The Marketing Chapter 3 Learning Goals 1. Understand environmental forces 2. Learn how demographic and economic factors affect marketing 3. Identify trends in the firm s natural and technological environments 4. Explore key changes in political and cultural environments 5. Realize how companies react to the marketing environment 1 1
The Marketing Marketing : The actors and forces outside marketing that affect marketing management s ability to build and maintain successful relationships with target customers. Includes the actors close to the company that affect its ability to serve its customers the company, suppliers, marketing, customer markets, competitors, and publics. Macroenvironment Involves the larger societal forces that affect the microenvironment demographic, economic, natural, technological, political, and cultural forces. 2 Goal 1: Understand environmental factors 3 Marketing must consider other parts of the organization including finance, R&D, purchasing, operations and accounting Marketing decisions must relate to broader company goals and strategies 2
4 Marketers must watch supply availability and pricing Effective partnership relationship management with suppliers is essential 5 Firms that help the company to promote, sell, and distribute its goods to final buyers; they include resellers, physical distribution firms, marketing service agencies and financial. Help to promote, sell and distribute goods to final buyers Effective partner relationship management is essential 3
6 The five types of customer markets Consumer 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. Reseller markets buy goods and services to resell at a profit. Government markets are made up of government agencies that buy goods and services to produce public services or transfer the goods and services to others who need them. International markets consist of these buyers in other countries, including consumers, producers, resellers, and governments. 7 Conducting competitor analysis is critical for success of the firm A marketer must monitor its competitors offerings to create strategic advantage 4
Public is any group that has an actual or potential interest in or impact on an organization s ability to achieve its objectives. Seven publics include: Financial publics influence the company s ability to obtain funds (banks, investment houses, stockholders). Media publics carry news, features, and editorial opinion (newspapers, magazines, radio & television stations). Government: Marketers must often consult the company s lawyers on issues of product safety, truth in advertising, etc. Citizen-action publics: A company s marketing decisions may be questioned by consumer organizations, environmental groups, minority groups, and others. Local publics include neighborhood residents and community organizations. General public: A company needs to be concerned about the general public's attitude toward its products and activities. The public s image of the company affects its buying. Internal publics include workers, managers, volunteers, and the board of directors. When employees feel good about their company, this positive attitude spills over to external publics. 8 Macroenvironment Macroenvironmental Forces Demographic Economic Natural Technological Political Cultural 9 5
Demographic Demographic : The study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics 10 Goal 2: Learn how demographic & economic factors affect marketing Demographic Changing age structure of the U.S. population is the single most important demographic trend Baby boomers: the 78 million people born during the baby boom following World War II and lasting until the early 1960s. Generation X: the 45 million people born between 1965 and 1976 in the birth dearth following the baby boom. Generation Y: the 72 million children of the baby boomers, born between 1977 and 1994. 11 Goal 2: Learn how demographic & economic factors affect marketing 6
Demographic Key Generations Baby Boomers Generation X Generation Y Born between 1946 and 1964 Represent 28% of the population; earn 50% of personal income Many mini-segments exist within the boomer group Entering peak earning years as they mature 12 Goal 2: Learn how demographic & economic factors affect marketing Demographic Key Generations Baby Boomers Generation X Generation Y Born between 1965 and 1976 First latchkey children Maintain a cautious economic outlook Respond to socially responsible companies Will be primary buyers of most goods by 2010 13 Goal 2: Learn how demographic & economic factors affect marketing 7
Demographic Key Generations Baby Boomers Generation X Generation Y Born between 1977 and 1994 72 million strong; almost as large a group as their baby boomer parents New products, services, and media cater to GenY Challenging target for marketers 14 Goal 2: Learn how demographic & economic factors affect marketing Economic It consists of factors that affect consumer purchasing power and spending patterns. 15 8
Natural Natural : 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 Concern for the natural environment has spawned the so-called green movement. Today, enlightened companies go beyond what government regulations dictate. They are developing environmentally sustainable strategies and practices in an effort to create a world economy that the planet can support indefinitely. They are responding to consumer demands with ecologically safer products, recyclable or biodegradable packaging, recycled materials and components, better pollution controls, and more energy-efficient operations. 16 Goal 3: Identify trends in natural and technological environments Technological The most dramatic force shaping our destiny. Forces that create new technologies, creating many new products and new marketing opportunities but also turns many existing products extinct. 17 Goal 3: Identify trends in natural and technological environments 9
Political Consists of laws, government agencies and pressure groups that influence or limit various organizations and individuals in a given society Legislation affecting businesses worldwide has increased Laws protect companies, consumers and the interests of society Increased emphasis on socially responsible actions Cause-Related Marketing: to exercise their social responsibility and build more positive images, many companies are now linking themselves to worthwhile causes: Marketers create link between brand and charitable organization Demonstrates social responsibility Helps build positive brand image Examples include General Mill s Box Tops for Education, Tang and Mothers Against Drunk Driving, Eddie Bauer and local schools 18 Goal 4: Explore political and cultural environments Cultural Made up of institutions and other forces that affect a society s basic values, perceptions, preferences and behaviors. 19 Goal 4: Explore political and cultural environments 10
Cultural Includes people s views of Themselves Identify with brands for self-expression Others Recent shift from me to we society Organizations Trend of decline in trust and loyalty to companies Society Patriotism on the rise Nature lifestyles of health and sustainability (LOHAS) consumer segment Universe Includes religion and spirituality REVIEW QUESTION: Define a firm s microenvironment and briefly discuss its elements. 20 Goal 4: Explore political and cultural environments 11