Analyzing the Marketing Environment

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Analyzing the MarketingEnvironment
Chapter 1
Chapter 3
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Rest Stop Previewing the Concepts

• 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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Case Study
McDonalds Responding to Change

• Challenges
• Faced shifting consumer lifestyles and a sales
  growth slump of 3 between 1997 and 2000. Posted
  first quarterly loss in 2002.
• McDonalds was losing share to the fast casual
  restaurant segment because consumers wanted
  healthier, better-tasting food in more upscale,
  fashionable surroundings.
• Named as the defendant in a highly publicized law
  suit.
• Response Introduced Plan to Win in early 2003.

• Plan to Win
• Focused on consistent products and reliable
  servicecore competencies.
• Introduced the Its what I eat and what I do. .
  . Im loving it ad campaign and revamped Web
  site to help consumers understand how to live
  balanced, active lives. Involved nutrition
  experts in menu redesign.
• Added upscale restaurants, such as McCafe coffee
  shops and offered healthier food options Go
  Active! Adult Happy Meal white meat McNuggets
  various salads.
• Results Increased sales by 42 while profits
  quadrupled.

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Marketing Environment

• Consists of actors and forces outside of the
  organization that affect managements ability to
  build and maintain relationships with target
  customers.
• The marketing environment is made the actors and
  forces outside marketing that affect marketing
  managements ability to develop and maintain
  successful relationships with its target
  customers.
• Studying the environment allows marketers to take
  advantage of opportunities as well as to combat
  threats.
• Marketing intelligence and research are used to
  collect information about the environment.

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Marketing Environment

• Includes
• Microenvironment Actors 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 Microenvironment

• Company itself
• Suppliers
• Marketing intermediaries
• Customers
• Competitors
• Publics

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Figure 4.1 The microenvironment
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The Microenvironment

• The company itself
• Areas/departments inside of a company.
• Affects the marketing departments planning
  strategies.
• All departments must think consumer and work
  together to provide superior customer value and
  satisfaction.

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The Microenvironment

• Suppliers
• Provide resources needed to produce goods and
  services.
• Important link in the value delivery system.
• Most marketers treat suppliers like partners.

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The Microenvironment

• Marketing intermediaries
• Help the company to promote, sell, and distribute
  its goods to final buyers.
• Resellers
• Physical distribution firms
• Marketing services agencies
• Financial intermediaries

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The Microenvironment

• Customers
• Five types of markets that may purchase a
  companys goods and services.
• Consumer
• Business
• Reseller
• Government
• International

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Customers
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The Microenvironment

• Competitors
• Those who serve a target market with products and
  services that are viewed by consumers as being
  reasonable substitutes for the firms products or
  services.
• Company must seek to gain strategic advantage
  against these organizations.

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The Microenvironment

• Publics
• Any group that has an interest in or impact on an
  organizations ability to achieve its objectives.
  
• Financial public
• Media public
• Government public
• Citizen-action public
• Local public
• General public
• Internal public

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The Macroenvironment

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

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The companys macroenvironment
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The Macroenvironment

• Forces in the macroenvironment can be categorized
  as
• Demographic
• Economic
• Natural
• Technological
• Political
• Cultural

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Demographic Environment

• Demographics
• The study of human populations in terms of size,
  density, location, age, gender, race, occupation,
  and other statistics.
• Marketers track changing age and family
  structures, geographic population shifts,
  educational characteristics, and population
  diversity at home and abroad.

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Demographic Environment

• The changing age structure of the U.S. population
  is the single most important demographic trend.
• Baby boomers, Generation X, and the Millennials
  are key generational groups.

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Demographic Environment

• Baby boomers
• 78 million born between 1946 and 1964.
• Nearly 30 of population.
• Spend 2.3 trillion annually and hold ¾ of the
  nations financial assets.
• Spend 30 billion annually on anti-aging products
  and services strong market for financial
  services, new housing, travel, etc.
• Are likely to postpone retirement.

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Demographic Environment

• Generation X
• 49 million born between 1965 and 1976.
• Defined by shared experiences
• Increased parental divorce rates and more
  employed mothers made Generation X the first of
  the latchkey kids.
• Gen X developed a more cautious economic outlook
  due to recessions and downsizing that were common
  when they grew up.

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Demographic Environment

• Generation X
• Cares about the environment.
• Prizes experience, not acquisition.
• Family comes first, career second.
• Skeptical of marketing messages researches
  purchases carefully, uses communities to share
  information.
• Represents close to 1.4 trillion in annual
  purchasing power.

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Demographic Environment

• Millennials
• 83 million born between 1977 and 2000larger than
  baby boomer segment.
• Includes tweens, teens, and young adults.
• Ethnically diverse.
• Fluent with computer and digital technology.
• Personalization and product customization are key
  to marketing success.

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Demographic Environment

• The American family and household makeup is
  changing
• Traditional households are in decline
• Married couples with children 23
• Non-traditional households are growing
• Married without children 29
• Single parents 16
• Non-family households 32
• Special needs of non-traditional households are
  increasingly being considered by marketers.

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Demographic Environment

• Geographic shifts in population
• 14 of U.S. residents move each year.
• General shift toward the Sunbelt states.
• City to suburb migration continues.
• More people are moving to micropolitan areas.
• More people telecommute
• 1 in 10 people now work out of their home.
• Home office segment is being targeted.

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Demographic Environment

• Better educated population
• 1980
• 69 of people over age 25 completed high school
  17 had completed college.
• 2004
• 86 of people over age 25 completed high school
  28 had completed college.
• Increasing demand for quality products,
  books/magazines, computers, travel, etc.

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Demographic Environment

• Increasing white-collar population
• 19501985
• White-collar workers increased from 41 to 54,
  while blue-collar workers decreased from 47 to
  33.
• 19831999
• Professionals and managers increased from 23 to
  greater than 30.
• 20042012
• Professionals should increase by 21 while
  manufacturing is expected to decline by 5.

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Demographic Environment

• Increasing diversity
• The United States is an ethnic salad bowl.
• Ethnic segments will continue to grow as a
  percentage of the U.S. population.
• Marketers target specially designed ads,
  products, and promotions at ethnic groups.
• Marketing efforts are increasing toward
• Gay and lesbian consumers.
• People with disabilities.

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Economic Environment

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

• Changes in income
• 1990sconsumption frenzy, record debt
• 2000ssqueezed consumer
• Marketers focus on offering greater value

• Income distribution
• Upper class getting wealthier
• Middle class shrinkingin size
• Working class
• Underclass remain poor

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European Union enlargement and integration

• Goal to achiever economic integration among
  member states
• Established in 1993 by the Treaty on European
  Union (The Maastricht Treaty)
• Largest economy in the world
• GDP of 11.6 million
• 35 of worlds GDP
• Worlds largest exporter
• Worlds second largest importer

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Income distribution
Upper income
Middle income
Lower income
Underclass
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How should we market to the
very wealthy?

• Remember the wealthy are just like us
• Recognize that the super-rich are not
  one culture
• Know that the very wealthy can indulge their
  tastes
• To sell to the rich, you must know how and where
  they live, where they go, what they do

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Natural environment trends

• Growing shortage of raw materials
• Increased cost of energy
• Increased pollution and climate change
• Government intervention in natural resource
  management

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Natural Environment

• Involves natural resources that are needed as
  inputs by marketers or that are affected by
  marketing activities.
• Factors include
• Shortages of raw materials
• Increased pollution
• Increased government intervention
• Environmentally sustainable strategies

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Technological Environment

• Most dramatic force shaping our destiny.
• Changes rapidly, creating new markets and
  opportunities and/or danger of products becoming
  obsolete.
• Challenge is to make practical, affordable new
  products.
• Safety regulations result in higher research
  costs and longer time between product
  conceptualization and introduction.

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Trends in the technological environment

• Fast pace of technological change
• Increased regulation

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Political Environment

• Includes laws, government agencies, and pressure
  groups that influence or limit various
  organizations and individuals in a given society.
• Areas of concern
• Increasing legislation.
• Changing government agency enforcement.
• Increased emphasis on ethics and socially
  responsible behavior.

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Public policy implications

• Laws are created at different levels
• Member states vary in the extent to which they
  comply with EU legislation
• Regulations are constantly changing

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Marks Spencer participates
in cause-related marketing
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Cultural Environment

• The institutions and other forces that affect a
  societys basic values, perceptions, preferences,
  and behaviors.
• Core beliefs and values are passed on from
  parents to children and are reinforced by
  schools, churches, business, and government.
• Secondary beliefs and values are more open to
  change.
• Marketers may be able to change secondary
  beliefs, but NOT core beliefs.

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Cultural Environment

• Societys major cultural views are expressed in
  peoples views of
• Themselves
• Others
• Organizations
• Society
• Nature
• The universe

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Cultural characteristics affecting
marketing decision making

• Persistence of cultural values
• Shifts in secondary cultural values
• Peoples views of themselves
• Peoples views of others
• Peoples views of organisations
• Peoples views of society
• Peoples views of nature
• Peoples views of the universe

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Consumer segments related to views of self

• I am expressive
• I am driven
• I am at capacity
• I am rock steady
• I am down to earth
• I am sophisticated
• I measure twice
• I am devoted

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Responding to theMarketing Environment

• Reactive responses
• Many firms simply react to changes in the
  marketing environment.
• Proactive responses
• Some firms attempt to manage the marketing
  environment via aggressive actions designed to
  affect the publics and forces in the marketing
  environment.

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Responding to theMarketing Environment

• Examples of proactive responses
• Hiring lobbyists
• Running advertorials
• Pressing law suits
• Filing complaints
• Forming agreements to control channels

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Rest Stop Reviewing the Concepts

• 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.