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Chapter 3

Analysing the
marketing
environment

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Analysing the marketing environment


Learning objectives
Objective 1 Describe the environmental forces that affect the
companys ability to serve its customers.
Objective 2 Explain how changes in the demographic and economic
environments affect marketing decisions.
Objective 3 Identify the main trends in the firms natural and
technological environments.
Objective 4 Explain the key changes in the political and cultural
environments.
Objective 5 Discuss how companies can react to the marketing
environment.

Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486002696/Armstrong/Principles of Marketing/6e

Company-wide strategic planning:


Defining marketings role

A companys marketing environment consists of


the actors and forces outside of marketing that
affect marketing managements ability to build
and maintain successful relationships with target
customers. Companies constantly watch and
adapt to the changing environment.

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Actors in the marketing environment

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The company

Top
management

Finance

R&D

Purchasing

Operations

Accounting

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Actors in the marketing environment: Suppliers

Suppliers form an important link in


the companys overall customer
value delivery system.

Most marketers today treat their


suppliers as partners in creating
and delivering customer value.

Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486002696/Armstrong/Principles of Marketing/6e

Types of marketing intermediaries

Resellers
Find
Find &
& sell
sell to
to customers
customers

Physical distribution firms


Inventory & move goods

Marketing service agencies


Research, advertising, media &
consulting

Financial intermediaries
Finance transactions or insure against
risk

Getty Images Australia Pty Ltd

Financial intermediaries: Banks and insurance companies are among the many
financial intermediaries that comprise the broader value network in which a business
operates. Managing these relationships is also important.
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Actors in the marketing environment:


Intermediaries, market research firms and
advertising agencies

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Actors in the marketing environment: Competitors

To be successful, a company must


provide greater value than its
competitors.

Marketers must do more than simply


adapt to the needs of target consumers;
they must gain strategic advantage by
positioning their offerings strongly
against competitors.

Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486002696/Armstrong/Principles of Marketing/6e

Actors in the marketing environment: Publics


Financial
public

Internal
public
Publics are
any group that has
an actual or
potential interest in
or impact on an
organisations
ability to achieve
its objective.
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Media

Government
Publics
Publics

Citizens
action
groups

General
public
Local
public

Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486002696/Armstrong/Principles of Marketing/6e

Actors in the marketing environment: Customers


Companies might target any or all of five types of customer markets:
Consumer
Consumer markets
markets
Business
Business markets
markets
Reseller
Reseller markets
markets
Government
Government markets
markets
International
International markets
markets

Each
Each market
market type
type has
has special
special characteristics
characteristics that
that calls
calls for
for
careful
careful study
study by
by the
the seller.
seller.
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Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486002696/Armstrong/Principles of Marketing/6e

Discussion question

Consider the marketer of


a new energy drink.
How would each of the microenvironmental factors be
involved in their marketing
efforts?

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The companys macroenvironment

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Demographic environment
Demography is the study of human populations in terms of
Population
Population size,
size, density
density &
& diversity
diversity
Location
Location &
& geographic
geographic population
population shifts
shifts
Age
Age &
& gender
gender
Family
Family size
size &
& structure
structure
Educational
Educational characteristics
characteristics
Occupation
Occupation
Race/Ethnicity
Race/Ethnicity
Other
Other relevant
relevant demographic
demographic statistics
statistics

Marketers
Marketers keep
keep close
close track
track of
of demographic
demographic trends
trends &
& developments
developments
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Demographic environment: Changing age structure

Born 194664

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Born 196576

Born 19772000

Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486002696/Armstrong/Principles of Marketing/6 th edition

Discussion question

Do marketers need to develop


separate products or marketing
programs for each of the
different generations?

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Changing age structure: Generational segments

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Demographic environment: Changing family


structure
Rise of single parent
families & families with
no children

Decline in household size

Increasing number of
working women

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Demographic environment: Population diversity

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Economic environment
The
The economic
economic environment consists
consists of
of factors
factors that
that affect
affect
consumer
consumer purchasing
purchasing power
power & spending patterns, including
changes
changes in
in

Income
Income &
& income
income distribution
distribution
Spending
Spending patterns
patterns

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Natural environment
The
The natural
natural environment
environment involves
involves the
the natural resources
resources that
that
are
are needed
needed as
as inputs
inputs by
by marketers
marketers or
or that
that are
are affected
affected by
by
marketing
marketing activities.
activities.
Key natural environment issues:
Shortages
Shortages of raw materials

Increasing
Increasing pollution
pollution

Rise
Rise in
in government
government intervention
intervention
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Technological environment

Perhaps the most


dramatic force
shaping our future,
the technological
environment,
involves forces that
create new
technologies, new
products and market
opportunities.

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Technological environment

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Discussion question

Give examples of how new


technologies have influenced
what we buy, how we pay and
how we shop.

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Political and social environment


The
The political
political environment
environment consists
consists of
of laws,
laws, government
government
agencies
agencies and
and pressure
pressure groups
groups that
that influence
influence or
or limit
limit various
various
organisations
organisations and
and individuals
individuals in
in aa given
given society.
society.
Key political issues:
Legislation
Legislation affecting
affecting business:
business:
Increasing
Increasing legislation
legislation
Changing
Changing government
government agency
agency enforcement
enforcement
Emphasis
Emphasis on
on ethics
ethics and
and socially
socially responsible
responsible
behaviour:
behaviour:
Social
Social responsibility
responsibility
Cause-related
Cause-related marketing
marketing
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Cultural environment
The
The cultural
cultural environment
environment is
is made
made up
up of
of institutions
institutions and
and
other
other forces
forces that
that affect
affect aa societys
societys basic
basic values,
values,
perceptions,
perceptions, preferences
preferences and
and behaviours.
behaviours.

The
The persistence
persistence of
of culture
culture
Core
Core beliefs
beliefs &
& values:
values: relatively
relatively
resistant
resistant to
to change
change
Secondary
Secondary beliefs
beliefs &
& values:
values: more
more
open
open to
to change
change

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Cultural environment: Peoples views of


Themselves
Nature

Others

Organisations

Society

Universe

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Responding to the 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 to
to keep
keep
competitors
competitors in
in line.
line.

Form
Form contractual
contractual agreements
agreements to
to better
better control
control distribution
distribution
channels.
channels.

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Responding to the marketing environment

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Responding to the marketing environment

Despite the unpredictability of the external


environment, enlightened marketing managers
take a proactive rather than reactive
approach to the marketing environment.

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Suggested resources
Articles and case studies
Mindmap, PEST analysis (short article & video), http://
www.mindtools.com/pages/article/newTMC_09.htm
PESTLE analysis template, http://
pestleanalysis.com/how-to-create-pestle-analysis-template

Videos
ABC, Difference of Opinion (collection of video segments on a variety of
topics, including the digital age, attitudes of Gen Y), http://
www.abc.net.au/tv/differenceofopinion/episodes/episode_11.htm
Grey Worldwide, Eye on Australia (annual Australian consumer pulse survey,
video 4.5 minutes plus PDF download), http://eyeonaustralia.com.au

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Additional resources
Selected social and economic indicators
ABS, Future population growth and ageing (feature article), http
://www.abs.gov.au/AUSSTATS/abs@.
nsf/Lookup/4102.0Main+Features10March%202009
ABS, Spending patterns of couple families (feature article), http
://www.abs.gov.au/AUSSTATS/abs@.
nsf/Lookup/4102.0Main+Features30July+2013
ABS, The average Australian (feature article),
http://www.abs.gov.au/AUSSTATS/abs@.
nsf/Lookup/4102.0Main+Features30April+2013
Note: All ABS feature articles are supported by detailed reports and
downloadable data-cubes. Instructors may wish to point out relevant
publications such as Household Expenditure Survey, Australian Social
Trends and Census data, which learners may wish to consult for
assignment and wider reading purposes.

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