1. The Marketing Environment
Chapter 4
The Marketing Environment

2. Road Map: 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.

3. Marketing Environment
Marketing Environment- consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers.
Includes:
Microenvironment - forces close to the company that affect its ability to serve its customers.
Macroenvironment - larger societal forces that affect the microenvironment.

4. Company’s Internal Environment (Fig. 4-1)

5. The Company’s Microenvironment
Company’s Internal Environment –
areas inside a company; top management,
affect the marketing department’s plans
Suppliers –
provide resources needed to produce goods and services,
important link in the “value delivery system”
Marketing Intermediaries –
help the company to promote, sell, and distribute its goods to final buyers i.e. resellers

6. The Company’s Microenvironment
Customers –
five types of markets that purchase a company’s goods and services
Competitors –
those who serve a target market with similar products and services,
company must gain strategic advantage against these organizations
Publics –
group that has an interest in or impact on an organization's ability to achieve its objectives

7. Types of Customer Markets (Fig. 4-2)

8. Types of Publics (Fig. 4-3)

9. The Company’s Macroenvironment (Fig. 4-4)

10. The Company’s Macroenvironment
Demographic –
studies populations in terms of size, density, location, age, gender, race, occupation and other statistics.
Economic –
factors that affect consumer purchasing power and spending patterns.
Natural -
natural resources needed as inputs by marketers or that are affected by marketing activities.

11. Key U.S.Demographic Trends
Changing Age Structure
Population contains 7 generational groups
Changing American Family
Later (or no) marriage, fewer children, working
women, and nontraditional households
Geographic Shifts
Shifted to the Sunbelt, suburbs,
“micropolitan areas”
Better-Educated & More White-Collar
Increased college attendance
(up 9% in 20 years) and white-collar workers
Increasing Diversity
Ethnic heritage, gays & lesbians, disabled people

12. Changing Age Structure
Baby Boomer Generation
(78 million people born ) One of the most powerful forces shaping the marketing environment, 28% of population
Generation X
(45 million people born ) More skeptical, savvy shoppers, respond to honesty in advertising, share cultural concerns
Generation Y
(72 million people born ) Fluent and comfortable with technology, smart, aware, fair-minded (N-Gens)

13. Changing American Family
58% of all women 16 and older are working or looking for a job.
Many marketers of tires, cars, insurance, travel and financial services target these women.

14. Interactive Student Assignments
Form small groups to discuss the following questions.
With respect to the seven U.S. generations (Fig. 4-5), which generation are you in?
How would you describe your generation?
If you were going to attempt to sell to the older baby boomer generation, what would be a key to selling successfully to this generational group?
Despite the financial planning efforts of many baby boomers, the reality is that the majority of generation members have saved too little to support retirement -- a situation that will require them to continue working well into their 70s. At this point, the generation will probably press for more flexible hours and for a working arrangement that permits telecommuting from home. This provides a marketing opportunity for manufacturers of fax machines, computers, laser printers, and modems as well as for online services that provide electronic mail and business research. Even phone companies will benefit as work-at-home baby boomers install multiple phone lines to support their telecommuting needs.
For our aging population there is an increasing trend toward larger more comfortable luxury and semi-luxury cars. “Creature comforts” are predicted to be at a premium. In addition, sport utility vehicles (despite their fuel consumption) have gained tremendously in popularity. The ultimate luxury of ten or twenty years ago was to have a Lincoln or a Cadillac. Today, it is to have an Expedition, Land Rover, or Navigator (which cost as much or more than the popular luxury cars).
The older generation of ten years ago had no real interest in computers or software. As shown above, the Baby Boomers that have reached maturity in their life cycles are from the computer age. However, these products must be matched to their needs.

15. Economic Environment Changes in Income Income Distribution
1980’s – consumption frenzy
1990’s – “squeezed consumer”
2000’s – value marketing
Income Distribution
Upper class
Middle class
Working class
Underclass
Changing Consumer Spending Patterns
Engel’s laws -Consumers at different income levels have different spending patterns

16. Environmentally Sustainable
Natural Environment
Shortages of
Raw Materials
Factors Affecting
the
Natural
Environment
Environmentally Sustainable
Strategies
Increased Pollution
Increased Government
Intervention

17. The Company’s Macroenvironment
Technological –
Most dramatic force now shaping our destiny.
Political –
laws, government agencies, and pressure groups that influence and limit organizations and individuals in a given society.
Cultural –
institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors.

18. Technological Environment
Changes rapidly
Creates new markets and opportunities
Challenge to make practical, affordable products
Safety regulations result in higher research costs

19. Discussion Questions
Which technological force will impact marketing the most in the near future?
What technological force has impacted you the most? Comment.
Students will have many answers to these questions. To the first one, students might respond to what they read in the text:
computers – more people use them to shop
Internet – huge availability of products
manufacturing technology.
Many others might be named as well based on the students knowledge.

20. Political Environment
Includes Laws, Government Agencies, Etc. that Influence
& Limit Organizations/Individuals in a Given Society
Increasing
Legislation
Changing
Government
Agency
Enforcement
Increased
Emphasis on
Ethics &
Socially
Responsible
Actions

21. Cultural Environment
Yankelovick Monitor has identified eight major consumer value themes:
Paradox
Trust not
Go it alone
Smarts really count
No sacrifices
Stress hard to beat
Reciprocity is the way to go
Me 2

22. Society’s Major Cultural Views Are Expressed in People’s View of:
Cultural Environment
Society’s Major Cultural Views Are Expressed in People’s View of:
Themselves
Others
Organizations
Society
Nature
The Universe

23. Responding to the Marketing Environment
Environmental Management Perspective
Taking a proactive approach to managing the microenvironment and the macroenvironment by taking aggressive (rather than passive) actions to affect the publics and forces in the marketing environment.
How? Hire lobbyists , run “advertorials”, press law suits, file complaints, and form agreements.

24. Rest Stop: 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.