Entering a Market: Scanning The Market Environment Chapter Ten

2 Market Environment Market Environment Forces outside of marketing Forces outside of marketing that affect marketing management’s ability that affect marketing management’s ability to build & maintain successful relationships with target customers. to build & maintain successful relationships with target customers.

3 Includes: Includes: –Microenvironment: actors within the internal environment of the company that affect its ability to serve its customers. actors within the internal environment of the company that affect its ability to serve its customers. –Macroenvironment: larger societal forces that affect the microenvironment. larger societal forces that affect the microenvironment. Considered to be beyond the control of the organization. Considered to be beyond the control of the organization. Market Environment

4

5 Factors in the Microenvironment

6 Suppliers: 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

7 Marketing Intermediaries: Marketing Intermediaries: –Help the company promote, sell, and distribute its goods to final buyers Resellers Resellers Physical distribution firms Physical distribution firms Marketing services agencies Marketing services agencies Financial intermediaries Financial intermediaries

8 5 Types of Customers Consumer markets Consumer markets Business markets (B to B) Business markets (B to B) Reseller markets Reseller markets Government markets Government markets International markets International markets

9 Competitors Must understand competitor’s strengths Must understand competitor’s strengths Must differentiate firm’s products and offerings from those of competitors Must differentiate firm’s products and offerings from those of competitors Competitive strategies should emphasize firm’s distinctive competitive advantage in marketplace Competitive strategies should emphasize firm’s distinctive competitive advantage in marketplace

10 Types of Publics

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

12 The Company’s Macroenvironment

13 Demography studying human populations in terms of size, density, location, age, gender, race, and occupation studying human populations in terms of size, density, location, age, gender, race, and occupation helps to divide the population into market segments and target markets helps to divide the population into market segments and target markets One of the most frequently used classification: year of birth One of the most frequently used classification: year of birth

The United States as an example

3-15 The Seven U.S. Generations

16 Changing American Family Household makeup: Household makeup: –Married couples with children = 34%, and falling –Married couples and people living with other relatives = 22% –Single parents = 12% –Single persons and adult “live-togethers” = 32%

17 Better Educated Population 1980: 1980: –69% of people over age 25 completed high school –17% had completed college 2008: 2008: –84% of people over age 25 completed high school –27% had completed college Currently, ⅔ of high school grads start college Currently, ⅔ of high school grads start college

18 Increasing Diversity U.S. is a “salad bowl” U.S. is a “salad bowl” –Various groups mixed together, each retaining its ethnic and cultural differences Increased marketing to: Increased marketing to: –Gay and lesbian consumers –People with disabilities

19 Benefits: Demographic study Help marketers decide who their product would benefit most and tailor their marketing plan to attract that segment. Help marketers decide who their product would benefit most and tailor their marketing plan to attract that segment.

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

21 Economic Environment Subsistence economies: based more in agriculture and consume their own industrial output. Subsistence economies: based more in agriculture and consume their own industrial output. Industrial economies: Industrial economies: have markets that are diverse and carry many different types of goods. have markets that are diverse and carry many different types of goods.

22 Natural Environment Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Increased pollution, shortages (scarcity) of raw materials and increased governmental intervention. Increased pollution, shortages (scarcity) of raw materials and increased governmental intervention.

23 Technological Environment Most dramatic force now shaping our destiny. Most dramatic force now shaping our destiny. Requires a company to stay ahead of others and update their own technology as it becomes outdated. Requires a company to stay ahead of others and update their own technology as it becomes outdated.

24 Cultural Environment The institutions and other forces that affect a society’s basic values, perceptions, preference, and behaviors. The institutions and other forces that affect a society’s basic values, perceptions, preference, and behaviors.

25 Political Environment 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

26 Responding to the Marketing Environment Environmental Management Perspective 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. 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. This can be done by: This can be done by: –Hiring lobbyists –Running “advertorials” –Pressing lawsuits –Filing complaints –Forming agreements to control channels

27 PEST Analysis PEST Analysis

28 Political Factors stability of political environment stability of political environment gov't policy influencing or regulating business gov't policy influencing or regulating business government's position on marketing ethics government's position on marketing ethics government's policy on the economy government's policy on the economy government's view on culture and religion government's view on culture and religion gov't involved in trading agreements? gov't involved in trading agreements?

29 Economic Factors Interest rates. Interest rates. The level of inflation The level of inflation Employment level per capita. Employment level per capita. Long-term prospects for the economy Long-term prospects for the economy Gross Domestic Product (GDP) per capita Gross Domestic Product (GDP) per capita

30 Sociocultural Factors the dominant religion the dominant religion attitudes to foreign products and services attitudes to foreign products and services language impact language impact consumers' time for leisure consumers' time for leisure roles of men and women within society roles of men and women within society life expectancy life expectancy

31 Technological Factors technology: cheaper and better products technology: cheaper and better products more innovative products and services more innovative products and services distribution channel changed by tech distribution channel changed by tech better communication methods better communication methods

32 Reading Page 36 Page 36 Who is the text aimed at? Who is the text aimed at? Note down all nouns used without articles. Note down all nouns used without articles. –Why is no article used?

33 No article is used With most country names With most country names With uncountable nouns referring to a general concept With uncountable nouns referring to a general concept When referring to general plural nuns When referring to general plural nuns When referring to general plural or uncountable nouns qualified by an adjective When referring to general plural or uncountable nouns qualified by an adjective

34 Listening Listen and fill in blanks. Listen and fill in blanks. Do you agree with Tanya Liddell? Do you agree with Tanya Liddell?