Marketing Environment


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  • Marketing Environment

    2. 2. “ It is useless to tell a river to stop running; the best thing is to learn how to swim in the direction it is flowing.” - Anonymous
    3. 3. Chapter Objectives <ul><li>List and discuss the importance of the elements of the company’s microenvironment </li></ul><ul><li>Describe the macroenvironmental forces that affect the company’s ability to serve its customers </li></ul><ul><li>Explain how changes in demographic and economic environments affect marketing and describe the levels of competition </li></ul>
    4. 4. Chapter Objectives <ul><li>Identify the major trends in the firm’s natural and technological environments </li></ul><ul><li>Explain the key changes that occur in the political and cultural environments </li></ul><ul><li>Discuss how companies can be proactive rather than reactive when responding to environmental trends </li></ul>
    5. 5. <ul><li>Includes: </li></ul><ul><ul><li>Microenvironment: actors close to the company that affect its ability to serve its customers. </li></ul></ul><ul><ul><li>Macro environment: larger societal forces that affect the microenvironment. </li></ul></ul><ul><ul><ul><li>Considered to be beyond the control of the organization. </li></ul></ul></ul>Marketing Environment
    6. 6. Actors in the Microenvironment
    7. 7. <ul><ul><li>Marketing must consider other parts of the organization including finance, R&D, purchasing, operations and accounting </li></ul></ul><ul><ul><li>Marketing decisions must relate to broader company goals and strategies </li></ul></ul>Microenvironment <ul><li>The company </li></ul>Goal 1: Describe environmental factors
    8. 8. The Company <ul><li>Marketing managers must work with all departments of a company </li></ul><ul><li>All Departments have an impact on the marketing department’s plans and actions </li></ul><ul><li>“ Think Consumer” </li></ul>
    9. 9. <ul><ul><li>Provide resources needed to produce goods and services. </li></ul></ul><ul><ul><li>Important link in the “value delivery system.” </li></ul></ul><ul><ul><li>Most marketers treat suppliers like partners. </li></ul></ul>Suppliers:
    10. 10. Marketing Intermediaries <ul><li>Marketing intermediaries help the company promote, sell, and distribute its goods to the final buyers </li></ul><ul><li>Marketing service agencies help formulate and implement marketing strategies </li></ul><ul><li>Financial intermediaries help hospitality companies finance their transactions </li></ul>
    11. 11. Partnering With Intermediaries
    12. 12. 5 Types of Customers <ul><li>Consumer markets </li></ul><ul><li>Business markets (B to B) </li></ul><ul><li>Reseller markets </li></ul><ul><li>Government markets </li></ul><ul><li>International markets </li></ul>
    13. 13. Competitors <ul><li>To be successful, a company must satisfy needs and wants of consumers better than competitors </li></ul><ul><li>A company should monitor three variables when analyzing each of its competitors </li></ul><ul><ul><li>Share of Market </li></ul></ul><ul><ul><li>Share of Mind </li></ul></ul><ul><ul><li>Share of Heart </li></ul></ul>
    14. 14. Levels of Competition (Adapted from Analysis for Market Planning), Donald R. Lehmann and Russell S. Winer, p.22, ©1994 by Richard D. Irwin
    15. 15. Competitors… <ul><li>Must understand competitor’s strengths </li></ul><ul><li>Must differentiate firm’s products and offerings from those of competitors </li></ul><ul><li>Competitive strategies should emphasize firm’s distinctive competitive advantage in marketplace </li></ul>
    16. 16. Types of Publics
    17. 17. The Company’s Macro environment
    18. 18. Demographic Environment <ul><li>Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics </li></ul><ul><li>Demographics change over time and companies must keep up with them </li></ul>
    19. 19. Age Distribution of the U.S. Population (78 million people born 1946-1964) One of the most powerful forces shaping the marketing environment, 30% of population (45 million people born 1965-1976) More skeptical, cynical of frivolous marketing pitches promising easy success (72 million people born 1977-1994) Fluent and comfortable with computer, digital, and Internet technology (Net-Gens) Baby Boomer Generation Generation X Echo Boomer Generation
    20. 20. Key U.S. Demographic Trends Changing Age Structure Population is getting older Changing Family Structure Marrying later, fewer children, working women, and nonfamily households Geographic Shifts Moving to the Sunbelt and suburbs (MSA’s) Increased Education Increased college attendance and white-collar workers Growing Ethnic and Racial Diversity 72% Caucasian, 13% African-American, 11% Hispanic & 3% Asian
    21. 21. Changing American Family <ul><li>Household makeup: </li></ul><ul><ul><li>Married couples with children = 34%, and falling </li></ul></ul><ul><ul><li>Married couples and people living with other relatives = 22% </li></ul></ul><ul><ul><li>Single parents = 12% </li></ul></ul><ul><ul><li>Single persons and adult “live-togethers” = 32% </li></ul></ul>
    22. 22. Better Educated Population <ul><li>1980: </li></ul><ul><ul><li>69% of people over age 25 completed high school </li></ul></ul><ul><ul><li>17% had completed college </li></ul></ul><ul><li>2002: </li></ul><ul><ul><li>84% of people over age 25 completed high school </li></ul></ul><ul><ul><li>27% had completed college </li></ul></ul><ul><li>Currently, ⅔ of high school grads start college </li></ul>
    23. 23. Economic Environment <ul><li>Changes in Income </li></ul><ul><ul><li>1980’s – consumption frenzy </li></ul></ul><ul><ul><li>1990’s – “squeezed consumer” </li></ul></ul><ul><ul><li>2000’s – value marketing </li></ul></ul><ul><li>Income Distribution </li></ul><ul><ul><li>Upper class </li></ul></ul><ul><ul><li>Middle class </li></ul></ul><ul><ul><li>Working class </li></ul></ul><ul><ul><li>Underclass </li></ul></ul>Consists of factors that affect consumer purchasing power and spending patterns.
    24. 24. Economic Environment Global Economic Development Changes in Income Changing Consumer Spending Patterns Key Economic Concerns for Marketers
    25. 25. <ul><li>Economic Factors </li></ul><ul><li>(a)Gross national product. </li></ul><ul><li>(b)Per capita income. </li></ul><ul><li>(c)Balance of payments position. </li></ul><ul><li>(d)Industry life cycle and current phase through which the industry is passing. The different phases of this life cycle could be classified as recovery, boom, recession and depression. </li></ul><ul><li>(e)Trends in the prices of goods and services—specifically, whether the inflationary or deflationary trends are visible. </li></ul><ul><li>(f)Fiscal policies and prime rate of interest charged by commercial banks. </li></ul>
    26. 26. Statewise depiction of different classes of Rich
    27. 29. Natural Environment <ul><li>Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities. </li></ul>
    28. 30. Natural Environment Conservation Of Resources Ecotourism Recycle and Reduce Waste Factors Affecting the Natural Environment
    29. 31. Natural Environment <ul><li>Natural Environment: </li></ul><ul><ul><li>Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities </li></ul></ul><ul><li>Trends </li></ul><ul><ul><li>Shortages of raw materials </li></ul></ul><ul><ul><li>Increased pollution </li></ul></ul><ul><ul><li>Increased government intervention </li></ul></ul>Goal 3: Identify trends in natural and technological environments
    30. 32. Technological Environment <ul><li>Most dramatic force now shaping our destiny. </li></ul>
    31. 33. Technological Forces <ul><li>Changes in technology may make business obsolete; e.g., </li></ul><ul><ul><li>buggy whips (automobile) </li></ul></ul><ul><ul><li>airport at Gander, Newfoundland (longer range aircraft) </li></ul></ul><ul><ul><li>Federal Express (fax machine; Internet) </li></ul></ul><ul><li>New opportunities—e.g., specialty online retailers, mass customization </li></ul>
    32. 34. Cultural Environment <ul><li>The institutions and other forces that affect a society’s basic values, perceptions, preference, and behaviors. </li></ul>
    33. 35. Marketing Management <ul><li>Themselves </li></ul><ul><ul><li>Identify with brands for self-expression </li></ul></ul><ul><li>Others </li></ul><ul><ul><li>Recent shift from “me” to “we” society </li></ul></ul><ul><li>Organizations </li></ul><ul><ul><li>Trend of decline in trust and loyalty to companies </li></ul></ul><ul><li>Society </li></ul><ul><ul><li>Patriotism on the rise </li></ul></ul><ul><li>Nature </li></ul><ul><ul><li>“ lifestyles of health and sustainability” (LOHAS) consumer segment </li></ul></ul><ul><li>Universe </li></ul><ul><ul><li>Includes religion and spirituality </li></ul></ul>Cultural Environment Includes people’s views of… Goal 4: Explore political and cultural environments
    34. 36. Political Environment Increasing Legislation Changing Government Agency Enforcement Includes Laws, Government Agencies, Etc. that Influence & Limit Organizations/ Individuals in a Given Society Increased Emphasis on Ethics & Socially Responsible Actions
    35. 37. Political Trends <ul><li>Increased legislation and regulation affecting business </li></ul><ul><li>Changing government Agency Enforcement </li></ul><ul><li>Increased emphasis on socially responsible actions and ethics e.g. MADD and PETA </li></ul>
    36. 38. Legal and Regulatory Environment <ul><li>Laws and Regulations </li></ul><ul><ul><li>for safety </li></ul></ul><ul><ul><li>for consumer protection </li></ul></ul><ul><ul><li>to protect special interests </li></ul></ul><ul><li>Dangers of litigation-- anyone can sue, and juries often buy it! </li></ul><ul><li>Examples: </li></ul><ul><ul><li>Antitrust </li></ul></ul><ul><ul><ul><li>Fair competition </li></ul></ul></ul><ul><ul><ul><li>Pricing </li></ul></ul></ul><ul><ul><li>“ Truth in Lending”--have to tell people real costs of financing; car leases now regulated </li></ul></ul>
    37. 39. The Marketing Environment and Competitor Analysis <ul><li>SWOT analysis </li></ul><ul><li>PEST analysis </li></ul><ul><li>Five forces analysis </li></ul>
    38. 40. SWOT analysis <ul><li>Strengths (internal) </li></ul><ul><li>Weaknesses (internal) </li></ul><ul><li>Opportunities (external) </li></ul><ul><li>Threats (external) </li></ul>
    39. 42. PEST analysis <ul><li>Political factors </li></ul><ul><li>Economic factors </li></ul><ul><li>Socio-cultural factors </li></ul><ul><li>Technological factors </li></ul>
    40. 43. Political/legal <ul><li>Monopolies legislation </li></ul><ul><li>Environmental protection laws </li></ul><ul><li>Taxation policy </li></ul><ul><li>Employment laws </li></ul><ul><li>Government policy </li></ul><ul><li>Legislation </li></ul><ul><li>Others? </li></ul>
    41. 44. Economic Factors <ul><li>Inflation </li></ul><ul><li>Employment </li></ul><ul><li>Disposable income </li></ul><ul><li>Business cycles </li></ul><ul><li>Energy availability and cost </li></ul><ul><li>Others? </li></ul>
    42. 45. Sociocultural factors <ul><li>Demographics </li></ul><ul><li>Distribution of income </li></ul><ul><li>Social mobility </li></ul><ul><li>Lifestyle changes </li></ul><ul><li>Consumerism </li></ul><ul><li>Levels of education </li></ul><ul><li>Others? </li></ul>
    43. 46. Technological <ul><li>New discoveries and innovations </li></ul><ul><li>Speed of technology transfer </li></ul><ul><li>Rates of obsolescence </li></ul><ul><li>Internet </li></ul><ul><li>Information technology </li></ul><ul><li>Others? </li></ul>
    44. 47. Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4. Threat of substitutes Potential entrants Threat of entrants Suppliers Bargaining power Substitutes Buyers Bargaining power COMPETITIVE RIVALRY Five forces analysis
    45. 48. Five Forces Analysis: Key Questions and Implications <ul><li>What are the key forces at work in the competitive environment? </li></ul><ul><li>Are there underlying forces driving competitive forces? </li></ul><ul><li>Will competitive forces change? </li></ul><ul><li>What are the strengths and weaknesses of competitors in relation to the competitive forces? </li></ul><ul><li>Can competitive strategy influence competitive forces (eg by building barriers to entry or reducing competitive rivalry)? </li></ul>
    46. 49. Environmental Scanning and Analysis SCANNING ANALYSIS ACTION
    47. 50. Environmental Scanning Determine Environmental Areas That Need to Be Monitored Determine How the Information Will Be Collected Implement the Data Collection Plan Anaylze and Use the Data in Planning
    48. 51. Responding to the Marketing Environment <ul><li>Many companies feel the marketing environment is uncontrollable </li></ul><ul><li>An environmental management perspective takes action to sway the marketing environment </li></ul><ul><li>Take a proactive rather than a reactive approach </li></ul>
    49. 52. THANKS…….