The Global

Marketing Environment

Chapter Objectives

1. List the elements of the marketing organisation’s microenvironment and discuss their importance in the marketing process.

2. Explain the broad concept of the organisation’s macroenvironment.

3. Outline the key changes occurring in the organisation’s macroenvironment including shifts in the demographic, economic, technological, political, cultural and natural environments.

The Marketing Environment

• Micro-environment (internal)– The forces close to the company that directly affect its

ability to serve its customers.• The firm itself• Its marketing channel• Customer markets• Competitors and influential publics

• Macro-environment (external)– The broader societal forces that can influence the

whole microenvironment.– Demographic; cultural– Economic; natural– Political; technological

Figure 3.1 Main Players Organisation’s Micro-environment

The Marketing Organisation's Micro-environment

• The Marketing Organisation– Success will depend on how well information is shared

with the organisation’s inter-related groups (Fig. 3.2).

• Suppliers - those who provide the resources needed by the company.

• Marketing Intermediaries• Customers• Competitors • Publics - any group that has an interest in the firm.

Figure 3.2 An Organisation’s Internal Environment

The ‘marketing’ orientation

As we saw last week, a marketing firm can select from four basic philosophies when implementing its approach to the market.

Those organisations that aim to adopt the ‘marketing’ philosophy need to continually ‘think customer’, and work towards meeting and exceeding customer expectations

Suppliers

• Suppliers are an important link in the firm’s overall customer ‘value delivery system’. – Marketing managers must watch for:

• supply availability, including delays or shortages• labour strikes • price trends of supplies

• Each of the above events can have a direct effect on customer satisfaction in the long term.

• Rising supply costs may force price increases that can reduce the firm’s sales volumes/ profits.

Marketing Intermediaries

• Marketing Intermediaries help a firm to promote; sell; and distribute its goods to final buyers. These intermediaries include:

• Resellerswho help the firm find suitable customers and sell the products to them.

• Physical Distribution Firmswho help the firm to store goods, and move them from point of origin to end destination.

Cont’d

• Marketing Services Agenciesare the facilitating agencies: - marketing research companies; advertising agencies; media firms; export agencies; and marketing consulting firms that help the firm target/ promote its products to the right markets.

• Financial Intermediaries– include banks; credit organisations; insurance firms;

and other businesses that can help to finance transactions or insure against the risks associated with the buying and selling of commercial goods.

Customers• The marketing firm must closely study its

customer markets. The firm can operate in five types of customer markets: 1. Consumer markets2. Business markets3. Reseller markets4. Government markets5. International markets

Each one will have different characteristics

Figure 3.3 Types of Customer Markets

Competitors

• Every organisation faces a wide range of competitors. The ‘marketing’ concept states that, to be successful, a firm must provide

greater customer value and

satisfaction than its competitors. • No single competitive marketing strategy is

best for all organisations. Each firm should consider its own size and industry position compared to that of its competitors.

Publics

• The marketing environment also includes various publics.

A public is any group that has an actual or potential interest in, or influence on, a firm’s ability to achieve its objectives.Every organisation is, potentially, involved with seven types of publics.

Figure 3.4 Types of Publics

Cont’d

• Financial gain access to business funds• Media maintain positive publicity• Government must comply with regulations• Citizen consumer and minority groups• Local generate good community relations• General gain acceptance by general

public• Internal positive staff attitude/ motivation

Which of the following is not part of the organisation’s micro-environment?

A. economic

B. supplier

C. customer

D. competitor

E. marketing intermediary

The Marketing Organisation’s Macro-environment

• The organisation and its micro-environment operate in a larger macro-environment of forces that shape opportunities and pose threats to the organisation. Firms must carefully watch and respond to these forces.

• The macro-environment consists of 6 forces.

Figure 3.5 Main Forces in the Organisation’s Macro-environment

Macro-environment (Cont’d)

• 1. Demographic Environment– Changing age distribution of population (increases and

decreases in the different age groups); changing types of households; geographic shifts in population; better educated, increased white-collar population; increased ethnic diversity.

• 2. Economic Environment– Greater economic development; increase in disposable

income; changes in consumer spending patterns.

• 3. Natural Environment– Climate change; shortage of raw materials; increased cost

of energy; increased pollution; government intervention.

Figure 3.6 Projected Australian Population Growth 2001-2101

Macro-environment (Cont’d)

• 4. Technological Environment– Forces that affect new technologies, creating new

product and market opportunities; rapid change; high R & D costs.

• 5. Political Environment– Laws; government agencies; and pressure groups

that influence and restrict firms and individuals.

– Legislation to Regulate Business• ACCC; Trade Practices Act; Government regulatory

agencies; increased emphasis on business ethics and socially responsible actions.

6. Cultural Environment

• Cultural environment is made up of institutions and other forces that affect society’s basic values; perceptions; preferences; behaviours.

• People grow up in a particular society that shapes their basic beliefs and values. As a result, they adopt a view that defines their relationships to themselves and others.

• Cultural characteristics can directly affect behaviour and, therefore, buying decisions.

Cont’d

• Persistence of cultural values– People hold beliefs and values which are

either core or secondary.

• Core beliefs and values are passed on from parents and are reinforced by society. They tend to be consistent over time.

• Secondary values are not as fixed, and are more open to change.

Shifts in Secondary Cultural Values

• Cultural shifts do take place– e.g. the influence of popular music; influence

of movie personalities on fashion etc.

• The main cultural values of a society are expressed in people’s view of themselves; of others; and of organisations; society; nature; and the universe.

The popularity of professional wrestling, body piercing, and the Beanie Baby collecting mania are all

facets of the __________ environment.

A. technological

B. demographics

C. political-legal

D. cultural

E. economic

Cultural Values

• People’s view of themselves

– The “ME” society?

• People’s view of others

– The “WE” society?

• People’s view of organisations

– Organisations need to find new ways to win consumer confidence. They need to review their activities and ensure they are viewed as “good corporate citizens”.

Cultural Values

• People’s view of society– Patriots; reformers; and malcontents.

• People’s view of nature

– Attitudes to nature affect product development e.g. ecotourism.

• People’s view of the universe– Variations in beliefs about the origin of the

universe; religious beliefs.

Which of the following a not an example of demographic change?

A. aging population

B. decreasing household size

C. increased demand for a convenience based lifestyle

D. growing regional centres

E. higher education levels attained

Responding to the Marketing Environment

• Many companies view the marketing environment as an uncontrollable element to which they must adapt.

• Other companies take an environmental management perspective.

• Marketing management cannot always affect environmental forces but, wherever possible, they should be proactive rather than reactive when dealing with them.