
❖ Changes in governmental agency
enforcement.
❖ Increased emphasis on ethical
behavior and social responsibility.
Cause-related marketing is one method

of demonstrating social responsibility
The Cultural Environment

▪ Is composed of institutions and
other forces that
affect a society’s
basic values,
perceptions,
preferences,
and behaviors.
The Cultural Environment

Core beliefs are Society’s cultural values
persistent are expressed through
▪ Passed from parents people’s views of:
to children; reinforced
by society ▪ Themselves
▪ Shape attitudes and ▪ Others
behavior ▪ Organizations
Secondary cultural ▪ Society
values change and ▪ Nature
shift more easily ▪ The Universe
Responding to the
Marketing Environment
Reactive:
Passive Acceptance and Adaptation
▪ Companies design strategies that avoid
threats and capitalize upon opportunities.
Proactive:
Environmental Management
▪ Use of lobbyists, PR, advertorials, lawsuits,
complaints, and contractual agreements to
influence environmental forces.

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The Marketing

Know the environmental forces

Identify the major trends in the

“Millennial fever” set The new VW beetle

Discussion: Is VW’s next nostalgia venture, the “flower-power”

Aspects of the marketing

Departments within the company

Suppliers help to create and deliver

Marketing intermediaries help to sell,

Customer markets must be studied.

Various publics must also

Key Demographic Trends

Key Demographic Trends

The “graying of America”

Generation X has been

Key Demographic Trends

Zoots Video Clip

The Economic Environment

The Economic Environment

Key Economic Trends

The Natural Environment

Many companies use recycling to help

Key Technological Trends

The Political Environment

The Political Environment

Cause-related marketing is one method

The Cultural Environment

The Cultural Environment

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