1. THE MARKETING ENVIRONMENT
OBJECTIVES
• Understand what makes up the “environment”
• How various forces have influence on the firm
• The definitions of micro and macro environments
• Factors that comprise micro environment
• Factors that comprise macro environment
• Why the environment needs to be monitored
BHO1171 - School of HTM - VU

2. THE MARKETING ENVIRONMENT
Decisions regarding the 4Ps of marketing cannot be made
in isolation from the changing environment.
• The business environment must be:
Examined and Monitored
on an ongoing basis.
• What are the factors the company needs to monitor?
BHO1171 - School of HTM - VU

3. The Operating Environment
• The marketing environment does not actually
form part of the marketing process, however the
environmental factors influence most aspects of
the marketing process
• Business firms are open systems, which means
that outside factors impact on business
operations
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4. Definition
• A Company's marketing environment consists of the
actors and forces that are external to the marketing
management function of the firm and that impinge on
the marketing managements' ability to develop and
maintain successful transactions with its target
customers. (Kotler).
• Marketing Environment = Opportunities and threats.
• Environment = Micro and Macro.
BHO1171 - School of HTM - VU

5. The Firm’s Environment
• The environment of a company consists of a large
range of factors and influences that may impact on its
ability to serve its customers and survive in the long
term.
• Factors outside the control of the firm
• Factors that are internal to the firm and on which the
firm can exercise full control directly
• Factors and influences on operations coming from
independent organisations which can be “managed” by
the marketing firm
BHO1171 - School of HTM - VU

6. The Firm’s Internal Resources
The firm’s micro environment includes:
• Production
• Financial capability
• Human resources
• Company’s location and image
• Research and Development capability
Important to have coordination between marketing
and these non-marketing resources
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7. Actors in Microenvironment- figure
3.1
Company
Marketing
Suppliers Inter- Customers
mediaries
Competitors
Publics
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8. Internal Environment- Figure 3.2
Marketing
Accounting Finance
Senior
Management
Manufacturing R & D
Purchasing
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9. Why are suppliers and buyers considered as
micro factors?
Suppliers
• Provide resources and raw materials to run the business. Can
impact on prices, costs, availability and quality
Buyers & Facilitating organisations
• Those that distribute the firm’s output, like wholesalers and
retailers (specialists in their field)
• Organisations that provide transportation, warehousing an other
support services like financing (publics)
To what extent are these controllable by a firm?
BHO1171 - School of HTM - VU

10. Why are competitors and consumers considered as
micro factors?
• Competitors: Other firms in the same line of business,
using the same or similar suppliers of raw materials,
channels of distribution, and trying to attract the same
customers. A firm’s activities may be constantly
affected by actions of direct competitors.
• Consumers: also have a constant impact on the
activities of the firm and what a firm does is greatly
influenced by its customers
BHO1171 - School of HTM - VU

11. Customers and Markets
• Insert Fig 3.3 - describes the various types of
markets
• Insert Fig 3.4 -describes the role of “Publics”
Eg Why are banks interested in how firm’s perform?
Why would the media be interested?
Why would the Government be interested (regulations)
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12. Types of Customer Markets
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13. Types of Publics
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14. Macro-environment
Macro-environment consists of larger forces that
influence the company's operations
• Social & Cultural forces
• Demographics
• Technology
• Economics
• Political
• Natural & Physical
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15. Major Forces in the organisation’s
Macro Environment
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16. MACRO-ENVIRONMENTAL FORCES
• Cannot be controlled
• External forces influence organisational plans.
• Often totally unpredictable.
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17. MACRO-ENVIRONMENTAL FORCES
CASE STUDY
1 S11 and airlines and tourism 2001
2 Arnotts Biscuits - 1996
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18. Demographic Environment
Growing
Ethnic Age
Diversity Structures
Education Key
Demographic
Trends
Changing
Family
Geographic Structure
Shifts
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19. DEMOGRAPHICS
Description of the population
• Age structure of population
• 37% of the population are aged 40-64
• Aging population
• Family Structure changing
• Increasing age of those marrying
• Delayed child bearing
• Increasing two income families
• Non-family households
• Geographic population shifts
• More education
• Jobs in the services sector
• Women in workforceBHO1171 - School of HTM - VU

20. • Students will need to understand why marketers need to study
the population(markets)
• What are the implications of the changing age structure of the
population?
• Explain who the baby boomers are…their changing needs &
wants
• What are the implications of
– changing household structure,
– ethnic diversity?
– Movement of population
BHO1171 - School of HTM - VU

21. Economic Environment
Economic Changes
Development in Income
Key
Economic
Concerns for
Marketers
Changes
in Consumer
Spending Patterns
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22. THE ECONOMIC ENVIRONMENT
• Inflation and interest rates
• Unemployment
• Economic Cycle
• Markets require purchasing power as well as people.
• Purchasing Power = f (income, prices, savings, credit
costs, etc.)
• It is often unclear what impact the economy will have
on a single industry. Good times do not necessarily
help all businesses.
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23. Natural Environment
Shortage of
Raw Materials
Key Areas
Government of Concern Energy
Intervention in the Natural Costs
Environment
Increased
Pollution
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24. THE NATURAL or PHYSICAL
ENVIRONMENT
• Marketers should be aware of the threats and opportunities with
four trends in the natural environment:-
(a) impending storage of raw materials
(b) the increased cost of energy
(c) the increased levels of pollution
(d) the government intervention in natural resource
management.
• Others to be aware of are:
– natural phenomena that affects their markets,
– greenhouse effect,
– solid waste problem (eg: McDonald's move away from
polystyrene packaging), - School of HTM - VU
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25. Technological Environment
Fast Pace of High R & D
Change Budgets
Issues in the
Technological
Environment
Focus on Minor Increased
Improvements Regulation
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26. THE TECHNOLOGICAL ENVIRONMENT
• Determines the type of products that can be made
available for the satisfaction of needs and wants.
• Technology fosters opportunities to:
• increase consumer satisfaction and
• gain competitive edge.
• Today we have many products not available a few years
ago:
• New developments - new markets but destroy existing
ones.
• Product development, prices, promotions, packaging
and distribution are all directly influenced by
technology. BHO1171 - School of HTM - VU

27. Political Environment
Legislation Enforcement
Key
Trends in the
Political
Environment
Greater
Concern for
Ethics
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28. THE POLITICAL ENVIRONMENT
(includes legal framework)
• Inequities develop when the economic and social
systems are left to their own devices. Government
intervenes and represents the wants and needs of
citizens and makes laws on their behalf.
• Government regulation has two purposes -
• (a) to protect companies from one another
• (b) to protect individuals and society at large
from unethical business practices.
• EG Food Safety legislation
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29. Shift in Secondary Cultural Values
Of
Oneself
Of Of
the Universe Others
People’s
Views
Of Of
Nature Organizations
Of
Society
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30. SOCIAL & CULTURAL ENVIRONMENT
• Beliefs, values, norms of behaviour
• Cultural patterns are changing faster
• Attitudes, perceptions and behaviour patterns
• Subcultures
Subcultures display different consumption behaviour:
ethnic groups
older generations
women
gay community
children
religious groups
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31. COLLECTING DATA ON YOUR OPERATING
ENVIRONMENT
• Many companies collect data on the environment as a
matter of course. Some areas of interest being
• resource availability
• recent and pending legislation
• what competitors are doing
• technological changes.
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32. STATE AND FEDERAL LEGISLATION THAT
AFFECT MARKETING
• FEDERAL LEGISLATION
• Trade Practices Act
• Broadcasting and Television Act
• Trade Descriptions Act
• Customs Act
• Insurance Act
• Conciliation and Arbitration Act
• STATE LEGISLATION
• Consumer Affairs Act
• Sale of Goods Act
• Hire Purchase Act
• Fair Prices Act
• Companies Code
• Motor Car Traders Act
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