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Chapter Two

The Dynamic Marketing Environment Instructor: Ajab Khan Burki

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TWO LEVELS OF EXTERNAL FORCES HAVE AN EFFECT ON MARKETING:


Macro influences include demographics, economic conditions, culture, and laws. Micro influences consist of suppliers, marketing intermediaries, and customers.

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Copyright 1997 by The McGraw-Hill Companies, Inc.

Economic conditions
Demographics

Competition

COMPANYS MARKETING PROGRAM


Social and cultural forces Technology

Political and legal forces


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Copyright 1997 by The McGraw-Hill Companies, Inc.

SIX INTERRELATED MACROENVIRONMENTAL


FORCES CAN AFFECT AN ORGANIZATIONS MARKETING PROGRAM:

Demographics Economics conditions Competition Social and cultural forces Political and legal forces Technology

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Copyright 1997 by The McGraw-Hill Companies, Inc.

MORE HOUSEHOLDS WHY DOES THAT MATTER?


Number of households (in millions):

98.5

115

= +16%

1995
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2010
Copyright 1997 by The McGraw-Hill Companies, Inc.

MORE HOUSEHOLDS WHY DOES THAT MATTER?


Importance to marketers: Many products are not sold to individual consumers but to households. (Examples: dinnerware, rug cleaning, houses.)


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Under age 25: Steady at 5 percent of all households. 25-34 years old: Decline by 10 percent in the next 15 years. 35-44 years old: Decline by 14 percent. 45-64 years old: Grow by 30 million, or 16 percent of households, by the year 2000. Over age 65: Grow almost 20 percent.
Copyright 1997 by The McGraw-Hill Companies, Inc.

ARE WEALTHY CONSUMERS ALL THE SAME?


The answer in a word: NO! Research has identified five distinct groups:

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Luxury lovers 29 percent. Flaunt their affluence. Savvy affluents 23 percent. Seek bargains, hide their wealth. Trailblazers 21 percent. Love adventure travel, active investors. Contented affluents 14 percent. Old money, country-club set, believe in large estate for their children. Strained affluents 13 percent. Have large debt burden, believe strongly in image.
Copyright 1997 by The McGraw-Hill Companies, Inc.

THREE ENVIRONMENTAL FORCES ARE PART OF


A COMPANYS MARKETING SYSTEM BUT ARE EXTERNAL TO THE COMPANY:

The firms market. Its producer-suppliers. Its marketing intermediaries.

A FIRM CAN INFLUENCE THESE FORCES MORE


SO THAN FORCES IN THE MACROENVIRONMENT

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Copyright 1997 by The McGraw-Hill Companies, Inc.

Suppliers

Marketing intermediaries

COMPANYS MARKETING PROGRAM

Marketing intermediaries

The market

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Copyright 1997 by The McGraw-Hill Companies, Inc.

AN ORGANIZATIONS MARKETING IS
INFLUENCED BY INTERNAL FORCES THAT ARE CONTROLLABLE BY MANAGEMENT:

Production Finance Personnel

OTHER NONMARKETING FORCES IN AN


ORGANIZATION ALSO MAY AFFECT MARKETING EFFORTS:

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Companys location Its research and development strength Its image


Copyright 1997 by The McGraw-Hill Companies, Inc.

Financial resources

COMPANYS NONMARKETING RESOURCES


Research and development

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CUTTING PRICES TO STAY


COMPETITIVE
With little inflation, companies are having trouble raising prices. Instead they are:

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Redesigning products for ease of manufacture or to cut out costly, superfluous features. Using price-driven costing rather than cost-plus pricing. Emphasizing everyday low prices, rather than sporadic rebates and discounts. Forging closer links with customers to speed up new product development. Introducing bare-bones products. Investing in high-tech equipment to cut costs.
Copyright 1997 by The McGraw-Hill Companies, Inc.

SHADES OF GREEN
Green consumers are not homogenous. Roper Starch Worldwide identified five subgroups based upon levels of environmental activities such as recycling:


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True-Blue Greens. Change their personal behavior and purchases to aid the environment. Greenback Greens. Support environmental political candidates and donate money to environmental causes but are not as willing to change their habits. Sprouts. Make a few environmental friendly purchases. Grousers. Grudgingly acknowledge environmental mandates. Basic browns. Most apathetic and their ranks are growing.
Copyright 1997 by The McGraw-Hill Companies, Inc.