Chapter 4: The Marketing Environment

The Micro- and Macro-Environments

1. The micro-environment consists of factors close to the company that affect
its ability to serve its customers, the company itself, marketing channel firms,
customer markets, and a broad range of publics.
2.
1

Figure 4-1
Major actors in
the companys
microenvironment.

3. Marketers must do more than adapt to the needs of target customers. They
must also adapt to the strategies of other companies serving the same target
markets.
4. Companies can gain strategic advantage by strongly positioning their product
in the minds of consumers.
5. Each firm must consider its size and industry position in relation to that of its
competitors in order to implement a competitive marketing strategy.
6. Large firms with dominant positions in an industry can use strategies that
smaller companies cannot afford.
7. Small and individually owned companies do not have to worry about
standardizing their products. This allows them to adapt quickly to local trends
and offer more variety.
8. In general a company has three variables to monitor when analyzing each of
its competitors: share of market, share of mind, and share of heart.
9. In addition to having behavioral loyalty, a truly loyal customer exhibits
attitudinal loyalty and is more likely to make favorable recommendations.

10.Spurious loyal customers are frequent visitors but are not emotionally
attached.
11. The four levels of competition: Budget, General, Product Category, and
Product Form.
12.Suppliers are firms and individuals that provide the resources needed by the
company to produce its goods and services.
13.When outsourcing food and beverage operations, a partnering deal creates
more commitment on the chefs part because they share directly in the
profits of the company.
14.Marketing intermediaries help the company promote, sell, and distribute its
goods to the final buyers. They include travel agents, wholesale tour
operators, and hotel representatives.
15.Hotels may create disintermediation by using Internet reservations systems,
making them less dependent on travel agents.
16.Marketing services agencies are suppliers that help the firm implement its
marketing strategy and tactics. Their capabilities include Public Relations,
advertising, and direct mail housing.
17.Consumer markets consist of individuals and households that purchase
hospitality services for leisure activities, medical needs, and gatherings.
18.The companys marketing environment should include various publics. These
groups have an actual or potential interest in or impact on an organizations
ability to achieve its objectives.
19. The macro-environment consists of the larger societal forces that affect the
entire microenvironment, that is, demographic, economic, natural,
technological, political, competitor, and cultural forces.

20.

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2
4

Figure 4-3 Major forces in the companys macroenvironment.

21.Low barriers to entry characterize the restaurant business. This makes it hard
to predict future competition because many individuals have the means to
become immediate competitors.
22.It takes a relatively small amount of capital to get started in the restaurant
business.
23.Hotels have high barriers to entry. This is due to costs of building a hotel and
scarcity of good locations.
24.At a period when existing hotels are struggling to fill their rooms, it is
common to have competitors enter the market. This is because most hotels
are planned during upswings in the business cycle.
25.Demography is the study of human populations in terms of size, density,
location, age, gender, race, and occupation.
26.Baby boomers look for value and research in their vacations. This is one of
the reasons why all-inclusive vacations are popular among them.
27.After the baby boomers came a generation lacking distinguishable
characteristics. Known as Generation X or Baby Busters, they grew up during
the recession and corporate downsizing.
28.Because more people are divorcing, separating, choosing not to marry,
marrying later, and marrying without intending to have children, marketers

are increasingly adapting to the needs of nontraditional households.

29.A farming environment is said to have a subsistence economy. The population
consumes most of its own industrial and agricultural products.
30.Industrial economies constitute rich markets for many different kinds of
goods. This type of economy has greater market opportunities.
31.The US is experiencing the age of the squeezed consumer. Along with
rising incomes have come increased financial burdens.
32.Environmental trends that marketers must be aware of are shortages of raw
materials, increasing pollution, and increased government intervention in
natural resource management.
33.Government regulation and enforcement in business practices is likely to
increase in the future. Business executives should take into consideration
major laws protecting competition, consumers, and society when planning
products and marketing programs.
34.Each society contains subcultures, groups of people with shared value
systems based on common life experiences or situations. These groups have
specific wants and buying behavior that allow marketers to choose them as
target markets.
35.Believing in marriage is a core belief, while believing that people should get
married early is a secondary belief. Marketers have some chance of changing
secondary values but little chance of changing core values.
Responding to the Market Environment
36.Many companies view the marketing environment as an uncontrollable
element to which they must adapt.
37.Rather than watching and reacting, some firms take aggressive action to
affect the publics and forces in their marketing environment. This is an
example of the environmental management perspective.
38.By communicating the possible effects of legislation on the industry and the
community, PACs can sometimes influence pending legislation. This goes to
show that the political environment is an element of the macro-environment
that can be influenced.
39.Part of environmental scanning requires that information be collected and
analyzed in the market planning process to evaluate the importance of the

trends so the organization may keep them in proper perspective.

40.Data collected about the environment must be reliable, timely, and used in
decision making. Best Westerns VP of Marketing said researchers must put
less emphasis on data collection and more effort in data interpretation.