1. The Marketing Environment3
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
The marketing environment consists of actors and forces outside the organization that affect management’s ability to build and maintain relationships with target customers.
Environment offers both opportunities and threats.
Marketing intelligence and research used to collect information about the environment.

4. Marketing Environment
Includes:
Microenvironment: actors close to the company that affect its ability to serve its customers.
Macroenvironment: larger societal forces that affect the microenvironment.
Considered to be beyond the control of the organization.
Microenvironment includes: the company itself, supplies, marketing channel firms, customer markets, competitors, and publics.
Macroenvironment includes: demographic, economic, natural, technological, political, and cultural forces.

5. The Company’s Microenvironment
Company’s Internal Environment:
Areas inside a company.
Affects the marketing department’s planning strategies.
All departments must “think consumer” and work together to provide superior customer value and satisfaction.

6. Actors in the Microenvironment

7. The Company’s Microenvironment
Suppliers:
Provide resources needed to produce goods and services.
Important link in the “value delivery system.”
Most marketers treat suppliers like partners.

8. The Company’s Microenvironment
Marketing Intermediaries:
Help the company to promote, sell, and distribute its goods to final buyers.
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.

9. The Company’s Microenvironment
Customers:
They purchase a company’s goods and services

10. The Company’s 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 (competitive advantage))
Publics:
Group that has an interest in or impact on an organization's ability to achieve its objectives (

11. Types of Publics
Financial Public: influence the company’s ability to obtain funds. Banks, investment houses, and stockholders and the major financial publics.
Media Publics: carry news, features, and editorial opinion. They include newspapers, magazines, and radio and television stations.
Government Publics: Management must take government developments into account. Marketers must often consult the company’s lawyers on issues of product safety, truth in advertising, and other matters.
Citizen-Action Publics: A company’s marketing decisions may be questioned by consumer organizations, environmental groups, minority groups, and others. Its public relations department can help it stay in touch with consumer and citizen groups.
Local Publics: include neighborhood residents and community organizations. Large companies usually appoint a community relations office to deal with the community, attend meetings, answer questions, and contribute to worthwhile causes.
General Public: A company needs to be concerned about the general public’s attitude toward its products and activities. The public’s image of the company affects its buying.
Internal Publics: include workers, managers, volunteers, and the board of directors. Large companies use newsletters and other means to inform and motivate their internal publics. When employees feel good about their company , this positive attitude spills over to external publics.

12. 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.

13. The Company’s Macroenvironment

14. The Company’s Macroenvironment
1. Demographic:
The study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics.
Marketers track changing age and family structures, geographic population shifts, educational characteristics, and population diversity.

15. The Seven U.S. Generations

16. Baby Boomers 78 million born between 1946 and 1964
Account for 28% of population
Earn more than half 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

17. Generation X 45 million born between 1965 and 1976
Defined by their shared experiences
Increasing divorce rates
More of their mothers employed
First generation of latchkey kids
Cynical of frivolous marketing pitches
Care about the environment
Prize experience, not acquisition

18. Generation Y 72 million born between 1977 and 1994
Have large amount of disposable income
Comfortable with computer technology
Tend to be impatient and “Now-Oriented”
Many product lines targeted at Gen Ys

19. Interactive Student Assignment
Pair with another student to discuss the following questions:
In what ways does the buying behavior of you and your parents differ?
In what ways does the buying behavior of you and your grandparents differ?
What selling strategies would work best for:
You
Your parents
Your grandparents

20. Changing American Family
Household makeup:
Married couples with children = 34%, and falling
Married couples and people living with other relatives = 22%
Single parents = 12%
Single persons and adult “live-togethers” = 32%

21. The Changing American Family
Non-family households—single live-alones or adult live-togethers of one or both sexes—make up a full 32 percent of U.S. households. Today’s marketers must incorporate “the likes of Murphy Brown, Ally McBeal, and Will and Grace into their business plans.”

22. Geographic Shifts in Population
16% 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
Micropolitan area: small cities located beyond congested metropolitan areas.

23. Better Educated Population
1980:
69% of people over age 25 completed high school
17% had completed college
2002:
84% of people over age 25 completed high school
27% had completed college
Currently, ⅔ of high school grads start college

24. More White-Collar Population
1950 – 1985:
Proportion of white-collar workers increased from 41% to 54%
Proportion of blue-collar workers decreased from 47% to 33%
Proportion of service workers increased from 12% to 14%
1983 – 1999:
Proportion of managers and professionals increased from 23% to >30%

25. Increasing Diversity U.S. is a “salad bowl” Increased marketing to:
Various groups mixed together, each retaining its ethnic and cultural differences
Increased marketing to:
Gay and lesbian consumers
People with disabilities

26. Diversity-Based Advertising
Based on careful study of cultural differences, Bank of America has developed targeted advertising messages for different cultural subgroups, here Asians and Hispanics.

27. 2. Economic Environment
Consists of factors that affect consumer purchasing power and spending patterns.
Changes in Income
1980’s – consumption frenzy
1990’s – “squeezed consumer”
2000’s – value marketing
Income Distribution
Upper class
Middle class
Working class
Underclass

28. Income Distribution
Walt Disney markets two distinct Pooh bears to match its two-tiered market.

29. 3. Natural Environment
Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities.

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

31. Environmental Responsibility
McDonald’s has made a substantial commitment to the so-called “green movement.”

32. 4. Technological Environment
Most dramatic force now shaping our destiny.

33. Technological Environment
Changes rapidly.
Creates new markets and opportunities.
Challenge is to make practical, affordable products.
Safety regulations result in higher research costs and longer time between conceptualization and introduction of product.

34. Discussion Questions
Within the last ten years, which technological force has had the greatest impact on marketing? In what areas of marketing has this impact been seen?
What technological force has impacted you the most? In what ways has this occurred?

35. 5. Political Environment
Includes Laws, Government Agencies, and Pressure Groups that Influence or Limit Various Organizations and Individuals In a Given Society.
Increasing Legislation
Changing Government
Agency Enforcement
Increased Emphasis on Ethics
& Socially Responsible Actions
Cause-Related Marketing

36. Cause-Related Marketing
KitchenAid donates $50 to breast cancer research for every pink mixer it sells and encourages consumers to host a “Cook for the Cure” dinner party.

37. 6. Cultural Environment
The institutions and other forces that affect a society’s basic values, perceptions, preference, and behaviors.

38. Cultural Environment
Core beliefs and values are passed on from parents to children and are reinforced by schools, mosques, business, and government.
Secondary beliefs and values are more open to change.

39. 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.
This can be done by:
Hiring lobbyists
Running “advertorials”
Pressing lawsuits
Filing complaints
Forming agreements to control channels

40. 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.