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Learn how the marketing environment, including micro & macro factors, influences strategies to build strong customer relationships. Explore key elements such as demographics, economics, and competitors.
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MKT 202Spring 2015 Chapter 3 ANALYZING THE MARKETING ENVIRONMENT
Defining Marketing Environment • Marketing EnvironmentConsists outside actors and forces that affect marketing managements ability to build and maintain successful relationships with customers. Marketers should be environmental trend tracker and opportunity seekers. • A marketer needs to adapt his or her strategies with the changing environment, to meet new marketplace challenges & opportunities. e.g. Xerox. Changed with the time because of change in environment.
Company’s Marketing Environment • A company’s marketing environment is made up of- • Micro-environment actors which are close to company and can affect the ability to serve it’s customers. Elements of this environment are – Company, Suppliers, Marketing Intermediaries, Competitors, Publics. • Macro-environment larger societal forces that affect the overall micro-environment. Such as – Demographic, Economic, Natural, Technological, Political & Cultural forces.
Micro-Environment Factors • Micro-environmentfactors are mostly controllable to some extent in the business atmosphere. Now we will discuss about some key Micro-environment actors - The Company Marketing managers need to take into account, the other departments while making strategies. Departments should work in harmony to ensure superior value and strong customer relationships. E.g. Wal-Mart. Suppliers An important link to company’s customer value delivery system. Suppliers provide important resources. Marketers treat this Suppliers as partners in creating & delivering customer value.
Micro-Environment Factors (con’t) Marketing IntermediariesFirms which can help the marketers/ company to promote, sell, finance and distribute the goods to final buyers. These firms can be of any type, such as – a) Resellers A form of distribution channel that help the firm to find customers to make sales to them. e.g. Wholesalers, Retailers etc. b) Physical Distribution Firms help the company to stock and move goods from their point of origins to final customers. c) Marketing Service Agency firms that help the marketers to target and promote its products to right customers. Such as, research firms, advertising agencies, marketing consulting firms etc.
Micro-Environment Factors (con’t) Competitors A company needs to gain strategic advantage by positioning their offerings strongly against competitors offerings, in the mind of the customers. But, each firm should compare its size and industry positions against the competitors before applying a strategy. Publics Any group that has an actual or potential interest in or impact on an organization’s ability to achieve it’s objective. We can identify mainly 7 types of publics – • Financial public • Media public • Government public
Micro-Environment Factors (con’t) • Citizen-action public • Local public • General public • Internal public CustomersThe company can target any one or all of the following 5 types of customer markets – • Consumer markets buy goods for personal consumption. • Business markets buy goods and services for further processing or for use in production process. • Reseller markets buy to resell goods at a profit. • Government markets government agencies buying goods to produce public services. • International markets consists of buyers of other countries.
Macro-Environment Factors • Consists of broader forces that affect the company & other micro-environmental factors. Such as – demographic, economic, natural, technological, political and cultural environment. • Demographic EnvironmentIt is of major interest to marketer because it involves people & people make up market. Marketers keep close track of demographic trends & developments in their markets, both at home and abroad. Now we will look at most important demographic trends -
Macro-Environment Factors (con’t..) a) Changing Age Structure This is the single most important demographic trend in international market now a days. We will see the most largest groups – • The baby boomers • Generation X • Millenials / Generation Y b) Changing American Family • Non-traditional households are increasing in U.S. • Increasing number of Women in the workforce.
Macro-Environment Factors (con’t..) c) Geographic Shifts - Shifting to different places also changes the buying habit of people. d) Better Educated Population - Rising number of educated people will rise the purchase of quality products. - White-collar workforce is increasing rather than blue-collar. e) Increasing Diversity - Countries vary in their ethnic & racial makeup. - Successful marketers try to diversify their marketing programs to take advantage of opportunities in diverse segments.
Macro-Environment Factors (con’t..) • Economic Environment includes the factors that affect consumer buying power and spending patterns. Nations vary greatly in their level & distribution of income. Marketers must pay attention to major trends & consumer spending patterns. • 2 most important factors affecting this environment are – a) Changes in Income - Today’s consumers are more Value Conscious. They want quality products and services in fair price. - Income distribution has not been fair in past decades.
Macro-Environment Factors (con’t..) b) Changing Spending Pattern - In different income levels, consumers tend to spend differently - changes in major economic variables have large impact on the marketplace.
Macro-Environment Factors (con’t..) • Natural Environment Natural resources are needed by marketers as inputs. - Concerns about the environment is growing steadily and marketers should be aware about these trends: • Shortages of raw materials • Increased pollution • Increased government intervention • Marketers are building strategies to support Environmental Sustainability. An effort to create World Economy that the planet can support indefinitely. e.g. HP wants the old PC’s back from their customers, to recycle the product and offer new ones. The company is either resale or donate these products.
Macro-Environment Factors (con’t..) • Technological Environment Most dramatic phase in today’s world that is shaping our destiny. • Technology market changes rapidly. It creates new market and opportunities. • Each and every marketer should strive to produce and market practical, affordable & safe products for customers. • Outdated products will fail to capture market. Company’s R&D team has a big role in identifying the current demand. e.g. CD’s have taken place of Tape-recorders. So, marketers of Music and Video should try to use the technology of CD rather than Cassette Players.
Macro-Environment Factors (con’t..) • Political Environment Law, Government agencies, Pressure groups all are part of political environment. These factors influence and limit the activities of an organization in the society. a) Legislation Regulating Business - Well conceived regulation encourages competition. Thus government develop public policies to guide Commerce. - One of the important reason to build Business Legislation is to protect consumers. - Another reason is to protect the rights of company. And, finally to protect the rights of society from unrestrained business behavior. - International marketers will also encounter hundreds of agencies set up to enforce Trade Policies and Regulations.
Macro-Environment Factors (con’t..) b) Emphasis on Ethics & Social Responsibilities Business is also governed by social codes and rules of professional ethics. - More companies are now developing policies, guidelines and other responses to complex social responsibility issues. - Many companies are now linking themselves to worthwhile causes, known as ‘Cause-related Marketing’. - An effective marketing tool which helps to develop Brand Image.
Macro-Environment Factors (con’t..) • Cultural Environment People grow up in a particular society that shapes up their value and lifestyles. 2 important Cultural characteristics that affect marketing decision are – • Persistence of Cultural Values People hold different beliefs in a society. - Core Beliefs pass on from parents are reinforced by educational and social institutions. - Secondary Beliefs are open to change. • Shifts in Secondary Cultural Values Major cultural values of a society are expressed in people’s view of themselves & others.
Macro-Environment Factors (con’t..) • As well as their views of Organizations, Society, Nature and finally the whole Universe. • People’s view of themselves - Some people seek fun, personal pleasure, change etc. - Others look for Self-realization. People use products, brands and services as means of Self-expression. • People’s view of others - Now a days, people prefer to stay alone at home, rather going with others for outdoor entertainment. • People’s view of organizations - Individuals at present love to work for major organizations. - Many people work for money to enjoy their leisure times.
Macro-Environment Factors (con’t..) • People’s view of society - Person’s orientation towards his/her society influences their consumption patterns and attitudes toward the marketplace. - e.g. marketers offer patriotic products, such as Indigenous goods, to influence customers to buy more. • People’s view of nature - Recently people have recognized that, nature is fragile and finite. It can be destroyed by human activities. - As a result of this sense, they are looking for everything organic, natural and nutritional products. e.g. Fuel-efficient Cars, Alternative medicine.
Macro-Environment Factors (con’t..) • People’s view of the universe - Spiritualism among people has been growing in recent times in developing and developed countries. - By tapping into this sensitive issue, marketers are capturing the opportunity to establish brands. • Marketers need to act Proactively rather than Reactively to the situation to reduce the effect of the uncontrollable forces of marketing environment.
