Marketing : An Introduction The Marketing Environment Armstrong, Kotler & da Silva Marketing : An Introduction An Asian Perspective 3 The Marketing Environment

Marketing Environment The marketing environment consists of actors and forces outside the organization that affect management’s ability to build and maintain relationships with target customers. Environment offers both opportunities and threats. Marketing intelligence and research used to collect information about the environment.

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. Microenvironment includes: the company itself, supplies, marketing channel firms, customer markets, competitors, and publics. Macroenvironment includes: demographic, economic, natural, technological, political, and cultural forces.

Actors in the Microenvironment Figure 3.3

The Company’s Microenvironment 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.

The Internal Environment Figure 3.4

The Company’s Microenvironment Suppliers: Provide resources needed to produce goods and services. Important link in the “value delivery system.” Most marketers treat suppliers like partners.

The Company’s 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 Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers who buy and resell merchandise. Resellers often perform important functions more cheaply than the company can perform itself. However, seeking and working with resellers is not easy because of the power that some demand and use. Physical distribution firms help the company to stock and move goods from their points of origin to their destinations. Examples would be warehouses (that store and protect goods before they move to the next destination). Marketing services agencies (such as marketing research firms, advertising agencies, media firms, etc.) help the company target and promote its products to the right markets. Financial intermediaries (such as banks, credit companies, insurance companies, etc.) help finance transactions and insure against risks associated with buying and selling goods.

Resellers Resellers are distribution channel firms that help the company to find its customers or make sales to them. These include wholesalers and retailers who buy and resell merchandise. Big C, Carrefour, Tesco Lotus etc. are examples of big retailers.

Partnering With Intermediaries Coca-Cola provides McDonalds with much more than just soft drinks. It also pledges powerful marketing support.

Physical distribution firms Physical distribution firms help the company to stock and move goods from their points of origin to their destinations.

Marketing Service Agencies Marketing services Agencies are the marketing research firms that help the company target and promote its products to the right market. Acorn Marketing and Research Consultants Co. Ltd Research Dynamics Co. Ltd. TNS Research International

Financial intermediaries Financial intermediaries include banks, credit companies, insurance companies and other businesses that help the finance transactions or insure against risks associated with the buying and selling goods

The Company’s Microenvironment Customers: Five types of markets that purchase a company’s goods and services Consumer markets Business markets Reseller markets Government markets International markets

Consumer markets Consumer market consists of individuals and households that buy goods and services for personal consumption.

Business markets Business markets buy goods and services for further processing or for use in their production process.

Reseller markets Reseller markets buy goods and services to resell at a profit. Retailers Wholesalers

Government markets Government markets are made up of government agencies that buy goods and services to produce public services or transfer the goods and services to others who need them.

International markets International market consists of buyers in other countries including consumers, producers, resellers, and governments.

The Company’s 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 Competitor analysis is an important aspect of developing effective marketing strategies

Who will win?

The Competitive “Radar Screen” Figure 3.7

Types of Publics Publics: Group that has an interest in or impact on an organization's ability to achieve its objectives Financial Public: influence the company’s ability to obtain funds. Banks, investment houses, and stockholders and the major financial publics. Media Publics: carry news, features, and editorial opinion. They include newspapers, magazines, and radio and television stations. Government Publics: Management must take government developments into account. Marketers must often consult the company’s lawyers on issues of product safety, truth in advertising, and other matters. Citizen-Action Publics: A company’s marketing decisions may be questioned by consumer organizations, environmental groups, minority groups, and others. Its public relations department can help it stay in touch with consumer and citizen groups. Local Publics: include neighborhood residents and community organizations. Large companies usually appoint a community relations office to deal with the community, attend meetings, answer questions, and contribute to worthwhile causes. General Public: A company needs to be concerned about the general public’s attitude toward its products and activities. The public’s image of the company affects its buying. Internal Publics: include workers, managers, volunteers, and the board of directors. Large companies use newsletters and other means to inform and motivate their internal publics. When employees feel good about their company , this positive attitude spills over to external publics.

Financial Public These influence the company’s ability to obtain funds. Banks, investment houses and stockholders are the major financial publics.

Media Public These carry news, features etc. They include newspapers, magazines, and radio and television stations.

Government public Management must take government developments into account. Management must always follows the government rules and regulations when doing businesses mainly on issues of product safety, truth in advertising and other matters.

Citizen action Public

Local/General public

Internal Public These include workers, managers, volunteers, and the board of directors. Large companies use newsletters and other means to inform and motivate their internal publics. When employees feel good about their company, this positive attitude spills over to the external publics.

The Macro environment The company and all of the other actors operate in a larger macroenvironment of forces that shape opportunities and pose threats to the company.

The Company’s Macroenvironment Figure 3.8

The Company’s Macroenvironment Demographic: 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.

Changing Demographic Trends in Asia create new Marketing Opportunities

Economic Environment Consists of factors that affect consumer purchasing power and spending patterns. Changes in Income 1980’s – consumption frenzy 1990’s – “squeezed consumer” 2000’s – value marketing Income Distribution Upper class Middle class Working class Underclass

Rising Consumer Affluence in Asia

Natural Environment Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities.

Factors Impacting the Natural Environment Shortages of Raw Materials Increased Pollution Increased Government Intervention Environmentally Sustainable Strategies

Environmental Responsibility McDonald’s has made a substantial commitment to the so-called “green movement.”

Technological Environment Most dramatic force now shaping our destiny.

Technological Environment Changes rapidly. Creates new markets and opportunities. Challenge is to make practical, affordable products.

Technology Gaps Between Asian Markets for Consumer Electronic Products Figure 3.9

Political Environment Includes Laws, Government Agencies, and Pressure Groups that Influence or Limit Various Organizations and Individuals In a Given Society. Increasing Legislation Changing Government Agency Enforcement Increased Emphasis on Ethics & Socially Responsible Actions Cause-Related Marketing

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, churches, business, and government. Secondary beliefs and values are more open to change.

Thai culture

Schools

Society’s Major Cultural Views Are Expressed in People’s Views of: Cultural Environment Society’s Major Cultural Views Are Expressed in People’s Views of: Themselves Others Organizations Society Nature The Universe

Linkage between Environmental Analysis and Marketing Figure 3.10

Linking of Macro and Micro Environmental Forces Figure 3.12

Rest Stop: Reviewing the Concepts 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.