1. Analyzing the Marketing Environment
Chapter 3

2. Rest Stop: 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.
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3. First Stop The Revitalization of Xerox Price of Complacency
Beginnings: Xerox invented the plain paper office copier nearly 50 years ago and came to dominate the market.
The Changing Environment: Xerox failed to adapt to new customer needs for digital document management systems, rather than copiers. The sales force was ill-equipped to detail with info technology managers. Stock prices plummeted and Xerox was on the brink of bankruptcy in 2001.
Rethinking, Reinventing
Redefined Mission: To be the “World’s leading document-management technology and services enterprise.”
Customer Focus: Focus group research aids in new product development; top managers serve as Customer Officer of the Day; 100 innovative offerings introduced in last few years.
Corporate Image: New logo was chosen to symbolize Xerox’s strengths while portraying firm as modern, innovative, and flexible.
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4. Marketing Environment
Consists of actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers.
Studying the marketing 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, including customers and the competition.
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5. Marketing Environment
Microenvironment: Actors close to the company that affect its ability to serve its customers.
Macroenvironment: Larger societal forces that affect the microenvironment.
Microenvironment includes: the company itself, supplies, marketing channel firms, customer markets, competitors, and publics.
Macroenvironment includes: demographic, economic, natural, technological, political, and cultural forces.
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The Microenvironment
Company itself
Suppliers
Marketing intermediaries
Customer markets
Competitors
Publics
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The Microenvironment
The company itself:
Areas/departments inside of a company.
Affects the marketing department’s planning strategies.
All departments must “think consumer” and work together to provide superior customer value and satisfaction.
Microenvironment includes: the company itself, supplies, marketing channel firms, customer markets, competitors, and publics.
Macroenvironment includes: demographic, economic, natural, technological, political, and cultural forces.
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The Microenvironment
Suppliers:
Important link in the overall customer value delivery system.
Provide resources needed to produce goods and services.
Most marketers treat suppliers like partners in creating and delivering customer value.
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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
Competitors:
Marketers must seek to gain strategic advantage against competitive organizations.
Size of firm and industry position will influence choice of strategy.
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The Microenvironment
Publics:
Any group that has an actual or potential 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
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The Microenvironment
Customers:
Companies may target any or all of the types of markets that may purchase a company’s goods and services.
Consumer
Business
Reseller
Government
International
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.
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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 macroenvironment can be categorized as:
Demographic
Economic
Natural
Technological
Political
Cultural
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15. 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 here and abroad.
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16. Demographic Environment
The changing age structure of the U.S. population is the single most important demographic trend.
Baby boomers, Generation X, and the Millennials are key generational groups.
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17. Demographic Environment
Baby boomers:
78 million people born between 1946 and 1964; nearly 25% of population.
Wealthiest generation in history; account for 50% of consumer spending and hold ¾ of the nation’s financial assets.
Recent recession has hit baby boomers hard, eating into nest eggs and retirement prospects.
Boomers “think young;” strong targets for financial services.
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18. Demographic Environment
Generation X:
49 million born between 1965 and 1976.
Defined by shared experiences:
Increased parental divorce rates and more employed mothers made Generation X the first of the latchkey kids.
Less materialistic; prize experiences.
Skeptical of marketing.
Most educated generation to date.
Spend carefully; face economic pressures.
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19. Demographic Environment
Millennials (Gen Y/Echo Boomers):
83 million born between 1977 and 2000—larger than baby boomer segment.
Includes tweens, teens, and young adults.
$733 billion in purchasing power.
Ethnically diverse.
Fluent with digital technology.
Personalization and product customization are key to marketing success.
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20. Demographic Environment
The American family and household makeup is changing:
Traditional households are in decline:
Married couples with children = 23%
Non-traditional households are growing:
Married without children = 29%
Single parents = 16%
Non-family households = 32%
Special needs of non-traditional households are increasingly being considered by marketers.
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21. Demographic Environment
Better educated population:
1980:
69% of people over age 25 completed high school; 17% had completed college.
2007:
84% of people over age 25 completed high school; 27% had completed college.
Demand for quality products, books, magazines, computers, travel, etc. has increased as a result.
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22. Demographic Environment
Increasing white-collar population :
Professionals and managers increased from 23% to greater than 35%. :
Professionals should increase by 23% while manufacturing is expected to decline by more than 10%.
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23. Demographic Environment
Increasing diversity:
The United States is an ethnic “salad bowl.”
Ethnic segments will continue to grow as a percentage of the U.S. population.
Marketers target specially designed ads, products, and promotions at ethnic groups.
Marketing efforts are increasing toward:
Gay and lesbian consumers.
People with disabilities.
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24. Demographic Environment
Geographic shifts in population:
13% of U.S. residents move each year.
General shift toward the Sunbelt states.
City to suburb migration continues.
More people are moving to suburbs and “micropolitan” areas.
Marketers court increasing numbers of telecommuters.
Micropolitan area: small cities located beyond congested metropolitan areas.
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Economic Environment
Consists of factors that affect consumer purchasing power and spending patterns.
Changes in income
1990s—consumption frenzy, record debt
Economic crisis leads to consumer frugality.
Value marketing is key to success.
Income distribution
Upper class is getting wealthier.
Middle class is shrinking.
Underclass remain poor.
Income distribution has created a tiered market.
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Natural Environment
Involves natural resources that are needed as inputs by marketers or that are affected by marketing activities.
Key trends include:
Shortage of raw materials.
Increased pollution.
Increased government intervention.
Many firms now focus on creating environmentally-sustainable strategies.
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27. Technological Environment
Most dramatic force shaping our destiny.
Changes rapidly, creating new markets and opportunities and/or danger of products becoming obsolete.
Challenge is to make practical, affordable new products.
Government bans unsafe products and sets safety standards, resulting in higher research costs, and longer time to market for new products.
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28. Political Environment
Includes laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society.
Marketing activities face:
Increasing legislation.
Changing government agency enforcement.
Increased emphasis on ethics and socially responsible behavior (including cause-related marketing).
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Cultural Environment
The institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors.
Core beliefs and values are passed on from parents to children and are 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.
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Cultural Environment
Society’s major cultural views are expressed in people’s views of:
Themselves
Others
Organizations
Society
Nature
The universe
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31. Responding to the Marketing Environment
Reactive responses:
Many firms are passive & simply react to changes in the marketing environment.
Proactive responses:
Some firms attempt to manage the marketing environment via aggressive actions designed to affect the publics and forces in the marketing environment.
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32. Responding to the Marketing Environment
Examples of proactive responses:
Hiring lobbyists
Running “advertorials”
Pressing lawsuits
Filing complaints with regulators
Forming agreements to control channels
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33. 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.
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall

34. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall
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Copyright © 2011 Pearson Education, Inc.  
Publishing as Prentice Hall
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall