1. The Marketing Environment Chapter 3

2. 2 Learning Goals 1. Understand environmental forces 2. Learn how demographic and economic factors affect marketing 3. Identify trends in the firm’s natural and technological environments 4. Realize how companies react to the marketing environment

3. 3 The Marketing Environment  Marketing Environment: The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers  Microenvironment Forces close to the company that affect its ability to serve its customers.  Macroenvironment Larger societal forces that affect the microenvironment. Goal 1: Understand environmental factors

4. 4 Marketing must consider other parts of the organization including finance, R&D, purchasing, operations, accounting etc. that form the internal environment. Marketing decisions must relate to broader company goals and strategies. Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics Goal 1: Describe environmental factors

5. 5 Provide the resources needed to produce goods and services and are an important link in the “value delivery system”. Marketers must watch supply availability and pricing Effective partnership relationship management with suppliers is essential Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics Goal 1: Describe environmental factors

6. 6 Help to promote, sell and distribute goods to final buyers Include resellers, physical distribution firms, marketing services agencies and financial intermediaries Effective partner relationship management is essential Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics Goal 1: Describe environmental factors

7. 7 The five types of customer markets  Consumer  Business  Reseller  Government  International Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics Goal 1: Describe environmental factors

8. 8 Those who serve a target market with similar products and services against whom a company must gain strategic advantage. Conducting competitor analysis is critical for success of the firm A marketer must monitor its competitors’ offerings to create strategic advantage Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics Goal 1: Describe environmental factors

9. 9 A group that has an actual or potential interest in or impact on an organization Type of public:  Financial  Media  Government  Citizen-action  Local  General  Internal Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics Goal 1: Describe environmental factors

10. 10 Goal 1: Describe environmental factors The Macroenvironment Major forces in the company’s Macroenvironment

11. 11 The Macroenvironment  Demographic - The study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics  Economic - factors that affect consumer purchasing power and spending patterns.  Natural Environment - Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities Goal 2: Learn how demographic & economic factors affect marketing

12. 12 The Macroenvironment  Technological - Forces that create new technologies, creating new product and market opportunities.  Political - laws, agencies and pressure groups that influence and limit organizations and individuals in a given society.  Cultural - institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors. Goal 3: Identify trends in natural and technological environments

13. 13 Demographic Trends Changing Age Structure Changing Family Late marriage, fewer children, working women Geographic Shifts Moving to the suburbs, “micropolitan areas” Goal 2: Learn how demographic & economic factors affect marketing

14. 14 Changing Consumer Spending Patterns  Engel’s laws  As family income rises  The percentage spent food declines,  The percentage spent on housing remains about constant,  The percentage spent on most other categories and that devoted to savings increase.

15. 15 Technological Environment  Changes rapidly  Creates new markets and opportunities  Challenge to make practical, affordable product  Safety regulations result in higher research costs Goal 3: Identify trends in natural and technological environments

16. 16 Natural Environment Factors Affecting the Natural Environment Shortages of Raw Materials Increased Pollution Governmental Intervention Environmentally Sustainable Strategies Goal 3: Identify trends in natural and technological environments

17. 17 Responding to the Marketing Environment “There are three kinds of companies: those who make things happen, those who watch things happen, and those who wonder what’s happened.”  Passive acceptance  Proactive stance Goal 4: Realize how companies react to the marketing environment