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The Marketing Environment
Week 2 - 09.20.04Week 2 - 09.20.04
CompetitionCompetition
SuppliersSuppliers
IntermediariesIntermediaries
Marketing Environment
DemographicsDemographics
SocialChangeSocial
Change
EconomicConditionsEconomicConditions
Political & Legal FactorsPolitical &
Legal Factors
TechnologyTechnology Target Market
Internal Environment
Internal Environment
External-Macro Environment External-Macro Environment is not controllableis not controllable
Ever-ChangingEver-ChangingMarketplaceMarketplace
Micro Environment Micro Environment is not totally controllableis not totally controllable
EnvironmentalEnvironmentalScanningScanning
Marketing Environment
Marketing Environment- consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers.
Includes: Microenvironment - forces close to the company
that affect its ability to serve its customers. Macroenvironment - larger societal forces that
affect the microenvironment.
The Company’s Microenvironment
Company’s Internal Environment- functional areas inside a company that have an impact on the marketing department’s plans.
Suppliers - provide the resources needed to produce goods and services and are an important link in the “value delivery system”.
Marketing Intermediaries - help the company to promote, sell, and distribute its goods to final buyers. i.e. resellers.
Company’s Internal Environment
The Company’s Microenvironment
Competitors - those who serve a target market with similar products and services against whom a company must gain strategic advantage.
Publics - any group that perceives itself having an interest in a company’s ability to achieve its objectives.
Competition Story
Weyerhaeuser’s Personal Care Products Division launched Ultrasofts in early 1990. It used Wegman’s Food Markets chain as its distributor. Much fanfare and major advertising accompanied the product launch; 50,000 customers received promotional discounts. The product was technically superior to Pampers and Huggies, the leading U.S.
premium brands. The diaper had extra cushy waistbands and cuffs to prevent leakage. It was softer than competitive products because it had a cloth-like covering instead of the plastic covering typical of competitive products. Its super-absorbent pulp material woven into the pad kept babies drier than did other diaper brands. Ultrasofts cost $8.39 for a package of thirty-two diapers, about $1.60 less than competing brands. Pilot tests in the market showed that parents
preferred Ultrasofts two-to-one over leading brands.Despite these technological advantages and consumer support, Ultrasofts failed. Weyerhaeuser’s competitive strategy
was simply deficient in dealing with the fierce competition in the diaper industry. Weyerhaeuser did not have good estimates of demand for the product and market share distributions. Its strategy of supplying through a regional
distributor limited its demand. Suppliers of lining materials did not want to enter into long-term contracts for small quantities. Weyerhaeuser’s own production plant in Bowling Green, Kentucky, was too small for large-scale
production, which prevented the company from exploiting economies of scale.Weyerhaeuser also underestimated the fight for shelf space in the fiercely competitive retailing industry. Within six
months of launching Ultrasofts, the company raised prices by 22% to cover extra manufacturing costs. It also cut back on promotions. Simultaneously, Procter & Gamble and Kimberly-Clark – big national competitors – responded to
Weyerhaeuser’s entry into the market by aggressively promoting their own brands. They gave special price discounts to retailers and customers. Retailers became reluctant to give shelf space to Ultrasofts. Customers switched to lower-priced alternatives. Within a year of launching Ultrasofts, Weyerhaeuser withdrew it from the market and sustained a
large, unspecified loss.
Exhibit 2.9a: Perceptual Map Comparing Variety and Service
1-2-3
Types of Publics
PUBLICS
I n this ad,Wal -Martrecogni zes thei mportance ofboth i ts localand employeepubl i cs.
Company
CitizenActionPublics
LocalPublics G
eneral
Public
Intern
al
Publics
Government
Publics
Med
iaPu
blic
s
Financi
al
Public
s
Major Forces in the Company’s Macroenvironment
The Company’s Macroenvironment
Customers - five types of markets that purchase a company’s goods and services.
Demographic - studies populations in terms of size, density, location, age, gender, race, occupation and other statistics.
Economic - factors that affect consumer purchasing power and spending patterns.
Natural - natural resources needed as inputs by marketers or that are affected by marketing activities.
Types of Customer Markets
Government Markets
International
Markets
ResellerMarkets
Business
Markets
Con
sum
er M
arke
ts
Company back
Key U.S. Demographic Trends
Changing Age StructurePopulation is aging; many divisions
Changing American FamilyLater marriage, fewer children, workingwomen, and nontraditional households
Geographic ShiftsMoving to the Sunbelt, suburbs,
“micropolitan areas”
Better-Educated & More White-Collar Increased college attendance
and white-collar workers
Increasing Diversity72% Caucasian, 13% African-American,
11% Hispanic & 3% Asian
back
Age Distribution of the U.S. Population
(78 million people born 1946-1964) One of the most powerful forces shaping
the marketing environment, 30% of population
(45 million people born 1965-1976) More skeptical, cynical of frivolous marketing pitches promising easy
success (72 million people born 1977-1994)
Fluent and comfortable with computer, digital, and Internet
technology (Net-Gens)
GEN Y vs GEN X
GEN Y vs GEN X
GEN Y : Talk to them, Possible?
How
Would you segment your market using generations (GEN Y, GEN X, Baby boomers) if you were in the soft drink market? Why ?
Who would you target and why?
Let’s compare Coke and Pepsi. According to you who is the best in terms of reaching the generation Y? What about other products?
Generation Y
Honda Element Analysis
EconomicDevelopment
EconomicDevelopment
Changes in Income:Value Marketing
Changes in Income:Value Marketing
Changing ConsumerSpending Patterns
Changing ConsumerSpending Patterns
KeyEconomic
Concerns forMarketers
KeyEconomic
Concerns forMarketers
Economic Environment
Natural Environment
Factors Affecting
the Natural
Environment
Shortages of Raw Materials
Increased Pollution
GovernmentalIntervention
Environmentally SustainableStrategies
The Company’sMacroenvironment
Technological - forces that create new technologies, creating new product and market opportunities.
Political - laws, agencies and pressure groups that influence and limit organizations and individuals in a given society.
Cultural - institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors.
Technological Environment
Faster pace of technological change; products are outdated at a rapid pace.
Almost unlimited opportunities being developed daily in health care, space industry, robotics, and bio-genetic field.
Challenge is not only technical, but also commercial – make practical, affordable versions of products.
Increased regulation concerning product safety, individual privacy, and other areas that affect technological changes.
Increasing LegislationIncreasing Legislation
Changing Government
AgencyEnforcement
Changing Government
AgencyEnforcement
Includes Laws, Government Agencies, Etc. that Influence & Limit Organizations/ Individuals in a Given Society
Includes Laws, Government Agencies, Etc. that Influence & Limit Organizations/ Individuals in a Given Society
IncreasedEmphasis on
Ethics &Socially
ResponsibleActions
IncreasedEmphasis on
Ethics &Socially
ResponsibleActions
Political Environment
Cultural Environment
People’s View of Organizations
People’s View of Organizations
People’s View of Nature
People’s View of Nature
People’s View of Themselves
People’s View of Themselves
People’s View of Society
People’s View of Society
People’s View ofthe Universe
People’s View ofthe Universe
People’s View of Others
People’s View of Others
Cultural Valuesof a
Society
Cultural Valuesof a
Society
Responding to the Marketing Environment
Environmental Management Perspective
Taking a proactive approach to managing the microenvironment and the macroenvironment by taking aggressive (rather than passive) actions to affect the publics and forces in the marketing environment.
How? Hire lobbyists , run “advertorials”, press law suits, file complaints, and form agreements.
WAL-MART CASEWAL-MART CASE