0. CHAPTER THREE Analyzing the Marketing Environment Mkt 202 Lecturer: NNA

1. Chapter Learning Outcomes
Topic Outline 3.1 The Company’s Microenvironment 3.2 The Company’s Macroenvironment 3.3 Demographic Environment 3.4 Economic Environment 3.5 Natural Environment 3.6 Technological Environment 3.7 Political and Social Environment 3.8 Cultural Environment 3.9 Responding to the Marketing Environment
Ch 3 - 2
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2. The Marketing Environment
The marketing environment includes the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with customers.
Ch 3 - 3
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3. The Company’s Microenvironment
A microenvironment consists of the actors close to the company that affect its ability to serve its customers, the company, suppliers, marketing intermediaries, customer markets, competitors, and publics.
Ch 3 - 4
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4. The Company’s Microenvironment
Top management
Finance
R&D
Purchasing
Operations
Accounting
Note to Instructor
Discussion Questions
What types of collaboration does there need to be between the departments?
How might projects be integrated between marketing and finance?
How might projects be integrated between marketing and information systems?
This question on finance could lead to a discussion about budgeting for marketing. The collaboration between marketing and IS could lead to discussions of market research, ordering systems, and customer relationship management systems.

5. The Company’s Microenvironment
Suppliers
Provide the resources to produce goods and services
Treated as partners to provide customer value

6. The Company’s Microenvironment
Marketing Intermediaries
Marketing Intermediaries help the company to promote, sell and distribute its products.
Resellers are distribution channel firms that help the company find customers or make sales to them.
Physical distribution firms help the company stock and move goods from their points of origin to their destinations.
Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets.
Financial intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods.
Note to Instructor
Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers that buy and resell merchandise.
Physical distribution firms help the company to stock and move goods from their points of origin to their destinations. Distributors and agents are organizations based in the markets that generally have a contractual relationship with the principal company to buy their products and to distribute them in the local market.
Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consultancy firms that help the company target and promote its products to the right markets.
Financial intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods.
Ch 3 - 8
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7. The Company’s Microenvironment
Competitors
Firms must gain strategic advantage by positioning their offerings against competitors’ offerings.
Note to Instructor
Students should note that the competition is just a click away with online purchasing. This link goes to Bizrate—one of many comparison shopping sites online. Enter a product like coffee makers to see the competing products and retailers for this category.
Ch 3 - 9
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8. The Company’s Microenvironment
Publics are any groups that have an actual or potential interest in or impact on an organization’s ability to achieve its objectives. They include:
Financial publics
Media publics
Government publics
Citizen-action publics
Local publics
The general public
Internal publics
Note to Instructor
A good example of local publics is the BurJuman Breast Cancer Awareness campaign in UAE. It has run successfully for a number of years in partnership
with Welcare Hospital. This campaign is supported by a number of major companies, including Kodak, ENOC/EPPCO, the Ministry of Social Affairs, TECOM Investments (Dubai Technology, Electronic Commerce, and Media Free Zone), Hertz, and GEMS (Global Education Management Systems). These organizations recognize the importance of community publics through their involvement in raising community awareness of this important health issue. Ch
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9. The Company’s MacroenvironmentCh
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10. Demographic Environment
Demography
Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics.
The demographic environment is important because it involves people, and people make up markets.
Demographic trends include age, family structure, geographic population shifts, educational characteristics, and population diversity. Ch
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11. Demographic Environment
Changing Age Structure of the Population
Traditionalists
Baby Boomers
Generation X
Generation Y
Generation Z
Discussion Questions
What type of information boomers might be seeking?
Emirates NDB is one of many companies in the financial sector which are successfully targeting the generation of people nearing or entering retirement. Ch
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12. Demographic Environment
Traditionalists
Traditionalists includes people born between 1922 and This generation tends to display the following traits:
Extreme company loyalty, believing that they’ll work for the same company for their entire lives
Structured and disciplined
Supportive of hierarchy
Less tech savvy
Note to Instructor
The Gen Xers are displacing the lifestyles, culture, and materialistic values of the baby boomers. Many companies are focusing on Gen Xers as a major target segment. For example, Dubai Islamic Bank targets its sharia-compliant Takaful product at this age group. The Al Islami Takaful Program is a sharia-compliant alternative to conventional life nsurance products. The appeal of Takaful programs is that they offer various plan options which combine savings and investments to suit particular customer needs, circumstances, and priorities. Dubai Islamic Bank promotes the plans by emphasizing the focus on offering investors peace of mind and taking care of the future of their loved ones. The Takaful programs include a provision for the payment of Takaful benefits to investors’ beneficiaries or heirs in the event of their death. Overall, the programs have particular appeal to those with families to support, by giving the investor comfort in the knowledge that the future of their loved ones is provided for. As the
bank’s marketing literature puts it:
“As an individual you have many dreams…
A day when your child graduates from a prestigious university
A day when your child gets married
A day when you relax in the comfort of your dream home
A day when you start leading a retired life with enough savings to take care of you and much more.”
Emirates NDB is one of many companies in the financial sector which are successfully targeting the generation of people nearing or entering retirement. Ch
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13. Demographic Environment
Changing Age Structure of the Population
Baby boomers include people born between 1946 and 1964
Baby boomers “think young” no matter how old they are
Baby boomers retire later and work more after retirement
Discussion Questions
What type of information boomers might be seeking?
Emirates NDB is one of many companies in the financial sector which are successfully targeting the generation of people nearing or entering retirement. Ch
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14. Demographic Environment
Generation X
Generation X includes people born between 1965 and This generation tends to display the following traits:
Skepticism
Cautious economic outlook
Less materialistic
Family comes first
Research products before considering a purchase
Note to Instructor
The Gen Xers are displacing the lifestyles, culture, and materialistic values of the baby boomers. Many companies are focusing on Gen Xers as a major target segment. For example, Dubai Islamic Bank targets its sharia-compliant Takaful product at this age group. The Al Islami Takaful Program is a sharia-compliant alternative to conventional life nsurance products. The appeal of Takaful programs is that they offer various plan options which combine savings and investments to suit particular customer needs, circumstances, and priorities. Dubai Islamic Bank promotes the plans by emphasizing the focus on offering investors peace of mind and taking care of the future of their loved ones. The Takaful programs include a provision for the payment of Takaful benefits to investors’ beneficiaries or heirs in the event of their death. Overall, the programs have particular appeal to those with families to support, by giving the investor comfort in the knowledge that the future of their loved ones is provided for. As the
bank’s marketing literature puts it:
“As an individual you have many dreams…
A day when your child graduates from a prestigious university
A day when your child gets married
A day when you relax in the comfort of your dream home
A day when you start leading a retired life with enough savings to take care of you and much more.”
Emirates NDB is one of many companies in the financial sector which are successfully targeting the generation of people nearing or entering retirement. Ch
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15. Demographic Environment
Millennial
Millennials (Generation Y or Echo Boomers) include those born between 1977 and 2000:
Comfortable with technology
Family Oriented
Ambitious
Team Players
Communicators
Note to Instructor
One thing that all Millennials have in common is their utter fluency and comfort with computer, digital, and Internet technology. “Whereas Gen X spent a lot of time in front of the TV,” says one expert, the Millennials “are always ‘on.’ They’re consumers of every imaginable means of communication: TV, radio, cell phone, Internet, video games—often simultaneously. Ch
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16. Demographic Environment
Linksters
Linksters (Generation Z) include those born after the year 2000:
Regards technology as a lifestyle
Very liberal/ Open to change
Believes in a flat organizational structure
Highly dependent on the Internet
Note to Instructor
One thing that all Millennials have in common is their utter fluency and comfort with computer, digital, and Internet technology. “Whereas Gen X spent a lot of time in front of the TV,” says one expert, the Millennials “are always ‘on.’ They’re consumers of every imaginable means of communication: TV, radio, cell phone, Internet, video games—often simultaneously. Ch
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17. Demographic Environment
Generational marketing
Generational marketing is important in segmenting people by lifestyle, life stage and common values, rather than by age.
(Chapter 7 will explain more)
Note to Instructor
Real Marketing 3.1 considers an example of how companies are responding to the changing habits and work patterns of customers and the cultural diversity of their markets. ExxonMobil, recognizing the importance of value-added services for customers visiting its numerous filling stations, opened a chain of convenience stores called On the Run. Located at key Esso and Mobil retail sites, the convenience stores have been successfully introduced to the Egyptian market. The aim of On the Run is to offer motorists and others fast-food, pastries, drinks, and convenience items. The key to the approach
is the three terms fast, fresh and friendly. In Egypt, the On the Run concept is appealing to consumers who like to buy quality groceries on the go, particularly on their way to work, on their way home, and while traveling. In fact, the brand has become so strong that it attracts a large number of premium customers,who value freshness, speed, and quality of service. Ch
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18. Demographic Environment
Increased Diversity
Markets are becoming more diverse
International
National
Includes:
Ethnicity
Language
Note to Instructor
Companies in the Arab world are targeting ethnic groups with specific products, services, and promotions. Western Union, for example, refined ethnic marketing and brought mobile remittances to the region. Labor migration and the money-transfer market are both booming. Immigrants send money to their families in their country of origin, through remittances. This boom results from an increase in economic migration, as more people travel to seek work and a better quality of life. The remittance market totals about US$290 billion globally, with an annual growth rate of 8 percent. In 2006 Arab world remittances totalled US$59 billion. Western Union has noticed that there are some differences between people of different nationalities. In general it finds that expatriates from South Asia or the Arab world are more price sensitive, while Europeans tend to look more for convenience, security, and speed. Western Union aims to work in a wide range of languages to tailor its marketing to each group, insuring that it offers the most suitable value proposition. Ch
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Economic Environment
Economic Environment
The economic environment consists of factors that affect consumer purchasing power and spending patterns.
Industrial economies are richer markets.
Subsistence economies consume most of their own agriculture and industrial output.
Changes in consumer spending
Income distribution Ch
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20. Copyright © 2011 Pearson Education
Natural Environment
Natural Environment
The natural environment involves the natural resources that are needed as inputs by marketers, or that are affected by marketing activities.
Trends
Shortages of raw materials
Increased pollution
Increase government intervention
Environmentally sustainable strategies
Note to Instructor
This Web link connects you to Masdar company in Abu Dhabi. The site shows you Masdar’s different units and Masdar City--a zero- waste, zero-emissions city. “Masdar is a long term investment into a more sustainable future, reflecting the ambitious aims set out by Abu Dhabi’s leadership in its 2030 vision”. Ch
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21. Technological Environment
The technological environment is the most dramatic force in changing the marketplace.
One of the most dramatic forces shaping our destiny
It creates new products and opportunities.
Safety of new product always a concern.
Note to Instructor
New technologies create new markets and opportunities. However, every new technology replaces an older technology. Transistors hurt the vacuum-tube industry; xerography hurts the carbon-paper business; CDs hurt phonograph records; and digital photography hurts the film business. When old industries fought or ignored new technologies, their businesses declined. Thus, marketers should watch the technological environment closely. Companies that do not keep up will soon find their products outdated. And they will miss new product and market opportunities.
Dicussion Question
Ask students what changes they have seen in technology in the past four years including medical products, communications, and media.
They will most likely talk about the use of artificial organs and stem cell research, the growth of PDA’s like the iPod, and the use of new media products including DVR or TiVo. Ch
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22. Political Environment
The political environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society. Ch
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23. Political Environment
Increased Emphasis on Ethics and Socially Responsible Actions
Socially responsible behavior
Enlightened companies encourage their managers to work beyond what the regulatory system allows and simply do the right thing
Many companies are now developing policy guideline and other responses to complex social responsibility issues
Cause-related marketing
Many companies are now linking themselves to worthwhile causes
E.g. Toyota campaign of 100 cars
E.g. The P&G Tide loads of hope program
Note to Instructor
Companies in the Arab world are slowly adopting cause-related marketing campaigns. As part of its social awareness initiative ‘Making it Our Business,’ Dubai Chamber of Commerce and Industry collaborates with Vital Voices Global Partnership and the US Middle East Partnership for Breast Cancer
Awareness and Research, in the ongoing fight against breast cancer. Ch
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Cultural Environment
The cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors.
Persistence of Cultural Values
Core beliefs and values are persistent and are passed on from parents to children and are reinforced by schools, mosques, businesses, and governments.
Secondary beliefs and values are more open to change and include people’s views of themselves, others, organizations, society, nature, and the universe. Ch
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