The Marketing Environment Chapter 3

Learning Goals Understand environmental forces Learn how demographic and economic factors affect marketing Identify trends in the firm’s natural and technological environments Realize how companies react to the marketing environment

The Marketing Environment The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers Microenvironment Forces close to the company that affect its ability to serve its customers. Macroenvironment Larger societal forces that affect the microenvironment. Goal 1: Understand environmental factors

Goal 1: Describe environmental factors Microenvironment Actors Marketing must consider other parts of the organization including finance, R&D, purchasing, operations, accounting etc. that form the internal environment. Marketing decisions must relate to broader company goals and strategies. The company Suppliers Marketing intermediaries Customers Competitors Publics Goal 1: Describe environmental factors

Goal 1: Describe environmental factors Microenvironment Actors Provide the resources needed to produce goods and services and are an important link in the “value delivery system”. Marketers must watch supply availability and pricing Effective partnership relationship management with suppliers is essential The company Suppliers Marketing intermediaries Customers Competitors Publics Goal 1: Describe environmental factors

Goal 1: Describe environmental factors Microenvironment Actors Help to promote, sell and distribute goods to final buyers Include resellers, physical distribution firms, marketing services agencies and financial intermediaries Effective partner relationship management is essential The company Suppliers Marketing intermediaries Customers Competitors Publics Goal 1: Describe environmental factors

Goal 1: Describe environmental factors Microenvironment Actors The five types of customer markets Consumer Business Reseller Government International The company Suppliers Marketing intermediaries Customers Competitors Publics Goal 1: Describe environmental factors

Goal 1: Describe environmental factors Microenvironment Actors Those who serve a target market with similar products and services against whom a company must gain strategic advantage. Conducting competitor analysis is critical for success of the firm A marketer must monitor its competitors’ offerings to create strategic advantage The company Suppliers Marketing intermediaries Customers Competitors Publics Goal 1: Describe environmental factors

Goal 1: Describe environmental factors Microenvironment Actors A group that has an actual or potential interest in or impact on an organization Type of public: Financial Media Government Citizen-action Local General Internal The company Suppliers Marketing intermediaries Customers Competitors Publics Goal 1: Describe environmental factors

The Macroenvironment Goal 1: Describe environmental factors Major forces in the company’s Macroenvironment Goal 1: Describe environmental factors

Goal 2: Learn how demographic & economic factors affect marketing The Macroenvironment Demographic - The study of human 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 Environment - Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities Goal 2: Learn how demographic & economic factors affect marketing

Goal 3: Identify trends in natural and technological environments The Macroenvironment 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. Goal 3: Identify trends in natural and technological environments

Demographic Trends Changing Age Structure Changing Family Late marriage, fewer children, working women Geographic Shifts Moving to the suburbs, “micropolitan areas” Goal 2: Learn how demographic & economic factors affect marketing

Changing Consumer Spending Patterns Engel’s laws As family income rises The percentage spent food declines, The percentage spent on housing remains about constant, The percentage spent on most other categories and that devoted to savings increase.

Technological Environment Changes rapidly Creates new markets and opportunities Challenge to make practical, affordable product Safety regulations result in higher research costs Goal 3: Identify trends in natural and technological environments

Goal 3: Identify trends in natural and technological environments Natural Environment Shortages of Raw Materials Factors Affecting the Natural Environment Environmentally Sustainable Strategies Increased Pollution Governmental Intervention Goal 3: Identify trends in natural and technological environments

Responding to the Marketing Environment “There are three kinds of companies: those who make things happen, those who watch things happen, and those who wonder what’s happened.” Passive acceptance Proactive stance Goal 4: Realize how companies react to the marketing environment