Chapter 3

The Marketing Environment 1

Marketing Environment

Marketing Environment- consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers.

Includes:  Microenvironment - forces close to the company that affect its ability to serve its customers.

 Macroenvironment - larger societal forces that affect the microenvironment.

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The Company’s Microenvironment

Company’s Internal Environment- functional areas inside a company that have an impact on the marketing department’s plans.

Suppliers - provide the resources needed to produce goods and services and are an important link in the “value delivery system”.

Marketing Intermediaries - help the company to promote, sell, and distribute its goods to final buyers. i.e. resellers.

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Company’s Internal Environment (Fig. 3.1)

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The Company’s Microenvironment

Customers - five types of markets that purchase a company’s goods and services.

Competitors - those who serve a target market with similar products and services against whom a company must gain strategic advantage.

Publics - any group that perceives itself having an interest in a company’s ability to achieve its objectives.

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Types of Customer Markets (Fig. 3.2)

Reseller Markets Company 6

Types of Publics (Fig. 3.3)

Citizen Action Publics Company 7

Major Forces in the Company’s Macroenvironment (Fig. 3.4) 8

The Company’s Macroenvironment

Demographic - studies 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 - natural resources needed as inputs by marketers or that are affected by marketing activities.

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Key U.S.Demographic Trends

Changing Age Structure

Population is aging; many divisions

Changing American Family

Later marriage, fewer children, working women, and nontraditional households

Geographic Shifts

Moving to the Sunbelt, suburbs, “micropolitan areas”

Better-Educated & More White-Collar

Increased college attendance and white-collar workers

Increasing Diversity

72% Caucasian, 13% African-American, 11% Hispanic & 3% Asian 10

Age Distribution of the U.S. Population

(78 million people born 1946-1964) One of the most powerful forces shaping the marketing environment, 30% of population (45 million people born 1965-1976) More skeptical, cynical of frivolous marketing pitches promising easy success (72 million people born 1977-1994) Fluent and comfortable with computer, digital, and Internet technology (Net-Gens) 11

Discussion Connections

Form small groups to identify a company that has done a good job of reacting to:    Baby Boomers, or Generation X, or Echo Boomers What did the company do well?

Compare this company to one that has done a poor job. What did they do poorly?

Economic Environment

Economic Development Changes in Income: Value Marketing Key Economic Concerns for Marketers Changing Consumer Spending Patterns 13

Natural Environment

Shortages of Raw Materials Environmentally Sustainable Strategies Factors Affecting the Natural Environment Governmental Intervention Increased Pollution 14

The Company’s 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.

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Technological Environment

Faster pace of technological change; products are outdated at a rapid pace.

Almost unlimited opportunities being developed daily in health care, space industry, robotics, and bio-genetic field.

Challenge is not only technical, but also commercial – make practical, affordable versions of products.

Increased regulation concerning product safety, individual privacy, and other areas that affect technological changes.

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Political Environment

Includes Laws, Government Agencies, Etc. that Influence & Limit Organizations/ Individuals in a Given Society Increasing Legislation Changing Government Agency Enforcement Increased Emphasis on Ethics & Socially Responsible Actions 17

Cultural Environment

People’s View of Themselves People’s View of the Universe People’s View of Nature Cultural Values of a Society People’s View of Others People’s View of Organizations People’s View of Society 18

Responding to the Marketing Environment

Environmental Management Perspective   Taking a proactive approach to managing the microenvironment and the macroenvironment by taking aggressive (rather than passive) actions to affect the publics and forces in the marketing environment. How? Hire lobbyists , run “advertorials”, press law suits, file complaints, and form agreements. 19

Review of Concept Connections

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.

Explain the key changes in the political and cultural environments.

Discuss how companies can react to the marketing environment.

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