1. The Marketing Environment Chapter 4

2. 4- 1 Objectives Know the environmental forces that affect the company’s ability to serve its customers. Know the environmental forces that affect the company’s ability to serve its customers. Realize how changes in the demographic and economic environments affect marketing decisions. Realize how changes in the demographic and economic environments affect marketing decisions.

3. 4- 2 Objectives Identify the major trends in the firm’s natural and technological environments. Identify the major trends in the firm’s natural and technological environments. Know the key changes in the political and cultural environments. Know the key changes in the political and cultural environments. Understand how companies can react to the marketing environment. Understand how companies can react to the marketing environment.

4. 4- 3 Case Study “Millennial fever” set the stage to bring back the Beetle “Millennial fever” set the stage to bring back the Beetle VW’s investment: $ 560 million VW’s investment: $ 560 million Demand quickly outstripped supply Demand quickly outstripped supply The new VW beetle enjoyed cross- generational appeal Earned many awards Beetle now accounts for over 25% of company sales Volkswagen Discussion: Will the flower-power Microbus succeed next?

5. 4- 4 Key Environments Marketing Environment Marketing Environment  The actors and forces that affect a firm’s ability to build and maintain successful relationships with customers.  Aspects of the marketing environment:  Microenvironment  Macroenvironment

6. 4- 5 Actors Affecting a Firm’s Ability to Serve Customers The Microenvironment Company Company Suppliers Suppliers Customer Markets Customer Markets Competitors Publics Marketing Intermediaries

7. 4- 6 The Microenvironment Departments within the company impact marketing planning. Departments within the company impact marketing planning. Suppliers help create and deliver customer value. Suppliers help create and deliver customer value.  Treat suppliers as partners. Marketing intermediaries help sell, promote, and distribute goods. Marketing intermediaries help sell, promote, and distribute goods.  Intermediaries take many forms.

8. 4- 7 The Macroenvironment Customer markets must be studied. Customer markets must be studied.  Consumer, business, government, reseller and international markets exist. Successful companies provide better customer value than the competition. Successful companies provide better customer value than the competition.  Size and industry position help to determine the appropriate competitive strategy. Various publics must also be considered. Various publics must also be considered.

9. 4- 8 Types of Publics The Microenvironment Financial Financial Media Media Government Government Local General Internal Citizen Action Citizen Action

10. 4- 9 Macroenvironmental Forces The Macroenvironment Demographic Demographic Economic Economic Natural Natural Technological Political Cultural

11. 4- 10 The Macroenvironment Key Demographic Trends Key Demographic Trends  World population growth  Changing age structure  The U.S. population consists of seven generational groups. – Baby boomers, Generation X, and Generation Y are key groups.  Distinct segments typically exist within these generational groups.

12. 4- 11 The Macroenvironment Born between 1946 and 1964 Represent 28% of the population; earn 50% of personal income Many mini-segments exist within the boomer group Entering peak earning years as they mature Lucrative market for travel, entertainment, housing, and more Baby Boomers Baby Boomers Generation X Generation X Generation Y Generation Y Key Generations

13. 4- 12 The Macroenvironment Born between 1965 and 1976 First latchkey children Maintain a cautious economic outlook Share new cultural concerns Represent $125 billion in annual purchasing power Will be primary buyers of most goods by 2010 Baby Boomers Baby Boomers Generation X Generation X Generation Y Generation Y Key Generations

14. 4- 13 The Macroenvironment Born between 1977 and 1994 72 million strong; almost as large a group as their baby boomer parents New products, services, and media cater to GenY Computer, Internet and digitally saavy Challenging target for marketers Baby Boomers Baby Boomers Generation X Generation X Generation Y Generation Y Key Generations

15. 4- 14 The Macroenvironment Key Demographic Trends Key Demographic Trends  Changing American household  Geographic population shifts  Better-educated, more white-collar workforce  Increasing Diversity

16. 4- 15 The Macroenvironment The Economic Environment The Economic Environment  Affects consumer purchasing power and spending patterns.  Two types of national economies: subsistence vs. industrial.  U.S. consumers now spend carefully and desire greater value.

17. 4- 16 The Macroenvironment Key Economic Trends Key Economic Trends  U.S. income distribution is skewed.  Upper class, middle class, working class and the underclass.  Rich are getting richer, the middle class is shrinking, and the underclass remains poor.  Consumer spending patterns are changing.

18. 4- 17 The Macroenvironment The Natural Environment The Natural Environment  Concern for the natural environment has grown steadily, increasing the importance of these trends:  Shortage of raw materials  Increased pollution  Increased governmental intervention

19. 4- 18 The Macroenvironment Key Technological Trends Key Technological Trends  The technological environment is characterized by rapid change.  New technologies create new opportunities and markets but make old technologies obsolete.  The U.S. leads the world in research and development spending.

20. 4- 19 The Macroenvironment The Political Environment The Political Environment  Includes laws, governmental agencies, and pressure groups that impact organizations and individuals. Key trends include:  Increased legislation to protect businesses as well as consumers.  Changes in governmental agency enforcement.  Increased emphasis on ethical behavior and social responsibility.

21. 4- 20 The Macroenvironment The Cultural Environment The Cultural Environment  Is composed of institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors.  Culture can influence decision making.  Core beliefs are persistent; secondary cultural values change and shift more easily.  The cultural values of a society are expressed through people’s views.

22. 4- 21 Cultural values are expressed via how people view: The Macroenvironment Themselves Themselves Others Others Organizations Organizations Society Nature The Universe

23. 4- 22 Responding to the Marketing Environment Reactive: Passive Acceptance and Adaptation Reactive: Passive Acceptance and Adaptation  Companies design strategies that avoid threats and capitalize upon opportunities. Proactive: Environmental Management Proactive: Environmental Management  Use of lobbyists, PR, advertorials, lawsuits, complaints, and contractual agreements to influence environmental forces.