Principles of Marketing 6/11/2018 Principles of Marketing Spring 2010- MKTG 220 Dr. Abdullah Sultan 1 Copyright 2005 Brainy Betty, Inc. 1

If Marketing is about managing profitable customer relationships, why do companies fail in this task?

Marketing Environment 6/11/2018 Marketing Environment Consists of actors and forces outside the organization that affect management’s ability to build and maintain relationships with 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. Copyright 2005 Brainy Betty, Inc.

Marketing Environment 6/11/2018 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. Copyright 2005 Brainy Betty, Inc.

Segmentation Product Distribution Price Promotion Target 5

Segmentation Product Distribution Price Promotion Target Microenvironment Factors Macroenvironment Factors Segmentation Product Distribution Price Promotion Target 6

Marketing Environment 6/11/2018 Marketing Environment Actors in the microenvironment include: The company itself Suppliers Marketing intermediaries Customers Competitors Publics Copyright 2005 Brainy Betty, Inc.

The Microenvironment Company’s Internal Environment: 6/11/2018 The 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. Copyright 2005 Brainy Betty, Inc.

The Microenvironment Suppliers: 6/11/2018 The Microenvironment Suppliers: Provide resources needed to produce goods and services. Important link in the “value delivery system.” Most marketers treat suppliers like partners. Copyright 2005 Brainy Betty, Inc.

The Microenvironment Marketing intermediaries: 6/11/2018 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 Copyright 2005 Brainy Betty, Inc.

The Microenvironment Customers: 6/11/2018 The Microenvironment Customers: Five types of markets that purchase a company’s goods and services. Consumer Business Reseller Government International Copyright 2005 Brainy Betty, Inc.

The Microenvironment Competitors: 6/11/2018 The 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. Copyright 2005 Brainy Betty, Inc.

The Microenvironment Publics: 6/11/2018 The Microenvironment Publics: Any group that has an interest in or impact on an organization's ability to achieve its objectives. Financial public Media public Government public Citizen-action public Local public General public Internal public Copyright 2005 Brainy Betty, Inc.

6/11/2018 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. Copyright 2005 Brainy Betty, Inc.

6/11/2018 The Macroenvironment Forces in the macroevironment can be categorized as: Demographic Economic Natural Technological Political Cultural Copyright 2005 Brainy Betty, Inc.

Demographic Environment 6/11/2018 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. Copyright 2005 Brainy Betty, Inc.

Demographic Environment 6/11/2018 Demographic Environment The changing age structure of the population is the single most important demographic trend. USA: Baby boomers, Generation X, and Generation Y are the key groups. Kuwait: Grandparents, Parents, and You. Copyright 2005 Brainy Betty, Inc.

Demographic Environment 6/11/2018 Demographic Environment Baby Boomers: 78 million born between 1946 and 1964 (47 years and above). Equal 28% of population. Earn more than 50% 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. Copyright 2005 Brainy Betty, Inc.

Demographic Environment 6/11/2018 Demographic Environment Generation X: 45 million born between 1965 and 1976 (34 years to 46 years). Defined by shared experiences: Increasing divorce rates. More of their mothers employed. First generation of latchkey kids (kids who stay at home with little parental supervision). Care about the environment. Copyright 2005 Brainy Betty, Inc.

Demographic Environment 6/11/2018 Demographic Environment Generation Y: 72 million born between 1977 and 1994 (16 to 33 years). Have large amount of disposable income. Comfortable with computer technology. Tend to be impatient and “Now-Oriented.” Many product lines targeted at those who are part of Generation Y: Teen and young adult games Clothes, furniture, food Copyright 2005 Brainy Betty, Inc.

Demographic Environment 6/11/2018 Demographic Environment Increasing diversity: Kuwait is a “salad bowl” mixing together various groups, each of which retains its ethnic and cultural differences. Ethnic segments are growing as a percentage of the Kuwait population and growth is projected to continue. Increased marketing efforts towards: Asians and people from Lebanon/Syria/Egypt Young people with purchasing power (demand) Copyright 2005 Brainy Betty, Inc.

6/11/2018 Economic Environment Consists of factors that affect consumer purchasing power and spending patterns. Changes in Income 1980s – consumption frenzy 1990s – “squeezed consumer” 2000s – value marketing Income Distribution Upper class Middle class Working class Underclass Copyright 2005 Brainy Betty, Inc.

6/11/2018 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. Trend toward more environmentally sustainable strategies (e.g., recyclable packages, more energy-efficient operations). Copyright 2005 Brainy Betty, Inc.

Technological Environment 6/11/2018 Technological Environment Most dramatic force shaping our destiny. Changes rapidly. Creates new markets and opportunities (e.g., K-Net, RFID technology). Challenge is to make practical, affordable products. When old industries ignore new technologies, old businesses decline. Companies that do not keep up with technology will miss new products and opportunities. Copyright 2005 Brainy Betty, Inc.

Political Environment 6/11/2018 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. Copyright 2005 Brainy Betty, Inc.

6/11/2018 Cultural Environment The institutions and other forces that affect a society’s basic values, perceptions, preference, and behaviors. 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. Marketers may be able to change secondary beliefs, but NOT core beliefs. Copyright 2005 Brainy Betty, Inc.

Responding to the Marketing Environment 6/11/2018 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. Example: NBK social programs (anti-drugs, exercise) Copyright 2005 Brainy Betty, Inc.

Question? Do you believe that taking a proactive approach to manage the marketing environment is more effective than a reactive approach? Why?