Lecture 3A

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Lecture 3A

• The Marketing Environment

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Marketing Environment

• Marketing Environment- consists of the actors and
  forces outside marketing that affect marketing
  managements 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.

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The Companys Microenvironment

• Companys Internal Environment- functional areas
  inside a company that have an impact on the
  marketing departments 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.

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The Companys Microenvironment

• 4. Customers - five types of markets that
  purchase a companys goods and services.
• 5. Competitors - those who serve a target market
  with similar products and services against whom a
  company must gain strategic advantage.
• 6. Publics - any group that perceives itself
  having an interest in a companys ability to
  achieve its objectives.

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Six Major Forces of the Company (Fig. 4.1)
Marketing Intermediaries
Customers
Competitors
Suppliers
Publics
The Company
Marketing
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Companys Internal Environment
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Types of Customer Markets (Fig. 4.2)
Reseller Markets
Government Markets
Business Markets
Consumer Markets
International Markets
Company
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Types of Publics (Fig. 4.3)
Citizen Action Publics
Local Publics
Government Publics
General Public
Media Publics
Financial Publics
Internal Publics
Company
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Major Forces in the Companys Macroenvironment
(Fig. 4.4)
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The Companys Macroenvironment

• 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.

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Key U.S.Demographic Trends
Changing Age Structure Population is aging many
divisions
Changing American Family Later marriage, fewer
children, working women, and nontraditional
households
Geographic Shifts Moving to the Sunbelt, suburbs,
micropolitan areas
Better-Educated More White-Collar Increased
college attendance and white-collar workers
Increasing Diversity 72 Caucasian, 13
African-American, 11 Hispanic 3 Asian
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Age Distribution of the U.S. Population
Baby Boomer Generation

(78 million people born 1946-1964)
One of the most powerful forces
shaping the marketing environment, 30 of
population
Generation X
(45 million people born 1965-1976) More
skeptical, cynical of frivolous marketing pitches
promising easy success
Echo Boomer Generation


(72 million people born 1977-1994)
Fluent and comfortable with computer, digital,
and Internet technology (Net-Gens)
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Economic Environment
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Brief Introduction of Gini Index
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Brief Introduction of Gini Index

• In this analysis, we assume that the society is
  divided into two layers and the group of A of
  total people earns 100-A for easy
  understanding.
• For instance, the Gini Index of 0.7 means the
  rich layer of 15 earns 85 of total income and
  the gap of two layers becomes about 32times
  ?(85/15)/(15/85) 32.1?
• As for the Gini Index of 0.7068 as the income of
  the world, the rich layer of 14.7 earns 85.3 of
  total income and the gap of two layers becomes
  33.9 times even if the income inequality within
  each country is neglected.

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• The Gini Index is 0.3 in "the society where one
  king owns 30 percent of the whole income and the
  other people have others" and also in "the
  society where the citizen layer of 70 gets all
  income and the slave layer of 30 gets nothing".
  There is no clear definition of the difference in
  this case.

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Spending Patten (Engles Law)

• Differences noted over a century ago by Ernst
  Engle in how people shit their spending across
  food, housing, transportation, health care, and
  other goods and serves categories as family
  income rises.
• Family income increases, on food declined, but
  housing keeps constant. (see Table 4.1 on page
  122 of textbook)

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Natural Environment
Shortages of Raw Materials
Factors Affecting the Natural Environment
Environmentally Sustainable Strategies
Increased Pollution
Governmental Intervention
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The CompanysMacroenvironment

• 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 societys basic values, perceptions,
  preferences, and behaviors.

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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.

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Political Environment
Includes Laws, Government Agencies, Etc. that
Influence Limit Organizations/ Individuals in
a Given Society
Increasing Legislation
Changing Government Agency Enforcement
Increased Emphasis on Ethics Socially Responsibl
e Actions
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Cultural Environment

• Core Beliefs
• High degree of persistence,
• American Core beliefs working, getting
  married, giving charity and being honest
• Secondary Beliefs
• More open to change

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Secondary Beliefs and Value
Peoples View of Themselves
Peoples View of Others
Peoples View of the Universe
Cultural Values of a Society
Peoples View of Organizations
Peoples View of Nature
Peoples View of Society
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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.

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Review of Concept Connections

• Describe the environmental forces that affect the
  companys ability to serve its customers.
• Explain how changes in the demographic and
  economic environments affect marketing decisions.
• Identify the major trends in the firms natural
  and technological environments.
• Explain the key changes in the political and
  cultural environments.
• Discuss how companies can react to the marketing
  environment.

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Group Discussion

• The following questions will be discussing in
  groups and you should discuss and find the answer
  in your group and send a representative to
  present your ideas.

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Issue For Discussion (1)

• In the 1930s, President Franklin Roosevelt used
  his cigarette holder as a personal
• trademark. Discuss how the cultural
  environment has changed? Would a president be
  seen smoking today? Considering the rash of
  recent court rulings and settlements concerning
  the tobacco industry, how might a cigarette
  manufacturer market its products differently in
  this new environment? What are the long-term
  prospects for the tobacco industry?

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Issue For Discussion (2)

• Americans are becoming more concerned about the
  natural environment. Explain how this trend
• would affect a company that markets
• (a) sandwich bags,
• (b) tires,
• (c) computers,
• (d) electrical power. Suggest some effective
  responses to these concerns.

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Issue For Discussion (2)

• What do you think is Chinese core beliefs?