THE EXTERNAL MARKETING ENVIRONMENT

Marketing Environment: factors and forces that affect a firms ability to build and
maintain successful relationships with customers.
Levels of the environment are:
Micro (internal): small forces within the company, affects serving its customers.
Macro (external): larger social forces that affect the firms internal environment.
Example: Applebees, what happened? Applebees didnt adapt quickly enough to the
external changing environment
Target market: A defined group most likely to buy a firms product.
External marketing environment consists of: PESTEL,DC
Marketers generally cannot control the elements of the external environment. Instead,
they must understand how the external environment is changing and the impact of
change on the target market. Then marketing managers can create a marketing mix to
effectively meet the needs of target customers.
Environmental management: When company implements strategies that attempt to shape
the external environment.
The factors that affects external environments are: PESTEL,DC
Social Factors: include our values, lifestyles, and attitudes.
Demographic: the study of peoples vital statistics, such as their age, race and ethnicity,
and location.
Ethnic: Multiculturalism occurs when all major ethnic groups in an area are roughly
equally represented
Economic: The three economic areas consumers incomes, inflation, and recession
Technological: Basic and Applied research
Political and legal: To Protect New Technology, Society, Businesses, and Consumers
Competitive: number, size of competitors, and the degree of interdependence within the
industry

Social Factors:
Social change is perhaps the most difficult external variable for marketing managers to
forecast, influence, or integrate into marketing plans.
Social factors includes
Our Attitudes
Our Values
Our Lifestyles

Social factors influence

Products people buy
Prices paid for products
Effectiveness of promotions
How, where, and when people purchase

VALUES: A persons values are key determinants of what is important and not, what
actions to take or not, and how one behaves in social situations. The influence of
values on buying habits; (6 characteristics)
Reliability, Durability, Easy maintenance, Ease of use, a trusted brand name, a
low price.

Component lifestyles: A lifestyle is a mode of living; it is the way people choose to

live their lives. In other words, they are choosing products and services that meet
diverse needs and interests rather than conforming to traditional stereotypes. The
unique lifestyles of every consumer can require a different marketing mix.
Changing the role of women: Single and married women are making purchase
decisions and buying more products and services that were traditionally dominated by
males
Time pressure
Economic factors:
The economic condition is strongly associated with the consumers buying position. In
this step, factors such Income, inflation, and recession are considered
In recent years, incomes have risen. At the same time, the financial power of women has
increased, and they are making the purchasing decisions for many products in
traditionally male-dominated areas.
Inflation: A measure of the decrease in the value of money, expressed as the
percentage reduction in value since the previous year. During a time of inflation,
marketers generally attempt to maintain level pricing to avoid losing customer
brand loyalty.
Recession: is a period of economic activity characterized by negative growth.
During times of recession, many marketers maintain or reduce prices to counter
the effects of decreased demand; they also focus on increasing production
efficiency and improving customer service.
Purchasing Power: is measured by comparing income to the cost of standard
goods and services in different geographic areas

Demographic factors:
The study of peoples vital statistics, such as age, race and ethnicity, and location
Today, some basic demographic shapes are influencing marketing mixes. Because the
population is growing at a slower rate, marketers can no longer rely on profits from
generally growing markets. Marketers are also faced with increasingly experienced
consumers among the younger generations such as tweens and teens. And because the
population is also growing older, marketers are offering more products that appeal to
middle-aged and older consumers.
Ethnic markets:
Multiculturalism occurs when all major ethnic groups in an area are roughly equally
represented. Growing multiculturalism makes the marketers task more challenging.
Example: Saudi German, Indo Arab and Saudi British etc. Many companies are now
creating departments and committees to effectively target multicultural market
segments. Companies have quickly found that ethnic markets are not similar.
Technological factors:
Monitoring new technology is essential to keeping up with competitors in todays
marketing environment. The basic research, in recent years, has dramatically improved
its track record in applied research. Without innovation, companies cant compete in
global markets. Innovation is increasingly becoming a global process. The most
innovative firms have an average profit margin growth of 3 percent higher than the
typical firm.
Basic research: pure research that aims to confirm an existing theory or to learn
more about a concept or phenomenon
Applied research: an attempt to develop new or improved products
Political & legal factors:
Business needs government regulation to protect:
Innovators of new technology
The interests of society in general
One business from another
Consumers
In exchange, government needs business because the marketplace generates taxes that
support a number of vital programs.
Competitive factors:
The competitive environment includes the number of competitors a firm must face, the
relative size of the competitors, and the degree of interdependence within the industry.
Declining population growth, rising costs, and shortages of resources have increased
domestic competition. Example: Boeing and Airbus
Competition for Market Share and Profits: Firms must work harder to maintain
profits and market share.

 Global Competition: More foreign firms are entering the market. A foreign firm
is now competing on product quality.
REVIEW
Discuss the external environment of marketing and explain how it affects a firm.
The external marketing environment consists of 6 PESTEL, DC variables. Marketers
cannot control the elements of the external environment. Instead, they must understand
how the external environment is changing and the impact of that change on the target
market. Then marketing managers can create a marketing mix to meet the needs of target
customers.
Describe the social factors that affect marketing.
Social factors are difficult for marketers to be predicted. Several major social trends are
currently shaping marketing strategies.
People of all ages have a wider range of interests, along with a different
traditional consumer profiles.
Changing gender roles, bring women into the workforce and they are buying
products that were traditionally dominated by males
An increase in the number of dual-career families has created demand for
timesaving goods and services.
Explain the importance to marketing managers of current demographic trends.
The population is increasing at a slower rate; marketers can no longer rely on
profits from growing markets.
Marketers are faced with experienced consumers among the younger generations
The population is also growing older; marketers are offering more products that
appeal to middle-aged and older consumers.
Explain the importance to managers of multiculturalism and growing ethnic markets.
Growing multiculturalism makes the marketers task more challenging. Many
companies are now creating departments and product to target this market segments.
Companies found that ethnic markets are not similar.
Identify consumer and marketer reactions to the state of the economy.
The incomes grow at slow speed. At the same time, the financial power of women has
increased, and they make the purchasing decisions for many products, which was males
expert areas.
Inflation: is the decrease in the value of money
During a time of inflation, marketers keep the level of pricing to avoid losing
customer.
Recession: is a period of negative growth.
During times of recession, marketers keep or reduce prices; they also increase
production and improving customer service.
Purchasing Power: is measured by comparing income to the cost of standard

goods or services in different geographic areas.

Identify the impact of technology on a firm.
Monitoring new technology is needed to keeping up with competitors in todays
marketing environment. Without innovation, companies cant compete in global
markets.
Basic research: pure research that aims to confirm an existing theory or to learn
more about a concept or phenomenon
Applied research: an attempt to develop new or improved products
Discuss the political and legal environment of marketing.
Politics affects the business a lot; because a company must follow certain (laws) made
by the government. Business needs government to protect:
Innovators of new technology
Interests of society in general
One business from another
Consumers.
In exchange, government needs business to generate taxes that support their programs.
Explain the basics of foreign and domestic competition.
The competitive environment includes:
The number of competitors
The size of the competitors
The degree of relationship within the industry.
Declining population growth, rising costs, and shortages of resources have increased
domestic competition.
Competition for Market Share and Profits: Firms must work harder to maintain
profits and market share.
Global Competition: More foreign firms are entering the market. A foreign firm
is now competing on product quality.