Topic 2 - Marketing Environment

Prepared By :
Ms Hafizah Binti Hussin, Sir Mohd Razali Bin Hasam

Topic 2
MARKETING
ENVIRONMENT

MARKETING ENVIRONMENT

 DEFINITION :
• The factors and forces that affect a firm’s ability to build and
maintain successful relationships with targets customers.
• The marketing environment offers both opportunities and threats.

 Includes:
(a) MICRO-ENVIRONMENT
– Factors/ forces close to the company which it has some control
of the organization

(b) MACRO-ENVIRONMENT
– Larger societal forces that affect the micro environment.
– Considered to be beyond the control of the organization.

MARKETING ENVIRONMENT

MICRO-
ENVIRONMENT

Demographic

Company

Cultural Economic

Publics Suppliers

Company

Political Competitors Customers
Natural

Intermediaries

Technological

The Company’s Micro-environment
Factors/ forces close to the company which it has some
control of the organization

MICROENVIRONMENT

1. Company

 Top management is responsible for the vision, mission, objectives,
strategies and policies

 To achieve the task of the marketing, Marketing managers MUST WORK
CLOSELY with other departments. Other departments have an impact on
the marketing department’s plan and actions.

 Finance department  is concerned with finding and using funds to
carry out the marketing plan

 R&D department  focuses on designing safe and attractive products
 Purchasing department  getting supplies and buys the appropriate

materials
 Production department  manufactures the goods according to the

market requirements
 Accounting department  has to maintain accounts of all the events in

the business.

MICROENVIRONMENT

2. Suppliers

 Suppliers are the businesses and individuals who provide raw materials to a
company to be converted into finished goods

 Suppliers must supply:
a) quality products and services
b) on-time delivery
c) supply shortages or delays
d) competitive prices
e) ethical corporate behavior
f) performance history
g) geographic location

 The cost of the products of the company largely depends on the cost at which the
raw materials are supplied to the company.

 Therefore, suppliers exert a very strong influence on the company and its marketing.

MICROENVIRONMENT

3. Marketing Intermediaries

 Firms that help the company to promote, sell and distribute its goods to final
buyers

 They include :
 Resellers - help the company find customers or make sales
 Transport organizations- enable the physical distribution of the goods
 Marketing service agencies – eg ; marketing research firms and
marketing consulting firms - help the company target and promote its
products to the right market
 Financial intermediaries - include banks, credit companies and other
businesses - help finance transactions or insure against the risks
associated with the buying and selling of goods.

MICROENVIRONMENT

4. Customers

 Customers are the people who buy the products.

If customers do not buy the products of a company,
there is no way any company can survive

5 types of customer markets :

Consumer markets Consist of individuals and households that buy goods and
services for personal consumption

Business markets Buy goods and services for further processing or for use in their
Reseller markets production process

Buy goods and services to resell at a profit

Government Are made up of government agencies that buy goods and
markets services in order to produce public services or transfer the
goods and services to others who need them
International
markets Consist of these buyers in other countries, including consumers,
producers, resellers and governments.

MICROENVIRONMENT

5. Competitors

 Competitors are other companies that are competing with company for the
same consumers with the intention of fulfilling the same needs & wants

 The company must :
 provide greater customer value and satisfaction than competitors do.
 differentiate company’s products and offerings from those of competitors
 understand competitor’s strengths

 Marketers must be as concerned with how their competitors can affect the
organization

MICROENVIRONMENT

6. Publics

 Any group that has an actual or potential interest in or impact an
organization’s ability to achieve its objectives

 7 types of publics
i. Financial public
ii. Media public
iii. Government public
iv. Citizen action public
v. Local public
vi. Internal public
vii. General public

7 Types of Publics

Financial  Influence the company’s ability to obtain funds.
publics  Banks, investment houses and stock holders are the

Media publics major financial publics

 Carry news, features and editorial opinions
 They include newspapers, magazines, radio and

television stations

Government  Management must take government developments
publics into account.

 Marketers must often consult the company’s lawyers
in issues of product safety, truth in advertising and
other matters

7 Types of Publics

Citizen-action  A company’s marketing decisions maybe questioned by consumer
publics organizations, environmental groups, minority groups, and others.

Local publics  Its public relations department can help it stay in touch with the
customer and citizen groups
General publics
 Include neighborhood residents and community organizations.
Internal publics  Large companies usually appoint a community relations officer to

deal with the community, attend meetings, answer questions and
contribute to worthwhile causes

 A company needs to be concerned about the general public’s
attitude toward its products and activities.

 The public’s image of the company affects its buying

 Include workers, managers, volunteers and the board of directors.
 Large companies use newsletters and other means to inform and

motivate their internal publics.
 When the employee feel good about their company, this positive

attitude spills over to external publics

The Company’s Macro environment

Demographic

Company

Cultural Publics Suppliers Economic
Political Natural
Company

Customers

Competitors

Intermediaries

Technological MACRO-
ENVIRONMENT

• Larger societal forces that affect the macro environment.
• Considered to be beyond the control of the organization.

MACROENVIRONMENT

1. Demographic

 Demograhic is the study of human populations in terms of size, education,
location, age, sex, race, occupation , religion and other statistics.

 The demographic environment is of major interest to marketers because it
involves people, and people make up markets

 Marketers will depend on demographic factors to improve the product
market and will also influence buying behavior

MACROENVIRONMENT

2. Economic

 Consists of factors that affect the consumer purchasing power and
spending patterns

 The purchasing power enables them to buy goods and services.
 Total purchasing power depends on current income levels, prices, saving

and debts
 Marketers should monitor change in :

a) consumer income
b) consumer spending patterns
 Understanding of the economic factors will enable a company to frame
pragmatic policies in terms of pricing, advertisement budgets, quantity of
goods to be manufactured etc.

MACROENVIRONMENT

3. Natural

 The natural resources that are needed as
inputs by marketers or that are affected by
marketing activities.

 Natural resources include raw materials, air
and water supply, mineral extracts, forests and
etc

 Factors like environmental pollution,
weakening ozone layer, dwindling forests,
shrinking water bodies, deficient power supply
etc. have a very negative impact on firms’
production and marketing process.

MACROENVIRONMENT

4. Technological

 Marketers use technology to improve the quality of products & services.

 Marketers need to understand the changing technological environment
and the way that new technologies can serve human needs

 Eg: In the past, TV and radio were used to deliver information but now
the internet has been used for that purpose.

 Therefore, companies must always monitor the technological
development today to ensure that they are not left behind by their
competitors.

MACROENVIRONMENT

5. Political

 Consists of laws, regulations and social pressure affecting the marketers.
 Laws and regulations cover many areas relevant to marketers including

packaging, pricing, advertising and sales.
 These laws also keep changing from time to time.
 The reason for such rules is to protect the competition among companies as

well as defending customers from unruly business activities.
 Marketing managers need to know the relevant laws affecting business and

also need to be aware of the policies toward enforcement of those laws.

MACROENVIRONMENT

6. Cultural

 Culture is defined as institutions and other forces that
affect society’s basic values, perceptions, preferences and behaviors.

 It includes codes of manner, dress, language, religion, rituals, norms of
behavior & systems of belief.

 People grow up in a particular society that shapes their basic beliefs and
values.

 Cultural values affect marketing in several ways. Eg: In Malaysia, the majority
of the population is Muslim, so food producers need to ensure that the food
prepared is halal.

 A company has to understand these cultural factors before
designing products or marketing policies.