analyzing the marketing environment four analyzing the marketing environment Chapter 4 – Analyzing the Marketing Environment McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Analyzing the Marketing Environment LO1 Outline how customers, the company, competitors, and corporate partners affect marketing strategy. LO2 Explain why marketers must consider their macroenvironment when they make decisions. LO3 Describe the differences among the various generational cohorts. LO4 Identify the various social trends. These questions are the learning objectives guiding the chapter and will be explored in more detail in the following slides. 4-2

Analyzing the Marketing Environment Kimberly-Clark uses wood fiber from recycled sources or well-managed forestlands. Ask students: How does Kimberly-Clark help the environment? Is it enough to make a difference to the environment? The consumer? Kimberly-Clark regards sustainability as a natural extension of its corporate values, which include quality, service, and fair dealing. Courtesy of iStockphoto with design by Curran & Connors, Inc 4-3

A Marketing Environment Analysis Framework In all marketing activities, the consumer is at the center. Anything that affects consumers affects marketers. Any change in one of these environments likely requires an adjustment to the firm’s marketing mix. By identifying potential environmental trends, firms often can take proactive steps. 4-4

The Immediate Environment The immediate environment includes the firm and its immediate influences, such as competition and corporate partners. 4-5

Company Capabilities applied to Core competency Existing knowledge, facilities, patents, etc. applied to Ask students: What are Pepsi’s core competencies? What do they do well? Answer: They know how to bottle beverages, distribute them to stores, and promote their brand. Ask students: How they capitalized on their core competencies in the face of changing market trends? Answer: The trend toward more diet-conscious consumers has led to the development of low-calorie alternatives to sodas. Both Coke and Pepsi understood the market had changed and introduced bottled water products with great success. In 2004, Americans consumed 23 gallons of bottled water per person—ten times as much as in 1980. ©M Hruby New markets, new products, etc. 4-6

Competitors Know strengths & weaknesses Proactive rather than reactive strategy Competition also significantly affects consumers in the immediate environment. It is therefore critical that marketers understand their firm’s competitors, including their strengths, weaknesses, and likely reactions to the marketing activities. Chad Baker/Getty Images 4-7

Kimberly-Clark: Pull-Ups (Huggies) versus Procter & Gamble: Easy-Ups (Pampers) Daniel Acker/Bloomberg via Getty Images When Kimberly-Clark introduced Pull-Ups to extend its Huggies line of diapers, Procter & Gamble was quick to respond with Easy-Ups for its Pampers brand to ensure potty-training parents still considered its brand. 4-8

Corporate Partners Firms are part of alliances Align with competitors, suppliers, etc. Just in Time Delivery Systems (JIT) D Normark/PhotoLink/Getty Images Firms must work together to create a seamless system that delivers goods and services to customers when and where they want them. Many attribute a key reason for Wal-Mart’s success is their close relationships with their suppliers. Siede Preis/Getty Images ©Lars A Niki From factory Retailer to 4-9

What are the components of the immediate environment? 1. The company’s capabilities, competitors, and competitive intelligence, and the company’s corporate partners. 4-10

Macroenvironmental Factors This slide can be used to review this topic instead of the following slides, which provide more in-depth discussions. 4-11

Culture Country Culture vs. Regional Culture Firms often remove brands from the market because of their poor overall sales, but this strategy can backfire when those brands have strong regional support. For example, the removal of a chowder cracker caused such upheaval among Northeastern consumers that the firm hired a tall ship to reintroduce the cracker to its New England market, where consumers had threatened to boycott all products from the company if the cracker was not returned. ©Brand X Pictures/PunchStock PhotoLink/Getty Images 4-12

Controversy Surrounds All Catholic Town 4-13

Demographics Provides an easily understood snapshot of the typical consumer in a specific target market Ask students: What are some typical demographics? Answer: age, gender, income, education. Demographic segmentation is probably the most common form of segmentation because the information is so widely available. BananaStock/JupiterImages Comstock Images/Alamy U.S. Census Website 4-14

Generational Cohorts Group activity: Have students brainstorm a list of the defining characteristics of their generation. Ask students: How does your generation differ from previous generations, such as their parents — the Baby Boomers. What macroenvironmental forces have had the most impact on your generation? 4-15

Income Purchasing power is tied to income Many middle class families feel the decline in purchasing power in recent years The “middle-class squeeze” is a very real global phenomenon. Many developing countries face similar income inequities to those found in the United States. Pay gaps also cause problems for many new college graduates who find they cannot afford to live on their own and must move back in with their parents. Courtesy of Hammacher Schlemmer, wwwhammachercom 4-16

Education is related to income, which determines spending power = ©Fancy Photographer/Veer Ask students: Do you plan to continue your education after graduation? Many students believe they will never return to school after they finish their Bachelors’ degree, but modern conditions make this choice more and more unlikely. Lifelong learning of new skills and new knowledge has become key to survival in the global economy Brand X Pictures Education is related to income, which determines spending power 4-17

Gender Male/female roles have been shifting Marketing has changed to reflect these shifts Male/female roles have been shifting Women now make up more than 60% of the college population. Ask students? How do you believe this will affect the workplace in the future? Ask students? Do you believe that there are still significant gender differences? What are they? Jochen Sand/Digital Vision/Getty Images 4-18

By 2050, minorities will represent 50% of the population. Ethnicity By 2050, minorities will represent 50% of the population. Ask students: What steps can and should marketers take to respond to the changing ethnic mix of the United States? Many marketers already have adjusted their marketing mix to meet the needs of ethnically diverse segments better. This YouTube video is for a Carlos Mencia Bud Light superbowl ad about teaching English. (always check YouTube links before class). ©2006 Oldemarak, LLC Reprinted with permission The Wendy’s name, design and logo are registered trademarks of Oldemark, Llc and are licensed to Wendy’s International, Inc. Bud Light Commercial 4-19

Health and Wellness Concerns Social Trends Price Sensitivity Health and Wellness Concerns Greener Consumers Privacy Concerns Time-Poor Society This graphic introduces significant social trends. 4-20

Price Sensitivity Consumers Attempting to save more Spend less on luxuries Do not dip into their savings Recent economic impacts of a recession and the housing crash have prompted many people to embrace the idea of spending less as a virtuous pursuit. 4-21

Health and Wellness Concerns Worldwide Pandemics or Epidemics Child-Teenage Obesity Recent news stories have made many consumers increasingly aware of the threats of worldwide pandemics or epidemics. Health concerns, especially those pertaining to children, extend far beyond short-term crises though. Courtesy Subway Franchise Advertising Fund Trust 4-22

Greener Consumers Customers who appreciate firms efforts to supply them with environmentally friendly merchandise. Green consumers purchase products based on issues beyond the tangible product. These issues can include a variety of social causes such as environmental awareness, protection of animals, HIV/AIDS awareness and prevention, etc. Consumers who purchase these products do so to support these causes. Courtesy Ford Motor Company 4-23

Privacy Concerns Loss of privacy Identity theft Do not call Do not e-mail In recent years, firms have had to inform consumers of the steps they take to protect their privacy. The government also has instituted new rules for privacy protection. Ask students: Have you ever had a privacy problem with a credit card or when using the Internet? Chad Baker/Ryan McVay/Getty Images 4-24

Time Poor Society In the majority of families, most parents work Consumers have many more choices regarding leisure time Many consumers multitask With more time spent at work, the amount of time available for home or leisure activities has shrunk. In turn, services that complete the tasks that people no longer have the time to do, such as housecleaning, errands, and cooking, have grown. Ask students: What other entrepreneurial marketing opportunities have a time-poor society provided? They will mention many food products, Blackberry’s, TiVo. 4-25

McDonald’s Moms 4-26

Technological Advances Technology has impacted every aspect of marketing New products New forms of communication New retail channels Arguably the single most important change in the way we live is the introduction of new technology. Ask students: What new technologies have you seen at retailers? This web link is for the shoppers tool page of Stop and Shop a large east coast grocery retailer. They offer self-scanners, computer kiosk deli ordering and self checkout. AP Photo/Ric Feld Stop and Shop Website 4-27

Economic Situation Foreign currency fluctuations Brand X Pictures Combined with inflation and interest rates affect firms’ ability to market goods and services Depending on the time of year, discuss projections about Christmas shopping, vacation planning, or home buying. Various economic factors affect each of these areas. The web link leads to the Consumer Confidence Index which takes into account how consumers feel about how the economy is doing. This economic indicator relates directly to spending. PhotoLink/Getty Images Conference Board Website 4-28

Political/Regulatory Environment Competitive Practice and Trade Legislation 1890: Sherman Antitrust Act 1914: Clayton Act 1914: Federal Trade Commission 1936: Robinson-Putman Act 1938: Wheeler-Lea Act 1993: North American Free Trade Agreement (NAFTA) This list includes the major legislation designed to ensure a competitive marketplace and clearly demonstrates the U.S. government’s long history of enacting laws that protect fair trade. David Hiller/Getty Images 4-29

What are the six key macroeconomic factors? Differentiate between country culture and regional culture. Identify the different generational cohorts. What key dimension is used to classify an individual into a given cohort? What are some important social trends shaping consumer values these days? Culture, demographics, social issues, technological advances, economic situation, and political/regulatory environment. Country Culture is the entire country but regional culture is based on the region or area within the country. Tweens, Gen Y, Gen X, Baby Boomers, Seniors Age Greener consumers, marketing to children, privacy concerns, and time-poor societies. 4-30

Glossary Country culture involves visual nuances of a country’s culture such as artifacts, behavior, dress, symbols, physical settings, ceremonies, language differences, colors and tastes, and food preferences, as well as language. Country culture involves visual nuances of a country’s culture such as artifacts, behavior, dress, symbols, physical settings, ceremonies, language differences, colors and tastes, and food preferences, as well as language. 4-31

Glossary Culture is the shared meanings, beliefs, morals, values, and customs of a group of people. Culture is the shared meanings, beliefs, morals, values, and customs of a group of people. 4-32

Glossary Demographics indicate the characteristics of human populations and segments, especially those used to identify consumer markets. Demographics indicate the characteristics of human populations and segments, especially those used to identify consumer markets. 4-33

Glossary A generational cohort is a group of people of the same generation. A generational cohort is a group of people of the same generation. 4-34

Glossary The political/regulatory environment comprises political parties, government organizations, and legislation and laws. The political/regulatory environment comprises political parties, government organizations, and legislation and laws. 4-35

Glossary Regional culture involves the region in which people live in a particular country. Regional culture involves the region in which people live in a particular country. 4-36