Analyzing the marketing environment

COURSE #3

Daniela Ionita,
Associate Professor - Marketing Department
Objectives

 Define marketing environment

 Explain how changes in the demographic and
economic environments affect marketing
decisions
Identify the major trends in the firm’s natural
and technological environments
 Explain the key changes in the political and
cultural environments
Microenvironment and macroenvironment
Marketing environment consists of actors
and forces that affect company’s ability
to build and maintain successful Company
relationships with target customers.
Microenvironment
• Suppliers
• Marketing
intermediaries
• Competitors
• Publics
• Customers
Macroenvironment
• Demographic
• Economic
• Natural
• Technological
• Political and social
• Cultural
Suppliers
IKEA, the world’s largest furniture retailer has
• Provide resources more than 300 huge stores in 38 countries and
needed by the sales of over $32 billion. But IKEA’s biggest
obstacle to growth isn’t opening new stores and
company to produce its attracting customers. Rather, it’s finding enough
goods and services of the right kinds of suppliers to help design and
make it’s products. IKEA currently relies on more
• Marketers must watch than 2,000 suppliers in 50 countries to stock its
supply availability and shelves. IKEA can’t just rely on spot suppliers
who might be available when needed. Instead, it
costs must develop a robust network of supplier-
– Shortages and delays partners. IKEA designers start with a basic
=> customer satisfaction customer value proposition. Then they find and
work closely with key suppliers to bring that
– Rising supply costs may proposition to market. Thus IKEA does more
force price increases than just buy from suppliers. It involves them
deeply in questions of quality, design and price
to create products that keep customers coming
back again and again.
Marketing intermediaries
 Important component of the overall value delivery
network
 Help the company to distribute, promote and sell its
products to final buyers
Pysical distribution firms: stock and move goods from their
points of origin to their destinations.
 Marketing services agencies: help the company target and
promote its products to the right markets (market research
firms, advertising agencies, consulting firms, etc.)
Financial intermediaries: support finance transactions or insure
against the risks (banks, credit and insurance companies)
Competitors
• To be successful a company must
provide greater customer value
than its competitors.
• Marketers must do more than simply
adapt to the needs of target
consumers
• They must gain strategic advantage
by positioning their offerings strongly
against competitors’ offerings.
Competitor analysis
 Identify the company’s competitors
(either from an industry point of view – e.g. soft drinks industry
Pepsi vs Coca Cola
or from a market view = companies that are trying to satisfy
the same customer need/ thirst – bottled water, energy
drinks, fruit juice, iced tea)
 Assess competitors’ objectives, strategies, strengths
and weaknesses
 Select which competitors to attack or avoid
Develop a competitive marketing strategy which
position the company againts its competitors.
Publics
Public = any group that has an actual
or potential interest in or impact on an
organization’s ability to achieve its objectives.

 Financial publics (influence company’s ability to obtain funds: banks,

investment analysts, stockholders)
 Media publics (carries news, editorial opinion: newspapers,
magazines, blogs and other Internet media)
 Government publics (product safety, truth in advertising)
 Local publics (neighborhood residents, community organizations)
 General public (a company needs to be concerned about the general
public’s attitude toward its products and activities)
Customers
 The most important actors in the company’s
environment
 The aim is to serve target customers and create
relationships with them
• Consumer markets (individuals and households that buy
goods and services for personal consumption)
• Business markets (buy goods and services for further
processing or use in their production processes)
• Government markets (government agencies that buy goods
and services to produce public services or transfer them to
others)
Macroenvironment
Demographic environment

Demography – the study

of human populations in
terms of size, density,
location, age, gender, race,
occupation.

Changes in the world demographic environment have

major implications for business (age structure, gender,
family patterns, educational level, increasing diversity).
 • 70 million • 65 milion • 73 million
• Although they seek • The most financially

Generation X (1965-1980)
• The wealthiest

Generation Y (1981-1996)
Baby boomers (1946-64)

generation in US success, they are less strapped generation

history materialistic than (high unemployment,
• 25% of adult other groups more debts)
population but • They prize experience • Huge and attractive
control 80% of not acquisition market now and in
nation’s personal • More skeptical the future
wealth consumers, tend to • Fluency and comfort
• See themselves as 12 research products with digital
yrs younger than they before purchase, technology
are prefer quality to • They engage with
• In the last 12 months, quantity brands in an entirely
9% attended the • The most educated new way (mobile or
opera, 12% - a rock generation to date social media)
concert with a considerable • Rather than having
• Represent a segment purchasing power mass-marketing
of the American • Spend 62% more on messages pushed at
population that has a housing, 50% more on them, they prefer to
thirst for adventure apparel, 27% more on seek out information
and the financial entertainment than and engage in two-
freedom to explore the average way brand
that passion conversations
Economic environment
Economic factors that affect consumer
purchasing power and spending
patterns (income, cost of living, interest
rates, savings and borrowing patterns).

Nations vary greatly in their levels and distribution of income and consumer spending.
 Industrial economies (rich markets for many kinds of goods), developing economies
(opportunities for the right kinds of products), subsistence economies (few market
opportunities; consume most of their own agricultural and industrial output).
 Over the past several decades the rich have grown richer, the middle class has shrunk
and the poor have remained poor (top 5% of Americans get 22% of country’s income
while the bottom 40% of Americans get 12%). This distribution has created a tiered
market: some companies are focusing on the affluent consumers while others on
those with modest means.
 Untill the Great Recession 2008/09, consumers spent freely fueled by income growth,
rapid increases in housing values => they bought seemingly without caution amassing
record levels of debts. Nowadays consumers have adopted a back-to-basics sensibility
in their lifestyles and spending patterns (buy less and looking for greater value).
Natural environment
The natural environment involves
the physical environment and the natural resources that are
needed as inputs.
Trends which are affecting this environment:
Growing shortages of raw materials
Increased pollution
Increased government intervention in natural resource management
Visionary companies go beyond what government regulations
dictate => environmental sustainability (developing strategies
and practices that create a world economy that the planet can
support indefinitely)
Technological environment
Forces that create new technologies,
creating new products and market
opportunities

https://www.youtube.com/watch?v=NrmMk1Myrxc
New technologies create new markets and opportunities.
New technologies replace older technologies (transistors hurt the
vacuum-tube industry, digital photography -film business, MP3 players
and digital downloads -CD business )
Companies that do not keep up will find their products outdated.
Political and social environment
Consists of laws, government agencies and pressure groups that
influence and limit various organizations and individuals in a
given society.
Business legislation has been enacted for a number of reasons:
- To protect companies from each other (prevent unfair competition)
- To protect consumers from unfair business practices (shoddy
products, invading consumer privacy, misleading advertising,
deceiving pricing)
- To protect the interests of society against unrestrained business
behavior (firms should take responsibility for the social costs of their
production/products)
Increased emphasis on ethics and socially
responsible actions
The boom in Internet marketing has
• Written regulations created a new set of social and ethical
issues. Critics worry most about online
cannot possibly cover all privacy issues. There has been an
potential marketing explosion of personal digital data
available. Users themselves supply
abuses and existing laws some of it. However much of the
information is systematically developed
are difficult to enforce. by businesses seeking to learn more
about their customers often without
• Business is also governed consumers realizing that they are under
the microscope. Businesses track
by social codes and rules consumers’Internet browsing
buying behavior and collect, analyze
and

of professional ethics and share digital data from every move

consumers make. Critics worry that
(“do the right things”). these companies may now know too
much and might use digital data to take
unfair advantage of consumers.
Cultural environment
Consists of institutions and other
forces that affect a society’s basic
values, perceptions, preferences
and behaviors.

People in a given society hold many values with a high degree

of persistence:
core beliefs are passed from parents to children and reinforced
by other institutions (believing in marriage =core belief)
secondary beliefs are more open to change (believing that
people should get married early in life = secondary belief).
Cultural differences by means of a high-
context/low-context analysis
Hofstede cultural dimensions
POWER DISTANCE INDEX the degree to which the less powerful members of a society accept and expect that
(PDI) power is distributed unequally.
INDIVIDUALISM VERSUS
COLLECTIVISM (IDV) the degree to which individuals in a society are integrated into groups.
MASCULINITY VERSUS a preference in society for achievement, heroism, assertiveness, and material rewards for
FEMININITY (MAS) success vs. cooperation, modesty, caring for the weak and quality of life.
UNCERTAINTY the degree to which the members of a society feel uncomfortable with uncertainty and
AVOIDANCE INDEX (UAI) ambiguity.
LONG TERM
ORIENTATION (LTO) the sense of immediacy within a culture.
INDULGENCE VERSUS free gratification of basic and natural human drives related to enjoying life and having fun
RESTRAINT (IVR) vs. suppresses gratification of needs and regulates it by means of strict social norms.
Responding to the marketing environment

“There are three kinds of companies: those who make things

happen, those who watch things happen and those who
wonder what’s happened.”

- Reactive: viewing the marketing environment as an

uncontrollable element to which you must react and adapt
- Proactive: taking aggressive actions to affect the publics and
other forces in the marketing environment (hiring lobbyist to
influence legislation, staging media events to gain favorable press
coverage, running advertorials to shape public opinion, filing
complaints to keep competitors in line, forming contractual
agreements to better control the distribution channels).