Chapter 1 Chapter 3 Analyzing the Marketing Environment

Chapter 1 Chapter 3 Analyzing the Marketing Environment

Rest Stop: Previewing the Concepts § 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. Prentice Hall, Copyright 2009 3 -2

Case Study Mc. Donald’s – Responding to Change Challenges § Faced shifting consumer § § § lifestyles and a sales growth slump of 3% between 1997 and 2000. Posted first quarterly loss in 2002. Mc. Donald’s was losing share to the “fast casual” restaurant segment because consumers wanted healthier, bettertasting food in more upscale, fashionable surroundings. Named as the defendant in a highly publicized law suit. Response: Introduced “Plan to Win” in early 2003. Prentice Hall, Copyright 2009 “Plan to Win” § Focused on consistent products and § § § reliable service—core competencies. Introduced the “It’s what I eat and what I do. . . I’m loving it” ad campaign and revamped Web site to help consumers understand how to live balanced, active lives. Involved nutrition experts in menu redesign. Added upscale restaurants, such as Mc. Cafe coffee shops and offered healthier food options: Go Active! Adult Happy Meal; white meat Mc. Nuggets; various salads. Results: Increased sales by 42% while profits quadrupled. 3 -3

Marketing Environment § Consists of actors and forces outside of the organization that affect management’s ability to build and maintain relationships with target customers. ► Studying the environment allows marketers to take advantage of opportunities as well as to combat threats. ► Marketing intelligence and research are used to collect information about the environment. Prentice Hall, Copyright 2009 3 -4

Marketing Environment § Includes: ►Microenvironment: Actors close to the company that affect its ability to serve its customers. ►Macroenvironment: Larger societal forces that affect the microenvironment. Prentice Hall, Copyright 2009 3 -5

The Microenvironment § Company itself § Suppliers § Marketing intermediaries § Customers § Competitors § Publics Prentice Hall, Copyright 2009 3 -6

The Microenvironment § The company itself: ►Areas/departments inside of a company. ►Affects the marketing department’s planning strategies. ►All departments must “think consumer” and work together to provide superior customer value and satisfaction. Prentice Hall, Copyright 2009 3 -7

The Microenvironment § Suppliers: ►Provide resources needed to produce goods and services. ►Important link in the “value delivery system. ” ►Most marketers treat suppliers like partners. Prentice Hall, Copyright 2009 3 -8

The Microenvironment § Marketing intermediaries: ►Help the company to promote, sell, and distribute its goods to final buyers. • Resellers • Physical distribution firms • Marketing services agencies • Financial intermediaries Prentice Hall, Copyright 2009 3 -9

The Microenvironment § Customers: ►Five types of markets that may purchase a company’s goods and services. • Consumer • Business • Reseller • Government • International Prentice Hall, Copyright 2009 3 -10

The Microenvironment § Competitors: ►Those who serve a target market with products and services that are viewed by consumers as being reasonable substitutes for the firm’s products or services. ►Company must seek to gain strategic advantage against these organizations. Prentice Hall, Copyright 2009 3 -11

The Microenvironment § Publics: ► Any group that has an interest in or impact on an organization’s ability to achieve its objectives. • Financial public • Media public • Government public • Citizen-action public • Local public • General public • Internal public Prentice Hall, Copyright 2009 3 -12

The Macroenvironment § The company and all of the other actors operate in a larger macroenvironment of forces that shape opportunities and pose threats to the company. Prentice Hall, Copyright 2009 3 -13

The Macroenvironment § Forces in the macroenvironment can be categorized as: ►Demographic ►Economic ►Natural ►Technological ►Political ►Cultural Prentice Hall, Copyright 2009 3 -14

Demographic Environment § Demographics: ►The study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. ►Marketers track changing age and family structures, geographic population shifts, educational characteristics, and population diversity at home and abroad. Prentice Hall, Copyright 2009 3 -15

Demographic Environment § The changing age structure of the U. S. population is the single most important demographic trend. ►Baby boomers, Generation X, and the Millennials are key generational groups. Prentice Hall, Copyright 2009 3 -16

Demographic Environment § Baby boomers: ► 78 million born between 1946 and 1964. ►Nearly 30% of population. ►Spend $2. 3 trillion annually and hold ¾ of the nation’s financial assets. ►Spend $30 billion annually on anti-aging products and services; strong market for financial services, new housing, travel, etc. ►Are likely to postpone retirement. Prentice Hall, Copyright 2009 3 -17

Demographic Environment § Generation X: ► 49 million born between 1965 and 1976. ►Defined by shared experiences: • Increased parental divorce rates and more employed mothers made Generation X the first of the latchkey kids. • Gen X developed a more cautious economic outlook due to recessions and downsizing that were common when they grew up. Prentice Hall, Copyright 2009 3 -18

Demographic Environment § Generation X: ►Cares about the environment. ►Prizes experience, not acquisition. ►Family comes first, career second. ►Skeptical of marketing messages; researches purchases carefully, uses communities to share information. ►Represents close to $1. 4 trillion in annual purchasing power. Prentice Hall, Copyright 2009 3 -19

Demographic Environment § Millennials: ► 83 million born between 1977 and 2000—larger than baby boomer segment. ► Includes tweens, teens, and young adults. ► Ethnically diverse. ► Fluent with computer and digital technology. ► Personalization and product customization are key to marketing success. Prentice Hall, Copyright 2009 3 -20

Demographic Environment § The American family and household makeup is changing: ► Traditional households are in decline: • Married couples with children = 23% ► Non-traditional households are growing: • Married without children = 29% • Single parents = 16% • Non-family households = 32% ► Special needs of non-traditional households are increasingly being considered by marketers. Prentice Hall, Copyright 2009 3 -21

Demographic Environment § Geographic shifts in population: ► 14% of U. S. residents move each year. ►General shift toward the Sunbelt states. ►City to suburb migration continues. ►More people are moving to “micropolitan” areas. ►More people telecommute: • 1 in 10 people now work out of their home. • Home office segment is being targeted. Prentice Hall, Copyright 2009 3 -22

Demographic Environment § Better educated population: ► 1980: • 69% of people over age 25 completed high school; 17% had completed college. ► 2004: • 86% of people over age 25 completed high school; 28% had completed college. ►Increasing demand for quality products, books/magazines, computers, travel, etc. Prentice Hall, Copyright 2009 3 -23

Demographic Environment § Increasing white-collar population ► 1950— 1985: • White-collar workers increased from 41% to 54%, while blue-collar workers decreased from 47% to 33%. ► 1983— 1999: • Professionals and managers increased from 23% to greater than 30%. ► 2004— 2012: • Professionals should increase by 21% while manufacturing is expected to decline by 5%. Prentice Hall, Copyright 2009 3 -24

Demographic Environment § Increasing diversity: ►The United States is an ethnic “salad bowl. ” • Ethnic segments will continue to grow as a percentage of the U. S. population. • Marketers target specially designed ads, products, and promotions at ethnic groups. ►Marketing efforts are increasing toward: • Gay and lesbian consumers. • People with disabilities. Prentice Hall, Copyright 2009 3 -25

Economic Environment § Consists of factors that affect consumer purchasing power and spending patterns. § Changes in income 1990 s—consumption frenzy, record debt ► 2000 s—“squeezed consumer” ► Marketers focus on offering greater value ► Prentice Hall, Copyright 2009 § Income distribution Upper class: getting wealthier ► Middle class: shrinking in size ► Working class ► Underclass: remain poor ► 3 -26

Natural Environment § Involves natural resources that are needed as inputs by marketers or that are affected by marketing activities. § Factors include: ►Shortages of raw materials ►Increased pollution ►Increased government intervention ►Environmentally sustainable strategies Prentice Hall, Copyright 2009 3 -27

Technological Environment § Most dramatic force shaping our destiny. § Changes rapidly, creating new markets and opportunities and/or danger of products becoming obsolete. § Challenge is to make practical, affordable new products. § Safety regulations result in higher research costs and longer time between product conceptualization and introduction. Prentice Hall, Copyright 2009 3 -28

Political Environment § Includes laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society. § Areas of concern: ► Increasing legislation. ► Changing government agency enforcement. ► Increased emphasis on ethics and socially responsible behavior. Prentice Hall, Copyright 2009 3 -29

Cultural Environment § The institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors. ► Core beliefs and values are passed on from parents to children and are reinforced by schools, churches, business, and government. ► Secondary beliefs and values are more open to change. • Marketers may be able to change secondary beliefs, but NOT core beliefs. Prentice Hall, Copyright 2009 3 -30

Cultural Environment § Society’s major cultural views are expressed in people’s views of: ►Themselves ►Others ►Organizations ►Society ►Nature ►The universe Prentice Hall, Copyright 2009 3 -31

Responding to the Marketing Environment § Reactive responses: ►Many firms simply react to changes in the marketing environment. § Proactive responses: ►Some firms attempt to manage the marketing environment via aggressive actions designed to affect the publics and forces in the marketing environment. Prentice Hall, Copyright 2009 3 -32

Responding to the Marketing Environment § Examples of proactive responses: ►Hiring lobbyists ►Running “advertorials” ►Pressing law suits ►Filing complaints ►Forming agreements to control channels Prentice Hall, Copyright 2009 3 -33

Rest Stop: Reviewing the Concepts § 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. Prentice Hall, Copyright 2009 3 -34

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