The Marketing EnvironmentThe Marketing Environment

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Marketing Marketing EnvironmentEnvironment

• Environment offers both opportunities and Environment offers both opportunities and threats.threats.

• Marketing intelligence and research used to Marketing intelligence and research used to collect information about the environment.collect information about the environment.

The marketing environment consists of The marketing environment consists of actors and forces outside the organization actors and forces outside the organization that affect management’s ability to build that affect management’s ability to build

and maintain relationships with target and maintain relationships with target customers.customers.

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The Company’s environmentThe Company’s environment

• Company’s Internal Environment:Company’s Internal Environment: – Structure of companyStructure of company

– CultureCulture

– ResourcesResources

• Companies External EnvironmentCompanies External Environment

– Microenvironment:Microenvironment: actors close to the company that actors close to the company that affect its ability to serve its customers.affect its ability to serve its customers.

– Macro environment:Macro environment: larger societal forces that affect larger societal forces that affect the microenvironment.the microenvironment.

• Considered to be beyond the control of the organization.Considered to be beyond the control of the organization.

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Company

Demographic

Economic

Natural

Technological

Political

Cultural Company

Customers

Intermediaries

Suppliers

Competitors

Publics

Micro Environment

Macro Environme

nt

Marketing Marketing EnvironmentEnvironment

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Actors in the MicroenvironmentActors in the Microenvironment

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The Company (Internal The Company (Internal Marketing)Marketing)

– Marketing must consider other parts of the Marketing must consider other parts of the organization includingorganization including• FinanceFinance

• R&DR&D

• PurchasingPurchasing

• Operations and Operations and

• AccountingAccounting

– Marketing decisions must relate to broader Marketing decisions must relate to broader company goals and strategiescompany goals and strategies

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• Suppliers: Suppliers:

– Provide resources Provide resources needed to produce needed to produce goods and services.goods and services.

– Marketers must watch Marketers must watch supply availability and supply availability and pricingpricing

– Important link in the Important link in the “value delivery “value delivery system.”system.”

– Most marketers treat Most marketers treat suppliers like partners.suppliers like partners.

The Company’s The Company’s MicroenvironmentMicroenvironment

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The Company’s The Company’s MicroenvironmentMicroenvironment

• Marketing Intermediaries: Marketing Intermediaries:

– Help the company to promote, sell, and Help the company to promote, sell, and distribute its goods to final buyersdistribute its goods to final buyers

•ResellersResellers

•Physical distribution firmsPhysical distribution firms

•Marketing services agenciesMarketing services agencies

•Financial intermediariesFinancial intermediaries

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Partnering With IntermediariesPartnering With Intermediaries

Coca-Cola provides Wendy’s with much more than just soft drinks. It also pledges powerful marketing support.

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• Customers:Customers: – Five types of Five types of

customer markets customer markets that purchase a that purchase a company’s goods and company’s goods and servicesservices•ConsumerConsumer

•BusinessBusiness

•ResellerReseller

•GovernmentGovernment

• InternationalInternational

The Company’s The Company’s MicroenvironmentMicroenvironment

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The Company’s The Company’s MicroenvironmentMicroenvironment

• Competitors: Competitors: – Those who serve a target market with Those who serve a target market with

products and services that are viewed by products and services that are viewed by consumers as being reasonable substitutesconsumers as being reasonable substitutes

– Company must gain strategic advantage Company must gain strategic advantage against these organizationsagainst these organizations

– Conducting competitor analysis is critical for Conducting competitor analysis is critical for success of the firmsuccess of the firm

– A marketer must monitor its competitors’ A marketer must monitor its competitors’ offerings to create strategic advantageofferings to create strategic advantage

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PublicPublicss

Group that has an interest in or impact on an Group that has an interest in or impact on an organization's ability to achieve its objectivesorganization's ability to achieve its objectives

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The MacroenvironmentThe Macroenvironment

• The company and all of the other The company and all of the other actors operate in a larger actors operate in a larger macroenvironment of forces that shape macroenvironment of forces that shape opportunities and pose threats to the opportunities and pose threats to the company.company.

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The Company’s The Company’s MacroenvironmentMacroenvironment

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The Company’s The Company’s MacroenvironmentMacroenvironment• Demographic: Demographic:

– The study of human populations in terms of size, The study of human populations in terms of size, density, location, age, gender, race, occupation, density, location, age, gender, race, occupation, and other statistics.and other statistics.

– Marketers track changes with respect toMarketers track changes with respect to• Age and GenerationsAge and Generations

• House hold Patterns/ House hold makeup (FLCS)House hold Patterns/ House hold makeup (FLCS)

• Population size and growth ratePopulation size and growth rate

• Geographic Shifts in PopulationGeographic Shifts in Population

• Better Educated PopulationBetter Educated Population

• Ethnic mix.Ethnic mix.

• Increasing Diversity Increasing Diversity

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The Seven U.S. GenerationsThe Seven U.S. Generations

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Baby BoomersBaby Boomers

• 78 million born between 1946 and 196478 million born between 1946 and 1964

• Account for 28% of populationAccount for 28% of population

• Earn more than half of all personal Earn more than half of all personal incomeincome

• Almost 25% belong to racial or ethnic Almost 25% belong to racial or ethnic minorityminority

• Spend a lot on anti-aging products and Spend a lot on anti-aging products and servicesservices

• Are likely to postpone retirementAre likely to postpone retirement

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Generation XGeneration X

• 45 million born between 1965 and 45 million born between 1965 and 19761976

• Defined by their shared experiencesDefined by their shared experiences– Increasing divorce ratesIncreasing divorce rates– More of their mothers employedMore of their mothers employed– First generation of latchkey kidsFirst generation of latchkey kids

• Cynical of frivolous marketing pitchesCynical of frivolous marketing pitches

• Care about the environmentCare about the environment

• Prize experience, not acquisitionPrize experience, not acquisition

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Generation YGeneration Y

• 72 million born between 1977 and 72 million born between 1977 and 19941994

• Have large amount of disposable Have large amount of disposable incomeincome

• Comfortable with computer technologyComfortable with computer technology

• Tend to be impatient and “Now-Tend to be impatient and “Now-Oriented”Oriented”

• Many product lines targeted at Gen YsMany product lines targeted at Gen Ys

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• Pair with another student to discuss Pair with another student to discuss the following questions:the following questions:– In what ways does the buying behavior In what ways does the buying behavior

of you and your parents differ?of you and your parents differ?– In what ways does the buying behavior In what ways does the buying behavior

of you and your grandparents differ?of you and your grandparents differ?– What selling strategies would work best What selling strategies would work best

for:for:•YouYou

•Your parentsYour parents

•Your grandparentsYour grandparents

Interactive Student Assignment

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Diversity-Based AdvertisingDiversity-Based Advertising

Based on careful study of cultural differences, Bank of America has developed targeted advertising messages for different cultural subgroups, here Asians and Hispanics.

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Economic EnvironmentEconomic Environment

• Changes in Income levelChanges in Income level

• Income DistributionIncome Distribution– Upper classUpper class– Middle classMiddle class– Working classWorking class– UnderclassUnderclass

Consists of factors that affect consumer purchasing power and spending patterns. it

includes• IncomeIncome• SavingsSavings• GiftsGifts• DebtDebt• Credit availabilityCredit availability

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Income DistributionIncome Distribution

Walt Disney markets two distinct Pooh bears to match its two-tiered market.

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Natural EnvironmentNatural Environment

• Involves the natural Involves the natural resources that are needed resources that are needed as inputs by marketers or as inputs by marketers or that are affected by that are affected by marketing activities.marketing activities.

• Types of Resources Types of Resources – Infinite resources Infinite resources (air and (air and

water)water)– Finite renewable resources Finite renewable resources

(forest and food)(forest and food)– Fininte nonrenueable Fininte nonrenueable

resources resources (Oil and minerals)(Oil and minerals)

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Factors Impacting the Natural Factors Impacting the Natural EnvironmentEnvironment

Shortages of Raw Materials

Increased Pollution

Increased Government Intervention

Environmentally Sustainable Strategies

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Environmental ResponsibilityEnvironmental Responsibility

McDonald’s has made a substantial commitment to the so-called “green movement.”

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Technological Technological EnvironmentEnvironment

•Most Most dramatic dramatic force now force now shaping our shaping our destiny.destiny.

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Technological EnvironmentTechnological Environment

• Changes rapidly.Changes rapidly.• Creates new markets Creates new markets

and opportunities.and opportunities.• Challenge is to make Challenge is to make

practical, affordable practical, affordable products.products.

• Safety regulations Safety regulations result in higher result in higher research costs and research costs and longer time between longer time between conceptualization and conceptualization and introduction of introduction of product.product.

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• Within the last ten years, which Within the last ten years, which technological force has had the technological force has had the greatest impact on marketing? In greatest impact on marketing? In what areas of marketing has this what areas of marketing has this impact been seen?impact been seen?

• What technological force has What technological force has impacted you the most? In what ways impacted you the most? In what ways has this occurred?has this occurred?

Discussion Questions

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Political EnvironmentPolitical Environment

Includes Laws, Government Agencies, and Pressure Groups that Influence or Limit Various Organizations and Individuals In a Given Society.

Increasing Legislation

Changing GovernmentAgency Enforcement

Increased Emphasis on Ethics& Socially Responsible Actions

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Cultural EnvironmentCultural Environment

• The institutions and The institutions and other forces that affect a other forces that affect a society’s basic values, society’s basic values, Beliefs, Norms, Beliefs, Norms, perceptions, preference, perceptions, preference, and behaviors.and behaviors.

• Types of beliefsTypes of beliefs– Core beliefsCore beliefs– Secondary beliefsSecondary beliefs

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ThemselvesThemselves

OthersOthers

OrganizationsOrganizations

SocietySociety

NatureNature

The UniverseThe Universe

Cultural Cultural EnvironmentEnvironment

Society’s Major Cultural Views Are

Expressed in People’s Views of:

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Responding to the Marketing Responding to the Marketing EnvironmentEnvironment

• Environmental Management Perspective Environmental Management Perspective •Taking a proactive approach to managing Taking a proactive approach to managing

the environment by taking aggressive the environment by taking aggressive (rather than reactive) actions to affect the (rather than reactive) actions to affect the publics and forces in the marketing publics and forces in the marketing environment. environment.

•This can be done by:This can be done by:– Hiring lobbyistsHiring lobbyists– Running “advertorials”Running “advertorials”– Pressing lawsuitsPressing lawsuits– Filing complaintsFiling complaints– Forming agreements to control channelsForming agreements to control channels

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Rest Stop: Reviewing the Rest Stop: Reviewing the ConceptsConcepts

• Describe the environmental forces that Describe the environmental forces that affect the company’s ability to serve its affect the company’s ability to serve its customers.customers.

• Explain how changes in the demographic Explain how changes in the demographic and economic environments affect and economic environments affect marketing decisions.marketing decisions.

• Identify the major trends in the firm’s Identify the major trends in the firm’s natural and technological environments.natural and technological environments.

• Explain the key changes in the political and Explain the key changes in the political and cultural environments.cultural environments.

• Discuss how companies can react to the Discuss how companies can react to the marketing environment.marketing environment.

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How to scan the environmentHow to scan the environment

• Value chainValue chain

• Porters five forces modelPorters five forces model

• SWOT analysisSWOT analysis

• PEST analysisPEST analysis

• TOWS analysisTOWS analysis