1. Marketing An Introduction3
Analyzing the Marketing Environment

2. Learning Objectives
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.
This chapter describes the environmental forces that affect the company’s ability to serve its customers, explains how changes in the demographic and economic environments affect marketing decisions, and identifies the major trends in the firm’s natural and technological environments.

3. Learning Objectives
Explain the key changes in the political and cultural environments.
Discuss how companies can react to the marketing environment.
This chapter further explains the key changes in the political and cultural environments and discusses how companies can react to the marketing environment.

4. First Stop: Microsoft: Adapting to the Fast-Changing Digital Marketing Environment
The success of Windows increased Microsoft’s revenues, profits, and stock price.
A lag occurred after the millennium from decreased PC sales growth.
People moved on with new digital devices and technologies.
Transformation—released new, improved, or acquired digital products and services
As the dominant software developer, Microsoft put its Windows operating system and Office productivity suite on almost every computer sold. The huge success of Windows drove Microsoft’s revenues, profits, and stock price to great heights.
But moving into the new millennium, PC sales growth flattened due to the advent of new digital devices and technologies. Today, rather than just creating the software that makes PCs run, Microsoft wants to be a full-line digital devices and services company that delivers “delightful, seamless technology experiences” that connect people to communication, productivity, entertainment, and one another.

5. Marketing Environment
Outside forces that affect marketing management’s ability to build and maintain successful relationships with target customers
Microenvironment: Actors close to the company that affect its ability to serve its customers
Macroenvironment: Larger societal forces that affect the microenvironment
Marketing environment refers to the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. The marketing environment consists of a microenvironment and a macroenvironment.
The microenvironment consists of the actors close to the company that affect its ability to serve its customers.
The macroenvironment consists of the larger societal forces that affect the microenvironment.

6. Figure 3.1 - Actors in the Microenvironment
This figure shows the major actors in the marketer’s microenvironment.
In designing marketing plans, marketing management takes other company groups into account.
Suppliers provide the resources needed by the company to produce its goods and services. Supplier problems can seriously affect marketing.
Marketing intermediaries help the company promote, sell, and distribute its products to final buyers. They include resellers, physical distribution firms, marketing services agencies, and financial intermediaries.
Marketers must gain strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of consumers.
A public is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. These include financial, media, government, citizen-action, local publics, general, and internal publics.
Customers are the most important actors in the company’s microenvironment. Customers include consumer markets, business markets, reseller markets, and international markets.

7. Figure 3.2 - Major Forces in the Company’s Macroenvironment
This figure shows the six major forces in the company’s macroenvironment.
Each of these forces are discussed in greater detail in the following slides.

8. Demographic Environment
Demography: Study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics
Marketers analyze:
Changing age and family structures
Geographic population shifts
Educational characteristics
Population diversity
Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. Marketers analyze several important factors that affect the marketing environment.
The first factor is the changing age and family structures. The U.S. population contains several generational groups. These include the baby boomers, Generation X, Generation Y or Millennials, and Generation Z.
The second factor is the changing American household. More people are divorcing or separating, choosing not to marry, marrying later, or marrying without intending to have children. Marketers must increasingly consider the special needs of nontraditional households because they are now growing more rapidly than traditional households. Each group has distinctive needs and buying habits.
The third factor is geographic shifts in population. Population shifts interest marketers because people in different regions buy differently. For example, people in the Midwest buy more winter clothing than people in the Southeast.
And the final factor is increasing diversity. Marketers face increasingly diverse markets as their operations become more international in scope. Some major companies also explicitly target gay and lesbian consumers.

9. Economic Environment
Economic factors that affect consumer purchasing power and spending patterns:
Industrial economies
Subsistence economies
Developing economies
Changes in consumer spending
Differences in income distribution
The economic environment consists of economic factors that affect consumer purchasing power and spending patterns.
Nations vary greatly in their levels and distribution of income. Some countries have industrial economies, which constitute rich markets for many different kinds of goods. Some other countries have subsistence economies, where they consume most of their own agricultural and industrial output and offer few market opportunities. In between are developing economies that can offer outstanding marketing opportunities for the right kinds of products.
Economic factors can have a dramatic effect on consumer spending and buying behavior. Value marketing has become the slogan for many marketers. Marketers in all industries are looking for ways to offer today’s frugal buyers greater value.
This distribution of income has created a tiered market. Many companies aggressively target the affluent, while other firms target those with more modest means. Still other companies tailor their marketing offers across a range of markets, from the affluent to the less affluent.

10. Natural Environment
Physical environment and natural resources needed as inputs by marketers or affected by marketing activities
Environmental sustainability concerns have grown steadily over past three decades.
Trends:
Shortages of raw materials
Increased pollution
Increased government intervention
The natural environment involves the physical environment and the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Marketers should be aware of several trends in the natural environment.
The first involves growing shortages of raw materials. Firms making products that require scarce resources face large cost increases, even if the materials remain available. The second trend is increased pollution. The third trend is increased government intervention in natural resource management. The governments of different countries vary in their concern and efforts to promote a clean environment.
Today enlightened companies adopt practices that support environmental sustainability. This refers to the effort to create a world economy that the planet can support indefinitely.

11. Technological Environment
New technologies create new markets and opportunities.
Radio-frequency identification (RFID) is technology to track products through various points in the distribution channel.
Government agencies investigate and ban potentially unsafe products.
New technologies can offer exciting opportunities for marketers. Many firms use radio-frequency identification or RFID technology to track products through various points in the distribution channel. New technologies create new markets and opportunities. Companies that do not keep up will soon find their products outdated.
Government agencies investigate and ban potentially unsafe products. Regulations have resulted in much higher research costs and longer times between new product ideas and their introduction. Marketers should be aware of these regulations when applying new technologies and developing new products.

12. Political Environment
Forces that influence and limit various organizations and individuals in a society
Laws, government agencies, and pressure groups
Goals of enacting business legislation:
Protect companies from each other
Protect consumers from unfair business practices
Protect the interests of society against unrestrained business behavior
The political environment refers to laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society.
Business legislation has been enacted for a number of reasons. The first is to protect companies from each other. The second purpose of government regulation is to protect consumers from unfair business practices. The third purpose is to protect the interests of society against unrestrained business behavior.

13. Socially Responsible Behavior
Socially responsible companies actively seek out ways to protect the long-run interests of consumers and the environment.
Companies develop policies, guidelines, and other responses to complex social responsibility issues.
Socially responsible firms actively seek out ways to protect the long-run interests of their consumers and the environment. Almost every aspect of marketing involves ethics and social responsibility issues. Companies are now developing policies, guidelines, and other responses to complex social responsibility issues.

14. Cause-Related Marketing
Used by companies to:
Exercise their social responsibility
Build more positive images
Primary form of corporate giving
Controversy—strategy for selling more than a strategy for giving
To exercise their social responsibility and build more positive images, many companies are now linking themselves to worthwhile causes. Cause-related marketing has become a primary form of corporate giving.
Critics worry that cause-related marketing is more a strategy for selling than a strategy for giving. Thus, companies using cause-related marketing might find themselves walking a fine line between increased sales and an improved image and charges of exploitation.

15. Cultural Environment
Institutions and other forces that affect society’s basic values, perceptions, preferences, and behaviors
Society shapes people’s values and beliefs.
Cultural characteristics that affect marketing decision making:
Persistence of cultural values
Shifts in secondary cultural values
The cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors. Society shapes basic beliefs and values. Cultural characteristics that can affect marketing decision making are the persistence of cultural values and shifts in secondary cultural values, such as people’s views of themselves, others, organizations, society, and nature.

16. Responding to the Marketing Environment
Reactive firms passively accept the marketing environment and do not try to change it.
Proactive firms develop strategies to change the environment.
They take aggressive actions to affect the publics and forces in their marketing environment.
Many companies view the marketing environment as an uncontrollable element to which they must react and adapt. They passively accept the marketing environment and do not try to change it.
Other companies take a proactive stance toward the marketing environment. Rather than assuming that strategic options are bounded by the current environment, these firms develop strategies to change the environment. These firms take aggressive actions to affect the publics and forces in their marketing environment.
Marketing management cannot always control environmental forces. In many cases, it must settle for simply watching and reacting to the environment. For example, a company would have little success trying to influence geographic population shifts, the economic environment, or major cultural values. But whenever possible, smart marketing managers take a proactive rather than reactive approach to the marketing environment.