Chapter 3

Analyzing the Marketing Environment

Chapter 1

Rest Stop: Previewing the Concepts

Describe the environmental forces that affect the

companys ability to serve its customers. Explain how changes in the demographic and economic environments affect marketing decisions. Identify the major trends in the firms natural and technological environments. Explain the key changes in the political and cultural environments. Discuss how companies can react to the marketing environment.
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Case Study
McDonalds Responding to Change
Faced shifting consumer
lifestyles and a sales growth slump of 3% between 1997 and 2000. Posted first quarterly loss in 2002. McDonalds was losing share to the fast casual restaurant segment because consumers wanted healthier, bettertasting food in more upscale, fashionable surroundings. Named as the defendant in a highly publicized law suit. Response: Introduced Plan to Win in early 2003.
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Challenges

Focused on consistent products and

reliable servicecore competencies. Introduced the Its what I eat and what I do. . . Im loving it ad campaign and revamped Web site to help consumers understand how to live balanced, active lives. Involved nutrition experts in menu redesign. Added upscale restaurants, such as McCafe coffee shops and offered healthier food options: Go Active! Adult Happy Meal; white meat McNuggets; various salads. Results: Increased sales by 42% while profits quadrupled.
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Plan to Win

Marketing Environment
Consists of actors and forces outside of the
organization that affect managements ability to build and maintain relationships with target customers.
Studying

the environment allows marketers to take advantage of opportunities as well as to combat threats. Marketing intelligence and research are used to collect information about the environment.
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Marketing Environment
Includes:
Microenvironment:

Actors close to the company that affect its ability to serve its customers. Macroenvironment: Larger societal forces that affect the microenvironment.
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The Microenvironment
Company itself Suppliers Marketing intermediaries Customers Competitors Publics
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The Microenvironment
The company itself:
Areas/departments

inside of a company. Affects the marketing departments planning strategies. All departments must think consumer and work together to provide superior customer value and satisfaction.
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The Microenvironment
Suppliers:
Provide

resources needed to produce goods and services. Important link in the value delivery system. Most marketers treat suppliers like partners.

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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

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The Microenvironment
Customers:
Five

types of markets that may purchase a companys goods and services.

Consumer Business Reseller Government International

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The Microenvironment
Competitors:
Those

who serve a target market with products and services that are viewed by consumers as being reasonable substitutes for the firms products or services. Company must seek to gain strategic advantage against these organizations.
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The Microenvironment
Publics:
Any

group that has an interest in or impact on an organizations ability to achieve its objectives.

Financial public Media public Government public Citizen-action public Local public General public Internal public
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The Macroenvironment
The company and all of the other
actors operate in a larger macroenvironment of forces that shape opportunities and pose threats to the company.

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The Macroenvironment
Forces in the macroenvironment can
be categorized as:
Demographic

Economic
Natural Technological Political Cultural
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Demographic Environment
Demographics:
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 at home and abroad.
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Demographic Environment
The changing age structure of the U.S.
population is the single most important demographic trend.
Baby

boomers, Generation X, and the Millennials are key generational groups.

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Demographic Environment
Baby boomers:
78

million born between 1946 and 1964. Nearly 30% of population. Spend $2.3 trillion annually and hold of the nations financial assets. Spend $30 billion annually on anti-aging products and services; strong market for financial services, new housing, travel, etc. Are likely to postpone retirement.
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Demographic Environment
Generation X:
49

million born between 1965 and 1976. Defined by shared experiences:

Increased parental divorce rates and more

employed mothers made Generation X the first of the latchkey kids. Gen X developed a more cautious economic outlook due to recessions and downsizing that were common when they grew up.

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Demographic Environment
Generation X:
Cares

about the environment. Prizes experience, not acquisition. Family comes first, career second. Skeptical of marketing messages; researches purchases carefully, uses communities to share information. Represents close to $1.4 trillion in annual purchasing power.
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Demographic Environment
Millennials:
83

million born between 1977 and 2000larger than baby boomer segment. Includes tweens, teens, and young adults. Ethnically diverse. Fluent with computer and digital technology. Personalization and product customization are key to marketing success.
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Demographic Environment
The American family and household
makeup is changing:
Traditional

Married couples with children = 23%

Married without children = 29% Single parents = 16% Non-family households = 32%

households are in decline: households are growing:

Non-traditional

Special

needs of non-traditional households are increasingly being considered by marketers.

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Demographic Environment
Geographic shifts in population:
14%

of U.S. residents move each year. General shift toward the Sunbelt states. City to suburb migration continues. More people are moving to micropolitan areas. More people telecommute:

1 in 10 people now work out of their home. Home office segment is being targeted.

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Demographic Environment
Better educated population:
1980:

69% of people over age 25 completed high

school; 17% had completed college.

2004:

86% of people over age 25 completed high

school; 28% had completed college.

Increasing

demand for quality products, books/magazines, computers, travel, etc.

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Demographic Environment
Increasing white-collar population
19501985:

White-collar workers increased from 41% to 54%,

while blue-collar workers decreased from 47% to 33%.

19831999:

Professionals and managers increased from 23% to

greater than 30%.

20042012:

Professionals should increase by 21% while

manufacturing is expected to decline by 5%.
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Demographic Environment Increasing diversity:

The

Ethnic segments will continue to grow as a

United States is an ethnic salad bowl.

percentage of the U.S. population. Marketers target specially designed ads, products, and promotions at ethnic groups.
Marketing

Gay and lesbian consumers. People with disabilities.

efforts are increasing toward:

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Economic Environment
Consists of factors that affect consumer
purchasing power and spending patterns.

Changes in income
1990sconsumption frenzy, record debt 2000ssqueezed consumer Marketers focus on offering greater value

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Income distribution
Upper class: getting wealthier Middle class: shrinking in size Working class Underclass: remain poor

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Natural Environment
Involves natural resources that are
needed as inputs by marketers or that are affected by marketing activities. Factors include:
Shortages

of raw materials Increased pollution Increased government intervention Environmentally sustainable strategies
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Technological Environment
Most dramatic force shaping our destiny. Changes rapidly, creating new markets and
opportunities and/or danger of products becoming obsolete. Challenge is to make practical, affordable new products. Safety regulations result in higher research costs and longer time between product conceptualization and introduction.
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Political Environment
Includes laws, government agencies, and
pressure groups that influence or limit various organizations and individuals in a given society. Areas of concern:
Increasing

legislation. Changing government agency enforcement. Increased emphasis on ethics and socially responsible behavior.
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Cultural Environment
The institutions and other forces that affect
a societys basic values, perceptions, preferences, and behaviors.
Core

beliefs and values are passed on from parents to children and are reinforced by schools, churches, business, and government. Secondary beliefs and values are more open to change.

Marketers may be able to change secondary beliefs,

but NOT core beliefs.

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Cultural Environment
Societys major cultural views are
expressed in peoples views of:
Themselves

Others
Organizations Society Nature The
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universe
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Responding to the Marketing Environment

Reactive responses:
Many

firms simply react to changes in the marketing environment. firms attempt to manage the marketing environment via aggressive actions designed to affect the publics and forces in the marketing environment.
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Proactive responses:
Some

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Responding to the Marketing Environment

Examples of proactive responses:

Hiring

lobbyists Running advertorials Pressing law suits Filing complaints Forming agreements to control channels

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Rest Stop: Reviewing the Concepts

Describe the environmental forces that affect the

companys ability to serve its customers. Explain how changes in the demographic and economic environments affect marketing decisions. Identify the major trends in the firms natural and technological environments. Explain the key changes in the political and cultural environments. Discuss how companies can react to the marketing environment.
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

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