1. analyzing the marketing environment
five
analyzing the marketing environment
Chapter 5 – Analyzing the Marketing Environment

2. Analyzing the Marketing Environment
LO 5-1 Outline how customers, the company, competitors, and corporate partners affect marketing strategy. LO 5-2 Explain why marketers must consider their macroenvironment when they make decisions. LO 5-3 Describe the differences among the various generational cohorts LO 5-4 Identify various social trends that affect marketing.
These questions are the learning objectives guiding the chapter and will be explored in more detail in the following slides.

3. Travelodge
Services such as hotel chains must constantly adapt to changing customer needs by transforming itself into one of the most innovative sectors marketing its services today.
Ask students to describe their version of a “desirable” hotel or motel offering.

4. A Marketing Environment Analysis Framework
Macroenvironment
Culture
Demographics
Social
Technology
Economic
Political/ Legal
Immediate Environment
Corporate Partners
Competition
Company
Consumers
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.

5. The Immediate Environment
Corporate Partners
Competition
Company
Consumers
The immediate environment includes the firm and its immediate influences, such as competition and corporate partners.

6. Successfully Leveraging Company Capabilities
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 has Pepsi 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.

7. 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

8. Gillette (Fusion) versus Energizer (Schick)
Gillette accused Schick of engaging in false and misleading advertising when ads claimed that its Hydro razor would hydrate skin.
Schick’s parent company countered with the complaint that Gillette’s fusion ProGlide Razor ads attempt to deceive when they assert that the blades are “Gillette’s thinnest blades ever.”
©M. Hruby.

9. 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 Walmart’s success to their close relationships with their suppliers.
Siede Preis/Getty Images
©Lars A Niki to
From factory
Retailer

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

11. Macroenvironmental Factors
Culture
Demographics
Social
Technology
Economic
Political/ Legal
Consumers
This slide can be used to review this topic instead of the following slides, which provide more in-depth discussions.

12. 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

13. Controversy Surrounds All Catholic Town
Click on number to watch the video

14. Demographics
Provides an easily understood snapshot of the typical consumer in a specific target market
Ask students: What are some typical demographics variables?
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

15. 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 your parents?
What macroenvironmental forces have had the most impact on your generation?

16. Courtesy of Hammacher Schlemmer
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.
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, the toys presented by the specialty retailer Hammacher Schlemmer (HS) versus the mass appeal of Walmart’s toy sections.
Courtesy of Hammacher Schlemmer

17. Education is related to income, which determines spending power=
©Fancy Photographer/Veer
Brand X Pictures
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
Education is related to income, which determines spending power

18. 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

19. 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 Super Bowl ad about teaching English.
YouTube link:
Super Bowl XLI Commercial
Bud Light Starring: Carlos Mencia
©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.

20. Social Trends Health and Wellness Concerns Greener Consumers
Privacy Concerns
This graphic introduces significant social trends. Video: “What's Hot and Not in Celebrity Magazine Covers”
Ask students: Why are traditional celebrities not catching consumers’ attention?
Ask students: How are tabloids going to continue to entice readers to buy their content?
Celebrity
Magazine
Covers

21. Health and Wellness Concerns
Worldwide Pandemics or Epidemics Child-Teenage Obesity Healthy Living
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.

22. Click on number to watch the video
McDonald’s Moms
Click on number to watch the video
Salad, coffee, and yogurt. How McDonald’s is listening to the consumer by offering healthier food and new facility makeovers, which have led to increased market share.

23. ©Glen Stubbe/ZUMAPRESS/Minneapolis Star Tribune/Newscom
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.
©Glen Stubbe/ZUMAPRESS/Minneapolis Star Tribune/Newscom

24. Privacy Concerns Loss of privacy Identity theft Do not call
Do not
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

25. 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 shopper’s tool page of Stop & 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

26. 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

27. Political/Regulatory Environment: Competitive Practice and Trade Legislation
1890: Sherman Antitrust Act
1914: Clayton Act
1914: Federal Trade Commission
1936: Robinson-Putman 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.
David Hiller/Getty Images

28. check yourself What are the six key macroenvironmental factors?
Differentiate between country culture and regional culture.
What are some important social trends shaping consumer values and shopping behavior?
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.
Thrift, greener consumers, marketing to children, privacy concerns, and time-poor societies.