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Marketing Environment Forces & Trends
- 2. Copyright © 2015 Pearson Education, Inc. Learning Objectives • 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. 3-2
- 3. Copyright © 2015 Pearson Education, Inc. Learning Objectives • Explain the key changes in the political and cultural environments. • Discuss how companies can react to the marketing environment. 3-3
- 4. Copyright © 2015 Pearson Education, Inc. First Stop: Microsoft: Adapting to the Fast- Changing Digital Marketing Environment • The success of Windows increased Microsoft’s revenues, profits, and stock price. • A lag occurred after the millennium from decreased PC sales growth. • People moved on with new digital devices and technologies. • Transformation—released new, improved, or acquired digital products and services 3-4
- 5. Copyright © 2015 Pearson Education, Inc. Marketing Environment • Outside forces that affect marketing management’s ability to build and maintain successful relationships with target customers • Microenvironment: Actors close to the company that affect its ability to serve its customers • Macroenvironment: Larger societal forces that affect the microenvironment 3-5
- 6. Copyright © 2015 Pearson Education, Inc. Figure 3.1 - Actors in the Microenvironment 3-6
- 7. Copyright © 2015 Pearson Education, Inc. The Company • Company: Internal environment of the company that forms interrelated groups • Creating Customer Value by groups working together 3-7
- 8. Copyright © 2015 Pearson Education, Inc. Suppliers • Suppliers: provide the resources needed by the company to produce its goods and services. • Marketers must watch: • Supply shortages or delays • Labor strikes • Price trends of key inputs 3-8
- 9. Copyright © 2015 Pearson Education, Inc. Marketing Intermediaries • Marketing Intermediaries: help the company to promote, sell, and distribute its products to final buyers. • Resellers • Physical distribution firms • Marketing services agencies • Financial Intermediaries 3-9
- 10. Copyright © 2015 Pearson Education, Inc. Competitors • Marketers must gain strategic advantage by positioning products strongly against competitors • No single strategy is best for all companies 3-10
- 11. Copyright © 2015 Pearson Education, Inc. Publics • Publics: any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives • Financial • Media • Government • Citizen action • Local • General • Internal 3-11
- 12. Copyright © 2015 Pearson Education, Inc. Customers • Five types of customer markets • Consumer markets • Business markets • Reseller markets • Government markets • International markets 3-12
- 13. Copyright © 2015 Pearson Education, Inc. Figure 3.2 - Major Forces in the Company’s Macroenvironment 3-13
- 14. Copyright © 2015 Pearson Education, Inc. Demographic Environment • Demography: Study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics • Marketers analyze: • Changing age and family structures • Geographic population shifts • Educational characteristics • Population diversity 3-14
- 15. Copyright © 2015 Pearson Education, Inc. Economic Environment • Economic factors that affect consumer purchasing power and spending patterns: • Industrial economies • Subsistence economies • Developing economies • Changes in consumer spending • Differences in income distribution 3-15
- 16. Copyright © 2015 Pearson Education, Inc. Natural Environment • Physical environment and natural resources needed as inputs by marketers or affected by marketing activities • Environmental sustainability concerns have grown steadily over past three decades. • Trends: • Shortages of raw materials • Increased pollution • Increased government intervention 3-16
- 17. Copyright © 2015 Pearson Education, Inc. Technological Environment • New technologies create new markets and opportunities. • Radio-frequency identification (RFID) is technology to track products through various points in the distribution channel. • Government agencies investigate and ban potentially unsafe products. 3-17
- 18. Copyright © 2015 Pearson Education, Inc. Political Environment • Forces that influence and limit various organizations and individuals in a society • Laws, government agencies, and pressure groups • Goals of enacting business legislation: • Protect companies from each other • Protect consumers from unfair business practices • Protect the interests of society against unrestrained business behavior 3-18
- 19. Copyright © 2015 Pearson Education, Inc. Major U.S. Legislation Affecting Marketing Legislation Purpose Sherman Antitrust Act (1890) • Prohibits monopolies and activities that restrain trade or competition in interstate commerce Federal Food and Drug Act (1906) Food and Drug Administration (FDA) • Forbids the manufacture or sale of adulterated or fraudulently labeled foods and drugs Clayton Act (1914) • Prohibits types of price discrimination, exclusive dealing, and tying clauses Federal Trade Commission Act (1914) Federal Trade Commission (FTC) • Monitors and remedies unfair trade methods Robinson-Patman Act (1936) • Establishes limits on quantity discounts • Forbids some brokerage allowances • Prohibits promotional allowances except when made on proportionately equal terms 3-19
- 20. Copyright © 2015 Pearson Education, Inc. Major U.S. Legislation Affecting Marketing Legislation Purpose Wheeler-Lea Act (1938) • Makes deceptive, misleading, and unfair practices illegal • Places advertising of food and drugs under FTC jurisdiction Lanham Trademark Act (1946) • Protects and regulates distinctive brand names and trademarks National Traffic and Safety Act (1958) • Provides for the creation of compulsory safety standards for automobiles and tires Fair Packaging and Labeling Act (1966) • Provides for the regulation of the packaging and labeling of consumer goods • Requires that manufacturers state what the package contains, who made it, and how much it contains Child Protection Act (1966) • Bans the sale of hazardous toys and articles • Sets standards for child-resistant packaging 3-20
- 21. Copyright © 2015 Pearson Education, Inc. Major U.S. Legislation Affecting Marketing Legislation Purpose Federal Cigarette Labeling and Advertising Act (1967) • Requires that cigarette packages contain a warning statement National Environmental Policy Act (1969) • Establishes a national policy on the environment Consumer Product Safety Act (1972) Consumer Product Safety Commission (CPSC) • Sets safety standards for consumer products and exacts penalties for failing to uphold those standards Magnuson-Moss Warranty Act (1975) • Determines rules for consumer warranties • Provides consumer access to redress Children’s Television Act (1990) • Limits the number of commercials aired during children’s programs Nutrition Labeling and Education Act (1990) • Requires that food product labels provide detailed nutritional information 3-21
- 22. Copyright © 2015 Pearson Education, Inc. Major U.S. Legislation Affecting Marketing Legislation Purpose Telephone Consumer Protection Act (1991) • Establishes procedures to avoid unwanted telephone solicitations Americans with Disabilities Act (1991) • Makes discrimination against people with disabilities illegal Children’s Online Privacy Protection Act (2000) • Prohibits online collection of information from children without parental consent • Allows parents to review information collected from their children Do-Not-Call Implementation Act (2003) • Collects fees from telemarketers for the enforcement of a Do-Not-Call Registry CAN-SPAM Act (2003) • Regulates the distribution and content of unsolicited commercial e-mail Financial Reform Law (2010) Bureau of Consumer Financial Protection • Creates and enforces rules for the marketing of financial products to consumers 3-22
- 23. Copyright © 2015 Pearson Education, Inc. Socially Responsible Behavior • Socially responsible companies actively seek out ways to protect the long-run interests of consumers and the environment. • Companies develop policies, guidelines, and other responses to complex social responsibility issues. 3-23
- 24. Copyright © 2015 Pearson Education, Inc. Cause-Related Marketing • Used by companies to: • Exercise their social responsibility • Build more positive images • Primary form of corporate giving • Controversy—strategy for selling more than a strategy for giving 3-24
- 25. Copyright © 2015 Pearson Education, Inc. Cultural Environment • Institutions and other forces that affect society’s basic values, perceptions, preferences, and behaviors • Society shapes people’s values and beliefs. • Cultural characteristics that affect marketing decision making: • Persistence of cultural values • Shifts in secondary cultural values 3-25
- 26. Copyright © 2015 Pearson Education, Inc. Responding to the Marketing Environment • Reactive firms passively accept the marketing environment and do not try to change it. • Proactive firms develop strategies to change the environment. • They take aggressive actions to affect the publics and forces in their marketing environment. 3-26
- 27. Copyright © 2015 Pearson Education, Inc. Learning Objectives • 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. 3-27
- 28. Copyright © 2015 Pearson Education, Inc. Learning Objectives • Explain the key changes in the political and cultural environments. • Discuss how companies can react to the marketing environment. 3-28
- 29. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2015 Pearson Education, Inc.Copyright © 2015 Pearson Education, Inc.
Editor's Notes
- This chapter describes the environmental forces that affect the company’s ability to serve its customers, explains how changes in the demographic and economic environments affect marketing decisions, and identifies the major trends in the firm’s natural and technological environments.
- This chapter further explains the key changes in the political and cultural environments and discusses how companies can react to the marketing environment.
- As the dominant software developer, Microsoft put its Windows operating system and Office productivity suite on almost every computer sold. The huge success of Windows drove Microsoft’s revenues, profits, and stock price to great heights. But moving into the new millennium, PC sales growth flattened due to the advent of new digital devices and technologies. Today, rather than just creating the software that makes PCs run, Microsoft wants to be a full-line digital devices and services company that delivers “delightful, seamless technology experiences” that connect people to communication, productivity, entertainment, and one another.
- Marketing environment refers to the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. The marketing environment consists of a microenvironment and a macroenvironment. The microenvironment consists of the actors close to the company that affect its ability to serve its customers. The macroenvironment consists of the larger societal forces that affect the microenvironment.
- This figure shows the major actors in the marketer’s microenvironment. In designing marketing plans, marketing management takes other company groups into account. Suppliers provide the resources needed by the company to produce its goods and services. Supplier problems can seriously affect marketing. Marketing intermediaries help the company promote, sell, and distribute its products to final buyers. They include resellers, physical distribution firms, marketing services agencies, and financial intermediaries. Marketers must gain strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of consumers. A public is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. These include financial, media, government, citizen-action, local publics, general, and internal publics. Customers are the most important actors in the company’s microenvironment. Customers include consumer markets, business markets, reseller markets, and international markets.
- Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers. Physical distribution firms help the company to stock and move goods from their points of origin to their destinations. Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets. Financial intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods.
- Financial publics influence the company’s ability to obtain funds. Media publics carry news, features, and editorial opinions. Government publics. Management must take government developments into account. Citizen-action publics. A company’s marketing decisions may be questioned by consumer organizations, environmental groups, etc. Local publics include neighborhood residents and community organizations. General public. The general public’s image of the company affects its buying. Internal publics include workers, managers, volunteers, and the board of directors.
- Consumer markets: 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 consist of government agencies that buy goods and services to produce public services. International markets: buyers in other countries, including consumers, producers, resellers, and governments.
- This figure shows the six major forces in the company’s macroenvironment. Each of these forces are discussed in greater detail in the following slides.
- Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. Marketers analyze several important factors that affect the marketing environment. The first factor is the changing age and family structures. The U.S. population contains several generational groups. These include the baby boomers, Generation X, Generation Y or Millennials, and Generation Z. The second factor is the changing American household. More people are divorcing or separating, choosing not to marry, marrying later, or marrying without intending to have children. Marketers must increasingly consider the special needs of nontraditional households because they are now growing more rapidly than traditional households. Each group has distinctive needs and buying habits. The third factor is geographic shifts in population. Population shifts interest marketers because people in different regions buy differently. For example, people in the Midwest buy more winter clothing than people in the Southeast. And the final factor is increasing diversity. Marketers face increasingly diverse markets as their operations become more international in scope. Some major companies also explicitly target gay and lesbian consumers.
- The economic environment consists of economic factors that affect consumer purchasing power and spending patterns. Nations vary greatly in their levels and distribution of income. Some countries have industrial economies, which constitute rich markets for many different kinds of goods. Some other countries have subsistence economies, where they consume most of their own agricultural and industrial output and offer few market opportunities. In between are developing economies that can offer outstanding marketing opportunities for the right kinds of products. Economic factors can have a dramatic effect on consumer spending and buying behavior. Value marketing has become the slogan for many marketers. Marketers in all industries are looking for ways to offer today’s frugal buyers greater value. This distribution of income has created a tiered market. Many companies aggressively target the affluent, while other firms target those with more modest means. Still other companies tailor their marketing offers across a range of markets, from the affluent to the less affluent.
- The natural environment involves the physical environment and the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Marketers should be aware of several trends in the natural environment. The first involves growing shortages of raw materials. Firms making products that require scarce resources face large cost increases, even if the materials remain available. The second trend is increased pollution. The third trend is increased government intervention in natural resource management. The governments of different countries vary in their concern and efforts to promote a clean environment. Today enlightened companies adopt practices that support environmental sustainability. This refers to the effort to create a world economy that the planet can support indefinitely.
- New technologies can offer exciting opportunities for marketers. Many firms use radio-frequency identification or RFID technology to track products through various points in the distribution channel. New technologies create new markets and opportunities. Companies that do not keep up will soon find their products outdated. Government agencies investigate and ban potentially unsafe products. Regulations have resulted in much higher research costs and longer times between new product ideas and their introduction. Marketers should be aware of these regulations when applying new technologies and developing new products.
- The political environment refers to 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. The first is to protect companies from each other. The second purpose of government regulation is to protect consumers from unfair business practices. The third purpose is to protect the interests of society against unrestrained business behavior.
- This table summarizes the major U.S. legislations affecting marketing and their purposes. Theses include the Sherman Antitrust Act, Federal Food and Drug Act, Clayton Act, Federal Trade Commission Act, and the Robinson-Patman Act.
- This table continues illustrating other U.S. legislations that affect marketing like the Wheeler-Lea Act, Lanham Trademark Act, National Traffic and Safety Act, Fair Packaging and Labeling Act, and the Child Protection Act .
- This table depicts the purpose of the Federal Cigarette Labeling and Advertising Act, National Environmental Policy Act, Consumer Product Safety Act, Magnuson-Moss Warranty Act, Children’s Television Act, and the Nutrition Labeling and Education Act.
- This table depicts the purpose of the Telephone Consumer Protection Act, Americans with Disabilities Act, Children’s Online Privacy Protection Act, Do-Not-Call Implementation Act, CAN-SPAM Act, and the Financial Reform Law.
- Socially responsible firms actively seek out ways to protect the long-run interests of their consumers and the environment. Almost every aspect of marketing involves ethics and social responsibility issues. Companies are now developing policies, guidelines, and other responses to complex social responsibility issues.
- To exercise their social responsibility and build more positive images, many companies are now linking themselves to worthwhile causes. Cause-related marketing has become a primary form of corporate giving. Critics worry that cause-related marketing is more a strategy for selling than a strategy for giving. Thus, companies using cause-related marketing might find themselves walking a fine line between increased sales and an improved image and charges of exploitation.
- The cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors. Society shapes basic beliefs and values. Cultural characteristics that can affect marketing decision making are the persistence of cultural values and shifts in secondary cultural values, such as people’s views of themselves, others, organizations, society, and nature.
- Many companies view the marketing environment as an uncontrollable element to which they must react and adapt. They passively accept the marketing environment and do not try to change it. Other companies take a proactive stance toward the marketing environment. Rather than assuming that strategic options are bounded by the current environment, these firms develop strategies to change the environment. These firms take aggressive actions to affect the publics and forces in their marketing environment. Marketing management cannot always control environmental forces. In many cases, it must settle for simply watching and reacting to the environment. For example, a company would have little success trying to influence geographic population shifts, the economic environment, or major cultural values. But whenever possible, smart marketing managers take a proactive rather than reactive approach to the marketing environment.