Chapter Three The Marketing Environment

3-2 Marketing Environment  Consists of actors and forces outside the organization that affect management’s ability to build and maintain relationships with target customers. –Studying the 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.

3-3 Marketing Environment  Includes: –Microenvironment: actors close to the company that affect its ability to serve its customers. –Macroenvironment: larger societal forces that affect the microenvironment. Considered to be beyond the control of the organization.

3-4 Marketing Environment  Actors in the microenvironment include: –The company itself –Suppliers –Marketing intermediaries –Customers –Competitors –Publics

3-5 The 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.

3-6 The Microenvironment  Suppliers: –Provide resources needed to produce goods and services. –Important link in the “value delivery system.” –Most marketers treat suppliers like partners.

3-7 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

3-8 The Microenvironment  Customers: –Five types of markets that purchase a company’s goods and services. Consumer Business Reseller Government International

3-9 The 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.

3-10  Publics: –Any group that has an 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 The Microenvironment

3-11 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.

3-12 The Macroenvironment  Forces in the macroevironment can be categorized as: –Demographic –Economic –Natural –Technological –Political –Cultural

3-13 Demographic Environment  Demographics: 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.

3-14 Demographic Environment  The changing age structure of the population is the single most important demographic trend.

3-15 Demographic Environment  Changing American family and 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” (also called nonfamily households) = 32%

3-16 Demographic Environment  Geographic Shifts in Population: –14% 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. 1 in 5 people now work out of their home.

3-17 Demographic Environment  Better Educated Population: –1980: 69% of people over age 25 completed high school. 17% had completed college. –2003: 85% of people over age 25 completed high school. 27% had completed college.

3-18 Demographic Environment  Increasing diversity: –U.S. is a “salad bowl” mixing together various groups, each of which retains its ethnic and cultural differences. Ethnic segments are growing as a percentage of the U.S. population and growth is projected to continue.

3-19 Economic Environment  Changes in Income  Income Distribution –Upper class –Middle class –Working class –Underclass  Consists of factors that affect consumer purchasing power and spending patterns.

3-20 Natural Environment  Involves natural resources that are needed as inputs by marketers or that are affected by marketing activities.  Factors include: –Shortages of raw materials. –Increased pollution. –Increased government intervention. –Environmentally sustainable strategies.

3-21 Technological Environment  Most dramatic force shaping our destiny.  Changes rapidly.  Creates new markets and opportunities.  Challenge is to make practical, affordable products.  Safety regulations result in higher research costs and longer time between conceptualization and introduction of product.

3-22 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.

3-23 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/mosques, business, and government. –Secondary beliefs and values are more open to change. Marketers may be able to change secondary beliefs, but NOT core beliefs.

3-24 Cultural Environment  Society’s major cultural views are expressed in people’s views of: –Themselves –Others –Organizations –Society –Nature –The universe

3-25 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.