The document analyzes the marketing environment by outlining the five key factors that affect marketing strategy: 1) customers, 2) the company, 3) competitors, 4) corporate partners, and 5) the macroenvironment. It describes the components of the immediate environment, including the company, consumers, competitors, and corporate partners. It then discusses the six factors of the macroenvironment: culture, demographics, social issues, technological advances, the economic situation, and the political/regulatory environment.

1. analyzing
the marketing environment
five
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chapter
1
Chapter 5 – Analyzing the Marketing Environment
LEARNING OBJECTIVES
LO 5-1 Outline how customers, the company, competitors,
and corporate partners affect marketing strategy.
LO 5-2 Explain why marketers must consider their
macroenvironment when they make decisions.
LO 5-3 Describe the differences among the various
generational cohorts.
LO 5-4 Identify various social trends that affect marketing.
5-‹#›
These questions are the learning objectives guiding the chapter
and will be explored in more detail in the following slides.
2
Macroenvironment
Culture

2. Demographics
Political/
Legal
Technology
Economic
Culture
A Marketing Environment
Analysis Framework
Immediate Environment
Corporate
Partners
Competition
Company
Consumers
5-‹#›
3
In all marketing activities, the consumer is at the center.
Anything that affects consumers affects marketers. Any change
in one of these environments likely requires an adjustment to
the firm’s marketing mix. By identifying potential
environmental trends, firms often can take proactive steps.
The Immediate Environment
Immediate Environment
Corporate
Partners
Competition
Company
Consumers

3. 5-‹#›
4
The immediate environment includes the firm and its immediate
influences, such as competition and corporate partners.
Successfully Leveraging
Company Capabilities
Existing knowledge,
facilities, patents, etc.
New markets,
new products, etc.
Core competency
applied to
©M Hruby
5-‹#›
5
Ask students: What are Pepsi’s core competencies? What do
they do well? Answer: They know how to bottle beverages,
distribute them to stores, and promote their brand.
Ask students: How they capitalized on their core competencies
in the face of changing market trends?
Answer: The trend toward more diet-conscious consumers has
led to the development of low-calorie alternatives to sodas.
Both Coke and Pepsi understood the market had changed and
introduced bottled water products with great success. In 2004,
Americans consumed 23 gallons of bottled water per person—
ten times as much as in 1980.

4. Competitors
Know strengths & weaknesses
Proactive rather than reactive strategy
Chad Baker/Getty Images
5-‹#›
6
Competition also significantly affects consumers in the
immediate environment. It is therefore critical that marketers
understand their firm’s competitors, including their strengths,
weaknesses, and likely reactions to the marketing activities.
Corporate Partners
From factory
Retailer
to
Firms are part of alliances
Align with competitors, suppliers, etc.
Just in Time Delivery Systems (JIT)
D Normark/PhotoLink/Getty Images
Siede Preis/Getty Images
©Lars A Niki
5-‹#›

5. 7
Firms must work together to create a seamless system that
delivers goods and services to customers when and where they
want them. Many attribute a key reason for Wal-Mart’s success
is their close relationships with their suppliers.
What are the components of the immediate environment?
check yourself
5-‹#›
1. The company’s capabilities, competitors, and competitive
intelligence, and the company’s corporate partners.
8
Macroenvironmental Factors
Culture
Demographics
Political/
Legal
Technology
Economic
Culture
Consumers
5-‹#›
9

6. This slide can be used to review this topic instead of the
following slides, which provide more in-depth discussions.
Culture
Country Culture vs. Regional Culture
©Brand X Pictures/PunchStock
PhotoLink/Getty Images
5-‹#›
10
Firms often remove brands from the market because of their
poor overall sales, but this strategy can backfire when those
brands have strong regional support.
For example, the removal of a chowder cracker caused such
upheaval among Northeastern consumers that the firm hired a
tall ship to reintroduce the cracker to its New England market,
where consumers had threatened to boycott all products from
the company if the cracker was not returned.
Demographics
Provides an easily understood snapshot
of the typical consumer in a specific target market
U.S. Census Website
BananaStock/JupiterImages
Comstock Images/Alamy
5-‹#›

7. 11
Ask students: What are some typical demographics?
Answer: age, gender, income, education.
Demographic segmentation is probably the most common form
of segmentation because the information is so widely available.
Generational Cohorts
5-‹#›
12
Group activity: Have students brainstorm a list of the defining
characteristics of their generation.
Ask students: How does your generation differ from previous
generations, such as their parents — the Baby Boomers. What
macroenvironmental forces have had the most impact on your
generation?
Income
Purchasing power is tied to income
Many middle class families feel the decline in purchasing power
in recent years
Courtesy of Hammacher Schlemmer, www.hammacher.com.
5-‹#›
13
The “middle-class squeeze” is a very real global phenomenon.
Many developing countries face similar income inequities to
those found in the United States. Pay gaps also cause problems

8. for many new college graduates who find they cannot afford to
live on their own and must move back in with their parents.
Education
Education is related to income,
which determines spending power
=
©Fancy Photographer/Veer
Brand X Pictures
5-‹#›
14
Ask students: Do you plan to continue your education after
graduation?
Many students believe they will never return to school after
they finish their Bachelors’ degree, but modern conditions make
this choice more and more unlikely. Lifelong learning of new
skills and new knowledge has become key to survival in the
global economy
Gender
Jochen Sand/Digital Vision/Getty Images
5-‹#›
15
Women now make up more than 60% of the college population.
Ask students? How do you believe this will affect the workplace
in the future?
Ask students? Do you believe that there are still significant

9. gender differences? What are they?
Male/female roles have been shifting
Marketing has changed to reflect these shifts
Ethnicity
By 2050, minorities will represent 50% of the population.
©2006 Oldemarak, LLC Reprinted with permission The
Wendy’s name, design and logo are registered trademarks of
Oldemark, Llc and are licensed to Wendy’s International, Inc.
Super Bowl XLI Commercial
Bud Light Starring: Carlos Mencia
5-‹#›
16
Ask students: What steps can and should marketers take to
respond to the changing ethnic mix of the United States?
Many marketers already have adjusted their marketing mix to
meet the needs of ethnically diverse segments better. This
YouTube video is for a Carlos Mencia Bud Light superbowl ad
about teaching English.
YouTube link:
http://www.youtube.com/watch?v=670X2MCWzK0

10. Social Trends
Thrift
Health and Wellness Concerns
Greener Consumers
Privacy Concerns
Time-Poor Society
Celebrity Magazine Covers
5-‹#›
17
This graphic introduces significant social trends. Video:
“What's Hot and Not in Celebrity Magazine Covers”
Ask students why are traditional celebrities not catching
consumers’ attention? Ask students how are tabloids going to
continue to entice readers to buy their content?
Technological Advances
Technology has impacted every aspect of marketing
New products
New forms of communication
New retail channels
Stop and
Shop Website
AP Photo/Ric Feld
Rachael Ray
5-‹#›

11. 18
Arguably the single most important change in the way we live is
the introduction of new technology.
Ask students: What new technologies have you seen at
retailers? This web link is for the shoppers tool page of Stop
and Shop a large east coast grocery retailer. They offer self-
scanners, computer kiosk deli ordering and self checkout.
WSJ: http://live.wsj.com/video/rachael-ray-goes-
digital/A0B4CC90-9D29-43EC-B22D-
31CF9A90D2F6.html#!A0B4CC90-9D29-43EC-B22D-
31CF9A90D2F6
Combined with inflation and interest rates affect firms’ ability
to market goods and services
Economic Situation
Foreign currency fluctuations
Conference Board Website
PhotoLink/Getty Images
Brand X Pictures
5-‹#›
19
Depending on the time of year, discuss projections about
Christmas shopping, vacation planning, or home buying.
Various economic factors affect each of these areas. The web
link leads to the Consumer Confidence Index which takes into
account how consumers feel about how the economy is doing.
This economic indicator relates directly to spending.

12. Political/Regulatory Environment
Competitive Practice and Trade Legislation
David Hiller/Getty Images
5-‹#›
20
This list includes the major legislation designed to ensure a
competitive marketplace and clearly demonstrates the U.S.
government’s long history of enacting laws that protect fair
trade.
1890: Sherman Antitrust Act
1914: Clayton Act
1914: Federal Trade Commission
1936: Robinson-Putman Act
1938: Wheeler-Lea Act
1993: North American Free Trade Agreement (NAFTA)

13. What are the six key macroeconomic factors?
Differentiate between country culture and regional culture.
Identify the different generational cohorts.
What are some important social trends shaping consumer values
and shopping behavior?
check yourself
5-‹#›
Culture, demographics, social issues, technological advances,
economic situation, and political/regulatory environment.
Country Culture is the entire country but regional culture is
based on the region or area within the country.
Tweens, Gen Y, Gen X, Baby Boomers, Seniors
Thrift, Greener consumers, marketing to children, privacy
concerns, and time-poor societies.
21
Country culture involves visual nuances of a country’s culture
such as artifacts, behavior, dress, symbols, physical settings,
ceremonies, language differences, colors and tastes, and food
preferences, as well as language.
Glossary

14. Return to slide
5-‹#›
Country culture involves visual nuances of a country’s culture
such as artifacts, behavior, dress, symbols, physical settings,
ceremonies, language differences, colors and tastes, and food
preferences, as well as language.
Culture is the shared meanings, beliefs, morals, values, and
customs of a group of people.
Glossary
Return to slide
5-‹#›
Culture is the shared meanings, beliefs, morals, values, and
customs of a group of people.
Demographics indicate the characteristics of human populations
and segments, especially those used to identify consumer
markets.
Glossary
Return to slide
5-‹#›
Demographics indicate the characteristics of human populations
and segments, especially those used to identify consumer
markets.
A generational cohort is a group of people of the same
generation.
Glossary

15. Return to slide
5-‹#›
A generational cohort is a group of people of the same
generation.
The political/regulatory environment comprises political
parties, government organizations, and legislation and laws.
Glossary
Return to slide
5-‹#›
The political/regulatory environment comprises political
parties, government organizations, and legislation and laws.
Regional culture involves the region in which people live in a
particular country.
Glossary
Return to slide
5-‹#›
Regional culture involves the region in which people live in a
particular country.