Chapter 2 Summary

Marketing takes place in a dynamic environment. A proactive organization consistently scans the external environment for both opportunities and threats. This chapter identifies the economic, political & legal, social, natural, technological, and competitive environments as components of the external environment that exert major influences on the marketing function.

The economic environment encompasses variables such as interest rates, business cycles, spending patterns, and consumer income. The political environment refers to the way a society organizes itself at the governmental level. The legal environment refers to the specific rules and regulations that exist at the federal, state, local, and consumer levels and exerting influence on the marketing function.

The social environment includes the people in society and their associated values, beliefs, and behaviors. This includes an examination of the demographic characteristics of a population along with its associated trends. Changes in demographic trends can lead to creation, elimination, or resizing of a marketing opportunity. The natural environment is made up of the natural resources available to or affected by the organization. The technological environment refers to competencies that lead to new or improved products or services. The competitive environment deals with the number and types of competitors in the market.