The Marketing Environment

1. 3 The Marketing Environment

2. ROAD MAP: Previewing the Concepts • Describe the environmental forces that affect the company’s ability to serve its customers. • Explain how changes in the demographic and economic environments affect marketing decisions. • Identify the major trends in the firm’s natural and technological environments. • Explain the key changes in the political and cultural environments. • Discuss how companies can react to the marketing environment.

3. Marketing Environment • The marketing environment consists of actors and forces outside the organization that affect management’s ability to build and maintain relationships with target customers. • Environment offers both opportunities and threats. • Marketing intelligence and research used to collect information about the environment.

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

5. The Company’s Microenvironment • Company’s Internal Environment: • Areas inside a company. • Affects the marketing department’s planning strategies. • All departments must “think consumer” and work together to provide superior customer value and satisfaction.

6. Actors in the Microenvironment

7. The Company’s Microenvironment • Suppliers: • Provide resources needed to produce goods and services. • Important link in the “value delivery system.” • Most marketers treat suppliers like partners.

8. The Company’s Microenvironment • Marketing Intermediaries: • Help the company to promote, sell, and distribute its goods to final buyers.

9. The Company’s Microenvironment • Customers: • They purchase a company’s goods and services

10. The Company’s Microenvironment • Competitors: • Those who serve a target market with products and services that are viewed by consumers as being reasonable substitutes • Company must gain strategic advantage against these organizations (competitive advantage)) • Publics: • Group that has an interest in or impact on an organization's ability to achieve its objectives (

11. Types of Publics

12. 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.

13. The Company’s Macroenvironment

14. The Company’s Macroenvironment • 1. Demographic: • 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.

15. The Seven U.S. Generations

16. Baby Boomers • 78 million born between 1946 and 1964 • Account for 28% of population • Earn more than half of all personal income • Almost 25% belong to racial or ethnic minority • Spend a lot on anti-aging products and services • Are likely to postpone retirement

17. Generation X • 45 million born between 1965 and 1976 • Defined by their shared experiences • Increasing divorce rates • More of their mothers employed • First generation of latchkey kids • Cynical of frivolous marketing pitches • Care about the environment • Prize experience, not acquisition

18. Generation Y • 72 million born between 1977 and 1994 • Have large amount of disposable income • Comfortable with computer technology • Tend to be impatient and “Now-Oriented” • Many product lines targeted at Gen Ys

19. Interactive Student Assignment • Pair with another student to discuss the following questions: • In what ways does the buying behavior of you and your parents differ? • In what ways does the buying behavior of you and your grandparents differ? • What selling strategies would work best for: • You • Your parents • Your grandparents

20. Changing American Family • Household makeup: • Married couples with children = 34%, and falling • Married couples and people living with other relatives = 22% • Single parents = 12% • Single persons and adult “live-togethers” = 32%

21. The Changing American Family Non-family households—single live-alones or adult live-togethers of one or both sexes—make up a full 32 percent of U.S. households. Today’s marketers must incorporate “the likes of Murphy Brown, Ally McBeal, and Will and Grace into their business plans.”

22. Geographic Shifts in Population • 16% of U.S. residents move each year • General shift toward the Sunbelt states • City to suburb migration continues • More people moving to “micropolitan” areas • More people telecommute

23. Better Educated Population • 1980: • 69% of people over age 25 completed high school • 17% had completed college • 2002: • 84% of people over age 25 completed high school • 27% had completed college • Currently, ⅔ of high school grads start college

24. More White-Collar Population • 1950 – 1985: • Proportion of white-collar workers increased from 41% to 54% • Proportion of blue-collar workers decreased from 47% to 33% • Proportion of service workers increased from 12% to 14% • 1983 – 1999: • Proportion of managers and professionals increased from 23% to >30%

25. Increasing Diversity • U.S. is a “salad bowl” • Various groups mixed together, each retaining its ethnic and cultural differences • Increased marketing to: • Gay and lesbian consumers • People with disabilities • www.peapod.com

26. Diversity-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.

27. Changes in Income 1980’s – consumption frenzy 1990’s – “squeezed consumer” 2000’s – value marketing Income Distribution Upper class Middle class Working class Underclass 2. Economic Environment Consists of factors that affect consumer purchasing power and spending patterns.

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

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

30. Factors Impacting the Natural Environment Shortages of Raw Materials Increased Pollution Increased Government Intervention Environmentally Sustainable Strategies

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

32. 4. Technological Environment • Most dramatic force now shaping our destiny.

33. Technological Environment • Changes rapidly. • Creates new markets and opportunities. • Challenge is to make practical, affordable products. • Safety regulations result in higher research costs and longer time between conceptualization and introduction of product.

34. Discussion Questions • Within the last ten years, which technological force has had the greatest impact on marketing? In what areas of marketing has this impact been seen? • What technological force has impacted you the most? In what ways has this occurred?

35. 5. Political Environment Includes Laws, Government Agencies, and Pressure Groups that Influence or Limit Various Organizations and Individuals In a Given Society. Increasing Legislation Changing Government Agency Enforcement Increased Emphasis on Ethics & Socially Responsible Actions Cause-Related Marketing

36. Cause-Related Marketing KitchenAid donates $50 to breast cancer research for every pink mixer it sells and encourages consumers to host a “Cook for the Cure” dinner party.

37. 6. Cultural Environment • The institutions and other forces that affect a society’s basic values, perceptions, preference, and behaviors.

38. Cultural Environment • Core beliefs and values are passed on from parents to children and are reinforced by schools, mosques, business, and government. • Secondary beliefs and values are more open to change.

39. Responding to the Marketing Environment • Environmental Management Perspective • Taking a proactive approach to managing the environment by taking aggressive (rather than reactive) actions to affect the publics and forces in the marketing environment. • This can be done by: • Hiring lobbyists • Running “advertorials” • Pressing lawsuits • Filing complaints • Forming agreements to control channels

40. Rest Stop: Reviewing the Concepts • Describe the environmental forces that affect the company’s ability to serve its customers. • Explain how changes in the demographic and economic environments affect marketing decisions. • Identify the major trends in the firm’s natural and technological environments. • Explain the key changes in the political and cultural environments. • Discuss how companies can react to the marketing environment.