1 The Marketing Environment

Challenges Shifting consumer lifestyles Low ratings of food and service quality Atmosphere not upscale Image of being unclassy, uncultured and uncool to younger target markets Preview Case: McDonald’s – Challenges and Reactions Marketing Initiatives Focus on core competency of consistent products and reliable service Upscale alternative including “McCafe” and “Bistro Gourmet” Healthier food options with elimination of “supersize” and introduction of Go Active! Adult Happy Meal

The Marketing Environment Marketing Environment  The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers

Marketing 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.

 Marketing must consider other parts of the organization including finance, R&D, purchasing, operations and accounting  Marketing decisions must relate to broader company goals and strategies Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics

Microenvironment - Company’s Internal Environment

Firms and individuals providing resources to the company and its competitors to produce goods and services.  Marketers must watch supply availability and price trends of key inputs  Effective partnership relationship management with suppliers is essential Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics

 Firms that help the company 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 Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics

Microenvironment – Marketing Intermediaries Resellers  Distribution channel firms that help the company to find customers or to make sales to them. Physical distribution firms  Help the company to stock and move goods from their origins to their destinations Marketing service agencies  Help the company target and promote its products such as marketing research firms, ad agencies etc. Financial intermediaries  Help finance transactions and insure against risks such as banks, insurance companies

 The five types of customer markets Consumer Business Reseller Government International Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics

Microenvironment – Customer Markets Consumer markets  Individuals & households that buy goods & services for personal consumption Business markets  Buy goods & services for further processing in their production process Resellers markets  Buy goods & services in order to resell them at a profit Government markets  Buy goods & services in order to produce public services or transfer them to those that need them International markets  Buyers of all types in foreign countries

Those who serve a target market with similar products/services Conducting competitor analysis is critical for success of the firm  A marketer must monitor its competitors’ offerings to create strategic advantage  No single competitive strategy is best for all companies Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics

 A group that has an actual or potential interest in or impact on an organization  Seven publics include: Financial Media Government Citizen-action Local General Internal Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics

Macroenvironmental Forces Macroenvironment Demographic Economic Natural Technological Political Social-Cultural

Demographic Environment Demography  The study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics

Demographic Environment Worldwide Population Growth Age Structure of the Population Household Patterns Educational Groups Geographical Shifts in Population Shift from Mass Market to Micromarkets Ethnic Markets

Economic Development Economic Development Changes in Income: Value Marketing Changes in Income: Value Marketing Changing Consumer Spending Patterns Changing Consumer Spending Patterns Key Economic Concerns for Marketers Key Economic Concerns for Marketers Economic Environment

Income Distribution Subsistence economies  The vast majority of people engage in simple agriculture, consume most of their output and barter the rest for simple goods and services. Subsistence economies  The vast majority of people engage in simple agriculture, consume most of their output and barter the rest for simple goods and services. Raw-material-exporting economies  are rich in one or more natural resources but poor in other respects. Much of their revenue comes from exporting these resources. Raw-material-exporting economies  are rich in one or more natural resources but poor in other respects. Much of their revenue comes from exporting these resources. Industrializing economies  Manufacturing accounts for 10 to 20% of gross domestic product. Industrialization creates a new rich class and a small but growing middle class, both demanding new types of goods. Industrializing economies  Manufacturing accounts for 10 to 20% of gross domestic product. Industrialization creates a new rich class and a small but growing middle class, both demanding new types of goods. Industrial economies  are major exporters of manufactured goods and investment funds. They buy manufactured goods from one another & export them to other types of economies in exchange for raw materials & semi-finished goods. Industrial economies  are major exporters of manufactured goods and investment funds. They buy manufactured goods from one another & export them to other types of economies in exchange for raw materials & semi-finished goods. Savings, Debt, & Credit Availability

Natural Environment Natural Environment:  Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities Trends  Shortages of raw materials  Increased pollution  Increased government intervention

Technological Environment Rapidly changing force which creates many new marketing opportunities but also turns many existing products extinct  Faster pace of technological change; products are outdated at a rapid pace.  Almost unlimited opportunities being developed daily in health care, space industry, robotics, and bio-genetic field.  Challenge is not only technical, but also commercial – make practical, affordable versions of products.  Increased regulation concerning product safety, individual privacy, and other areas that affect technological changes.

Political Environment Consists of laws, government agencies and pressure groups that influence or limit various organizations and individuals in a given society  Legislation affecting businesses worldwide has increased  Laws protect companies, consumers and the interests of society  Increased emphasis on socially responsible actions

Cultural Environment Made up of institutions and other forces that affect a society’s basic values, perceptions, preferences and behaviors.

Cause-Related Marketing Marketers create link between brand and charitable organization Demonstrates social responsibility Helps build positive brand image

Themselves  Identify with brands for self- expression Others  Recent shift from “me” to “we” society Organizations  Trend of decline in trust and loyalty to companies Society  Patriotism on the rise Nature  “lifestyles of health and sustainability” consumer segment Universe  Includes religion and spirituality Cultural Environment Includes people’s views of…

Responding to the Marketing Environment Environmental Management Perspective  Taking a proactive approach to managing the microenvironment and the macroenvironment by taking aggressive (rather than passive) actions to affect the publics and forces in the marketing environment. By hiring lobbyists, running advertorials, press law suits, file complaints, and forming agreements. “There are three kinds of companies: those who make things happen, those who watch things happen, and those who wonder what’s happened.”

The marketplace isn’t what it used to be… Changing technology Globalization Deregulation Privatization Empowerment Customization Convergence Disintermediation