Chapter Three The Marketing Environment. Roadmap: Previewing the Concepts Copyright 2007, Prentice Hall, Inc.3-2 1.Describe the environmental forces that

Chapter Three

The Marketing Environment

Copyright 2007, Prentice Hall, Inc. 3-2

Roadmap: Previewing the Concepts

1. Describe the environmental forces that affect the company’s ability to serve its customers.

2. Explain how changes in the demographic and economic environments affect marketing decisions.

3. Identify the major trends in the firm’s natural and technological environments.

4. Explain the key changes in the political and cultural environments.

5. Discuss how companies can react to the marketing environment.


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.

McDONALD’S – Facing New McDONALD’S – Facing New ChallengesChallenges

Case StudyCase Study

Marketing Initiatives Focus on core competency

of consistent products and reliable service.

Offers upscale alternatives including McCafe and Bistro Gourmet.

Eliminates “supersize,” offers healthier food options, and introduces Go Active! Adult Happy Meal.


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.



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.



Actors in the microenvironment include:– The company itself– Suppliers– Marketing intermediaries– Customers– Competitors– Publics


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.



Suppliers: – Provide resources needed to produce

goods and services.– Important link in the “value delivery

system.”– Most marketers treat suppliers like

partners.



Marketing intermediaries: – Help the company to promote, sell, and

distribute its goods to final buyers• Resellers• Physical distribution firms• Marketing services agencies• Financial intermediaries



Customers: – Five types of markets that purchase a

company’s goods and services.• Consumer• Business• Reseller• Government• International



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.


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 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.


The Macroenvironment

Forces in the macroevironment can be categorized as:– Demographic– Economic– Natural– Technological– Political– Cultural


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.



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.



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.



Generation X:– 45 million born between 1965 and 1976.– Defined by 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.



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 those who

are part of Generation Y:• Teen and young adult games• Clothes, furniture, food



Changing American family and 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”

(also called nonfamily households) = 32%



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.



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.



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%.



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


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.


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.– Environmentally sustainable strategies.


Technological Environment

Most dramatic force shaping our destiny. 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.


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.


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, 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.


Cultural Environment

Society’s major cultural views are expressed in people’s views of:– Themselves– Others– Organizations– Society– Nature– The universe


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.


Responding to theMarketing Environment

Manage the environment by:– Hiring lobbyists– Running “advertorials”– Pressing law suits– Filing complaints– Forming agreements to control channels


Rest Stop: Reviewing the Concepts

1. Describe the environmental forces that affect the company’s ability to serve its customers.

2. Explain how changes in the demographic and economic environments affect marketing decisions.

3. Identify the major trends in the firm’s natural and technological environments.

4. Explain the key changes in the political and cultural environments.

5. Discuss how companies can react to the marketing environment.

Documents

Chapter Three The Marketing Environment. Roadmap: Previewing the Concepts Copyright 2007, Prentice Hall, Inc.3-2 1.Describe the environmental forces that