PRINCIPLES OF

MARKETING
LE DO THIEN TRUC
EXECUTIVE MBA IN FINANCE
AND BANKING
SAIGON UNIVERSITY
CHAPTER 2:
THE MARKETING ENVIRONMENT
CONTENT

2.1. Definition

2.2. Levels of marketing environment

2.1
DEFINITION
The marketing environments are the
actors and forces outside marketing
that affect marketing management’s
ability to develop and maintain
successful transactions with its target
customers.
2.2. LEVELS OF MARKETING
ENVIRONMENT
Marketing

The
microenvironment

The macroenviroment
2.2.1. THE COMPANY’S
MICROENVIRONMENT
2.2.1. THE COMPANY’S
MICROENVIRONMENT
The forces close to the company that affect its ability to serve its
customers, include:
- The company
- Suppliers
- Marketing intermediaries
- Customer markets
- Competitors
- Publics
THE
COMPANY
- Financial capacity
- Technology, R&D
- Personnel
- Company’s culture
SUPPLIE
RS
They provide the resources needed by the
company to produce its good and services.
Suppliers are very important as supply
shortages, delays, labour strikes can seriously
affect marketing. Rising supply cost may force
price increases that can harm the company’s
sales volume.
MARKETING INTERMEDIARIES

Are firms that help the company to

promote, sell and distribute its good to
final buyers.
 MARKETING
INTERMEDIARIES
• the individuals and organisations that buy goods and services to resell at a profit.
Resellers

• warehouse, transportation and other firms that help a company to stock and move
Physical goods from their points of origin to their destination
distributio
n firms

• Marketing research firms, advertising agencies, media firms, marketing consulting

Marketing firms and other service providers that help a company to target and promote its
services products to the right market
agencies

• Banks, credit companies, insurance companies and other businesses that help
Financial finance transactions or insure against the risks associated with the buying and
intermedia selling of goods.
ries
CUSTOMERS

Consumer
markets

International Business
markets market

marketing

Government Reseller
markets markets

Institutional
markets
COMPETITORS

A company in the same industry or a similar

industry which offers a similar product or
services.

To be successful, a company must provide greater

customer value and satisfaction than its competitors
NYDC CLOSURE IN
VIETNAM
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.
PUBLICS
Citizen
action
Government publics Local
publics publics

Media General
publics publics

Financial Internal
publics marketing publics
2.2.2. THE COMPANY’S
MACROENVIRONMENT
DEMOGRAPHIC
ENVIRONMENT
Demography is the study of human
population in terms of size, density,
location, age, sex, race, occupation, and
other statistics
DEMOGRAPHIC
ENVIRONMENT
Growing
Ethnic Age
Diversity Structures

Education Key
Demographic
Trends

Changing
Family
Geographic Structure
Shifts
DEMOGRAPHIC
ENVIRONMENT

Geographic Shifts in population

- Move from rural to metropolitan areas
- Change in where people work
+ Telecommuting, online
communication
+ Home office
+ Shared office (co-working space)
DEMOGRAPHIC ENVIRONMENT

Changing family structure

©2012 Pearson Education

DEMOGRAPHIC
ENVIRONMENT
Changing age structure of the population
▪ Baby boomers. Born between 1946 and 1964. Most affluent in “western”
societies.
▪ Australia; Europe; USA

▪ Generation X. The baby boom was followed by a “birth dearth,” generation

of people born between 1965 and 1976. They developed a more cautious
economic outlook.
▪ High parental divorce rates
▪ Cautious economic outlook
▪ Less materialistic
▪ Family comes first
Millennials (gen Y or echo boomers) include those born between 1977
and 2000
▪ Comfortable with technology
▪ Gen Z (>2000): Who are you?
ECONOMIC
ENVIRONMENT

The economic environment consists of factors that

affect consumer-buying power and spending
patterns.
Population
Income
Family size
Education
Life expectancy
Infrastructure
Unemployment
Cost of labour
THE ECONOMIC
ENVIRONMENT

Economic Changes
Development Key in Income
Economic
Concerns for
Marketers

Changes
in Consumer
Spending Patterns
 THE ECONOMIC
ENVIRONMENT
Changing consumer spending patterns
- Product diffusion is the percentage of
households in a market that own a particular
product (rate of adoption of a new product)
ADOPTION OF
INNOVATIONS
Percentage of Adopters

Early Majority Late Majority

Innovators

Early
Adopters Laggards
34% 34%

13.5% 16%

2.5%

Early Time of Adoption Late

THE ECONOMIC ENVIRONMENT

Changing consumer spending patterns

- Engel’s Law: As family income increases, the
percentage spent on food declines, the percentage
spent on housing remains constant, and the
percentage spent on savings and other categories
(luxury goods) increases.
Eg. For example, a family that spends 25% of
their income on food at an income level of $50,000
will spend $12,500 on food. If their income increases
to $100,000, it is not likely that they will spend
$25,000 (25%) on food, but will spend a lesser
percentage while increasing spending in other areas.
 THE ECONOMIC
ENVIRONMENT
Food/beverages Clothing/footware Households goods/ser Leisure&education

Australia 10.24% 3.90% 5.80% 14.35%

Thailand 27.23% 12.02% 9.22% 4.55%

India 43.44% 4.69% 2.91% 7.74%

THE NATURAL ENVIRONMENT

Increased costs Increased

of energy pollution

Government
Shortages of intervention in
raw materials natural resource
Issues in management
Natural
environment
THE TECHNOLOGICAL ENVIRONMENT
Fast Pace of High R&D
Change Budgets

Issues in the
Technological
Environment

Focus on Minor Increased

Improvements Regulation
THE POLITICAL
ENVIRONMENT
Laws, government agencies and pressure groups
that influence and limit various organisations
and individuals in a given society.
THE POLITICAL
ENVIRONMENT

Laws: Marketers need an awareness of:

- Differences between the written law and common practice/
interpretation
- Differing laws related to each element of the marketing Mix
- Product: laws to protect consumers
- Price: price control mechanism, dumpling, tariffs
- Distribution: regulations covering distribution channels
- Promotion: prohibition of advertising: use of words/
expressions
THE CULTURAL
ENVIRONMENT

The cultural environment is made up of institutions

and other forces that affect society’s basic values,
perceptions, preferences, and behaviours.
People grow up in a particular society that shapes their
basic beliefs and values.
They absorb a world view that defines their
relationships to themselves and others.
CULTURAL ELEMENTS

Time-assumptions Language-
about time vary precision versus Religion-beliefs
across cultures ambiguity

Consumption Business/social
Importance of the
patterns-material customs–bribery,
context-verbal /
possessions / dress, etiquette, status,
non-verbal cues
mealtimes jokes, music.

Relationship with
authority Nationalism
(Hofstede, 1980)
LANGUAGE
BLUNDERS

Mitsubishi realized that Pajero was not the right name for a car
in Spanish speaking countries, so they changed it to Montero.
General Motors tried to sell the Chevrolet Nova in Latin
America, only to find that people found "no va" (doesn't go) a
funny name for a car.
Mazda has a van in Japan called the Laputa, but they made the
mistake of selling it under that name in Spanish-speaking
countries.
A car that would need a new name in Spain is the Nissan Moco
(they even have it in the right shade of green)!
RELIGION

• People find in religion a reason for being, the belief in a

higher power and the belief that they are part of the
“bigger picture‟.
• Religion has an impact on international marketing.
◦ seen in a culture’s values and attitudes towards
entrepreneurship, consumption and social organisation.
MANNERS AND CUSTOMS/MATERIAL
ELEMENTS
• Products are used differently according to manners and customers
• (examples?)
• Material culture is related to the way society organizes its economic
activity.
◦ Economic infrastructure: transportation (e.g. roads), energy (e.g. electrical
power plants), Communications (e.g. landline, mobile and internet)
◦Social infrastructure: Housing, health, education
◦Financial and marketing infrastructures: Banks, research firms
◦ Cultural convergence: Globally, consumers are showing a greater
acceptance of equipment for personal use (e.g. mobile phones, personal
computers and Internet use).
Changing consumer spending
patterns
- Product use differences
For example, appliances in European
households tend to be smaller than those in
Australian households.
 MANNERS AND CUSTOMS/MATERIAL
ELEMENTS (CONT.)
• The ability of marketers to reach consumers is affected by ownership of
radios, personal computers or televisions.
• Potential problem areas for marketers arise from an insufficient
understanding of:
◦different ways of thinking in the host country
◦the decision-making process and personal relations
◦the allocation of time for negotiations.
}Example: The number eight in Chinese culture is of great significance.
AESTHETICS

• What is good taste?

• What is and what is not acceptable?
•For example, attitudes towards sex in advertising differ across
cultures.
• Colours can have symbolic value (e.g. white is the colour of
mourning in India and Japan).
• International firms must be mindful of local tastes and
concerns when designing their facilities.
TOOLS FOR ENVIRONMENT
ANALYSIS
- PEST/PESTEL
- SWOT -> TOWS
- 5 FORCES
- ….

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SW
OT
Strengths
Weaknesse
s
(Điểm mạnh) (điểm yếu)

Opportunities Threats
(cơ hội) (Thách thức)
Example:

• SWOT analysis of PetraServe, a company which runs

motorway service stations.
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PESTEL

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