Analyzing the Marketing Environment

1. Analyzing the Marketing Environment Chapter 4

2. Previewing the Concepts Describe the environmental forces that affect the company’s ability to serve its customers 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 Discuss how companies can react to the marketing environment

3. Marketing Environment • Forces outside marketing that affect the ability to build and maintain successful relationships with customers • Microenvironment: • Actors close to the company that affect its ability to serve its customers • Macroenvironment: • Larger societal forces that affect the microenvironment

4. The Microenvironment • The microenvironment consists of: • Company • Suppliers • Marketing intermediaries • Customer markets • Competitors • Publics

5. The Microenvironment • The Company: • Involves groups such as top management, finance, R&D, purchasing, operations, accounting • Affects the marketing department’s planning strategies • All departments must “think consumer” and work together to provide superior customer value and satisfaction

6. The Microenvironment • Suppliers: • Important link in the overall customer value delivery system • Provide resources needed to produce goods and services • Most marketers treat suppliers like partners in creating and delivering customer value

7. The Microenvironment • Marketing intermediaries: • Help the company to promote, sell, and distribute its goods to final buyers • Resellers • Physical distribution firms • Marketing services agencies • Financial intermediaries

8. The Microenvironment • Competitors: • Marketers must seek to gain strategic advantage against competitive organizations • Size of firm and industry position will influence choice of strategy

9. The Microenvironment • Publics: • Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives • Seven types of publics:

10. The Microenvironment • Customers: • Companies may target any or all of the types of markets that may purchase a company’s goods and services • Consumer • Business • Reseller • Government • International

11. The Macroenvironment • Forces in the macroenvironment can be categorized as: • Demographic • Economic • Natural • Technological • Political • Cultural

12. Demographic Environment • Demography: • The study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics • Marketers track changing age and family structures, geographic population shifts, educational characteristics, and population diversity

13. Demographic Environment • The changing age structure of the Canadian population is the most important demographic trend • The three largest generational groups are: • Baby Boomers • Generation X • Millennials

14. Demographic Environment • Baby Boomers: • 9.8 million people born between 1947 and 1966; about one-third of population • Wealthiest generation that controls over 50% of country’s wealth • Recession hit Baby Boomers hard, eating into nest eggs and retirement prospects • Boomers “think young;” strong targets for financial services.

15. Demographic Environment • Generation X: • 7 million born between 1967 and 1976 • Defined by shared experiences: • Increased parental divorce rates and more employed mothers resulted in latchkey kids • Less materialistic; prize experiences • Skeptical of marketing • Most educated generation to date • Face economic pressures; spend carefully

16. Demographic Environment Targeting Gen-Xers: MEC Ad:

17. Demographic Environment • Millennials (Generation Y/Echo Boomers): • 10.4 million born between 1977 and 2000; larger than Generation X/Baby Boomers • Includes tweens, teens, and young adults • Fluent with digital technology • Personalization and product customization are key to marketing success

18. Demographic Environment • The Canadian family and household are changing: • Growing “crowded nest” syndrome • Fewer families have children • Average Canadian household shrank to 2.5 people • More dual-income families • Needs of non-traditional households must be considered by marketers

19. Demographic Environment • Geographic shifts in population: • Growth rates (2005-2009) across provinces and territories are not uniform • Rural to urban (city, suburb) migration continues • People in different regions buy differently • Shift in where people live is changing how they work • Marketers targeting growing telecommuting market

20. Demographic Environment • Better educated, white-collar population: • As of 2004, 59.1% of people had university degrees or post-secondary certificates • High number of educated people increases demand for quality products, books, magazines, travel, computers, internet

21. Demographic Environment • Increasing diversity: • 16% of Canadians consider themselves visible minorities • This group is growing 5 times faster than the whole population and has huge purchasing power • Marketers target specially designed ads, products, and promotions at ethnic groups • Marketing efforts are increasing toward: • LGBT community • People with disabilities

22. Economic Environment • Consists of factors that affect consumer purchasing power and spending patterns • Changes in income and spending • Recent years consumption frenzy, record debt • Economic crisis leading to consumer frugality • Value marketing is key to success • Changes in spending patterns • Engel’s laws note that consumers at different income levels have different spending patterns

23. Natural Environment • Natural resources are needed as inputs by marketers and are affected by marketing • Key trends include: • Shortage of raw materials • Increased pollution • Increased government intervention • Many firms focus on creating environmentally-sustainable strategies

24. Technological Environment • Technology changes rapidly • Creating new markets and opportunities • Increases obsolescence of products • Challenge is to make practical, affordable new products • Government bans unsafe products and sets safety standards • Regulations result in higher research costs, and longer time to market for new products

25. Political Environment • Includes laws, government agencies, and pressure groups that influence or limit organizations and individuals • Marketing activities face: • Increasing legislation • Changing government agency enforcement • Increased emphasis on ethics and socially responsible behavior (including cause-related marketing)

26. Cultural Environment • The institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors • Core beliefs are passed on from parents to children and reinforced by schools, churches, businesses, and government • Secondary beliefs and values are more open to change • Marketers may be able to change secondary beliefs, but not core beliefs

27. Cultural Environment • Society’s major cultural views are expressed in people’s views of: • Themselves • Others • Organizations • Society • Nature • The Universe

28. Cultural Environment Earthbound Farm Ad:

29. Responding to theMarketing Environment • Reactive responses: • Many firms are passive and simply react to changes in the marketing environment • Proactive responses: • Some attempt to manage the marketing environment via aggressive actions designed to affect the publics and forces in the marketing environment