Chapter 4: The Marketing Environment

Marketing does not take place in a vacuum.

Chapter Objectives

List and discuss the importance of the elements of the companys microenvironment. Describe the macro-environmental forces Explain how changes in the demographic and economic environments affect marketing Identify the major trends in the firms natural and technological environments. Explain the key changes that occur in the political and cultural environments Discuss how companies can be proactive rather than reactive

Key Concepts

Demography

Marketing environment

Echo Boomers
Economic environment Environmental scanning

Marketing intermediaries
Marketing service agencies

Financial intermediaries
Generation X Macroenvironment

Microenvironment
Political environment Suppliers

Marketing Environment
The actors and forces that affect a firms ability to build and maintain successful relationships with its target customers.

Marketing Environment
Aspects of the marketing environment Microenvironment

Actors

Macroenvironment
Larger

and forces close to the company The company, marketing channel firms, customer markets, and publics. societal forces Demographic, economic, natural, technological, political, competitor, and cultural forces.

The Microenvironment

Company: Marketing managers working with top management and other departments. Suppliers: Firms and individuals who provide
the resources needed by the organization to produce its goods and services. Marketing intermediaries: Firms that help the company promote, sell, and distribute its goods to final buyers, e.g., travel trade intermediaries.

The Microenvironment
Marketing Intermediaries

Marketing services agencies: marketing Financial intermediaries: banks, credit

research firms, advertising agencies, media firms, and marketing consultants. companies, insurance companies, and other finance companies.

Major Forces in the Companys Macro-environment

Macroenvironment
Competitors

Levels of Competition
(Adapted from Analysis for Market Planning), Donald R. Lehmann and Russell S. Winer, p.22, 1994 by Richard D. Irwin

Macroenvironment
Competitors
In general a company should monitor three variables when analyzing each of its competitors.
Share of market Share of mind Share of heart Four different forces effecting marketing environment

Macroenvironment
Demographic Environment

Changing age structure of population

Baby Boomers -1946-1964 Generation X -1965-1976 Echo Boomers -1977-1994

The changing American family Geographic shifts in population Better-educated and more white-collar population Increasing diversity

Macroenvironment
Demographic Environment
Changing Age Structure
Population is getting older

Changing American Family

Marrying later, fewer children, working women, and nonfamily households Moving to the Sunbelt and suburbs (MSAs)

Geographic Shifts in Population Increased Education

Increased college attendance and white-collar workers

Increasing Diversity
72% White, 13% African-American, 11% Hispanic & 3% Asian

Macroenvironment
Economic Environment

Changes in income
1980s, 1990s more disposable income Income distribution

Changing consumer spending patterns

Spending patterns change as income increase

Global economic patterns

Global markets McDonalds

15,000 restaurants in 119 countries

Macroenvironment
Natural Environment
Natural environment consists of natural resources required by marketers or affected by marketing activities.

Conservation of resources

Public concerns growing with natural environment Recycle and reduce waste Ecotourism activities are a growing source of visitors.

Waste disposal
Disneylands environment protection program

Macroenvironment
Technological Environment

Robots delivering hospital food trays to stations Computerized check-in, check-out services in hotels Taco Bells Flex-Station: Qantas: power source for notebook computers Internet and online services (Expedia) Business-card size CD-ROMs Starbucks wireless Internet connection Space tourism (Dennis Tito)

Macroenvironment
Political Environment
Laws, government agencies, and pressure groups.

Increased legislation and regulation affecting business

Food safety, employment, sales of liquor, hotel taxes Smoking, littering, polluting

International legislation
Competition, fair trade practices, environmental protection, product safety, truth in advertising, packaging and labeling, pricing and other areas

Government intervention in natural resource management

Macroenvironment
Political Environment
Laws, government agencies, and pressure groups.

Changing government agency enforcement

Many government agencies can have a major impact on companys marketing performance, such as Federal Trade Commission, FDA, EPA, etc.,

Increased emphasis on ethics and socially responsible actions

MADD - serving of alcohol in restaurants Business is also governed by social codes and rules of professional ethics.

Macroenvironment
Cultural Environment

Persistence of cultural values

Beliefs shape specific attitudes, and behaviors found in everyday life. Core beliefs, secondary beliefs Drinking and smoking Kosher food

Subcultures
Subcultural groups have specific wants, and buying behavior

Environmental Factors are Linked

People ate more meals prepared outside home

than they ate home-prepared meals. The working heads of household no longer have time to cook Men now participate in home duties Some grocery stores have fresh meals to go The competitive environment between grocery stores and quick-service restaurants is expected to heat up.

Responding to the Marketing Environment

Marketing environment: Uncontrollable or

controllable? Some companies accept the marketing environment Other companies try to affect the publics and forces in their marketing environment. Big companies, join trade organizations hire lobbyists to change legislation

Responding to the Marketing Environment

Environmental Scanning steps Determining the environmental areas that need to be monitored Determining how the information will be collected Implementing the date collection plan Analyzing the data and using it in the market planning process Using information about the marketing environment Critical to any marketing strategy The marketer must translate the data into information for strategic planning of the firm.

Next Chapter 05
Marketing Information Systems and Marketing Research