Learning Objectives

2. Learning Objectives After studying this chapter, you should be able to: • 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. Chapter Outline • The Company’s Microenvironment • The Company’s Macroenvironemnt • Responding to the Marketing Environment

4. The Marketing Environment Themarketing environmentincludes the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with customers.

5. The Marketing Environment Marketing Environment The microenvironmentconsists of the actors close to the company that affect its ability to serve its customers, the company, suppliers, marketing intermediaries, customer markets, competitors, and publics.

6. The Marketing Environment Marketing Environment The macroenvironmentconsists of the larger societal forces that affect the microenvironment. • Demographic • Economic • Natural • Technological • Political • Cultural

7. The Company’s Microenvironment • The company • Suppliers • Marketing intermediaries • Customers • Competitors • Publics

8. The Company’s Microenvironment The Company Internal environment includes: • Top management • Finance • R&D • Purchasing • Operations • Accounting

9. The Company’s Microenvironment Suppliers • Provide the resources to produce goods and services • Treated as partners to provide customer value

10. Marketing Intermediaries Help the company to promote, sell, and distribute its products to final buyers Include: Resellers Physical distribution firms Marketing services agencies Financial intermediaries The Company’s Microenvironment

11. The Company’s Microenvironment Marketing Intermediaries • Resellersare the distribution channel firms that help the company find customers or make sales to them. These include: • Wholesalers • Retailers • Physical distribution firms are the distribution channel firms that help the company to stock and move goods from their points of origin to their final destination.

12. The Company’s Microenvironment Marketing Intermediaries • Marketing service agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets. • Financial intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods.

13. The Company’s Microenvironment Customers Customer marketsconsist of individuals and households that buy goods and services for personal consumption. Business markets buy goods and services for further processing or for use in their production process.

14. The Company’s Microenvironment Customers • Reseller marketsbuy goods and services to resell at a profit. • Government markets buy goods and services to produce public services or transfer goods and services to others who need them. • International markets consist of buyers in other countries including consumers, producers, resellers, and governments.

15. The Company’s Microenvironment Competitors • Firms must gain strategic advantage by positioning their offerings against competitors’ offerings. • Each firm should consider its own size and industry position compared to those of its competitors.

16. Publics Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives: Financial publics Media publics Government publics Citizen-action publics Local publics General public Internal publics The Company’s Microenvironment

17. The Company’s Microenvironment Publics • Financial publicsinfluence the company’s ability to obtain funds—banks, investment houses, and stockholders. • Media publicscarry news, features, and editorial opinion—newspapers, magazines, and radio and television stations. • Government publics influence product safety and truth in advertising.

18. The Company’s Microenvironment Publics • Citizen-action publicsinclude consumer organizations, environment groups, and minority groups • Local publics include neighborhood residents and community organizations • General publics influence the company’s public image • Internal publics include workers, managers, volunteers, and directors

19. The Company’s Macroenvironment • Demographic environment • Economic environment • Natural environment • Technological environment • Political environment • Cultural environment

20. The Company’s Macroenvironment Demographic Environment • Demographyis the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. • Demographic environment is important because it involves people, and people make up markets. • Demographic trends include age, family structure, geographic population shifts, educational characteristics, and population diversity.

21. The Company’s Macroenvironment Demographic Environment Changing Age Structure of the Population • Generational marketingis important in segmenting people by lifestyle of life state instead of age.

22. The Company’s Macroenvironment Demographic Environment Changing Age Structure of the Population • Baby boomersinclude people born between 1946 and 1964 • Includes most affluent Asians

23. The Company’s Macroenvironment Demographic Environment Changing Age Structure of the Population • Generation X includes people born between 1965 and 1976. They tend to: • Have high divorce rates • Are concerned about the environment • Respond to socially responsible companies • Are less materialistic • Emphasize quality of life • Consumer organizations, environment groups, and minority groups

24. The Company’s Macroenvironment Demographic Environment Changing Age Structure of the Population • Generation Y includes people born between 1977 and 1994. • The Internet generation

25. The Company’s Macroenvironment Demographic Environment The Changing Asian Family More people are: • Divorcing or separating • Choosing not to marry • Choosing to marry later • Marrying without intending to have children • Higher divorce rates • Increased number of working women • More stay-at-home dads

26. The Company’s Macroenvironment Demographic Environment Geographic Shifts in Population • Trends include: • Migratory movements between and within countries • Moving from rural to metropolitan areas • Changes in where people work • Telecommuting • Home office • Divorce or separation

27. The Company’s Macroenvironment Demographic Environment Changes in the Workforce Trends include: • More educated • More white collar • More professional

28. Demographic Environment Increasing Diversity Markets are becoming more diverse International National Trends include: Ethnicity Gay and lesbian Disabled The Company’s Macroenvironment

29. The Company’s Macroenvironment Economic Environment • Economic environment consists of factors that affect consumer purchasing power and spending patterns. • Subsistence economies consume most of their own agriculture and industrial output. • Industrial economies are richer markets.

30. The Company’s Macroenvironment Economic Environment Changes in Income • Value marketing involves ways to offer financially cautious buyers greater value—the right combination of quality and service at a fair price. • Income distribution • Upper-class consumers • Middle-class consumers • Working-class consumers • Underclass consumers Changing consumer spending pattern

31. The Company’s Macroenvironment Natural Environment • Natural environmentinvolves the natural resources that are needed as inputs by marketers or that are affected by marketing activities. • Trends • Shortages of raw materials • Increased pollution • Increased government intervention • Environmentally sustainable strategies • Green marketing

32. The Company’s Macroenvironment Technological Environment • Most dramatic force in changing the marketplace with many positive and negative effects • Rapid change • Provides new markets and new opportunities • Internet • Medicine • Miniaturization • Weapons • Credit cards • Communication

33. The Company’s Macroenvironment Political Environment Political environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society.

34. The Company’s Macroenvironment Political Environment • Legislation regulating business • Public policy to guide commerce—sets of laws and regulations that limit business for the good of society at large • Increasing legislation to: • Protect companies • Protect consumers • Protect the interests of society

35. The Company’s Macroenvironment © Yukinobu Zengame Political Environment Increased Emphasis on Ethics and Socially Responsible Actions • Socially responsible behavioroccurs when firms actively seek out ways to protect the long-term interests of their consumers and the environment • Cause-related marketing

36. The Company’s Macroenvironment Cultural Environment The cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors.

37. The Company’s Macroenvironment Cultural Environment Persistence of Cultural Values • Core beliefs and values have a high degree of persistence, are passed on from parents to children, and are reinforced by schools, churches, businesses, and government. • Secondary beliefs and values are more open to change.

38. The Company’s Macroenvironment Cultural Environment Shifts in Secondary Cultural Values • Major cultural values of a society are expressed in people’s view of: • Themselves • Others • Organization • Society • Nature and the universe

39. The Company’s Macroenvironment Cultural Environment Shifts in Secondary Cultural Values • People’s view of themselves • Yankelovich Monitor’s consumer segments: • Do-It-Yourselfers—recent movers • Adventurers • People’s view of others

40. The Company’s Macroenvironment Cultural Environment Shifts in Secondary Cultural Values • People’s view of organizations • People’s view of society • Patriots defend it • Reformers want to change it • Malcontents want to leave it

41. The Company’s Macroenvironment Cultural Environment Shifts in Secondary Cultural Values • People’s view of nature • Some feel ruled by it • Some feel in harmony with it • Some seek to master it • People’s view of the universe • Renewed interest in spirituality

42. Responding to the Marketing Environment Views on Responding • Uncontrollable • Reacting and adapting to forces in the environment • Proactive • Taking aggressive actions to affect forces in the environment • Reactive • Watching and reacting to forces in the environment