1. The Marketing Environment
CHAPTER 3
The Marketing Environment

2. Roadmap: Previewing 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.
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3. McDONALD’S – Facing Challenges
Faces shifting consumer lifestyles and preferences for healthier foods.
Low ratings of food and service quality.
Atmosphere not upscale.
Image is perceived as being uncultured, uncool, and unclassy by younger target markets.
Marketing Initiatives
Focus on core competency of consistent products and reliable service.
Offers upscale alternative including McCafe and Bistro Gourmet.
Eliminates “supersize,” offers healthier food options, and introduces Go Active! Adult Happy Meal.
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4. Marketing Environment
Consists of actors and forces outside the organization that affect management’s ability to build and maintain relationships with target customers.
Studying the environment allows marketers to take advantage of opportunities as well as to combat threats.
Marketing intelligence and research are used to collect information about the environment.
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5. Figure 3-1 Actors in the Microenvironment
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6. The Microenvironment Company’s Internal Environment:
Areas inside of a company.
Affects the marketing department’s planning strategies.
All departments must “think consumer” and work together to provide superior customer value and satisfaction.
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7. The Microenvironment Suppliers:
Provide resources needed to produce goods and services.
Important link in the “value delivery system.”
Most marketers treat suppliers like partners – relationship management of suppliers is critical.
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8. The 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
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9. Partnering with Intermediaries
Marketing in Action
Partnering with Intermediaries
Coca-Cola’s partnership efforts help intermediaries to market more effectively.
Coca-Cola shares research results related to the beverage market, such as consumer preference and demographic data. They’ve even analyzed creative aspects of drive-through menu board design that could be improved.
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10. The Microenvironment Customers:
Five types of markets that purchase a firm’s goods and services.
Consumer
Business
Reseller
Government
International
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.
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11. The 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.
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12. Promoting Strategic Advantages
Marketing in Action
Promoting Strategic Advantages
Comparative advertising is often used to promote a company’s or brand’s strategic advantage.
Comparative advertising may name or show a specific competitor, or refer to the competition indirectly via comparisons to “other brands” or “the leading brand.”
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13. The Microenvironment Publics: Types of Publics:
Any group that has an interest in or impact on an organization's ability to achieve its objectives.
Types of Publics:
Financial
Media
Government
Citizen-action
Local
General
Internal
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14. The Macroenvironment
The company and all of the other actors operate in a larger MACROENVIRONMENT of forces that shape opportunities and pose threats to the company.
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15. Figure 3-2 Forces in the Macroenvironment
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16. Demographic Forces Demographics:
The study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics.
Free demographic information can be found on the Web.
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17. Demographic Forces
Marketers track changing age and family structures, geographic population shifts, educational characteristics, and population diversity.
The changing age structure of the U.S. population is the single most important demographic trend.
Baby boomers, Generation X, and Generation Y are the key groups.
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18. Demographic Forces Baby Boomers:
78 million born between 1946 and 1964.
Equal 28% of population.
Earn more than 50% of all personal income.
Almost 25% belong to racial or ethnic minority.
Spend a lot on anti-aging products and services.
Are likely to postpone retirement.
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19. Targeting Boomers’ Needs
Marketing in Action
Targeting Boomers’ Needs
As baby boomers age, their desire for vitality and continued good health will become increasingly important.
Many marketers are already attempting to satisfy these needs by developing new goods, drugs, and services.
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20. Demographic Forces Generation X: Generation Y:
Born between 1965 and 1976.
Defined by shared experiences.
Cynical of frivolous marketing pitches.
Cares about the environment.
Prize experience, not acquisition.
Generation Y:
Born between 1977 and 1994.
Large disposable income.
Comfortable with technology.
Tend to be impatient and “Now-Oriented.”
Targeted by many product lines.
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21. Reaching Out to Generation Y
Marketing in Action
Reaching Out to Generation Y
The ad shown at left plays to the fact that brands successfully targeting Gen Y are those that are perceived as hip and popular. It also recognizes that Gen Y’s composition is more racially diverse, with 1 in 3 members considering themselves to be non-Caucasian.
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22. Demographic Forces Changing American family and household makeup:
Married couples with children equal 34%, and this percentage is falling.
Married couples and people living with other relatives equals 22%.
Single parents equal 12%.
Single persons and adult “live-togethers” (also called nonfamily households) = 32%
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23. Changing American Household
Marketing in Action
Changing American Household
Dream Dinners was created to help working women who haven’t time to prepare or cook dinner themselves, but who want their families to eat well.
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24. Demographic Forces Geographic Shifts in Population:
14% of U.S. residents move each year.
General shift toward the Sunbelt states.
City to suburb migration continues.
More people moving to “micropolitan” areas.
More people telecommute.
1 in 5 people now work out of their home.
Micropolitan area: small cities located beyond congested metropolitan areas.
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25. Demographic Forces Better Educated Population: 1980:
69% of people over age 25 completed high school.
17% had completed college.
2003:
85% of people over age 25 completed high school.
27% had completed college.
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26. Demographic Forces Greater White-Collar Population 1950 – 1985:
White-collar workers increased from 41% to 54% while blue-collar workers decreased from 47% to 33%.
1983 – 1999:
Professionals and managers increased from 23% to greater than 30%.
2002 – 2012:
Professionals should increase by 25% while manufacturing is expected to increase 3%.
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27. Let’s Talk!
How might age-related generational characteristics affect Walt Disney World?
What about changes in the composition of households?
Education and work force status? Explain.
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28. Demographic Forces Increasing diversity:
U.S. is a “salad bowl,” mixing together various groups, each of which retains its ethnic and cultural differences.
Ethnic segments are growing as a percentage of the U.S. population and growth is projected to continue.
Increased marketing efforts towards:
Gay and lesbian consumers
People with disabilities
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29. Diversity Related Marketing
Marketing in Action
Diversity Related Marketing
Specialty consultants are often hired to research and target diverse markets.
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30. Economic Forces
Consists of factors that affect consumer purchasing power and spending patterns.
Changes in Income
1980s – consumption frenzy
1990s – “squeezed consumer”
2000s – value marketing
Income Distribution
Upper class
Middle class
Working class
Underclass
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31. Disney’s Two-Tiered Market
Marketing in Action
Disney’s Two-Tiered Market
Distinctly different items are targeted to each market.
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32. Natural Forces
Involves natural resources that are needed as inputs by marketers or that are affected by marketing activities.
Factors include:
Shortages of raw materials.
Increased pollution.
Increased government intervention.
Environmentally sustainable strategies.
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33. Environmental Sustainable Practices
Marketing in Action
Environmental Sustainable Practices
Some firms have adopted biodegradable packaging alternatives as part of their environmentally sustainable practices.
Mondi Business Paper is one such firm – note that the paper itself is 100% recycled.
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34. Technological Forces Video Snippet Technological forces are
dramatically shaping our
destiny. Watch the clip to
learn how consumers’ usage of the WWW
has impacted the
promotional efforts of American Express.
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35. Technological Forces
Technology changes rapidly, creating new markets and opportunities for some, while making other products obsolete.
Challenge is to make practical, affordable products.
Safety regulations result in higher research costs and a longer time period between conceptualization and introduction of a product.
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36. Let’s Talk!
Genetically modified or cloned foods have met with strong resistance in Europe.
How do you feel about eating genetically altered or cloned foods?
How else might genetic engineering advances create new opportunities?
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37. Political Forces
Includes laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society.
Areas of concern:
Increasing legislation.
Changing government agency enforcement.
Increased emphasis on ethics and socially responsible behavior.
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38. Diet Canada Dry – Cause-Related Marketing
Marketing in Action
Diet Canada Dry – Cause-Related Marketing
Canada Dry donated $ .10 to the Juvenile Diabetes Research Foundation of Canada for every 2 liter bottle & 12 pack sold during the promotional period. Learn more about the multi-tiered campaign by visiting the Web site.
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39. Cultural Forces
The institutions and other forces that affect a society’s basic values, perceptions, preferences, and behavior.
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40. Cultural Forces
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.
Marketers may be able to change secondary beliefs, but NOT core beliefs.
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41. Cultural Forces
Society’s major cultural views are expressed in people’s views of:
Themselves
Others
Organizations
Society
Nature
The Universe
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42. Responding to the Marketing Environment
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.
Manage the environment by:
Hiring lobbyists
Running “advertorials”
Pressing law suits
Filing complaints
Forming agreements to control channels
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43. Rest Area: 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.
Copyright 2007, Prentice-Hall Inc.