Chapter 3 MARKETING ENVIRONMENT 1 Objectives Understanding environmental

Chapter 3 MARKETING ENVIRONMENT 1

Objectives � Understanding environmental forces. � Company’s Micro-environment � Company’s Macro-environment � Responding to the marketing environment 2

Marketing Process Understan ding the market place and customer needs and wants Research customer and the market place Managing marketing information and customer data Design a customerdriven marketing strategy Select customer to serve: market segmentation and targeting Decide on value proposition: differentiation and positioning Construct marketing program that deliver superior value Product and service design: building a strong brand Price Create real value Distribution manage demand supply chain Promotion Communicating the value Build profitable relationshi p and create customer delight Capture value from the customers to create profits Customer relationship management: build strong relationship with chosen customers Create satisfied loyal customer Partner relationship management : build a strong relationship with marketing partners Increase share of market and share of customer Capture customer life time value 3

The Marketing Environment The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. � The marketing environment is made up of �micro-environment (The Company, Marketing Intermediaries, Customers Competitors, And Publics), and Suppliers, Markets, �macro-environment (Demographic, Economic, Natural, Technological, Political, And Culture Forces). 4

Micro-environment The actors close to the company that affect its ability to serve its customer – the company, suppliers, marketing intermediaries, customers markets, competitors, and publics. Marketing intermediaries customers suppliers The company competitors Marketing publics 5

Microenvironment Actors 1 • The company 2 • Suppliers 3 • Marketing intermediaries 4 • Customers 5 • Competitors 6 • Publics Marketing must consider other parts of the organization including finance, R&D, purchasing, operations and accounting Marketing decisions must relate to broader company goals and strategies 6

Microenvironment Actors 1 • The company 2 • Suppliers 3 • Marketing intermediaries 4 • Customers 5 • Competitors 6 • Publics Marketers must watch supply availability and pricing Effective partnership relationship management with suppliers is essential 7

Microenvironment Actors 1 • The company 2 • Suppliers 3 • Marketing intermediaries 4 • Customers 5 • Competitors 6 • Publics 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 8

Microenvironment Actors The five types of customer markets 1 • The company § Consumer 2 • Suppliers § Business 3 • Marketing intermediaries 4 • Customers 5 • Competitors 6 • Publics § Reseller § Government § International 9

Microenvironment Actors 1 • The company 2 • Suppliers 3 • Marketing intermediaries 4 • Customers 5 • Competitors 6 • Publics Conducting competitor analysis is critical for success of the firm A marketer must monitor its competitors’ offerings to create strategic advantage 10

Microenvironment Actors 1 • The company 2 • Suppliers 3 • Marketing intermediaries 4 • Customers 5 • Competitors 6 • Publics A group that has an actual or potential interest in or impact on an organization Seven publics include: ● Financial ● Media ● Government ● Citizen-action ● Local ● General ● Internal 11

Macro-environment The larger social forces that affect the micro-environment – demographic, economic, natural, technological, political, and culture forces. Natural forces Technological forces Economic forces Demographic forces Political forces Marketing Cultural forces 12

Macro-environment � Demographic environment “The study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics” Age structure of the population � 0 -14 years: 32. 6% (male 13, 172, 641; female 12, 548, 346) ○ 15 -64 years: 62. 9% (male 25, 102, 754; female 24, 519, 698) ○ 65 years and over: 4. 5% (male 1, 510, 280; female 2, 033, 288) (2006 est. ) ○ Geographic shifts in population � ○ people move to the cities in search of employment and a higher standard of living Education (a better-educated, more whit-collar, more professional population) � Changing in marital states (more single people) � The changing Egyptian family � Sub-cultures � Egyptians 94%, Nubians, Berbers, Bedouin Arabs 4%, Other 2% http: //meria. idc. ac. il/journal/2003/issue 4/jv 7 n 4 a 2. html http: //en. wikipedia. org/wiki/Demographics_of_Egypt ○ 13

Macro-environment � Economic environment “Factors that affect consumer buying power and spending patterns” � Value Marketing has become the watchword for many marketers. They are looking for ways to offer today’s more financially cautious buyers greater value. � ● Marketers should pay attention to income distribution as well as average income. ○ Upper-class consumers, whose spending patterns are not affected by current economic events. ○ The middle class is somewhat careful about its spending, but can still afford the good life some of the time. ○ The working class must stick close to the basics of food, clothing, and shelter. ○ The underclass must count their pennies when making even the most basic purchases. Consumers at different income levels have different spending patterns. 14

The Macroenvironment � The Economic Environment • Two types of national economies: o subsistence o industrial 15

Macro-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 Air and water may seem to be infinite resources, but some groups see long-run dangers. � Increased pollution Industry will almost always damage the quality of the natural environment. � Increased government intervention The governments of different countries vary in their concern and efforts to promote a clean environment. 16

The Macroenvironment Many companies use recycling to help protect natural resources “Environmental Sustainable Strategies” 17

Macro-environment � Technological environment “Forces that create new technologies, creating new products and market opportunities” The most dramatic force shaping our destiny New technologies create new markets and opportunities. However, every new technology replaces on older technology. Marketers should watch the technological environment closely. 18

Macro-environment � Political environment “Consists of laws, government agencies and pressure groups that influence or limit various organizations and individuals in a given society” � Legislation affecting businesses worldwide has increased � Laws protect companies, consumers and the interests of society � Increased emphasis on socially responsible actions ○ Cause-Related Marketing • Marketers create link between brand charitable organization and worthwhile cause. • Demonstrates social responsibility • Helps build positive brand image • Cause-related marketing has become a primary form of corporate giving. It lets companies “do well by doing good” 19

The Macroenvironment Cause-related Marketing is one method of demonstrating social responsibility 20

Macro-environment � Cultural Environment Made up of institutions and other forces that affect a society’s basic values, perceptions, preferences and behaviors. �Core beliefs values are passed on from parents to children and are reinforced by schools, religion, business, and government. �Secondary beliefs are more open to change. (Example: marriage) 21

Macro-environment � Cultural Environment Includes people’s views of… � Themselves Identify with brands for self-expression � Others Recent shift from “me” to “we” society � Organizations Trend of decline in trust and loyalty to companies � Society People vary in their attitudes toward their society - from patriots who defend it, to reformers who want to change it, and those who want to leave it. � Nature “lifestyles of health and sustainability” � Universe Includes religion and spirituality 22

Responding to the Marketing Environment Many companies view the marketing environment as an uncontrollable element in which they must react and adapt. They passively accept the marketing environment and do not try to change it. Other companies take a proactive stance toward the marketing environment. (Example: Cathay Pacific Airlines) 23