CHAPTER TWO

MARKETING ENVIRONMENT (ME)

Marketing Environment consists of the

actors and forces outside marketing that

affect marketing management’s ability to

develop and maintain successful

transactions with itsBY: target

ASHENAFI G. customers. 1
 Classification of Marketing
Environment
•The marketing environment is made up of:
1.A micro environment
2.A macro environment.

The Company's Microenvironment

The micro environment consists of the forces

close to the company that affect its ability to

serve its customers. BY: ASHENAFI G. 2

 … contd.
•The micro environment consists of six forces.
They are:
[Link] company itself (including departments)
[Link]
[Link] channel firms (intermediaries)
[Link] market
[Link]
[Link]
BY: ASHENAFI G. 3
 … contd.
The Company: in designing marketing plans,
marketing management takes other
company groups into account _ groups such
as top management, finance, research and
development (R&D), purchasing,
manufacturing, and accounting.
All these interrelated groups form the
internal environment.
BY: ASHENAFI G. 4
 … contd.
Suppliers
• Suppliers are firms and individuals that provide
the resources needed by the company and its
competitors to produce goods and services.
• Suppliers are an important link in the
company's overall customer value delivery
system.
• Therefore, Supplier problems can seriously
affect marketing.
BY: ASHENAFI G. 5
 … contd.
Marketing Intermediaries
 Marketing intermediaries are firms that help
the company to promote, sell, and distribute its
goods to final buyers. They include:
 Resellers
 Physical Distribution Firms
 Marketing Service Agencies
 Financial Intermediaries
BY: ASHENAFI G. 6
 … contd.
Customers
• The company needs to study its customer markets closely.
There are five types of customer markets.
1. Consumer markets consist of individuals and households that
buy goods and services for personal consumption.
2. Business markets or industrial markets buy goods and
services for further processing
3. Reseller markets buy goods and services to resell at a profit.
4. Government markets are made up of government agencies
that buy goods and services to produce public services
5. International markets consist of these buyers in other
countries, including consumers, producers, resellers, and
governments. BY: ASHENAFI G. 7
 … contd.

Reseller Markets

Business Markets Government

Markets

Consumer Markets
International
Markets
Company

Types of customer markets

BY: ASHENAFI G. 8
 … contd.
Competitors

• The marketing concept states that, to be

successful, a company must provide greater
customer value and satisfaction than its
competitors do.
Publics
 A public is any group that has an actual or
potential interest in or impact on an organization's
ability to achieve its objectives.
 There are seven types of publics.
BY: ASHENAFI G. They are: 9
 … contd.

Citizen action publics

Government
Publics Local
Publics

M e d ia General
Publics Publics

Financial Internal
Publics Company Publics

Types of Publics
BY: ASHENAFI G. 10
 … contd.

1. Financial publics influence the company's ability to obtain

funds. Banks, investment houses, and stockholders are the

major financial publics.

2. Media publics carry news, features, and editorial opinion.

They include newspapers, magazines, radio and television

stations.

3. Government publics: management must take government

developments into account. Marketers must often consult

the company's lawyers on issues of product safety, truth in

advertising and other matters.

BY: ASHENAFI G. 11
 … contd.
4. Citizen action publics: a company's marketing decisions may be

questioned by consumer organizations, environmental groups,

minority groups, and others. Its public relations department can

help it stay in touch with consumer and citizen groups.

5. Local publics include neighborhood residents and community

organizations. Large companies usually appoint a community

relations' officer to deal with the community, attend meetings

answer questions and contribute to worthwhile causes.

BY: ASHENAFI G. 12
 … contd.

6. General public: a company needs to be concerned about the

general public's attitude toward its products and activities. The

public's image of the company affects its buying.

7. Internal publics include workers, managers, volunteers, and the

board of directors. When employees feel good about their

company, this positive attitude spills over to external publics.

BY: ASHENAFI G. 13
 THE COMPANY'S MACRO
ENVIRONMENT
• The company and all of other actors operate in a large
macro environment of forces/actors that shape
opportunities and pose threats to the company. The
figure below shows that the six major forces in the
company's macro-environment.

BY: ASHENAFI G. 14
 … contd.

Natural Forces Technological

Forces

Economic Forces
Political Forces

Demographic
Forces Cultural Forces

Company

Major Forces in the company's macro-environment

BY: ASHENAFI G. 15
 Demographic Environment

• The demographic environment is of major interest

to marketers/businessperson because it involves
people, and people make up markets. Thus,
marketers/businessperson keep a close eye on
demographic trends and developments in their
markets—both at home and abroad.
• Marketers/businessperson analyze changing age
and family structures, geographic population shifts,
educational characteristics, and population diversity

BY: ASHENAFI G. 16
 Economic Environment
• Markets require buying power as well as people. The
economic environment consists of factors that affect
consumer purchasing power and consumption pattern or
spending patterns. Nations vary greatly in their levels and
distribution of income.
• Some countries have subsistence economies – they
consume most of their own agricultural and industrial
output. These countries offer few market opportunities.
• At the other extreme are industrial economies, which create
rich markets for many different kinds of goods.
• In between are developing economies that can offer
outstanding marketing opportunities
BY: ASHENAFI G.
for the right kinds 17
of
 … contd.
• Marketers/business managers must pay close attention
to major trends and consumer spending patterns both
across and with in their world markets.

• The major factors that affect purchasing power

include:
Changes in income of population

Income distribution
BY: ASHENAFI G. 18
 … contd.
• Generally, changes in major economic variables, such
as income, cost of living, interest rates, and savings and
borrowing patterns have a large impact on the
marketplace.
• Companies watch these variables by using economic
forecasting. Because, businesses do not have to be
wiped out (spread out) by an economic downturn. With
adequate warning, they can take advantage of changes
in the economic environment. (example business cycle)19
BY: ASHENAFI G.
 Natural Environment
• The natural environment involves the natural
resources that are needed as inputs by
marketers/businessperson or that are affected by
marketing activities. Thus, marketers/business managers
should be aware of several trends in the natural environment.
• growing shortages of raw materials
• increased pollution
• increased government intervention in natural resource
management
BY: ASHENAFI G. 20
 Technological Environment

• The technological environment includes forces

that create new technologies, creating new

product and market opportunities.

• The technological environment is perhaps the

most dramatic force now shaping our destiny and

the technological environment changes rapidly.

BY: ASHENAFI G. 21
 … contd.
 Marketers should watch the technological environment closely.

Companies that don't keep up with technological change soon

will find their products outdated. They will miss new product

and market opportunities. Therefore, marketer should monitor

the following trends in technology:

 Accelerating pace of the Technological Change

 the opportunities for innovation

 varying R and D budgets

 increased regulation. BY: ASHENAFI G. 22

 Political Environment

• Marketing decisions are strongly

affected by developments in the
political environment.
• The political environment consists of
laws, government agencies, and
pressure groups that influence and
limit various organizations and
individuals in a given society.
BY: ASHENAFI G. 23
 The Cultural Environment
• The cultural environment consists of institutions
and other forces that affect a society’s basic
values, perceptions, preferences, and behaviors.
People grow up in a particular society that
shapes their basic beliefs and values.
• The following cultural characteristics can affect
marketing decision making.
BY: ASHENAFI G. 24
 … contd.
• the persistence of cultural values

• shifts in secondary cultural values

• people’s views of themselves

• people’s views of others

• people’s views of organizations

• people’s views of society

• people’s views of nature

• people’s views of the universe

BY: ASHENAFI G. 25
 .

THANK YOU VERY

MUCH!

BY: ASHENAFI G. 26