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Copyright 2007, Prentice Hall, Inc. 1
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Principles of MarketingPrinciples of Marketing
Fall 2009 - MKTG 220Fall 2009 - MKTG 220 Dr. Abdullah SultanDr. Abdullah Sultan
If Marketing is about managing profitable customer relationships, why do companies fail in this task?
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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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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.
5
Segmentation
Target
Product
Price Promotion
Distribution
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Segmentation
Target
Product
Price Promotion
Distribution
MacroenvironmentFactors
MicroenvironmentFactors
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Marketing Environment
Actors in the microenvironment include: The company itself Suppliers Marketing intermediaries Customers Competitors Publics
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The 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.
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The Microenvironment
Suppliers: Provide resources needed to produce goods and
services. Important link in the “value delivery system.” Most marketers treat suppliers like partners.
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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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The Microenvironment
Customers: Five types of markets that purchase a company’s
goods and services. Consumer Business Reseller Government International
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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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Publics: Any group that has an interest in or impact on an
organization's ability to achieve its objectives. Financial public Media public Government public Citizen-action public Local public General public Internal public
The Microenvironment
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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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The Macroenvironment
Forces in the macroevironment can be categorized as: Demographic Economic Natural Technological Political Cultural
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Demographic Environment
Demographics: 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.
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Demographic Environment
The changing age structure of the population is the single most important demographic trend. USA: Baby boomers, Generation X, and
Generation Y are the key groups. Kuwait: Grandparents, Parents, and You.
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Demographic Environment
Baby Boomers: 78 million born between 1946 and 1964 (45 years
and above). 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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Demographic Environment
Generation X: 45 million born between 1965 and 1976 (33 years
to 44 years). Defined by shared experiences:
Increasing divorce rates. More of their mothers employed. First generation of latchkey kids (kids who stay at home
with little parental supervision). Care about the environment.
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Demographic Environment
Generation Y: 72 million born between 1977 and 1994 (15 to 32
years). Have large amount of disposable income. Comfortable with computer technology. Tend to be impatient and “Now-Oriented.” Many product lines targeted at those who are part
of Generation Y: Teen and young adult games Clothes, furniture, food
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Demographic Environment
Increasing diversity: Kuwait 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
Kuwait population and growth is projected to continue. Increased marketing efforts towards:
Asians and people from Lebanon/Syria/Egypt Young people with purchasing power (demand)
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Economic Environment
Changes in Income 1980s – consumption
frenzy 1990s – “squeezed
consumer” 2000s – value marketing
Income Distribution Upper class Middle class Working class Underclass
Consists of factors that affect consumer purchasing power and spending patterns.
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Natural Environment
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. Trend toward more environmentally sustainable
strategies (e.g., recyclable packages, more energy-efficient operations).
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Technological Environment
Most dramatic force shaping our destiny. Changes rapidly. Creates new markets and opportunities (e.g., K-Net,
RFID technology). Challenge is to make practical, affordable products. When old industries ignore new technologies, old
businesses decline. Companies that do not keep up with technology will
miss new products and opportunities.
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Political Environment
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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Cultural Environment
The institutions and other forces that affect a society’s basic values, perceptions, preference, and behaviors. 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. Marketers may be able to change secondary beliefs, but NOT
core beliefs.
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Responding to theMarketing 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.
Example: NBK social programs (anti-drugs, exercise)
Question?
1) Do you believe that taking a proactive approach to manage the marketing environment is more effective than a reactive approach? Why?
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