Chapter 3: Analyzing the Marketing Environment

The marketing environment includes the actors and forces outside marketing that affect
marketing management’s ability to build and maintain successful relationships with customers.
More than any other group in the company, marketers must be environmental trend trackers and
opportunity seekers.

I. Microenvironment

Microenvironment consists of the actors close to the company that affect its ability to serve its
customers, the company, suppliers, marketing intermediaries, customer markets, competitors,
and publics

1. Actors in the Microenvironment

- Marketing success requires building relationships with other company departments, suppliers,
marketing intermediaries, competitors, various publics, and customers, which combine to make
up the company’s value delivery network.

2. The Company's Microenvironment

a. The company

Top management sets the company’s mission, objectives, broad strategies, and policies.
Marketing managers make decisions within the broader strategies and plans made by top
management.
 + Finance

+ R&D

+ Purchasing

+ Operations

+ Accounting

b. Suppliers

- Provide the resources to produce goods and services.

- Treat as partners to provide customer value.

- Marketing managers must watch supply availability and costs. Supply shortages or delays,
labor strikes, natural disasters, and other events can cost sales and damage customer satisfaction.

c. Marketing Intermediaries

- Help the company to promote, sell and distribute its products to final buyers

Example: Coke

+ Understands each retailer partner’s business

+ Conducts consumer research and share with partners

+ Develops marketing programs and merchandising for partners

- Types of intermediaries

+ Resellers: Distribution channel firms that help the company find customers or make sales to
them. These include wholesalers and retailers who buy and resell merchandise.

+ Physical Distribution Firms: Help the company stock and move goods from their points of
origin to their destinations.

+ Marketing Services Agencies: 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.

+ Financial Intermediaries: 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.
d. Competitors

- Firms must gain strategic advantage by positioning their offerings against competitors’
offerings

- Marketers must gain strategic advantage by positioning their offerings strongly against
competitors’ offerings in the minds of consumers.

e. 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

f. Customers

+ Consumer markets

+ Business markets

+ Government markets

+ International markets

II. Macroenvironment

Macroenvironment consists of the larger societal forces that affect the microenvironment—
demographic, economic, natural, technological, political, and cultural forces.

1. Actors in 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. Even the most dominant companies can be
vulnerable to the often turbulent and changing forces in the marketing environment.
2. Demographic Environment

- Demography: the study of human populations-- size, density, location, age, gender, race,
occupation, and other statistics

- Demographic environment: involves people, and people make up markets

- Demographic trends: shifts in age, family structure, geographic population, educational

characteristics, and population diversity

- Baby Boomers

+ Born 1946 to 1964

+ Rethinking the purpose and value of their work, responsibilities, and relationships.

+ Spending more carefully and planning to work longer

+ The wealthiest generation in U.S. history

- Generation X

+ Includes people born between 1965 and 1976

+ High parental divorce rates

+ Cautious economic outlook

 + Less materialistic

+ Family comes first

- Millennials (gen Y or echo boomers)

+ Include those born between 1977 and 2000

+ Most financially strapped generation

+ Higher unemployment and saddled with more debt

+ Comfortable with technology

- Generational Marketing

+ Generational marketing is important in segmenting people by lifestyle instead of just age.

+ Defining people by their birth date may be less effective than segmenting them by their
lifestyle, life stage, or the common values they seek in the products they buy.

+ More people are:

• Divorcing or separating

• Choosing not to marry

• Choosing to marry later

• Marrying without intending to have children

• Increased number of working women

• Stay-at-home dads

+ Changes in the Workforce

• More educated

• More white collar Demographic Environment

- Increasing Diversity

+ Markets are becoming more diverse

• International

• National
+ Includes:

• Ethnicity

• Gay and lesbian

• Disabled

3. Economic Environment

- Economic environment consists of factors that affect consumer purchasing power and
spending patterns

- Industrial economies are richer markets

- Subsistence economies consume most of their own agriculture and industrial output

4. Natural Environment

- Natural resources that are needed as inputs by marketers or that are affected by marketing
activities

+ Trends

+ Increased shortages of raw materials

+ Increased pollution

+ Increased government intervention

+ Increased environmentally sustainable strategies

5. Technological Environment

- Most dramatic force in changing the marketplace

+ New products, opportunities

+ Concern for the safety of new products

6. Political and Social Environment

- Legislation regulating business

+ Increased legislation

+ Changing government agency enforcement

+ Socially responsible behavior

 + Cause-related marketing

7. Cultural Environment

- Institutions and other forces that affect a society’s basic values, perceptions, and behaviors

+ Core beliefs and values are persistent and are passed on from parents to children and are
reinforced by schools, churches, businesses, and government

+ Secondary beliefs and values are more open to change and include people’s views of
themselves, others, organization, society, nature, and the universe

- People’s view of themselves

+ Emphasis on serving themselves versus serving others.

- People’s view of others

+ Attitudes toward and interactions with others

- People’s view of organizations

+ Attitudes toward corporations, government agencies, trade unions, universities, and other
organizations

+ Decline of loyalty toward companies

- People’s view of society

+ Patriots / Reformers / Malcontents

8. Responding to the Marketing Environment Views on Responding

 Chapter 4: Managing Marketing
Information to Gain Customer Insights
۞ Customer Insights
Customer needs and buying motives are often anything but obvious—consumers themselves
usually can’t tell you exactly what they need and why they buy. To gain good customer insights,
marketers must effectively manage marketing information from a wide range of sources.

1. Marketing Information and Customer Insights

a. Customer Insights

 Fresh and deep insights into customers needs and wants

 Difficult to obtain

- Not obvious

- Customer’s unsure of their behavior

 Better information and more effective use of existing information

 Consumers are now volunteering a tidal wave of bottom-up information

 Marketers don’t need more information; they need better information.

 Need to make better use of the information they already have.

 Companies are forming customer insights teams

- Include all company functional areas

- Collect information from a wide variety of sources

- Use insights to create more value for their customers

 The real value of marketing research and marketing information lies in how it is used

b. Marketing Information Systems (MIS)

- Marketing information system (MIS) consists of people and procedures for

+ Assessing the information needs
 + Developing needed information
+ Helping decision makers use the information for customer 

- MIS begins and ends with information

+ First, it interacts with information users to assess information needs. 
+ Next, it interacts with the marketing environment to develop needed information
through marketing intelligence activities, and marketing research. 
+ Finally, the MIS helps users to analyze and use the information to develop customer
insights, make marketing decisions

2. Assessing Marketing Information Needs

- MIS provides information to the company’s marketing and other managers and
external partners such as suppliers, resellers, and marketing service agencies

- General steps taken in a needs assessment

 Exploration and identification: During the first phase of the needs assessment,
you need to determine what you already know about your organization's needs

 Data gathering and analysis: At this stage you are collecting the information you
need to better understand the gaps (needs) between where you are and where you want
to be.

 Utilization:This is where the data you analyzed is used to create a plan of action
and implement it.

 Evaluation: Evaluation can help you determine what made an action plan
successful or find the errors in your needs assessment

- Balancing what the information users would like to have against what they need
and what is feasible to offer. Too much information can be as harmful as too little

3. Developing Marketing Information

- The real challenge is to find the RIGHT information

- Marketers obtain information from:

+ Internal Databases: Electronic collections of consumer and market information

obtained from data sources within the company network.

+ Competitive Marketing Intelligence: The systematic collection and analysis of publicly

available information about consumers, competitors and developments in the marketplace
 + Marketing Research: The systematic design, collection, analysis, and reporting of data
relevant to a specific marketing situation facing an organization

- Steps in the Marketing Research Process:

+ Defining the problem and research objectives.

+ Developing the research plan

+ Implementing the research plan

+ Interpreting and reporting the findings.

a. Defining the Problem and Research Objectives

 Exploratory research

 Descriptive research

 Causal research

b. Developing the research plan

- Outlines sources of existing data

- Spells out the specific research approaches, contact methods, sampling plans, and
instruments to gather data

- Written Research Plan Includes

+ management problem

+ research objectives

+ information needed

+ how the results will help management decisions

+ budgets

- Data

* Secondary data consists of information that already exists somewhere, having

been collected for another purpose

+ Advantages: cost, speech, could not get data otherwise

+ Disadvantages: current, revelant, accuracy, impartial

* Primary data consists of information gathered for the special research plan

 Planning primary data collection

+ Research approaches

+ Contact methods

+ Sampling plan

+ Research instruments

 Research Approaches

- Observational research: involves gathering primary data by observing

relevant people, actions, and situations

- Ethnographic research: involves sending trained observers to watch and

interact with consumers in their natural environment

- Survey Research: Best for descriptive information—knowledge, attitudes,

preferences, and buying behavior

+ Flexible
+ People can be unable or unwilling to answer
+ Gives misleading or pleasing answers
+ Privacy concerns

 Contact methods: Best for gathering causal information—cause-and-effect

relationships

+ Focus Groups

+ Six to 10 people

+ Trained moderator

+ Challenges

+ Expensive

+ Difficult to generalize from small group

+ Consumers not always open and honest

 Sampling plan
 - Sample is a segment of the population selected for marketing research to
represent the population as a whole

+ Who is to be surveyed?

+ How many people should be surveyed?

+ How should the people be chosen?

 Research instrument

- Questionnaires

+ Most common

+ Administered in person, by phone, or online

+ Flexible

+ Research must be careful with wording and ordering of questions

+ Closed-end questions include all possible answers, and subjects make

choices among them. Provide answers that are easier to interpret and
tabulate

+ Open-end questions allow respondents to answer in their own words.

Useful in exploratory research

- Mechanical Instruments

+ People Meters

+ Hand Scanners

+ Retinal Scanners

+ Biometric Scanners

+ Neuromarketing

c. Implementing the Research Plan

+ Collecting the information

+ Processing the information

+ Analyzing the information

+ Interpret findings
 + Draw conclusions

+ Report to the management

4. Analyzing Marketing Information

- Customer relationship management: CRM consists of sophisticated software and

analytical tools that integrate customer information from all sources, analyze it in depth,
and apply the results to build stronger customer relationships

5. Distributing and Using Marketing Information

- Information distribution involves entering information into databases and making it

available in a time-usable manner

• Intranet provides information to employees and other stakeholders

• Extranet provides information to key customers and suppliers

6. Other Marketing Information Considerations

- Marketing Research in Small Businesses and Nonprofit Organizations

- International Market Research

- Public Policy and Ethics

• Customer privacy

• Misuse of research findings