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Principles of Marketing
The Marketing Environment

Learning Objectives
After studying this chapter, you should be able to: 1. Describe the environmental forces that affect the company’s ability to serve its customers 2. Explain how changes in the demographic and economic environments affect marketing decisions 3. Identify the major trends in the firm’s natural and technological environments 4. Explain the key changes in the political and cultural environments 5. Discuss how companies can react to the marketing environment
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Chapter Outline
1. The Company’s Microenvironment 2. The Company’s Macroenvironemnt 3. Responding to the Marketing Environment

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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

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The Marketing Environment
Marketing Environment
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

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The Company’s Microenvironment
Marketing Environment
Macroenvironment consists of the larger societal forces that affect the microenvironment • Demographic • Economic • Natural • Technological • Political • Cultural
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The Company’s Microenvironment
• • • • • • The Company Suppliers Marketing intermediaries Customers Competitors Publics

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The Company’s Microenvironment The Company
Internal environment includes: • Top management • Finance • R&D • Purchasing • Operations • Accounting
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The Company’s Microenvironment
Suppliers
• • Provide the resources to produce goods and services Treated as partners to provide customer value

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The Company’s Microenvironment

• • • •

Marketing Intermediaries Help the company to promote, sell, and distribute its products to final buyers Include:
Resellers Physical distribution firms Marketing services agencies Financial intermediaries

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The Company’s Microenvironment
Marketing Intermediaries
Resellers are the distribution channel firms that help the company find customers or make sales to them • Include: • Wholesalers • Retailers
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The Company’s Microenvironment
Marketing Intermediaries
Physical distribution firms are the distribution channel firms that help the company to stock and move goods from their points of origin to their final destination

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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

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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

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

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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
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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
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The Company’s Microenvironment
Publics
Citizen-action publics include consumer organizations, environment groups, and minority 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

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The Company’s Macroenvironment
• • • • • • Demographic environment Economic environment Natural environment Technological environment Political environment Cultural environment

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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

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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

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The Company’s Macroenvironment
Demographic Environment
Changing Age Structure of the Population

Baby boomers include people born between 1946 and 1964
• Most affluent Americans

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The Company’s Macroenvironment
Demographic Environment
Changing Age Structure of the Population

Generation X includes people born between 1965 and 1976
• • • • • •

High divorce rates Concerned about the environment Respond to socially responsible companies Less materialistic Quality of life Consumer organizations, environment groups, and minority groups

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The Company’s Macroenvironment
Demographic Environment
Changing Age Structure of the Population

Generation Y includes people born between 1977 and 2000
• Internet generation

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The Company’s Macroenvironment
Demographic Environment
The Changing American Family More people are: • Divorcing or separating • Choosing not to marry • Choosing to marrying later • Marrying without intending to have children • Higher divorce rates • Increased number of working women • Stay-at-home dads
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The Company’s Macroenvironment
Demographic Environment
Geographic Shifts in Population • Trends include: • Migratory movements between and within countries • Moving from rural to metropolitan areas • Changes in where people work • Telecommuting • Home office • Divorcing or separating
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The Company’s Macroenvironment
Demographic Environment
Changes in the Workforce

Trends include: • More educated • More white collar • More professional

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The Company’s Macroenvironment
Demographic Environment
Increasing Diversity • • Markets are becoming more diverse
• • • • • International National Ethnicity Gay and lesbian Disabled
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Trends Include:

The Company’s Macroenvironment
Economic Environment
Economic environment consists of factors that affect consumer purchasing power and spending patterns
• • Subsistence economies consume most of their own agriculture and industrial output Industrial economies are richer markets
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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

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The Company’s Macroenvironment
Economic Environment
Changes in Income

Income distribution
• • • • Upper-class consumers Middle-class consumers Working-class consumers Underclass consumers

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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

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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 Environmentally sustainable strategies
• Green marketing

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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

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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

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The Company’s Macroenvironment
Political Environment
• •

Legislation regulating business Increasing legislation

Public policy to guide commerce—sets of laws and regulations that limit business for the good of society at large Protect companies Protect consumers Protect the interests of society

• • •

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The Company’s Macroenvironment
Political Environment
Changing Government Agency Enforcement • • • • • • • Federal Trade Commission Food and Drug Administration Federal Communications Commission Federal Energy Regulatory Commission Federal Aviation Administration Consumer Product Safety Commission Environmental Protection Agency
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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 • Cause-related marketing
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The Company’s Macroenvironment
Cultural Environment
Cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors

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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 schools, churches, businesses, and government Secondary beliefs and values are more open to change
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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
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The Company’s Microenvironment
Cultural Environment
Shifts in Secondary Cultural Values

People’s view of themselves
• Yankelovich Monitor’s consumer segments:
• • Do-It-Yourselfers—recent movers Adventurers

People’s view of others

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The Company’s Macroenvironment
Cultural Environment
Shifts in Secondary Cultural Values

• •

People’s view of organizations People’s view of society
• • • Patriots defend it Reformers want to change it Malcontents want to leave it

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The Company’s Macroenvironment
Cultural Environment
Shifts in Secondary Cultural Values

• • • •

People’s view of nature

People’s view of the universe

Some feel ruled by it Some feel in harmony with it Some seek to master it

Renewed interest in spirituality
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Responding to the Marketing Environment
Views on Responding
• •
• • •

Uncontrollable Proactive

Reacting and adapting to forces in the environment Taking aggressive actions to affect forces in the environment Watching and reacting to forces in the environment
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Reactive

PowerPoint created by:
Ronald Heimler
• Dowling College, MBA • Georgetown University, BS Business Administration • Adjunct Professor, LIM College, NY • Adjunct Professor, Long Island University, NY • Lecturer, California Polytechnic State University, Pomona, CA • President, Walter Heimler, Inc.

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