Page 87 - Foundations of Marketing

54 Part 1 | Strategic Marketing and Its Environment

To succeed in today’s highly competitive marketplace, companies must respond to changes in the
marketing environment, particularly changes in customer and public desires and competitors’
actions. Increasingly, success also requires that marketers act responsibly and ethically. Because
recognizing and responding to such changes in the marketing environment are crucial to mar-
keting success, this chapter explores in some detail the forces that contribute to these changes.
The first half of this chapter explores the competitive, economic, political, legal and regu-
latory, technological, and sociocultural forces that make up the marketing environment. This
discussion addresses the importance of scanning and analyzing the marketing environment, as
well as how each of these forces influences marketing strategy decisions. The second half of
the chapter considers the role of social responsibility and ethics. These increasingly important
forces raise several issues that pose threats and opportunities to marketers, such as the natural
environment and consumerism.

LO 1 . Recognize the importance THE MARKETING ENVIRONMENT
of the marketing environment.
The marketing environment consists of external forces that directly or indirectly influence an
organization’s acquisition of inputs (human, financial, natural resources and raw materials,
and information) and creation of outputs (goods, services, or ideas). As indicated in Chapter 1 ,
the marketing environment includes six such forces: competitive, economic, political, legal
and regulatory, technological, and sociocultural.
Whether fluctuating rapidly or slowly, environmental forces are always dynamic. Changes
in the marketing environment create uncertainty, threats, and opportunities for marketers. For
instance, firms providing digital products such as software, music, and movies face many envi-
ronmental threats as well as opportunities. Advancing technology enables digital delivery of these
products, which is an efficient and effective way to reach global markets. On the other hand, sites
such as Pirate Bay allow peer-to-peer transfers and are referred to as file-sharing sites or cyber-
lockers. The movie and music industries want more effective legislation in place to crack down
on the theft of their products. Most of these developments involve trying to influence controls to
stop this threat, including arresting individuals involved in the development of these piracy sites
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such as Pirate Bay co-founder Gottfrid Svartholm Warg. Monitoring the environment is there-
fore crucial to an organization’s survival and to the long-term achievement of its goals.
To monitor changes in the marketing environment effectively, marketers engage in envi-
ronmental scanning and analysis. Environmental scanning is the process of collecting infor-
mation about forces in the marketing environment. Scanning involves observation; secondary
sources such as business, trade, government, and Internet sources; and marketing research.
The Internet has become a popular scanning tool because it makes data more accessible and
allows companies to gather needed information quickly.
Environmental analysis is the process of assessing and interpreting the information gath-
ered through environmental scanning. A manager evaluates the information for accuracy; tries
to resolve inconsistencies in the data; and, if warranted, assigns significance to the findings.
By evaluating this information, the manager should be able to identify potential threats and
opportunities linked to environmental changes. A threat could be rising interest rates or com-
modity prices. An opportunity could be increases in consumer income, decreases in the unem-
ployment rate, or adoption of new technology related to the Internet.
Understanding the current state of the marketing environment and recognizing threats and
environmental scanning opportunities arising from changes within it help companies with strategic planning. In par-
The process of collecting ticular, they can help marketing managers assess the performance of current marketing efforts
information about forces in the and develop future marketing strategies.
marketing environment
environmental analysis
The process of assessing and Responding to the Marketing Environment
interpreting the information
gathered through environmental Marketing managers take two general approaches to environmental forces: accepting them
scanning as uncontrollable or attempting to influence and shape them. An organization that views
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