1. The Marketing Environment A Global Perspective 3 Philip Kotler Gary Armstrong Swee Hoon Ang Siew Meng Leong Chin Tiong Tan Oliver Yau Hon-Ming 3-1

2. 3-2 Learning Objectives After studying this chapter, you should be able to: 1. Describe the environmental forces that affect the company’s ability to serve its customers 2. Explain how changes in the demographic and economic environments affect marketing decisions 3. Identify the major trends in the firm’s natural and technological environments 4. Explain the key changes in the political and cultural environments 5. Discuss how companies can react to the marketing environment

3. 3-3 Chapter Outline 1. The Company’s Microenvironment 2. The Company’s Macroenvironemnt 3. Responding to the Marketing Environment

4. 3-4 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 Marketing Environment The 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 Marketing Environment

6. 3-6 The Marketing Environment Marketing Environment The macroenvironment consists of the larger societal forces that affect the microenvironment. Demographic Economic Natural Technological Political Cultural

7. 3-7 The Company’s Microenvironment The company Suppliers Marketing intermediaries Customers Competitors Publics

8. 3-8 The Company Internal environment includes: Top management Finance R&D Purchasing Operations Accounting The Company’s Microenvironment

9. 3-9 Suppliers Provide the resources to produce goods and services Treated as partners to provide customer value The Company’s Microenvironment

10. 3-10 Marketing Intermediaries Help the company to promote, sell, and distribute its products to final buyers Include: Resellers Physical distribution firms Marketing services agencies Financial intermediaries The Company’s Microenvironment

11. 3-11 Marketing Intermediaries Resellers are the distribution channel firms that help the company find customers or make sales to them. These include: Wholesalers Retailers Physical distribution firms are the distribution channel firms that help the company to stock and move goods from their points of origin to their final destination. The Company’s Microenvironment

12. 3-12 Marketing Intermediaries Marketing service 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. 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. The Company’s Microenvironment

13. 3-13 Customers Customer markets consist of 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. The Company’s Microenvironment

14. 3-14 Customers Reseller markets buy goods and services to resell at a profit. Government markets buy goods and services to produce public services or transfer goods and services to others who need them. International markets consist of buyers in other countries including consumers, producers, resellers, and governments. The Company’s Microenvironment

15. 3-15 Competitors Firms must gain strategic advantage by positioning their offerings against competitors’ offerings. Each firm should consider its own size and industry position compared to those of its competitors. The Company’s Microenvironment

16. 3-16 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 The Company’s Microenvironment

17. 3-17 Public Financial publics influence the company’s ability to obtain funds—banks, investment houses, and stockholders. Media publics carry news, features, and editorial opinion— newspapers, magazines, and radio and television stations. Government publics influence product safety and truth in advertising. The Company’s Microenvironment

18. 3-18 Public Citizen-action public include consumer organizations, environment groups, and minority groups Local public include neighborhood residents and community organizations General public influence the company’s public image Internal public include workers, managers, volunteers, and directors The Company’s Microenvironment

19. 3-19 Demographic environment Economic environment Natural environment Technological environment Political environment Cultural environment The Company’s Macroenvironment

20. 3-20 Demographic Environment Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. Demographic environment is important because it involves people, and people make up markets. Demographic trends include age, family structure, geographic population shifts, educational characteristics, and population diversity. The Company’s Macroenvironment

21. 3-21 Demographic Environment Changing Age Structure of the Population Generational marketing is important in segmenting people by lifestyle of life state instead of age. The Company’s Macroenvironment

22. 3-22 Demographic Environment Changing Age Structure of the Population Generation Y includes people born between 1977 and 1994. The Internet generation The Company’s Macroenvironment

23. 3-23 The Company’s Macroenvironment Demographic Environment Geographic Shifts in Population Trends include: Migratory movements between and within countries Moving from rural to metropolitan areas Changes in where people work Telecommuting Home office Divorce or separation

24. 3-24 Demographic Environment Changes in the Workforce Trends include: More educated More white collar More professional The Company’s Macroenvironment

25. 3-25 Demographic Environment Increasing Diversity Markets are becoming more diverse International National Trends include: Background Disabled The Company’s Macroenvironment

26. 3-26 Economic Environment Economic environment consists of factors that affect consumer purchasing power and spending patterns. Subsistence economies consume most of their own agriculture and industrial output. Industrial economies are richer markets. The Company’s Macroenvironment

27. 3-27 Economic Environment Changes in Income Value marketing involves ways to offer financially cautious buyers greater value—the right combination of quality and service at a fair price. Income distribution Upper-class consumers Middle-class consumers Working-class consumers Underclass consumers Changing consumer spending pattern The Company’s Macroenvironment

28. 3-28 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 Environmentally sustainable strategies Green marketing The Company’s Macroenvironment

29. 3-29 Technological Environment Most dramatic force in changing the marketplace with many positive and negative effects Rapid change Provides new markets and new opportunities Internet Medicine Weapons Credit cards Communication The Company’s Macroenvironment

30. 3-30 Political Environment Political environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society. The Company’s Macroenvironment

31. 3-31 Political Environment Legislation regulating business Public policy to guide commerce—sets of laws and regulations that limit business for the good of society at large Increasing legislation to: Protect companies Protect consumers Protect the interests of society The Company’s Macroenvironment

32. 3-32 Political Environment Increased Emphasis on Ethics and Socially Responsible Actions Socially responsible behavior occurs when firms actively seek out ways to protect the long-term interests of their consumers and the environment Cause-related marketing The Company’s Macroenvironment © Yukinobu Zengame

33. 3-33 Cultural Environment The cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors. The Company’s Macroenvironment

34. 3-34 Cultural Environment Persistence of Cultural Values Core beliefs and values have a high degree of persistence, are passed on from parents to children, and are reinforced by schools, churches, businesses, and government. Secondary beliefs and values are more open to change. The Company’s Macroenvironment

35. 3-35 Cultural Environment Shifts in Secondary Cultural Values Major cultural values of a society are expressed in people’s view of: Themselves Others Organization Society Nature and the universe The Company’s Macroenvironment

36. 3-36 Cultural Environment Shifts in Secondary Cultural Values People’s view of themselves Consumer segments: Do-It-Yourselfers—recent movers Adventurers People’s view of others The Company’s Macroenvironment

37. 3-37 Cultural Environment Shifts in Secondary Cultural Values People’s view of organizations People’s view of society Patriots defend it Reformers want to change it Malcontents want to leave it The Company’s Macroenvironment

38. 3-38 Cultural Environment Shifts in Secondary Cultural Values People’s view of nature Some feel ruled by it Some feel in harmony with it Some seek to master it People’s view of the universe Renewed interest in spirituality The Company’s Macroenvironment

39. 3-39 Views on Responding Uncontrollable Reacting and adapting to forces in the environment Proactive Taking aggressive actions to affect forces in the environment Reactive Watching and reacting to forces in the environment Responding to the Marketing Environment