1. Chapter 5 Analyzing the Marketing Environment
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2. Learning Objectives
Learning Objective 5.1 Outline how customers, the company, competitors, corporate partners, and the physical environment affect marketing strategy. Learning Objective 5.2 Explain why marketers must consider their macroenvironment when they make decisions. Learning Objective 5.3 Describe various social trends that impact marketing. Learning Objective 5.4 Examine the technological advances that are influencing marketers.
LO5-1 Outline how customers, the company, competitors, corporate partner, and the physical environment affect marketing strategy.
LO5-2 Explain why marketers must consider their macroenvironment when they make decisions.
LO5-3 Describe the various social trends that impact marketing.
LO5-4 Identify the technological advances that are influencing marketers.
These are the learning objectives guiding the chapter and will be explored in more detail in the following slides.

3. A Marketing Environment Analysis Framework
This slide illustrates factors that affect the marketing environment. The centerpiece, as always, is consumers. Consumers may be influenced directly by the immediate actions of the focal company, the company’s competitors, or corporate partners that work with the firm to make and supply products and services to consumers. The firm, and therefore consumers indirectly, is influenced by the macroenvironment, which includes various impacts of culture; demographics; and social, technological, economic, and political/legal factors.
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4. Exhibit 5.2: The Immediate Environment
The immediate environment includes the firm and its capabilities, competitors, corporate partners and the physical environment.

5. Successfully Leveraging Company Capabilities
Core competency
Existing knowledge, facilities, patents, etc.
applied to
In the immediate environment, the first factor that affects the consumer is the firm itself. Successful marketing firms focus on satisfying customer needs that match their core competencies. 
New markets, new products, etc.

6. Competitors
Know their strengths, weaknesses, and likely reactions to firm’s marketing activities.
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.
©Michael Nagle/Bloomberg/Getty Images /©Charles Sykes/Invision for Curves Jenny Craig/AP Images

7. Corporate Partners
Parties that work with the focal firm. Nau works with manufacturers to develop clothing from sustainable materials.
Few firms operate in isolation. For example, automobile manufacturers collaborate with suppliers of sheet metal, tire manufacturers, component part makers, unions, transport companies, and dealerships to produce and market their automobiles successfully. Parties that work with the focal firm are its corporate partners.
Consider an example that demonstrates the role these partners play and how they work with the firm to create a single, efficient manufacturing system. Unlike most outdoor clothing manufacturers that use synthetic, nonrenewable materials, Nau makes modern urban+outdoor apparel from renewable sources such as sustainably harvested eucalyptus and recycled plastic bottles. It was founded by a team of entrepreneurs who left companies such as Nike and Patagonia. To develop rugged and beautiful clothing from sustainable materials, these founders turned to manufacturing partners around the world to develop new fabrics that are performance-driven and technical.

8. Physical Environment
Sustainable development: Includes land, water, air, and living organisms.
Products and services are influenced by how they are used in the physical environment, and in turn they can also influence the physical environment.
Examples:
Energy Trends
Greener Practices and Green Marketing
Greenwashing
©Michael Nagle/Bloomberg/Getty Images /©Charles Sykes/Invision for Curves Jenny Craig/AP Images

9. 17 Global Goals of Sustainable Development

10. PROGRESS CHECK (1 of 2)
What are the components of the immediate environment?
1. The company’s capabilities, competitors, corporate partners and the physical environment.

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

12. Culture
Shared meanings, beliefs, morals, values, and customs of a group of people transmitted by words, literature, and institutions.
Country Culture
Subtler aspects can be difficult to navigate.
Sometimes best answer is to establish universal appeal within specific identities of country culture.
Regional Culture
For national and global chains, particularly important to cater to regional preferences.
McDonald’s – slightly different variations of staple menu.
We broadly define culture as the shared meanings, beliefs, morals, values, and customs of a group of people. Transmitted by words, literature, and institutions, culture is passed down from generation to generation and learned over time.  Our various cultures influence what, why, how, where, and when we buy. Two dimensions of culture that marketers must take into account as they develop their marketing strategies are the culture of the country and that of a region within a country.

13. Demographics
Characteristics of the human population and segments, especially those used to identify consumer markets. Provides an easily understood snapshot of the typical consumer in a specific target market. Marketers use data about consumers to target offers.
Demographics indicate the characteristics of human populations and segments, especially those used to identify consumer markets.
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.
Website:

14. Exhibit 5.5: Generational Cohorts
Consumers in a generational cohort—a group of people of the same generation—have similar purchase behaviors because they have shared experiences and are in the same stage of life. Applying age as a basis to identify consumers is quite useful to marketers, as long as it is used in conjunction with other consumer characteristics. Four major groups are described in the text: Gen Z (also known as Digital Natives), Gen Y (also called Millennials), Gen X, and Baby Boomers.
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 you parents’? What macroenvironmental forces have had the most impact on your generation?
Technologies used by Generation Z are being developed and adopted at an unprecedented rate, creating novel marketing possibilities and channels, as Social & Mobile Marketing 5.1 What Can Pokémon Go Do for Marketers? details.
Video Link:
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15. Income
Purchasing power is tied to income. Marketing opportunities exist across the broad range of income distribution.
SC Johnson targets the bottom of the income pyramid by selling pest control products in Ghana.
Income distribution in the United States has grown more polarized—the highest-income groups are growing, whereas many middle- and lower-income groups’ real purchasing power keeps declining. Although some marketers choose to target only affluent population segments, others have had great success delivering value to middle- and low-income earners. Consider, for example, SC Johnson, the parent company of many familiar household brands such as Glade, Ziploc, Windex, and Raid. SC Johnson has long been working at the bottom of the income pyramid; in the 1960s it began establishing locations in impoverished countries. Its most successful project has been in Ghana, where SC Johnson uses a direct-sales model and coaches to sell and teach customers about the benefits of pest control products and how to use them.
©Danita Delimont/Alamy Stock Photo

16. Education is related to income, which determines spending power.
Ask students: Do you plan to continue your education after graduation?
Many students believe they will never return to school after they finish their bachelor’s 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

17. Gender Male/female roles have been shifting.
Marketing has changed to reflect these shifts.
Firms may need to be careful about gender neutrality in positioning their products.
Women now make up more than 60 percent of the college population. Years ago gender roles appeared clear, but those male and female roles have been blurred. In particular, women today outperform men scholastically, earn higher grades on average, and graduate from both high school and college at greater rates. 
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?

18. Ethnicity
By 2050, minorities will represent 50% of the population. Nearly 23% will be Hispanic.
Hispanic buying power was projected to reach $1.3 trillion in 2015, a cumulative increase of around 25 percent compared with The 50 million Hispanic consumers in the United States have increasing influences on mainstream U.S. culture. 
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.
©Ethel Wolvovitz/The Image Works

19. Social Trends
Sustainability Health and Wellness Efficient Utilization and Distribution of Food
This graphic introduces significant social trends.

20. Sustainability
UN Sustainable Development Goals focus on social issues for basic needs. Certifications from various agencies may be important.
The UN Sustainability Goals highlight social issues associated with meeting basic needs, such as ensuring consistent, universal access to sufficient food, clean water, health care, and sanitary living conditions.
Firms can rely on certifications from various agencies such as the International Fairtrade Certification Mark.
Such shirts create challenges for other marketers. If a shirt costs only $5, how likely is it that the laborers who helped make it earned a living wage?
©Plush Studios/Blend Images LLC.

21. Health and Wellness
Child and Adult Obesity New Markets focused on healthy living Mobile Apps that support health and wellness
Health concerns, especially those pertaining to children, are prevalent, critical, and widespread. In the past 20 years, child obesity has doubled and teenage obesity tripled in the United States, leading to skyrocketing rates of high blood pressure, high cholesterol, early signs of heart disease, and type 2 diabetes among children. New advertising guidelines therefore require marketers to produce food in reasonably proportioned sizes. The advertising also cannot be aired during children’s programming, and companies cannot link unhealthy foods with cartoon and celebrity figures. 
Consumers’ interest in improving their health has opened up several new markets and niches focused on healthy living. For example, consumer spending on yoga classes, mats, and clothing has increased consistently in recent years. Health and wellness concerns have also spurred a number of mobile apps, many of which help customers get or stay in shape by tracking exercise, calorie intake, and sleep cycles. 
©Plush Studios/Blend Images LLC.

22. Efficient Utilization and Distribution of Food
Diet-related Products Reducing Hunger Reducing Food Waste

23. Technological Advances
Technology impacts every aspect of marketing:
New products and services
New forms of communication
New retail channels
Growing importance of mobile devices
New cutting-edge technology:
Artificial Intelligence
Robotics
Internet of Things (IoT)
Privacy concerns
Technological advances have accelerated during the past decade, improving the value of products as well as services. Consumers have constant access to the Internet everywhere through services such as WiFi, mobile hotspots, 4G, and LTE. Smartphones using the iOS or Android systems allow for greater computing, data storage, and communication. These examples of advanced technology make consumers increasingly dependent on the help they receive from the providers of the technology. Wireless payments through mobile applications (m-wallets) and the use of radio frequency identification device (RFID) technology are two additional technological developments having an impact on marketing. As Marketing Analytics 5.1 When the Best Is Good Enough: Netflix’s Stellar Predictive Analytics details, Netflix relies on its advanced technological capabilities not just to suggest which movies we should watch but also to develop new content that it is confident we will like.
Ask students: What new technologies have you seen at retailers?

24. Economic Situation
Affects the way consumers buy products and services and spend money.
Monitor the economic situation in home country and abroad.
Major factors to monitor:
Inflation
Foreign currency fluctuations
Interest rates
Marketers monitor the general economic situation, both in their home country and abroad, because it affects the way consumers buy merchandise and spend money. Some major factors that influence the state of an economy include the rate of inflation, foreign currency exchange rates, and interest rates. 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.
Website:
Conference Board Website

25. Political/Legal Environment
Comprises political parties, government organizations, and legislation and laws.
Firms must understand and comply with legislation regarding:
Fair competition
Consumer protection
Industry-specific regulation

26. Political/Legal Environment
1890: Sherman Antitrust Act 1914: Clayton Act 1914: Federal Trade Commission Act 1936: Robinson-Patman Act
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.

27. Responding to the Environment
Implement strategies that respond to multiple environmental forces.
Marketers that succeed are the ones that respond quickly, accurately, and sensitively to consumers.

28. PROGRESS CHECK (2 of 2) What are the six key macroeconomic factors?
Differentiate between country culture and regional culture.
What are some important social trends shaping consumer values and shopping behavior?
Culture, demographics, social trends, 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.
Sustainability, Health and wellness concerns, efficient utilization and distribution of food.

29. Marketing Chapter 5
The End