Chapter 3 The Marketing Environment Professor Marshall Queens College

Marketing Environment Consists of actors and forces outside the organization that affect management’s ability to build and maintain relationships with target customers. Environment offers both opportunities and threats to the company. Marketing intelligence and research used to collect information about the environment.

Marketing Environment Includes: Microenvironment: actors close to the company that affect its ability to serve its customers. (suppliers, marketing intermediaries, competitors) Macroenvironment: larger societal forces that affect the microenvironment. (demographic, economic, political) Beyond the control of the organization.

The Company’s 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.

The Company’s Microenvironment Suppliers: Provide resources needed to produce goods and services. Important link in the “value delivery system.” Most marketers treat suppliers like partners.

The Company’s Microenvironment Customers: Five types of markets that purchase a company’s goods and services Markets Include: Consumer Business Reseller Government International

The Company’s 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

The Company’s Microenvironment Publics: Group that has an interest in or impact on an organization's ability to achieve its objectives Publics Include: Financial Media Government Citizen-action Local General Internal

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. Forces Include: Demographic Economic Natural Technological Political Cultural

The Company’s Macroenvironment Demographic: 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 Company’s Macroenvironment The Seven U.S. Generations: GI Generation = born in or before 1930 Depression = 1931-1940 War Babies = 1941-1946 Baby Boomers = 1947-1965 Generation X = 1966-1977 Generation Y = 1978-1995 Millennials = 1996 or after

Changing American Family 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” = 32%

Geographic Shifts in Population 16% 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 Micropolitan area: small cities located beyond congested metropolitan areas.

Better Educated Population 1980: 69% of people over age 25 completed high school 17% had completed college 2002: 84% of people over age 25 completed high school 27% had completed college

More White-Collar Population 1950 – 1985: Proportion of white-collar workers increased from 41% to 54% Proportion of blue-collar workers declined from 47% to 33% Proportion of service workers increased from 12% to 14% 1983 – 1999: Proportion of managers and professionals increased from 23% to >30%

Increasing Diversity U.S. is a “salad bowl” Increased marketing to: Various groups mixed together, each retaining its ethnic and cultural differences Increased marketing to: Gay and lesbian consumers People with disabilities

Economic Environment Consists of factors that affect consumer purchasing power and spending patterns. Changes in Income 1980’s – consumption frenzy 1990’s – “squeezed consumer” 2000’s – value marketing Income Distribution Upper class Middle class Working class Underclass

http://www.census.gov/prod/2004pubs/p60-226.pdf

Natural Environment Factors Impacting the Natural Environment: Shortages of raw materials Increased pollution Increased government intervention Environmentally sustainable strategies

Technological Environment Changes rapidly. Creates new markets and opportunities. Challenge is to make practical, affordable products. Safety regulations result in higher research costs & 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.

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

Responding to the Marketing 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. This can be done by: Hiring lobbyists Running “advertorials” (ads that express an editorial point of view) Pressing law suits Filing complaints Forming agreements to control channels

Video Case Nike (14 minutes)

Thoughts Do you own Nike sneakers? What is your perception of Nike as a company? Who is Nike targeting? Mission: http://www.nike.com/nikebiz/nikebiz.jhtml?page=4 http://www.nike.com/nikebiz/