1. 3- 1 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall i t ’s good and good for you Chapter Three Analyzing the Marketing Environment

2. 3-2 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Analyzing the Marketing Environment The Company’s Microenvironment The Company’s Macroenvironemnt The Demographic Marketing Environment The Economic Environment The Natural Environment The Technological Environment The Political and Social Environment The Cultural Environment Responding to the Marketing Environment Topic Outline

3. 3-3 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Environmental Monitoring Environmental monitoring –also called environmental scanning- is the process of (1) gathering information, (2)analyzing it, and (3)forecasting the effects indicated by trend analysis. An organization operates within an external environment that it generally cannot control. At the same time, marketing and nonmarketing resources exist within the organization that generally can be controlled.

4. 3-4 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Marketing Environment The marketing environment includes the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with customers

5. 3-5 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Levels of External Forces There are two levels of external forces: 1.Macro influences 2.Micro influences Macro Level Influences that affect all firms Micro Level Influences that affect a particular firm

6. 3-6 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Marketing Environment Microenvironment consists of the actors close to the company that affect its ability to serve its customers, the company, suppliers, marketing intermediaries, customer markets, competitors, and publics The macroenvironment consists of larger societal forces that affect the microenvironment.

7. 3-7 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Successful marketing depends largely on a company’s ability to manage its marketing programs within its environment. To do this, a firm’s marketing executives must determine what makes up the firm’s environment and then monitor it in a systematic ongoing fashion.

8. 3-8 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall External forces largely beyond the control of a firm that influence the marketing opportunities and activities of all firms. Firms can influence this environment but have no direct control over it. A change in any one of them can cause changes in one or more of the others. Hence, they are interrelated. They are dynamic forces – that is they are subject to change and at an increasing rate.

9. 3-9 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company’s Microenvironment Actors in the Microenvironment

10. 3-10 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company’s Microenvironment Top management Finance R&D Purchasing Operations Accounting The Company

11. 3-11 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company All the interrelated groups form the internal environment. All groups must work in harmony to provide superior customer value and relationships.

12. 3-12 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company’s Microenvironment Provide the resources to produce goods and services Treat as partners to provide customer value Suppliers

13. 3-13 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Marketing managers must watch supply availability—supply shortages or delays, labor strikes, and other events can cost sales in the short run and damage customer satisfaction in the long run. Marketing managers also monitor the price trends of their key inputs.

14. 3-14 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company’s Microenvironment Help the company to promote, sell and distribute its products to final buyers Marketing Intermediaries

15. 3-15 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The text explains how Coke delivers value for their marketing intermediaries: –They understand each retailer partner’s business –The conduct consumer research and share with partners –They develop marketing programs and merchandising for partners

16. 3-16 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company’s Microenvironment Resellers Physical distribution firms Marketing services agencies Financial intermediaries Types of Marketing Intermediaries

17. 3-17 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers. Physical distribution firms help the company to stock and move goods from their points of origin to their destinations. Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets.

18. 3-18 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Financial intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods. Today’s marketers recognize the importance of working with their intermediaries as partners rather than simply as channels through which they sell their products.

19. 3-19 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company’s Microenvironment Firms must gain strategic advantage by positioning their offerings against competitors’ offerings Competitors

20. 3-20 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company’s Microenvironment Publics Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives –Financial publics –Media publics –Government publics –Citizen-action publics –Local publics –General public –Internal publics

21. 3-21 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Financial publics influence the company’s ability to obtain funds. Media publics carry news, features, and editorial opinion. Government publics. Management must take government developments into account. Citizen-action publics. A company’s marketing decisions may be questioned by consumer organizations, environmental groups, and others.

22. 3-22 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Local publics include neighborhood residents and community organizations. General public. The general public’s image of the company that affects its buying. Internal publics include workers, managers, volunteers, and the board of directors.

23. 3-23 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company’s Microenvironment Consumer markets Business markets Government markets International markets Customers

24. 3-24 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Customers There are five types of customer markets. The company may target any or all of these: Consumer markets: individuals and households that buy goods and services for personal consumption. Business markets: buy goods and services for further processing or for use in their production process. Reseller markets: buy goods and services to resell at a profit. Government markets: composed of government agencies that buy goods and services to produce public services. International markets: buyers in other countries, including consumers, producers, resellers, and governments.

25. 3-25 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company’s Macroenvironment

26. 3-26 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company’s Macroenvironment Demography: the study of human populations-- size, density, location, age, gender, race, occupation, and other statistics Demographic environment: involves people, and people make up markets Demographic trends: shifts in age, family structure, geographic population, educational characteristics, and population diversity Demographic Environment

27. 3-27 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Changes in the world demographic environment have major implications for business. Thus, marketers keep close track of demographic trends and developments in their markets, both at home and abroad.

28. 3-28 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company’s Macroenvironment Economic environment consists of factors that affect consumer purchasing power and spending patterns Industrial economies are richer markets Subsistence economies consume most of their own agriculture and industrial output Economic Environment

29. 3-29 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Economic Environment The economic environment consists of factors that affect consumer purchasing power and spending patterns. Industrial economies constitute rich markets for many different kinds of goods. Subsistence economies consume most of their own agricultural and industrial output, and offer few marketing opportunities. In between are developing countries, which can offer outstanding marketing opportunities.

30. 3-30 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Economic Factors People with Money to Spend and Willing to Spend it People with Money to Spend and Willing to Spend it InflationInflation Interest Rates RatesInterest Stage of the BusinessCycle BusinessCycle

31. 3-31 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Economic conditions: People alone do not make a market. They must have money to spend and a willingness to spend it. The economic environment is a significant force that affects the marketing activities of any organization. A marketing program is affected especially by such factors as stage of the business cycle, inflation, and interest rates.

32. 3-32 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall 1.The stage of the business cycle The business cycle goes through four stages —prosperity, recession, depression, and recovery, then returns full cycle to prosperity. Marketing executives need to know which stage of the business cycle the economy is currently in, because a company’s marketing program usually must be changed from one stage of the business cycle to another.

33. 3-33 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Prosperity is a period of economic growth. During this period organizations tend to add new products and enter new markets. Recession is a period of retrenchment for consumers and businesses- we tighten our economic belts. (For example, some consumers cut back on eating out and entertainment outside the home)

34. 3-34 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Recovery is a period when the economy is moving from recession to prosperity- unemployment declines, disposable income increase. (companies expand their marketing efforts to improve sales and profits.)

35. 3-35 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall 2. Inflation a rise in the prices of goods and services represent inflation. When prices rise at a faster rate than personal incomes, consumer buying power declines. 3.Interest rates —affecting expensive and long-term purchases. When interest rates are high, consumers tent not to make long term purchases such as housing.

36. 3-36 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Natural Environment The natural environment involves the natural resources that are needed as inputs by marketers, or that are affected by marketing activities. Trends in the natural environment: Growing shortages of raw materials. Increased pollution. Increased government intervention. Companies are developing strategies and practices that support environmental sustainability.

37. 3-37 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company’s Macroenvironment Technological Environment Most dramatic force in changing the marketplace New products, opportunities Concern for the safety of new products

38. 3-38 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Technological Environment The technological environment is perhaps the most dramatic force now shaping our destiny. Technology has released such wonders as antibiotics, robotic surgery, miniaturized electronics, smartphones, and the Internet. These new technologies can offer exciting opportunities for marketers. The United States leads the world in research and development spending.

39. 3-39 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Technology Affects How Marketing is Carried Out Affects How Marketing is Carried Out AlteringExistingIndustriesAlteringExistingIndustries Impacts lifestyles, consumption patterns, consumption patterns, economic well-being Impacts lifestyles, consumption patterns, consumption patterns, economic well-being StartingNewIndustriesStartingNewIndustries StimulatesMarketsand Other Industries StimulatesMarketsand

40. 3-40 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Technology—has a significant impact on our life- styles, consumptions habits, economic well-being. Affects the start of new industries.( airplane, computers, robots, laser…etc.) Radically alters or destroys existing industries. (typewriter- computer)

41. 3-41 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Stimulates industries and markets not directly related to the new technology. (microwavable foods- give people additional time in which they engage in other activities) Affects the execution of marketing activities. (Internet) Improves some areas of our lives while creating problems in others. ( ex: cars – air pollution, TV- reducing reading by children)

42. 3-42 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company’s Macroenvironment Political environment laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society Political and Social Environment

43. 3-43 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company’s Macroenvironment Legislation regulating business –Increased legislation –Changing government agency enforcement Increased emphasis on ethics –Socially responsible behavior –Cause-related marketin g Political and Social Environment

44. 3-44 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Political and Social Environment Marketing decisions are strongly affected by developments in the political environment. This consists of laws, government agencies, and various pressure groups. Legislation Regulating Business Governments develop public policy to guide commerce. Increasing Legislation. Legislation affecting business around the world has increased steadily over the years. Business legislation has been enacted for a number of reasons: To protect companies from each other. To protect consumers from unfair business practices. To protect the interests of society against unrestrained business behavior.

45. 3-45 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Changing Government Agency Enforcement. Because government agencies have discretion in enforcing laws, they can have an impact on a company’s marketing performance. Increased Emphasis on Ethics and Socially Responsible Actions Socially Responsible Behavior. Enlightened companies encourage their managers to “do the right thing.” The boom in Internet marketing has created a new set of social and ethical issues. Cause-Related Marketing. To exercise their social responsibility and build more positive images, many companies are now linking themselves to worthwhile causes.

46. 3-46 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall The Company’s Macroenvironment Cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors Cultural Environment

47. 3-47 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Social and Cultural Forces People Make Markets Markets BeliefsBeliefs Socio-culturalPatterns Changing Quickly Socio-culturalPatterns ValuesValues LifestylesLifestyles

48. 3-48 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Social and Cultural Changes Concern for Natural Environment Natural Environment Concern for Natural Environment Natural Environment Quality not Quantity Quality not Quantity Changing Gender Roles Two Incomes and Balance Two Incomes and Balance Physical Fitness and Health Health Exercise and Diet Premium on Time Convenience

49. 3-49 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Social and cultural forces: The task facing marketing executives is becoming more complex because our socio cultural patterns-lifestyles, values, and beliefs are changing much more quickly than they used to be. 1.Concern about the natural environment—increasing concern and consciousness about the quality of life and the natural environment.( concerns about air and water pollution, holes in the ozone layer…etc.)

50. 3-50 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Ex: - Procter & Gamble introduced Tide Coldwater, a new detergent that is designed to clean clothes in cold water and thus save energy. - Environmentally friendly products 2.Changing gender roles: male –female roles related to families, jobs, and buying behavior are changing dramatically. Ex: - Growing number of “house husbands” are staying at home and assuming primary responsibility for child care and homemaking while their wives work full time. - changing role of women; most of the women working outside the home today.

51. 3-51 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall 3.A premium on time—long work hours, a desire for more leisure time, and convenience as a priority attribute in products. -Time-short people and two income households are more willing to pay for convenience. -Goods and services that help consumers save time or make full use of it are increasingly popular. ( big shopping malls, frozen foods, Internet…etc.)

52. 3-52 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall 4.Physical fitness and health- increased interest in physical activity as well as dietary habits. - Large number of consumers have become more interested in diet for weight loss, foods low in salt, fat, additives, and cholesterol, and foods high in vitamins, minerals, and fiber content.

53. 3-53 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Responding to the Marketing Environment Uncontrollable React and adapt to forces in the environment Proactive Aggressive actions to affect forces in the environment Reactive Watching and reacting to forces in the environment Views on Responding

54. 3-54 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Rather than simply watching and reacting, companies should take proactive steps with respect to the marketing environment. RESPONDING TO THE MARKETING ENVIRONMENT Many companies think the marketing environment is an uncontrollable element to which they must react and adapt. Other companies take a proactive stance toward the marketing environment. Rather than assuming that strategic options are bounded by the current environment, these firms develop strategies to change the environment. By taking action, companies can often overcome seemingly uncontrollable environmental events.

55. 3-55 Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2012 Pearson Education, Inc. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall