2Road 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.
3Marketing 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.
5The Company’s Microenvironment Company’s Internal Environment –areas inside a company; top management,affect the marketing department’s plansSuppliers –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
6The Company’s Microenvironment Customers –five types of markets that purchase a company’s goods and servicesCompetitors –those who serve a target market with similar products and services,company must gain strategic advantage against these organizationsPublics –group that has an interest in or impact on an organization's ability to achieve its objectives
10The 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.
11Key U.S.Demographic Trends Changing Age StructurePopulation contains 7 generational groupsChanging American FamilyLater (or no) marriage, fewer children, workingwomen, and nontraditional householdsGeographic ShiftsShifted to the Sunbelt, suburbs,“micropolitan areas”Better-Educated & More White-CollarIncreased college attendance(up 9% in 20 years) and white-collar workersIncreasing DiversityEthnic heritage, gays & lesbians, disabled people
12Changing Age Structure Baby Boomer Generation(78 million people born ) One of the most powerful forces shaping the marketing environment, 28% of populationGeneration X(45 million people born ) More skeptical, savvy shoppers, respond to honesty in advertising, share cultural concernsGeneration Y(72 million people born ) Fluent and comfortable with technology, smart, aware, fair-minded (N-Gens)
13Changing 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.
14Interactive 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.
15Economic Environment Changes in Income Income Distribution 1980’s – consumption frenzy1990’s – “squeezed consumer”2000’s – value marketingIncome DistributionUpper classMiddle classWorking classUnderclassChanging Consumer Spending PatternsEngel’s laws -Consumers at different income levels have different spending patterns
17The 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.
18Technological Environment Changes rapidlyCreates new markets and opportunitiesChallenge to make practical, affordable productsSafety regulations result in higher research costs
19Discussion QuestionsWhich 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 shopInternet – huge availability of productsmanufacturing technology.Many others might be named as well based on the students knowledge.
20Political Environment Includes Laws, Government Agencies, Etc. that Influence& Limit Organizations/Individuals in a Given SocietyIncreasingLegislationChangingGovernmentAgencyEnforcementIncreasedEmphasis onEthics &SociallyResponsibleActions
21Cultural EnvironmentYankelovick Monitor has identified eight major consumer value themes:ParadoxTrust notGo it aloneSmarts really countNo sacrificesStress hard to beatReciprocity is the way to goMe 2
22Society’s Major Cultural Views Are Expressed in People’s View of: Cultural EnvironmentSociety’s Major Cultural Views Are Expressed in People’s View of:ThemselvesOthersOrganizationsSocietyNatureThe Universe
23Responding to the Marketing Environment Environmental Management PerspectiveTaking 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.
24Rest 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.