Week 2 Learning Material: Key Concepts

Week 2 Learning Material
Key Concepts
 Reading: Principles of Marketing 17th Edition: Chapter 3 Analyzing the Marketing
Environment, Page 90
THE COMPANY’S MICROENVIRONMENT
Marketing management’s job is to build relationships with customers by creating customer

value and satisfaction.
The Company
All the interrelated groups form the internal environment. All groups should work in harmony
to provide superior customer value and relationships.
Suppliers
Suppliers provide the resources needed by the company to produce its goods and services.
Marketing managers must watch supply availability—supply shortages or delays, labor

strikes, and other events can cost sales in the short run and damage customer satisfaction in
the long run.
Marketing managers monitor the price trends of their key inputs.
Marketing Intermediaries
help the company to promote, sell, and distribute its products to final
Marketing intermediaries
buyers.
 Resellers are distribution channel firms that help the company find customers or make
sales to them. These include wholesalers and retailers.
 Physical distribution firms help the company to stock and move goods from their
points of origin to their destinations.
 Marketing services agencies are the marketing research firms, advertising agencies,
media firms, and marketing consulting firms that help the company target and
promote its products to the right markets.
 Financial intermediaries include banks, credit companies, insurance companies, and

other businesses that help finance transactions or insure against the risks associated
with the buying and selling of goods.
Marketers recognize the importance of working with their intermediaries as partners rather
than simply as channels through which they sell their products.
Competitors
Marketers must gain strategic advantage by positioning their offerings strongly against
competitors’ offerings in the minds of consumers.
No single competitive marketing strategy is best for all companies.
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.
 Financial publics influence the company’s ability to obtain funds.

 Media publics carry news, features, and editorial opinion.
 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.
 Local publics include neighborhood residents and community organizations.
 General public. The general public’s image of the company affects its buying.
 Internal publics include workers, managers, volunteers, and the board of directors.
Customers
Five types of customer markets. The company may target any or all of these five markets.
1. Consumer markets: individuals and households that buy goods and services for
personal consumption.
2. Business markets: buy goods and services for further processing or for use in their
production process.
3. Reseller markets: buy goods and services to resell at a profit.
4. Government markets: made up of government agencies that buy goods and services to
produce public services.
5. International markets: buyers in other countries, including consumers, producers,
resellers, and governments.
THE COMPANY’S MACROENVIRONMENT
Demographic Environment
Demographyis the study of human populations in terms of size, density, location, age, gender,
race, occupation, and other statistics.
Changes in the world demographic environment have major implications for business.
Thus, marketers keep close track of demographic trends and developments in their markets,
both at home and abroad.
Cultural Environment
The cultural environment is made up of institutions and other forces that affect a society’s basic
values, perceptions, preferences, and behaviors.
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.
Shifts in Secondary Cultural Values
Marketers want to predict cultural shifts in order to spot new opportunities or threats.
People’s Views of Themselves. People vary in their emphasis on serving themselves versus
serving others.
The Yankelovich Monitor identifies consumer segments whose purchases are motivated by
self-views. Two examples:
 Do-It-Yourselfers—Recent Movers.
 Adventurers.
People’s Views of Others. Shifts in people’s attitudes toward others has been noted.
Trend trackers see a new wave of “cocooning.”
People’s Views of Organizations. People are willing to work for major organizations and
expect them to carry out society’s work.
Many people see work as a required chore to earn money to enjoy their nonwork hours.
People’s Views of Society. People vary in their attitudes toward their society.
People’s Views of Nature. Recently, people have recognized that nature is finite and fragile,
that it can be destroyed by human activities.
This renewed love of things natural has created a 41-million-person “lifestyles of health and
sustainability” (LOHAS) market.
The U.S. organic-food market generated $17.8 billion in sales last year, a 20 percent increase
over the prior year.
People’s Views of the Universe. Religious conviction and practice have been dropping off
gradually through the years
Political and Social Environment
Legislation Regulating Business
Governments develop public policy to guide commerce.
Increasing Legislation. Legislation affecting business around the world has increased
steadily over the years.
Business legislation has been enacted for a number of reasons.
1. To protect companies from each other.

2. To protect consumers from unfair business practices.
3. To protect the interests of society against unrestrained business behavior.
Changing Government Agency Enforcement. Because government agencies have

discretion in enforcing laws, they can have an impact on a company’s marketing
performance.
Increased Emphasis on Ethics and Socially Responsible Actions
Socially Responsible Behavior. Enlightened companies encourage their managers to “do the
right thing.”
The boom in Internet marketing has created a new set of social and ethical issues.
Cause-Related Marketing. Many companies are now linking themselves to worthwhile
causes.
Cause-related marketing has stirred some controversy.

RESPONDING TO THE MARKETING ENVIRONMENT
Many companies think the marketing environment is an uncontrollable element to which they
have to adapt.
Other companies take an environmental management perspective to affect the publics and
forces in their environment.
Marketing managers should take a proactive rather than reactive approach to the marketing
environment.

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Week 2 Learning Material

THE COMPANY’S MICROENVIRONMENT

Marketing management’s job is to build relationships with customers by creating customer

Marketing managers must watch supply availability—supply shortages or delays, labor

Marketing managers monitor the price trends of their key inputs.

 Financial intermediaries include banks, credit companies, insurance companies, and

No single competitive marketing strategy is best for all companies.

 Financial publics influence the company’s ability to obtain funds.

Persistence of Cultural Values

Secondary beliefs and values are more open to change.

Shifts in Secondary Cultural Values

Trend trackers see a new wave of “cocooning.”

Political and Social Environment

Legislation Regulating Business

Governments develop public policy to guide commerce.

Business legislation has been enacted for a number of reasons.

1. To protect companies from each other.

Changing Government Agency Enforcement. Because government agencies have

Increased Emphasis on Ethics and Socially Responsible Actions

Cause-related marketing has stirred some controversy.

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