Analyzing Marketing Environments Bluefield College September 7, 2010

Segmentation Segmentation is the process of dividing the market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate marketing programs or products. Targeting: Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter. Positioning: Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. http://www.pg.com/en_US/brands/household_care/index.shtml Differentiation: Creating superior customer value by actually differentiating the market offering.

“Powerful laundry detergent that is tough on stains” Product Positioning 26.0¢/oz “The smell says clean” “Dirt goes, color stays” 22.0¢/oz “Mild cleansing” 18.0¢/oz 2 5 3 “Powerful laundry detergent that is tough on stains” 20.0¢/oz 4 “For a clean you can trust” 28.0¢/oz 1 “Knows fabrics best” 6 16.8¢/oz

Marketing Mix These tools are often called the 4 P’s: Product Price The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. These tools are often called the 4 P’s: Product Price Place (distribution) Promotion

The Four Ps of the Marketing Mix

SWOT Analysis

Contents of a Marketing Plan Executive summary Current marketing situation Analysis of threats and opportunities Objectives and issues Marketing strategy Action programs Budgets Controls

Organizing Marketing Departments Functional organization: Each marketing activity is headed by a functional specialist. Geographic organization: Sales and marketing people are assigned to specific countries, regions, and/or districts. Product management organization: One person is given responsibility for complete strategy and marketing program for a single product. Market or customer organization: Manager responsible for particular market or type of customer (e.g., government buyers). Combination organization: Uses some combination of the previous four approaches.

Return on Marketing Investment

Marketing Environment Consists of actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. Studying the marketing environment allows marketers to take advantage of opportunities and to combat threats. Marketing intelligence and research are used to collect information about the environment, including customers and the competition. Both macroenvironment and microenvironment are important.

Microenvironment Actors close to the company that affect its ability to serve its customers. Includes all representatives between the company and its customers

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

Macroenvironment Larger societal forces that affect the company. The company and all of the other actors operate in a larger macroenvironment of forces that shape opportunities and pose threats to the company.

Demographic Environment Demography: The study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. The changing age structure of the U.S. population is the single most important demographic trend. The American family and household makeup is changing: Traditional households are in decline: Married couples with children = 23% Non-traditional households are growing: Married without children = 29% Single parents = 16% Non-family households = 32% Special needs of non-traditional households are increasingly being considered by marketers.

Demographic Environment Better educated population: 1980: 69% of people over age 25 completed high school; 17% had completed college. 2007: 84% of people over age 25 completed high school; 27% had completed college. Demand for quality products, books, magazines, computers, travel, etc. has increased as a result. Increasing white-collar population 1983—2007: Professionals and managers grew from 23% to greater than 35%. 2006—2016: Professionals should increase by 23% while manufacturing is expected to decline by more than 10%.

Demographic Environment Increasing diversity: The United States is an ethnic “salad bowl.” Ethnic segments will continue to grow as a percentage of the U.S. population. Geographic shifts in population: 13% of U.S. residents move each year. General shift toward the Sunbelt states. City to suburb migration continues. More people are moving to suburbs and micropolitan” areas. Marketers court increasing numbers of telecommuters.

Economic Environment Changes in income 1990s—consumption frenzy, record debt Economic crisis leads to consumer frugality. Value marketing is key to success. Income distribution Upper class is getting wealthier . Middle class is shrinking. Underclass remain poor. Income distribution has created a tiered market. Economic factors affect consumer purchasing power and spending patterns.

Natural Environment Involves natural resources that are needed as inputs by marketers or that are affected by marketing activities. Key trends include: Shortages of raw materials. Increased pollution. Increased government intervention. Many firms now focus on creating environmentally sustainable strategies.

Technological Environment Changes rapidly, creating new markets and opportunities and/or danger of products becoming obsolete. Challenge is to make practical, affordable new products. Government bans unsafe products and sets safety standards, resulting in higher research costs, and longer time to market for new products.

Political Environment Includes laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society. Marketing activities face: Increasing legislation. Changing government agency enforcement. Increased emphasis on ethics and socially responsible behavior (including cause-related marketing).

Cultural Environment The institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors. Core beliefs and values are passed on from parents to children and are reinforced by schools, churches, business, and government. Secondary beliefs and values are more open to change. Marketers may be able to change secondary beliefs, but NOT core beliefs.