Lect 3-The Marketing Environment
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Learning Objectives



The marketing environment

The external environment

Major actors in the microenvironment


Learning Objectives

When you have completed this unit, you should be able to:

  • understand the role and importance of the situational analysis in the development of a marketing plan
  • understand how relevant micro-environmental and macro-environmental forces can impact on a firm's products and the industry in general
  • identify the 'true market' a firm is operating within and partition the market down to include its various categories
  • explain the nature of competition and describe all direct and indirect market participants in the market
  • understand the role of segmentation and selecting one appropriate segment to target
  • identify elements of consumer behaviour and the influences on the buyer's decision making process
  • implement the use of strategic planning tools to explain and predict market behaviour
  • consolidate information to summarise the strengths and weaknesses of the firm and its products.  Identify external opportunities and threats facing the firm and its products.



Read the prescribed text, chapter 3.

This chapter provides the content and substance of Lecture 3.  As in previous lectures, you may find it useful to make brief notes as you read, paying particular attention to the highlighted section of the text book. 

Then read Part B of Lecture 3 (below).

In Part B, salient points have been extracted from the chapter as a guide for your learning and as a useful basis for later revision.

After reading Part B, you will be ready to work through Module 4.



The marketing environment

The first step in marketing planning is to analyse the environment in which we operate.  In this lecture we will address the process of identifying the strengths, weaknesses, opportunities and threats in the environment.

The marketing environment…

    consists of the actors and forces outside marketing that affect marketing management's ability to develop and maintain successful transactions with its target customers.'

 [Kotler et al, 1998, p100]


The microenvironment is the immediate environment that affects the company's ability to serve its customers.  The microenvironment

  • internal
  • partly controllable.


The macroenvironment describes the larger societal forces that affect all actors in the company's microenvironment.  It is:

  • external
  • uncontrollable.


Major actors in the microenvironment



Suppliers are the firms and individuals that provide the resources needed by the company and its competitors to produce goods and services.




The company's customers can include the following:

  • consumer markets: individuals purchasing for private final consumption
  • business markets: organisations purchasing for use or assistant in further processing
  • reseller market: purchase to resell at a profit
  • government markets: agencies that purchase too produce public services
  • international markets: overseas buyers, including all of the above.



The public is any group that has an actual or potential interest in, or impact on, an organisation's ability to achieve its objectives.  It includes the following:

  • financial
  • media
  • government
  • citizen-action
  • local
  • general
  • internal.


The external environment

The external environment is a marketing mix as illustrated:



The demographic environment is:

    the statistical study of human population and its distribution. 

Markets are formed by people and as such are subject to trends.  Trends can include the following:

  • more single people than couples or families
  • higher divorce rates
  • aging of the population, etc.


Economic conditions

People alone do not make a market.  They must have:

  • money
  • a willingness to spend it

for an exchange to occur.

Factors that can affect the availability and willingness to spend money include:

  • stage of business cycle
  • inflation
  • unemployment
  • interest rates.



The competitive environment refers to:

  • the types of competition
  • the competitive market structure
  • competitive intensity.

Types of competition

Types of competition can include the following:

  • competition from marketers of directly similar products, eg. Tooheys v CUB, Holden v Ford
  • substitute product competition, eg. Radio v TV, Nescafe v Pepsi
  • overall competition for a consumer's limited purchasing power.

How would our marketing approaches differ for these different types of competition?

Competitive market structure

Competitive market structure consists of the following:

  • pure competition, ie. many buyers and sellers, offering an undifferentiated product at a market price with full information (wool, milk, grain)
  • monopolistic competition, ie. many sellers with similar, although not necessarily identical products, with each searching to gain a differential.  They have considerable control over price (clothing)
  • oligopoly, ie. a few large sellers with essentially similar products, which account for the majority of industry sales.  They avoid price competition and compete mainly in non-price areas (oil, beer)
  • monopoly, ie. only one seller of a unique product (Crown).

Competitive intensity

Competitive intensity can consist of the following:

  • a competitive rivalry between firms
  • the bargaining power of suppliers and the threat that they offer of integration
  • customer bargaining power
  • substitute product threats
  • the threat of new entrants.


Society and culture

The focus of the current social and cultural environments is on:

  • the changing role of women
  • attitudes towards physical fitness and diet
  • the desire for convenience
  • growth in cultural diversity.

Name examples of companies and products that have evolved recently in response to changes in social and cultural environments.


Here are some statistics for marketers to consider:

  • In the 1970s, 90% of all marriages were first marriages compared with the 1990s, where 60% of all marriages were first marriages
  • 33% of all marriages will end in divorce
  • 22% of women will not have married by the age of 35
  • 25% of Australians born in the 1960s will never marry
  • 55% of all Australians live together before marrying.


Politics and law

Marketing decisions are regulated at all levels of government.  Political interest groups often attempt to influence a firm's or government's conduct.  Government influence is generally in the realm of the following:

  • fiscal policy (taxation)
  • social policy (anti-pollution laws)
  • specific marketing legislation (Trade Practices Act)



Technological advances have a significant impact on the types and quality of products available as well as the way they are produced.  Major technological breakthroughs carry a threefold marking impact.  These impacts are as follows:

  • the start of entirely new industries
  • the radically altered or destruction of existing industries
  • the stimulation of other markets and industries not directly related to the new technology in a flow-on effect.


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