Analyzing the Marke0ng Environment

Chapter 4

The marketing environment consists of forces outside marketing that affect the ability to build and maintain successful relationships with customers. It can be

divided into: the micro environment

and the macro environment

The Marketing Environment

Microenvironment: Consists of actors close to the company that

affect its ability to serve its customers Suppliers, customers, competitors, the public,

marketing intermediaries, and the company itself

Macroenvironment: Consists of larger societal forces that affect

the microenvironment Demographic, economic, technological, political,

natural, and cultural forces

The Marketing Environment

Microenvironment: Consists of actors close to the company that

affect its ability to serve its customers Suppliers, customers, competitors, the public,

marketing intermediaries, and the company itself

Macroenvironment: Consists of larger societal forces that affect

the microenvironment Demographic, economic, technological, political,

natural, and cultural forces

Micro-environemnt Customer

Compe0tors

Publics Company

Intermediaries

Suppliers

The Marketing Environment

Micro-environemnt Customer

Compe0tors

Publics Company

Intermediaries

Suppliers

The Marketing Environment

The Microenvironment

Customers: Companies may target any or all of the types

of markets, including: Consumer Business Reseller Government International

Micro-environemnt Customer

Compe0tors

Publics Company

Intermediaries

Suppliers

The Marketing Environment

The Microenvironment

Competitors: Marketers must seek to gain strategic

advantage against competitive organizations Size of firm and industry position will influence

choice of strategy when competing in the marketplace

Micro-environemnt Customer

Compe0tors

Publics Company

Intermediaries

Suppliers

The Marketing Environment

The Microenvironment

Publics: Any group that has an actual or potential

interest in or impact on an organizations ability to achieve its objectives

Seven types of publics:

Financial Publics Local / Community Organizations Media General Government Internal Citizen-action

Micro-environemnt Customer

Compe0tors

Publics Company

Intermediaries

Suppliers

The Marketing Environment

The Microenvironment

The Company: Involves groups such as top management,

finance, R&D, purchasing, operations, accounting

Affects the marketing departments planning strategies

All departments must think consumer and work together to provide superior customer value and satisfaction

Micro-environemnt Customer

Compe0tors

Publics Company

Intermediaries

Suppliers

The Marketing Environment

The Microenvironment

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

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

Micro-environemnt Customer

Compe0tors

Publics Company

Intermediaries

Suppliers

The Marketing Environment

The Microenvironment

Suppliers: Provide resources needed to produce goods

and services Important link in the overall customer value

delivery system! Most marketers treat suppliers like partners in

creating and delivering customer value

Macro-environemnt Demographic

Economic

Cultural Technological

Poli0cal

Natural

The Marketing Environment

Macro-environemnt Demographic

Economic

Cultural Technological

Poli0cal

Natural

The Marketing Environment

Demographic Environment

Demography: 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

Demographic Environment

The changing age structure of the Canadian population is the most important demographic trend

The three largest generational groups are: Baby Boomers Generation X Millennials or Generation Y

3 Largest Genera0onal Groups

Baby Boomers

Born between 47 and 66

Genera0on X

Born between 67 and 76

Genera0on Y/ Millennials

Born between 77 and 00

Demographic Environment

The Canadian family and household are changing: Growing crowded nest syndrome Fewer families have children Average Canadian household shrank to 2.5

people More dual-income families

Needs of non-traditional households must be considered by marketers

Demographic Environment

Geographic shifts in population: Rural to urban (city, suburb) migration

continues People in different regions buy differently Shift in where people live is changing how

they work

Demographic Environment

Increasing diversity: 16% of Canadians consider themselves

visible minorities This group is growing fast and has huge

purchasing power Marketers target specially designed ads, products,

and promotions at ethnic groups

Macro-environemnt Demographic

Economic

Cultural Technological

Poli0cal

Natural

The Marketing Environment

Economic Environment

Consists of factors that affect consumer purchasing power and spending patterns Changes in income and spending

Recent years: consumption frenzy, record debt Economic crisis leading to consumer frugality Value marketing is key to success

Economic Environment

Consists of factors that affect consumer purchasing power and spending patterns Changes in spending patterns

Engels laws note that consumers at different income levels have different spending patterns

Macro-environemnt Demographic

Economic

Cultural Technological

Poli0cal

Natural

The Marketing Environment

Cultural Environment

The institutions and other forces that affect a societys basic values, perceptions, preferences, and behaviors Core beliefs are passed on from parents to

children and reinforced by schools, churches, businesses, and government

Secondary beliefs and values are more open to change

Marketers may be able to change secondary beliefs, but not core beliefs

Macro-environemnt Demographic

Economic

Cultural Technological

Poli0cal

Natural

The Marketing Environment

Technological Environment

Technology changes rapidly Creating new markets and opportunities Increases obsolescence of products

Challenge is to make practical, affordable new products

Government bans unsafe products and sets safety standards Regulations result in higher research costs,

and longer time to market for new products

Macro-environemnt Demographic

Economic

Cultural Technological

Poli0cal

Natural

The Marketing Environment

Political Environment

Includes laws, government agencies, and pressure groups that influence or limit organizations and individuals

Marketing activities face: Increasing legislation Changing government agency enforcement Increased emphasis on ethics and socially

responsible behavior

Macro-environemnt Demographic

Economic

Cultural Technological

Poli0cal

Natural

The Marketing Environment

Natural Environment

Natural resources are needed as inputs by marketers and are affected by marketing

Key trends include: Shortage of raw materials Increased pollution Increased government intervention

Many firms focus on creating environmentally-sustainable strategies

Questions?

Marke0ng Research and Informa0on

Chapter 5

Marketing Information

To build and maintain profitable relationships with customers, companies need information about : Customers needs Marketing environment Competition

To make decisions, marketing managers need information that provides true customer insights

Customer Insights

Customer insights: Fresh understanding of customers and the

marketplace derived from marketing information that become the basis for creating customer value and relationships

Used to develop competitive advantage Customer insight teams are replacing traditional

market research departments

Marketing Information System

To gain customer insights, you need systems to give managers relevant information, in the right form, and at the right time This is known as Marketing Information

System (MIS): Therefore, an MIS helps managers to:

Assess information needs Develop needed information Analyze and use information

Assessing Information Needs

A good MIS balances what information users (marketers) want against what they need and what is feasible to offer Sometimes the company cannot provide the

needed information because it is not available or due to MIS limitations

MIS efforts are costly; firms must decide if the value of insights gained from more information is worth the cost

Assessing Information Needs

Managers do not always know the right questions to ask; MIS helps to make sure relevant information is not overlooked Ex: not all managers know to monitor word of

web

Developing Marketing Information

Once the MIS has determined the information needs, the information must be obtained in one of 3 ways: Internal Data Marketing Intelligence Marketing Research

Internal Databases

Internal databases are electronic collections of consumer and market information obtained from data sources within the company network (e.g. customer databases) Include information on demographics, sales

transactions, website visits

Marketing Intelligence

Competitive marketing intelligence: a collection and analysis of publicly available information about consumers, competitors, and developments in the marketing environment

For example: annual reports; brand discussions on blogs or social media, the census

Marketing intelligence can help a marketer understand what customers say about their brand

Market Research

Market research is the systematic design, collection, analysis and reporting of relevant data for specific situations Gives insight into:

Customer motivations Customer purchase behavior Customer satisfaction

Market Research

Market research occurs in 4 Stages: Identifying the Problem and Research

Objectives Planning and Developing the Research Collecting and Analyzing Data Interpreting and Reporting Findings

Defining the Problem and Objectives

This can be the most difficult step Research objectives may include:

Exploratory research: Descriptive research: Causal research:

Developing the Research Plan

The research plan outlines: Sources of data (primary vs. secondary) Specific research approaches Contact methods and sampling plans Instruments for data collection

Present research plan in a written proposal

Gathering Secondary Data

Secondary data: Information that already exists somewhere

which has been collected for another purpose Common sources of secondary data:

Internal databases Commercial data services Government sources (Stats Canada, the Census)

Secondary Data

Advantages of secondary data: Available more quickly and cheaper than

primary data Can provide data individual firm cannot collect

on its own Disadvantages of secondary data:

Needed information may not exist Information may not be usable; must evaluate

relevancy, accuracy, currency, and impartiality

Primary Data Collection

Secondary data rarely provides all necessary information, requiring firms to collect primary data

Primary data: Consists of information collected for the

specific purpose at hand Must be relevant, accurate, current, and

unbiased

Observational Research

Gathering primary data by observing relevant people, actions, and situations Obtains information that people are unwilling

or unable to provide Best method for exploratory research

Observational Research

Limitations: Cannot observe feelings, attitudes, motives,

or long-term or infrequent behavior May not be possible to observe long-term or

infrequent behavior Ethnographic research yields richer

understanding of consumers: Trained observers watch and interact with

consumers in their natural habitat

Observational Research

Ethnographic Research: A form of observational research in which

trained observers watch and interact with consumers in their natural habitat

Yields richer understanding of consumers allows companies to zero in on their customers

unarticulated desires

Survey Research

Survey research: Gathers primary data by asking people

questions about their knowledge, attitudes, preferences, and buying behavior

Most widely used method for primary data collection

Best method for gathering descriptive information

Can ask directly about attitudes, expectations etc

Experimental Research

Experimental research: Gathers primary data by selecting matched

groups of subjects, giving them different treatments, controlling related factors, and checking for differences in group responses

Best method for explaining cause-and-effect (causal) relationships

Sampling Plan

Sample: Segment of the population selected to

represent the population as a whole Need to determine:

Who to survey (sampling unit) How many people to survey (sample size) How to chose the people in the sample

(sampling procedure)

Research Instruments

Questionnaire decisions: What questions to ask Form of each question; closed or open-end Wording and ordering of questions

Mechanical instruments: Monitor consumer behaviour Includes people metres, checkout scanners,

eye tracking devices, neuro marketing

Implementing the Research Plan

Collecting the data: Most expensive phase Subject to error

Processing the data: Check for accuracy Code for analysis

Analyzing the data: Tabulate results Compute statistical measures

Interpreting and Reporting Findings

Interpret the findings Draw conclusions Report to management:

Present findings and conclusions that will be most helpful to decision making

Analyzing and Using Marketing Information

What is the best way to analyze and use individual customer data? One popular method is Customer

Relationship Management (CRM)

Customer Relationship Management : Sophisticated software and analytical tools

that integrate customer information from all sources, analyze it in depth, and apply the results to maximize customer loyalty

Provide best offers based on a customers use of products or services

Pinpoint and target high-value customers

Customer Relationship Management: Ideally, companies capture information at

every possible touch point or contact between the customer and company:

Customer purchases Sales force contracts Service calls Website visits

Many companies utilize CRM: Captures and analyzes information from all

customer sources Applies the results to build stronger

relationships Use data warehouses and data mining

techniques Findings may lead to new marketing

opportunities