Priciples of Marketing

by Philip Kotler and Gary Armstrong

Chapter 3
Analyzing the Marketing
Environment

PEARSON
Objective Outline
The Microenvironment
The Macroenvironment
1 Describe the environmental forces that affect the
company’s ability to serve its customers.

The Demographic Environment

The Economic Environment
2 Explain how changes in the demographic and
economic environments affect marketing decisions.
Objective Outline

The Natural Environment

3 The Technological Environment
Identify the major trends in the firm’s natural and
technological environments.

The Political and Social Environment

The Cultural Environment
4 Explain the key changes in the political and cultural
environments
Objective Outline

Responding to the Marketing Environment

Discuss how companies can react to the marketing
5 environment.
Preview
Marketing
Microenvironment Macroenvironment
Environment
• It is the actors • It consists of the • The
and forces actors close to macroenvironment
outside the company that consists of the
marketing that affect its ability larger societal
affect marketing to serve its forces that affect
management’s customers, the the
ability to build company, microenvironment
and maintain suppliers, —demographic,
successful marketing economic, natural,
relationships intermediaries, technological,
with target customer political, and
customers. markets, cultural forces.
competitors, and
publics.
The Microenvironment
 Marketing success requires building relationships with ot
her company departments, suppliers, marketing intermedi
aries, competitors, various publics, and customers, which
combine to make up the company’s value delivery networ
k.
The Company
 With marketing taking the lead, all departments—from manufa
cturing and finance to legal and human resources—share the re
sponsibility for understanding customer needs and creating cus
tomer value.

Top
Top
management
management

accounting
accounting finance
finance

Marketing
Marketing
management
management

Research
Research and
and
operations
operations
development
development

purchasing
purchasing
Suppliers
 Suppliers provide the resources needed by the co
mpany to produce its goods and services.
 Most marketers today treat their suppliers as part
ners in creating and delivering customer value.

Apple’s supplies in the world

Marketing Intermediaries
 Marketing intermediaries help the company promote, s
ell, and distribute its products to final buyers.
 Physical distribution firms help the company stock and m
ove goods from their points of origin to their destinations.
 Marketing services agencies are the marketing research fi
rms, advertising agencies, media firms, and marketing co
nsulting firms.
 Financial intermediaries include banks, credit companies
, insurance companies and other businesses that help fina
nce transactions or insure against the risks associated wit
h the buying and selling of goods.
Competitors
 Marketers also must gain strategic advantage by positioni
ng their offerings strongly against competitors’ offerings i
n the minds of consumers.
 Each firm should consider its own size and industry positi
on compared to those of its competitors.

V.S
Publics
• A company’s
Influences themarketing
company’sdecisions
ability tomay be questioned
obtain funds
Financial
A public is any group that has an actual or potential inter
Citizen- • by consumer
Banks, organizations,
investment analysts, environmental
and stockholders groups,
are the
publics
est in or impact
action on an
minority
major organization’s
groups,
financial ability to achieve its
and others.
publics.
objectives. • Its public relations department can help it stay in touch
publics
 We can identify with consumer
seven types and
of citizen groups.
publics:
• Carries news, features, and editorial opinion.
Media •• This group newspapers,
includes neighborhood
It includes magazines,residents
televisionand
stations,
publics
Internal community
• This groupand
and blogs organizations.
includes workers,media.
other Internet managers, volunteers,
Local • and
publics Largethecompanies usually create departments and
board of directors.
Publics
• programs
Management thatmust
deal take
with government
local community issues andinto
developments
Governm provide
account.community support.
ent • Marketers must often consult the company’s lawyers
Publics • Aoncompany
issues of needs
productto safety,
be concerned
truth inabout the general
advertising, and
General
public’s attitude toward its products and activities.
other matters.
public • The public’s image of the company affects its buying.
Customers Consist of individuals
and households that
buy goods and services
Consist of these for personal
 The company might target any or all five
Buy types
goodsofand
custom
buyers in other consumption.
er markets: services for further
countries, including
customers, producers,Consumer processing or use in
resellers, and markets their production
governments processes

Consist of Internationa Business

l markets markets
government Buy goods and
agencies that buy services to resell at a
goods and services profit.
to produce public
services or transfer
the goods and Governmen Reseller
t markets markets
services to others
who need them.
The Macroenvironment
The Demographic Environment
 Demography is the study of human populations i
n terms of size, density, location, age, gender, rac
e, occupation, and other statistics.
The Changing Age Structure of the Populat
ion
Generation X
The Baby Boomers
The
The baby
baby boom
boom was Millennials
Generational
was followed
followed (Generation
by a “birth Marketing Y) another
dearth,” creating
The post-World
generation
generation 49War
of 49 II baby
million
million boom
people
people bornproduced
born between 78 million
between 1965
1965 and
and 1976.baby
1976.
boomers,
Author
Author
Marketers whooften
Douglas
Douglaswere bornthe
Coupland
Coupland
split between
calls
calls
baby them
them1946 andinto
Generation
Generation
boomers 1964.
X Over
X because
because
three the years,
they
they
smaller lie
lie
groups—
Born
The
in
in baby
the
the between
boomers
shadow
shadow of Baby
1977
thehave and
been
boomers
ofboomers,
the boomers 2000,
one
and lackGeneration
ofthese
the children
most
obvious powerful of the
distinguishing baby
forces
leading-edge boomers core boomers, and
X trailing-edge boomers—
boomers number
characteristics.
shaping the marketing
characteristics. 83 environment.
million or more, dwarfing the Gen Xers
each with its own beliefs and behaviors. Similarly, they split the
and becoming larger even than the baby boomer segment. One
The Millennials
youngest into teens
boomers and
are nowyoung adults.
From
thing athat
marketing
Millennialsstandpoint,
have inmoving
the Gen
common intoistheir
Xers theirafifties;
are more the oldest
utter skeptical
fluency
areand
in comfort
their
bunch. latewith
They sixties
tend and technology.
toneed entering
research
digital retirement.
products before The
they maturing
consider a
Thus, marketers to form more precise age-specific
Boomers
purchase, areprefer
rethinking
quality theGeneration
topurpose
quantity,and andvalue
tendof to their work,
be less receptive
segments within each group. More important, defining people
resposibilities,
to overt marketing pitches. Y
and relationships.
by their birth date may be less effective than segmenting
The
themfirstbytotheir
growlifestyle,
up in thelifeInternet
stage, era,
orGeneration
the common X isvalues
a highlythey
connected generation that embraces the benefits of new technology.
seek in the products they buy.
They are increasingly displacing the lifestyles, culture, and values
of the baby boomers.
The Changing American Family
 More people are:
• Divorcing or separating
• Choosing not to marry
• Choosing to marry later
• Marrying without intending to have children
• Increasing number of working women
• Increasing number of stay-at-home dads
Geographic Shifts Population
 The shift in where people live has also caused a shift in where t
hey work.
 For example, the migration toward micropolitan and suburban
areas has resulted in a rapid increase in the number of people w
ho “telecommute”—work at home or in a remote office and co
nduct their business by phone or the Internet.
 This trend, in turn, has created a booming SOHO (small office/
home office) market.
A Better-Educated, More White-Collar, Mo
re Professional Population
 Changes in the Workforce
• More educated
• More white collar
Increasing Diversity
 Markets are becoming more diverse
• International
• National
 Includes:
• Ethnicity
• Gay and lesbian
• Disabled
The Economic Environment
 The economic environment consists of economic factors
that affect consumer purchasing power and spending patt
erns.
 Some countries have industrial economies, which constit
ute rich markets for many different kinds of goods.
 At the other extreme are subsistence economies; they con
sume most of their own agricultural and industrial output
and offer few market opportunities.
 In between are developing economies that can offer outsta
nding marketing opportunities for the right kinds of produ
cts.
Changes in Consumer Spending
 In turn, value marketing has become the watchword for m
any marketers.
 Marketers in all industries are looking for ways to offer to
day’s more financially frugal buyers greater value—just t
he right combination of product quality and good service
at a fair price.
Income Distribution
 Marketers should pay attention to income distribu
tion as well as income levels.
 Over the past several decades, the rich have grow
n richer, the middle class has shrunk, and the poo
r have remained poor.
The Natural Environment
 The natural environment involves the physical environ
ment and the natural resources that are needed as inputs b
y marketers or that are affected by marketing activities.
 Marketers should be aware of several trends:
• Increased shortages of raw materials
• Increased pollution
• Increased government intervention
 The environmental sustainability is the developing strat
egies and practices that create a world economy that the p
lanet can support indefinitely.
The Technological Environment
 The technological environment is perhaps the m
ost dramatic force now shaping our destiny.
 Marketers should watch the technological enviro
nment closely. Companies that do not keep up wil
l soon find their products outdated. If that happen
s, they will miss new product and market opportu
nities.
The Political and Social Environment
 The political environment consists of laws, gov
ernment agencies, and pressure groups that influe
nce or limit various organizations and individuals
in a given society.
Legislation Regulating Business
 Business legislation has been enacted for a numb
er of reasons:
• Protect companies from each other
• Protect consumers from unfair business practices
• Protect the interests of society against unrestrained busin
ess behavior.
Increased Emphasis on Ethics and
Socially Responsible Actions
 Socially Responsible Behavior:
• Enlightened companies encourage their managers to look bey
ond what the regulatory system allows and simply “do the rig
ht thing.”
• These socially responsible firms actively seek out ways to pro
tect the long-run interests of their consumers and the environ
ment.
Increased Emphasis on Ethics and Socially
Responsible Actions
 Caused-Related Marketing:
• Cause-related marketing has become a primary form of corpor
ate giving. It lets companies “do well by doing good” by linki
ng purchases of the company’s products or services with bene
fiting worthwhile causes or charitable organizations.
• It has some controversy. Critics worry that cause-related mark
eting is more a strategy for selling than a strategy for giving ─
that “cause related” marketing is really “cause-exploitative”
marketing.
The Cultural Environment
 Cultural environment consists of institutions an
d other forces that affect a society’s basic values,
perceptions, preferences, and behaviors
The Persistence of Cultural Values
 People in a given society hold many beliefs and values. T
heir core beliefs and values have a high degree of persiste
nce.
 Secondary beliefs and values are more open to change. B
elieving in marriage is a core belief; believing that people
should get married early in life is a secondary belief.
 Marketers have some chance of changing secondary valu
es but little chance of changing core values.
Shifts in Secondary Cultural Values
 People’s Views of Themselves.
• People vary in their emphasis on serving themselves ver
sus serving others.
• People use products, brands, and services as a means of
self-expression, and they buy products and services that
match their views of themselves.
Shifts in Secondary Cultural Values
 People’s Views of Organizations.
• In recent years, some analysts have voiced concerns that the I
nternet age would result in diminished human interaction, as p
eople buried their heads in their computers or e-mailed and te
xted rather than interacting personally.
• Instead, today’s digital technologies seem to have launched an
era of what one trend watcher calls “mass mingling.”
• Rather than interacting less, people are using online social me
dia and mobile communications to connect more than ever.
• And, often, more online and mobile interactions result in mor
e offline mingling
Shifts in Secondary Cultural Values
 People’s Views of Organizations.
• People vary in their attitudes toward corporations, governmen
t agencies, trade unions, universities, and other organizations.
• The past two decades have seen a sharp decrease in confidenc
e in and loyalty toward America’s business and political organ
izations and institutions.
• Many people today see work not as a source of satisfaction bu
t as a required chore to earn money to enjoy their non-work h
ours.
• This trend suggests that organizations need to find new ways t
o win consumer and employee confidence.
Shifts in Secondary Cultural Values
 People’s Views of Society.
• People vary in their attitudes toward their society—patriots de
fend it, reformers want to change it, and malcontents want to l
eave it.
• People’s orientation to their society influences their consumpt
ion patterns and attitudes toward the marketplace.
• Marketers respond with patriotic products and promotions, off
ering everything from orange juice to clothing to cars with pat
riotic themes.
Shifts in Secondary Cultural Values
 People’s Views of Nature.
• People vary in their attitudes toward the natural world—some
feel ruled by it, others feel in harmony with it, and still others
seek to master it.
• A long-term trend has been people’s growing mastery over nat
ure through technology and the belief that nature is bountiful.
• More recently, however, people have recognized that nature is
finite and fragile; it can be destroyed or spoiled by human acti
vities.
Shifts in Secondary Cultural Values
 People’s Views of Universe.
• People vary in their beliefs about the origin of the universe an
d their place in it.
• In recent years, some futurists have noted a renewed interest i
n spirituality, perhaps as a part of a broader search for a new i
nner purpose.
• This affects consumers in everything from television shows th
ey watch and the books they read to the products and services
they buy.
Responding to the Marketing Environmen
t

Uncontrollable Proactive Reactive

• React and • Aggressive • Watching and
adapt to actions to reacting to
forces in the affect forces forces in the
environment in the environment
environment
The End