The Marketing Environment

1. The Marketing
Environment
Chapter 4Chapter 4

2. 4- 2
Objectives
• Know the environmental forcesKnow the environmental forces
that affect the company’s abilitythat affect the company’s ability
to serve its customers.to serve its customers.
• Realize how changes in theRealize how changes in the
demographic and economicdemographic and economic
environments affect marketingenvironments affect marketing
decisions.decisions.

3. 4- 3
Objectives
• Identify the major trends in theIdentify the major trends in the
firm’s natural and technologicalfirm’s natural and technological
environments.environments.
• Know the key changes in theKnow the key changes in the
political and cultural environments.political and cultural environments.
• Understand how companies canUnderstand how companies can
react to the marketingreact to the marketing
environment.environment.

4. 4- 4
Case Study
• ““Millennial fever” setMillennial fever” set
the stage to bringthe stage to bring
back the Beetleback the Beetle
• VW’s investment:VW’s investment:
$ 560 million$ 560 million
• Demand quicklyDemand quickly
outstripped supplyoutstripped supply
• The new VW beetleThe new VW beetle
enjoyed cross-enjoyed cross-
generational appealgenerational appeal
• Earned many awardsEarned many awards
• Beetle now accountsBeetle now accounts
for over 25% offor over 25% of
company salescompany sales
VolkswagenVolkswagen
Discussion:Discussion: Willtheflower-powerMicrobus succeednext?Willtheflower-powerMicrobus succeednext?

5. 4- 5
Key Environments
• Marketing EnvironmentMarketing Environment
 The actors and forces that affect a firm’sThe actors and forces that affect a firm’s
ability to build and maintain successfulability to build and maintain successful
relationships with customers.relationships with customers.
 Aspects of the marketing environment:Aspects of the marketing environment:
 Micro e nviro nm e ntMicro e nviro nm e nt
 Macro e nviro nm e ntMacro e nviro nm e nt

6. 4- 6
Actors Affecting a Firm’s AbilityActors Affecting a Firm’s Ability
to Serve Customersto Serve Customers
The Microenvironment
• CompanyCompany
• SuppliersSuppliers
• CustomerCustomer
MarketsMarkets
• CompetitorsCompetitors
• PublicsPublics
• MarketingMarketing
IntermediariesIntermediaries

7. 4- 7
The Microenvironment
• Departments within the company impactDepartments within the company impact
marketing planning.marketing planning.
• Suppliers help create and deliverSuppliers help create and deliver
customer value.customer value.
 Treat suppliers as partners.Treat suppliers as partners.
• Marketing intermediaries help sell,Marketing intermediaries help sell,
promote, and distribute goods.promote, and distribute goods.
 Intermediaries take many forms.Intermediaries take many forms.

8. 4- 8
The Macroenvironment
• Customer markets must be studied.Customer markets must be studied.
 Consumer, business, government, resellerConsumer, business, government, reseller
and international markets exist.and international markets exist.
• Successful companies provide betterSuccessful companies provide better
customer value than the competition.customer value than the competition.
 Size and industry position help to determineSize and industry position help to determine
the appropriate competitive strategy.the appropriate competitive strategy.
• Various publics must also beVarious publics must also be
considered.considered.

9. 4- 9
Types of PublicsTypes of Publics
The Microenvironment
• FinancialFinancial
• MediaMedia
• GovernmentGovernment
• LocalLocal
• GeneralGeneral
• InternalInternal
• Citizen ActionCitizen Action

10. 4- 10
Macroenvironmental ForcesMacroenvironmental Forces
The Macroenvironment
• DemographicDemographic
• EconomicEconomic
• NaturalNatural
• TechnologicalTechnological
• PoliticalPolitical
• CulturalCultural

11. 4- 11
The Macroenvironment
• Key Demographic TrendsKey Demographic Trends
 World population growthWorld population growth
 Changing age structureChanging age structure
 The U. S. po pulatio n co nsists o f se ve nThe U. S. po pulatio n co nsists o f se ve n
g e ne ratio nalg ro ups.g e ne ratio nalg ro ups.
– Baby boomers, Generation X, andBaby boomers, Generation X, and
Generation Y are key groups.Generation Y are key groups.
 Distinct se g m e nts typically e xist withinDistinct se g m e nts typically e xist within

12. 4- 12
The Macroenvironment
• Born between 1946 andBorn between 1946 and
19641964
• Represent 28% of theRepresent 28% of the
population; earn 50% ofpopulation; earn 50% of
personal incomepersonal income
• Many mini-segmentsMany mini-segments
exist within the boomerexist within the boomer
groupgroup
• Entering peak earningEntering peak earning
years as they matureyears as they mature
• Lucrative market forLucrative market for
travel, entertainment,travel, entertainment,
housing, and morehousing, and more
• BabyBaby
Bo o m e rsBo o m e rs
• Ge ne ratio n XGe ne ratio n X
• Ge ne ratio n YGe ne ratio n Y
Key GenerationsKey Generations

13. 4- 13
The Macroenvironment
• Born between 1965 andBorn between 1965 and
19761976
• First latchkey childrenFirst latchkey children
• Maintain a cautiousMaintain a cautious
economic outlookeconomic outlook
• Share new culturalShare new cultural
concernsconcerns
• Represent $125 billion inRepresent $125 billion in
annual purchasing powerannual purchasing power
• Will be primary buyers ofWill be primary buyers of
most goods by 2010most goods by 2010
• BabyBaby
Bo o m e rsBo o m e rs
• Ge ne ratio n XGe ne ratio n X
• Ge ne ratio n YGe ne ratio n Y
Key GenerationsKey Generations

14. 4- 14
The Macroenvironment
• Born between 1977 andBorn between 1977 and
19941994
• 72 million strong; almost72 million strong; almost
as large a group as theiras large a group as their
baby boomer parentsbaby boomer parents
• New products, services,New products, services,
and media cater to GenYand media cater to GenY
• Computer, Internet andComputer, Internet and
digitally saavydigitally saavy
• Challenging target forChallenging target for
marketersmarketers
• BabyBaby
Bo o m e rsBo o m e rs
• Ge ne ratio n XGe ne ratio n X
• Ge ne ratio n YGe ne ratio n Y
Key GenerationsKey Generations

15. 4- 15
The Macroenvironment
• Key Demographic TrendsKey Demographic Trends
 Changing American householdChanging American household
 Geographic population shiftsGeographic population shifts
 Better-educated, more white-collarBetter-educated, more white-collar
workforceworkforce
 Increasing DiversityIncreasing Diversity

16. 4- 16
The Macroenvironment
• The Economic EnvironmentThe Economic Environment
 Affects consumer purchasing powerAffects consumer purchasing power
and spending patterns.and spending patterns.
 Two types of national economies:Two types of national economies:
subsistence vs. industrial.subsistence vs. industrial.
 U.S. consumers now spend carefullyU.S. consumers now spend carefully
and desire greater value.and desire greater value.

17. 4- 17
The Macroenvironment
• Key Economic TrendsKey Economic Trends
 U.S. income distribution is skewed.U.S. income distribution is skewed.
 Uppe r class, m iddle class, wo rking classUppe r class, m iddle class, wo rking class
and the unde rclass.and the unde rclass.
 Rich are g e tting riche r, the m iddle classRich are g e tting riche r, the m iddle class
is shrinking , and the unde rclass re m ainsis shrinking , and the unde rclass re m ains
po o r.po o r.
 Consumer spending patterns areConsumer spending patterns are
changing.changing.

18. 4- 18
The Macroenvironment
• The Natural EnvironmentThe Natural Environment
 Concern for the natural environmentConcern for the natural environment
has grown steadily, increasing thehas grown steadily, increasing the
importance of these trends:importance of these trends:
 Sho rtag e o f raw m ate rialsSho rtag e o f raw m ate rials
 Incre ase d po llutio nIncre ase d po llutio n
 Incre ase d g o ve rnm e ntalinte rve ntio nIncre ase d g o ve rnm e ntalinte rve ntio n

19. 4- 19
The Macroenvironment
• Key Technological TrendsKey Technological Trends
 The technological environment isThe technological environment is
characterized by rapid change.characterized by rapid change.
 New technologies create newNew technologies create new
opportunities and markets but makeopportunities and markets but make
old technologies obsolete.old technologies obsolete.
 The U.S. leads the world in researchThe U.S. leads the world in research
and development spending.and development spending.

20. 4- 20
The Macroenvironment
• The Political EnvironmentThe Political Environment
 Includes laws, governmental agencies, andIncludes laws, governmental agencies, and
pressure groups that impact organizationspressure groups that impact organizations
and individuals. Key trends include:and individuals. Key trends include:
 Incre ase d le g islatio n to pro te ct busine sse sIncre ase d le g islatio n to pro te ct busine sse s
as we llas co nsum e rs.as we llas co nsum e rs.
 Chang e s in g o ve rnm e ntalag e ncyChang e s in g o ve rnm e ntalag e ncy
e nfo rce m e nt.e nfo rce m e nt.
 Incre ase d e m phasis o n e thicalbe havio r andIncre ase d e m phasis o n e thicalbe havio r and
so cialre spo nsibility.so cialre spo nsibility.

21. 4- 21
The Macroenvironment
• The Cultural EnvironmentThe Cultural Environment
 Is composed of institutions and otherIs composed of institutions and other
forces that affect a society’s basic values,forces that affect a society’s basic values,
perceptions, preferences, and behaviors.perceptions, preferences, and behaviors.
 Culture can influence decision making.Culture can influence decision making.
 Core beliefs are persistent; secondaryCore beliefs are persistent; secondary
cultural values change and shift morecultural values change and shift more
easily.easily.
 The cultural values of a society areThe cultural values of a society are
expressed through people’s views.expressed through people’s views.

22. 4- 22
Cultural values are expressedCultural values are expressed
via how people view:via how people view:
The Macroenvironment
• ThemselvesThemselves
• OthersOthers
• OrganizationsOrganizations
• SocietySociety
• NatureNature
• The UniverseThe Universe

23. 4- 23
Responding to the
Marketing Environment
• Reactive: Passive Acceptance andReactive: Passive Acceptance and
AdaptationAdaptation
 Companies design strategies that avoidCompanies design strategies that avoid
threats and capitalize upon opportunities.threats and capitalize upon opportunities.
• Proactive: Environmental ManagementProactive: Environmental Management
 Use of lobbyists, PR, advertorials,Use of lobbyists, PR, advertorials,
lawsuits, complaints, and contractuallawsuits, complaints, and contractual
agreements to influence environmentalagreements to influence environmental
forces.forces.