Chapter 3

Analyzing The Marketing Environment

Principles of Marketing _ Lai Vinh Phuc, MBA

 Learning Outcomes
• Describe the environmental forces that affect the company’s ability to
serve its customers.
• Explain how changes in the demographic and economic environments
affect marketing decisions.
• Identify the main trends in the firm’s natural and technological
environments.
• Explain the key changes in the political and cultural environments.
• Discuss how companies can react to the marketing environment.

Principles of Marketing _ Lai Vinh Phuc, MBA

 Content:
I. Marketing Environment Definition
II. Microenvironment
III. Macroenvironment
IV. PESTLE Analysis
V. Responding to the Marketing Environment

Principles of Marketing _ Lai Vinh Phuc, MBA

I. Marketing Environment Definition
• Marketing Environment: consists of inside actors and forces outside
marketing that affect marketing management’s ability to build and
maintain successful relationships with target customer.
• Microenvironment: Actors close to the company affect the ability to
serve the customers.
• Macroenvironment: Larger forces affects the microenvironment.

Principles of Marketing _ Lai Vinh Phuc, MBA

 Figure 1: Marketing Environment of a Company
Principles of Marketing _ Lai Vinh Phuc, MBA
II. Microenvironment

Figure 2: Actors in Microenvironment

Principles of Marketing _ Lai Vinh Phuc, MBA

II. Microenvironment
1. The Company:
- Top Management: set mission, objectives, policies & strategies
- Finance & Accounting
- R&D Group
- Purchasing
- Operation
- Human Resources
=> All departments form internal environment

Principles of Marketing _ Lai Vinh Phuc, MBA

II. Microenvironment
2. Supplier:
• Important link in company’s overall customer value delivery network
• Creating value for company by: providing sufficient raw materials, goods
with suitable cost.
• As a partner: maintain good relationship for long run.
• Question: Which company or cooperation has many suppliers?

Principles of Marketing _ Lai Vinh Phuc, MBA

II. Microenvironment
3. Marketing Intermediaries:
a. Reseller:
- Distribution firm helps company find and sell to customers.
- Including: wholesaler and retailer
b. Physical Distribution firm:
- Help company to stock and move goods
c. Marketing Service Agencies:
- Doing research, advertising, media and consulting
d. Financial Intermediaries:
- Financial transactions & insure against risks
- Eg: Bank and insurance company
Principles of Marketing _ Lai Vinh Phuc, MBA
 Figure 3: Wholesaler vs Retailer

Principles of Marketing _ Lai Vinh Phuc, MBA

II. Microenvironment
4. Competitors:
- Existing in the same market with their positionings
- Company should gain strategic advantage to improve positioning
against competitors
- How to identify a competitor in the market?
- Eg: Competitors of The Coffee House?

Principles of Marketing _ Lai Vinh Phuc, MBA

II. Microenvironment
Financial
Media
5. Public: public

• The group that has an actual

or potential interest in or Internal Government
impact on an organization's public
Publics
Publics
ability to achieve its
objective.
Citizens’
General
action
public
groups
Local public

Principles of Marketing _ Lai Vinh Phuc, MBA

II. Microenvironment
6. Customers:

Consumer
Consumermarkets
markets

Business
Businessmarkets
markets

Reseller
Resellermarkets
markets Company
CompanyValue
Value

Government
Governmentmarkets
markets

International
Internationalmarkets
markets

Principles of Marketing _ Lai Vinh Phuc, MBA

 Discussion Question
Considering Pacific Airline joining the market. How would each
microenvironment factors impact on the company’s value creation?

Principles of Marketing _ Lai Vinh Phuc, MBA

III. Macroenvironment

Figure 4: Forces in Macroenvironment

Principles of Marketing _ Lai Vinh Phuc, MBA

III. Macroenvironment
1. Demographic Environment
• The study of human populations in terms of size, density, location, age,
gender, occupation, etc.
• Generation Structure: Baby Boomer, Gen X, Gen Y, Gen Z.
• Family Structure: Traditional Family -> Modern Family
• Geographic Shifting: Country -> City => Changing Density
• Education: High educated population

https://www.youtube.com/watch?v=TtIojDWOsgg

Principles of Marketing _ Lai Vinh Phuc, MBA

 Discussion Question
Do marketers need to develop separate products or marketing
programs for each of different generation?

ANSWER:
• Keeping marketing effort diverse (Eg: Toyota)
• “Don’t play with all favourites”
• Market with all your respect (message)

Principles of Marketing _ Lai Vinh Phuc, MBA

 1. Demographic Environment
• Changing family size:
- Rise of single parent family or no children family
- Modern family: less household size
- “Breadwinner can be women”

Principles of Marketing _ Lai Vinh Phuc, MBA

 2. Economic Environment
• Economic factors that affect consumer purchasing power and spending
patterns.
• Purchasing power is based on income and income distribution
• Eg: High income customer <-> high qualified products with fair price
Low income customer <-> affordable products

Principles of Marketing _ Lai Vinh Phuc, MBA

 3. Natural Environment
• Natural Environment involves the natural resources that are necessary
for marketers to input or affected by marketing activities.
• Environmental Issues:
- Shortages of raw materials (coal, oil)
- Pollution (Chemical, nuclear waste)
- Government intervention (budget for environmental protection)
- Natural Disaster
ÞEnvironmental sustainability: strategies and practices that support the
planet using infinite energy resources.
• Eg: Any sustainable energy resources?

Principles of Marketing _ Lai Vinh Phuc, MBA

3. Natural Environment

Principles of Marketing _ Lai Vinh Phuc, MBA

 4. Technological Environment
• Forces that create new technologies, create new product and market
opportunities => shaping future of the market

Principles of Marketing _ Lai Vinh Phuc, MBA

 Discussion Question
Give examples of how new technologies have influenced on what
we purchase, how we pay and how we shop?

ANSWER:

Principles of Marketing _ Lai Vinh Phuc, MBA

 5. Political and Social Environment
• The political environment consists of laws, government agencies and
pressure groups that influence or limit various organizations and individuals
in a given society.
• Legislation regulating business:
- Function: Protect companies, consumers and interests of society
- Issues: Increasing legislation & changing government agency
enforcement
• Emphasis on Ethics and Socially responsible actions:
- Encouraging social responsibility
- Cause-related marketing

Principles of Marketing _ Lai Vinh Phuc, MBA

 Discussion Question
What is the consequences of increasing legislation, changing
government agency enforcement, influencers’ ethics on social
responsibility and cause-related marketing?
ANSWER:
• Increasing legislation: electricity and meat price
• Changing government agency enforcement:
• Ethics: Privacy violence
• Cause-related marketing: “No one checks”

Principles of Marketing _ Lai Vinh Phuc, MBA

 Figure 5: Cause-related Marketing
Principles of Marketing _ Lai Vinh Phuc, MBA
 6. 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 culture:
- Core beliefs and values: resistant to change
- Secondary beliefs & values: open to change attitudes toward
=> According to people’s views of Themselves Nature

Others Society

Organisations Universe

Principles of Marketing _ Lai Vinh Phuc, MBA

IV. PESTLE Analysis
• Framework uses to exploit the macroenvironment of a company

Figure 6: PESTLE Analysis

Principles of Marketing _ Lai Vinh Phuc, MBA
V. Responding to Marketing Environment
Reactive
Reactive approach
approach
Assumptions:
Assumptions: The
The environment
environment is
is largely
largely uncontrollable.
uncontrollable.
Strategies:
Strategies: Research,
Research, understand,
understand, react
react and
and adapt.
adapt.

Proactive
Proactive approach
approach
Assumptions:
Assumptions: The The environment
environment is is partially
partially controllable.
controllable.
Strategies:
Strategies:
•• Hire
Hire lobbyists
lobbyists to
to influence
influence legislation
legislation affecting
affecting their
their industries.
industries.
•• Stage
Stage media
media events
events to to gain
gain favourable
favourable press
press coverage/run
coverage/run advertorials
advertorials to
to
shape
shape public
public opinion.
opinion.
•• Instigate
Instigate legal
legal actions
actions and
and regulatory
regulatory complaints
complaints toto keep
keep competitors
competitors in
in line.
line.
•• Form
Form contractual
contractual agreements
agreements to to better
better control
control distribution
distribution channels.
channels.

Principles of Marketing _ Lai Vinh Phuc, MBA

 Recap:
 Microenvironment
 Macroenvironment

Principles of Marketing _ Lai Vinh Phuc, MBA

 Next Week
Chapter 4: Managing Marketing Information to gain Customer Insights

Principles of Marketing _ Lai Vinh Phuc, MBA