The Marketing Environment

Introduction The importance of understanding the Marketing Environment

Analyzing the Environment –Fad –Trend –Megatrend

Marketing intelligence Marketing intelligence system: a set of procedures and sources that managers use to obtain everyday information about developments in the marketing environment

Components of a Marketing Information System (MIS) Internal company records Marketing intelligence activities Marketing research

Improving marketing intelligence Motivate sales force to report new developments Motivate intermediaries to pass along intelligence Hire external experts to collect intelligence Network internally and externally Set up a customer advisory panel Take advantage of government-related data Purchase information from outside research vendors Collect marketing intelligence on Internet

Digital Marketing Intelligence Independent customer goods and service review forums Distributor or sales agent feedback sites Customer complaint sites Blogs Social Media

Actors in the Microenvironment

Forces in the Macroenvironment

Demographics The study of human populations in terms of Population Size Population Density Population Location Income Age Gender Race, Ethnicity & Religion Occupation Education Other Classifications

Demographic Trends Aging of U.S. Population Prevalence of Baby Boomers Changing Family Structures – The erosion of traditional marriage – Single-parent households – Smaller “traditional” families – Extended families getting bigger – Friends and colleagues are the new family – Civil unions and co-habiting – LGBT community – Changing gender roles

The Baby Boomer Segment – 78 million born between 1946 and – 28% of population. – Earn more than 50% of all personal income. – 25% belong to racial or ethnic minority. – Spend a lot on anti-aging products and services. – Are likely to postpone retirement. – “Mature Hedonists”

Demographic Trends, cont. Geographic Shifts – Migration to Sunbelt States – Urban Exodus and Re-entry – Micropolitan/metropolitan migrations Work-Life – Tele-commuting / Virtual Work – Delayed retirements – Work-life balance trends – “Cocooning” Better educated population Blue- to white-collar shift Increasing Ethnic Diversity – Asians – Hispanics (fastest growing segment) – Indian Americans

Capitalizing on Demographic Shifts

Economic Forces $ Purchasing Power $ Employment $ Income Distribution $ Savings Rate $ Debt $ Credit Availability $ Consumer Psychology (Confidence)

Income distribution Subsistence economies Raw-material- exporting economies Industrializing economies Industrial economies Very low incomes Mostly low incomes Very low, very high incomes Low, medium, high incomes Mostly medium incomes

The Natural Environment Shortages of raw materials (oil, water, etc.) Catastrophes (i.e. Katrina, Tsunamis, etc.) Pollution concerns Global warming/climate change and carbon footprint Push for environmental sustainability Eco-friendly (“Green”) products and attitudes

The natural environment Corporate Environmentalism –Opportunities await those who can reconcile profitability with environmental protection

The Technological Environment Accelerating pace of change Unlimited opportunities for innovation Varying R&D budgets Increased regulation of technological change

Technological Forces Obsolescence – A double-edged sword – Advantages New product/market opportunities Increased productivity Cost savings – Disadvantages Cannibalization of current offerings Consumer frustration and alienation Undue pressure to advance leads to feature creep and sub-optimal product “improvements” Is Planned Obsolescence a good thing?

The Political-Legal Environment LAWS GOVERNMENT AGENCIES PRESSURE GROUPS

Political-Legal Environment Labeling: Success or Failure?

Political-Legal Environment Unit Pricing: Success or Failure?

Sociocultural Forces Culture: The institutions and other forces that affect a society’s basic values, perceptions, preferences, and behavior. Subculture: Groups with shared values, beliefs, preferences, and behaviors emerging from their special life experiences or circumstances Culture is never stagnant Core Values vs. Secondary Values Often the strongest determinant of wants and needs

The Sociocultural Environment Views of ourselves Views of society Views of nature Views of the universe Views of organizations Views of others

Question du Jour What will the macroenvironment look like in ten years? Demographic, Economic, Sociocultural, Technological, Legal-Political

Forecasting and Demand Measurement Market Demand measures –Potential market –Available market –Target market –Penetrated market

Estimating Current Demand Total Market Potential –Chain-ratio method

Estimating future demand – Some Methods Survey of buyers’ intentions –Purchase probability scale: How likely are you to purchase…? Composite of sales force opinions Marketing Research (i.e. BASES) Expert opinion Past-sales analysis Market-test method

Activity: Estimating Demand Estimate the Total Market Potential for: – Annual number of hamburgers consumed in the state of Oregon – Users of an app that provides real-time traffic data throughout the United States – The total yearly number of male haircuts in the state of California – The total number of Gluten-Free food consumers in New York state – The total demand for baseball bats in the state of Arizona