Chapter 2

1. Chapter 2 The Marketing Environment

2. 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.

3. 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.

4. Company’s Internal Environment (Fig. 3.1)

5. The Company’s Microenvironment • Customers - five types of markets that purchase a company’s goods and services. • 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.

6. Types of Customer Markets (Fig. 3.2) Reseller Markets Government Markets Business Markets Consumer Markets International Markets Company

7. Types of Publics (Fig. 3.3) Citizen Action Publics Government Publics Local Publics General Public Media Publics Financial Publics Internal Publics Company

8. Major Forces in the Company’s Macroenvironment (Fig. 3.4)

9. The Company’s 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.

10. 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

11. 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)

12. Discussion Connections • Form small groups to identify a company that has done a good job of reacting to: • Baby Boomers, or • Generation X, or • Echo Boomers • What did the company do well? • Compare this company to one that has done a poor job. What did they do poorly?

13. Economic Development Changes in Income: Value Marketing Key Economic Concerns for Marketers Changing Consumer Spending Patterns Economic Environment

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

15. 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.

16. 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.

17. 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 Responsible Actions

18. Cultural Environment People’s View of Themselves People’s View of Others People’s View of the Universe Cultural Values of a Society People’s View of Nature People’s View of Organizations People’s View of Society

19. 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.

20. Review of Concept Connections • 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.