3 Principles of Marketing The Marketing Environment Chapter

3 Principles of Marketing The Marketing Environment

Chapter Outline 1. The Company’s Microenvironment 2. The Company’s Macroenvironemnt 3. Responding to the Marketing Environment 3 -3

The Marketing Environment The marketing environment - the forces outside marketing that affect marketing management’s ability to build and maintain profitable relationships with customers 3 -4

The Marketing Environment Microenvironment - close to the company Include other parts of the company, suppliers, marketing intermediaries, customer markets, competitors, and publics 3 -5

The Company’s Microenvironment Marketing Environment Macroenvironment larger forces in society that affect the microenvironment • Demographic • Economic • Natural • Technological • Political • Cultural 3 -6

The Company’s Microenvironment • • • Other parts of the Company Suppliers Marketing intermediaries Customers Competitors Publics 3 -7

The Company’s Microenvironment The Company Internal environment includes: • Top management (controls budget) • Finance (can control the budget) • R&D (will they produce new things? ) • Purchasing (buy supplies and inputs) • Operations • Accounting 3 -8

The Company’s Microenvironment Suppliers • • Provide the resources to produce goods and services Treated as partners to provide customer value 3 -9

The Company’s Microenvironment Suppliers 3 -9

The Company’s Microenvironment Marketing Intermediaries • Help the company to promote, sell, and distribute its products to final buyers. Includes: • • Resellers Distribution firms Marketing services agencies Financial intermediaries 3 -10

The Company’s Microenvironment Marketing Intermediaries Resellers -the distribution channel to help the company find customers or make sales to them • Include: • Wholesalers • Retailers 3 -11

The Company’s Microenvironment Resellers 3 -11

The Company’s Microenvironment Marketing Intermediaries Physical distribution firms help the company to stock and move goods from their points of origin to their final destination 3 -12

The Company’s Microenvironment Marketing Intermediaries Marketing service 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 3 -13

The Company’s Microenvironment Marketing Intermediaries 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 3 -14

The Company’s Microenvironment Customers Customer markets consist of individuals and households that buy goods and services for personal consumption Business markets buy goods and services for further processing or for use in their production process 3 -15

The Company’s Microenvironment Customers Reseller markets buy goods and services to resell at a profit Government markets buy goods and services to produce public services or transfer goods and services to others who need them International markets consist of buyers in other countries including consumers, producers, resellers, and governments 3 -16

The Company’s Microenvironment Competitors Firms must gain strategic advantage by positioning their offerings against competitors’ offerings 3 -17

The Company’s Microenvironment Publics* Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives • Financial publics • Media publics • Government publics • Citizen-action publics • Local publics • General public • Internal publics 3 -18

The Company’s Microenvironment Publics Financial publics influence the company’s ability to obtain funds—banks, investment houses, and stockholders Media publics carry news, features, and editorial opinion—newspapers, magazines, and radio and television stations Government publics influence product safety and truth in advertising 3 -19

The Company’s Microenvironment Media Publics 3 -19

The Company’s Microenvironment Publics Citizen-action publics include consumer organizations, environment groups Local publics include neighborhood residents and community organizations General publics influence the company’s public image Internal publics include workers, managers, volunteers, and directors 3 -20

The Company’s Macroenvironment* • • • Demographic environment Economic environment Natural environment Technological environment Political environment Cultural environment 3 -21

The Company’s Macroenvironment Demographic Environment Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics 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 3 -22

The Company’s Macroenvironment Demographic Environment Changing Age Structure of the Population Generational marketing is important in segmenting people by lifestyle of life state instead of age 3 -23

The Company’s Macroenvironment Demographic Environment The Changed Chinese Family One Child Policy means: • Many little princes or princess • Two sets of grandparents - where do they live? • Savings rate 3 -27

The Company’s Macroenvironment Demographic Environment Geographic Shifts in Population • Trends include: • Migratory movements between and within countries • Moving from rural to metropolitan areas 3 -28

The Company’s Macroenvironment Demographic Environment Changes in the Workforce Trends include: • More educated • More white collar • More professional 3 -29

The Company’s Macroenvironment Economic Environment Economic environment consists of factors that affect consumer purchasing power and spending patterns • • Recession in most of world China continues to boom 3 -31

The Company’s Macroenvironment Economic Environment Changes in Income Value marketing involves ways to offer financially cautious buyers greater value—the right combination of quality and service at a fair price 3 -32

The Company’s Macroenvironment Economic Environment Changes in Income • Income distribution • • Upper-class consumers Middle-class consumers Working-class consumers Underclass consumers 3 -33

The Company’s Macroenvironment Economic Environment Changes in Consumer Spending Patterns Ernst Engel—Engel’s Law • As income rises: • • • The percentage spent on food declines The percentage spent on housing remains constant The percentage spent on savings increases 3 -34

The Company’s Macroenvironment Natural Environment 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 Increased government intervention 3 -35

The Company’s Macroenvironment Technological Environment Most dramatic force in changing the marketplace with many positive and negative effects • Rapid change • Provides new markets and new opportunities • • • Internet Medicine Miniaturization Weapons Credit cards Communication 3 -37

The Company’s Macroenvironment Political Environment Political environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society 3 -38

The Company’s Macroenvironment Political Environment • Legislation regulating business • • Public policy to guide commerce—sets of laws and regulations that limit business for the good of society at large Increasing legislation • • • Protect companies Protect consumers Protect the interests of society 3 -39

The Company’s Macroenvironment Political Environment Increased Emphasis on Ethics and Socially Responsible Actions Socially responsible behavior occurs when firms actively seek out ways to protect the long-term interests of their consumers and the environment 3 -41

The Company’s Macroenvironment Cultural Environment Cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors Sex is not used in Chinese advertising! 3 -42

The Company’s Macroenvironment Cultural Environment Persistence of Cultural Values Core beliefs and values have a high degree of persistence, are passed on from parents to children, and are reinforced by society - respect for elders in China Secondary beliefs and values are more open to change 3 -43

The Company’s Macroenvironment Cultural Environment Shifts in Secondary Cultural Values Major cultural values of a society are expressed in people’s view of: • Themselves • Others • Organization • Society • Nature and the universe 3 -44

The Company’s Microenvironment Cultural Environment Shifts in Secondary Cultural Values • People’s view of themselves • Yankelovich Monitor’s consumer segments: • People’s view of others 3 -45

The Company’s Macroenvironment Cultural Environment Shifts in Secondary Cultural Values • • People’s view of organizations People’s view of society 3 -46

The Company’s Macroenvironment Cultural Environment Shifts in Secondary Cultural Values • People’s view of nature • People’s view of the universe • Renewed interest in spirituality 3 -47