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- 1. Chapter 3 TheGlobal Marketing Environment PRINCIPLES OF MARKETING Eighth Edition Philip Kotler and Gary Armstrong
- 2. Marketing Environment Allthe actors and forces influencing the company’s ability to transact business effectively with it’s target market. Includes: Microenvironment - forces close to the company that affect its ability to serve its customers. Macroenvironment - larger societal forces that affect the whole microenvironment.
- 3. The Marketing EnvironmentCompany Demographic Economic Natural Technological Political Cultural Company Customers Intermediaries Suppliers Competitors Publics
- 4. The Microenvironment CompanyCustomers Publics Suppliers Competitors Intermediaries Forces Affecting a Company’s Ability to Serve Customers
- 5. The Company’s Microenvironment Company’s Internal Environment - functional areas such as top management, finance, and manufacturing, etc. Suppliers - provide the resources needed to produce goods and services. Marketing Intermediaries - help the company to promote, sell, and distribute its goods to final buyers.
- 6. The Company’s Microenvironment Customers - five types of markets that purchase a company’s goods and services. Competitors - those who serve a target market with similar products and services. Publics - any group that perceives itself having an interest in a company’s ability to achieve its objectives.
- 7. Customer Markets CompanyConsumer Markets International Markets Government Markets Business Markets Reseller Markets
- 8. The Macroenvironment DemographicTechnological Cultural Economic Political Natural Forces that Shape Opportunities and Pose Threats to a Company
- 9. The Company’s Macroenvironment Demographic - monitors population in terms of age, sex, race, occupation, location and other statistics. Economic - factors that affect consumer buying power and patterns. Natura l - natural resources needed as inputs by marketers or that are affected by marketing activities.
- 10. Key U.S. DemographicTrends 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 73% Caucasian, 12% African-American, 10% Hispanic & 3.4% Asian
- 11. Economic Environment Changesin Consumer Spending Patterns Economic Development Changes in Income Key Economic Concerns for Marketers
- 12. Natural Environment Factors Affecting the Natural Environment More Government Intervention Shortages of Raw Material Increased Costs of Energy Higher Pollution Levels
- 13. The Company’s MacroenvironmentTechnological - forces that create new product and market opportunities. Political - laws, agencies and groups that influence or limit marketing actions. Cultural - forces that affect a society’s basic values, perceptions, preferences, and behaviors.
- 14. Technological Environment RapidPace of Change High R & D Budgets Focus on Minor Improvements Increased Regulation Issues in the Technological Environment
- 15. Political Environment GreaterConcern for Ethics Increased Legislation Changing Enforcement Key Trends in the Political Environment
- 16. Cultural Environment OfOrganizations Of Nature Of Oneself Of Society Of the Universe Of Others Views That Express Values
- 17. Responding to the Marketing Environment Environmental Management Perspective Taking a proactive approach to managing the microenvironment and the macroenvironment to affect changes that are favorable for the company. How? Hire lobbyists , run “advertorials”, file law suits and complaints, and form agreements.
Editor's Notes
- #5Â Microenvironmental Forces Suppliers . Suppliers are the firms and persons that provide the resources needed by the company and competitors to produce goods and services. Company . Marketing plans must accommodate the needs of other functional areas of the firm to coordinate product/service delivery effectively (See following CTR and notes. Competitors . Competitors are usually considered those companies also serving a target market with similar products and services, although broader definitions may apply. Publics . Publics consist of any group that perceives itself having an interest in the actions of the firm. Publics can have positive as well as negative influences on the company's objectives. Intermediaries . Intermediaries include various middlemen and distribution firms as well as marketing service agencies and financial institutions. Customers . Customers consist of consumer, industrial, reseller, government, and international markets.
- #8 Customer Markets This CTR corresponds to Figure 3-2 on p. 73 and relates to the material on p. 72. Types of Customer Markets The company is concerned with five types of customer markets, including: Consumer Markets. These consist of individuals and households that buy goods and services for personal consumption. Business Markets. These buy goods and services for further processing or for use in their production process. Reseller Markets. Resellers buy goods and services for repackaging and reselling at a profit. Discussion Note: Students may have heard that these “middlemen” raise costs to end-users. You might point out that in most cases, resellers actually lower costs by performing marketing functions less expensively than could manufacturers. Government Markets. Governments buy goods and services to produce public services or to transfer them to needy constituents. International Markets. A growing concern for almost all marketers, these consist of those various types of buyers located in other countries.
- #9 The Macroenvironment This CTR corresponds to Figure 3-4 on p. 75 and relates to the material on pp. 74-92. Teaching Tip: This CTR overviews the major forces in the company’s macroenvironment. You might use it as an introduction before exploring each area in detail. Each of the six major forces is covered in greater detail on subsequent CTRs. Macroenvironmental Forces Demographic. The demographic environment monitors population characteristics on such items as size, density, age, location. Economic. The economic environment includes income and spending pattern concerns. Natural . The natural environment addresses pollution concerns, energy costs, raw materials availability, and growing government roles in resource management. Technological. The technological environment includes such issues as the fast pace of change, emerging product forms, and high R&D. Political . The political environment addresses the role of government and policy in the regulation of business. Cultural . The cultural environment recognizes the influence of values and beliefs of a society on purchase decisions and consumption patterns.
- #11Â Demographic Environment Demography is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other aggregate statistics. Key Aspects of the US demographic environment include: Age Structures (esp.. Baby Boomers). The post W.W.II Baby Boom is the most significant demographic feature by its sheer size: 75 million or over 1/3 of the US population. This bulge in age distribution leads growth strategies in industries serving age-specific markets. Where boomers go, marketers must follow. Discussion Note: More proactively, marketers need to identify emerging boomer needs to plan strategically for an aging population that also lives longer than previous ones. Family Structure. The typical American family rarely exists anymore. Increasing age of those marrying, delayed child-bearing, increased two- income families, and non-family households are key demographic trends. Geographic Population Shifts. Americans are mobile. Trends include movement to Sunbelt states, rural to urban shifts, and present urbanites moving to suburbs. Trends in Education. Americans are becoming more educated and white-collar. Increasing Ethnic Diversity . The United States population is 73% white, 12% black, with the remaining percentage mostly Hispanic (22 million) and Asian (7 million). Key U.S. Demographic Trends This CTR relates to the material on pp. 74-79.
- #12 Economic Environment This CTR relates to the material on pp. 79-82. The Economic Environment The Economic Environment consists of factors that affect consumer purchasing power and spending patterns. Key considerations include: Economic Development . Nations vary greatly in their levels of and distribution of income, often as a result of their stage of economic development. Typical distinctions include: Subsistence Economies. These consume most of their own agricultural and industrial output. These countries are poor targets for most products. Industrial Economies. These offer rich markets for many different kinds of goods. Changes in Income . Rising incomes for most consumers have only kept pace with inflation. As a result, consumers are more sensitive to Value Marketing - the careful promotion of a high degree of quality and performance for the price. Income distribution is also of key importance: Upper-class consumers are not affected by current economic events. Middle-class consumers can afford the “good life” most of the time, but are careful about spending. Working-class consumers must budget carefully. Underclass consumers are often unable to participate fully in the marketing system. Changing Consumer Spending Patterns . Knowledge of Engel’s Laws remains important: As income rises, the percentage spent on food declines, the percentage spent on housing remains constant, and the percentage spent on savings and other categories increases.
- #13 Natural Environment There are several areas affecting marketing that stem from the natural environment. Shortages of Raw Materials. Shortages both increase demand and sprout counter-movements aimed at conservation. Discussion Note: Both sides of the "green" movement utilize sophisticated database marketing and lobbying techniques. Energy Costs. The cost of energy makes long-term growth of high energy industries and goods difficult to predict. Increased Pollution . Industrial growth almost always damages the natural environment. The so-called “green movement” seeks to operate businesses in such a way so as not to damage the natural environment. The varying political power of “greens” in different countries is a consideration in global marketing efforts. Government Intervention in Natural Resource Management. Changing philosophies on the role of government in managing natural resources also blends into the legal environment. Marketers must take care in identifying natural environmental trends. Discussion Note: You might further expand this discussion by pointing out that even agencies like the EPA vary greatly in the amount of environmental regulation they perform depending upon funding and the agenda of whoever occupies the White House.
- #15Â Technological Environment This CTR relates to the material on pp. 83-84. Technological Environment Key forces operating in the technological environment include: Fast Pace of Technological Change . Anyone trying to learn all the features of their current software programs before they are updated and outdated understands this force. Teaching Tip: You might point out to students raised on Star Trek and Star Wars how much of yesterday's sci-fi is already coming true. Cellular phones as Star Trek-type communicators might get class discussion going. High R&D Budgets . The United States spends more on research and development than any other country. Placing marketing personnel on research teams can help focus research efforts on consumer needs and practical applications. Focus on Minor Improvements . Risk factors associated with high costs of development often lead to minor improvements over substantive product changes. Discussion Note: While minor improvements help keep products "fresh" to the market, marketers must anticipate that changing consumer needs will limit the competitiveness of too little innovation. Increased Government Regulation . Faster introduction of increasingly complex products often leads to greater regulation as consumers seek assurances that products are tested and safe.
- #16Â Political Environment This CTR relates to the material on pp. 84-87. Political Environment The political macroenvironmental forces consist of laws, government agencies, and interest groups that seek regulation of business activities to forward their own interests. Business in general, more than other groups, uses lobbying efforts to try and obtain legislation favorable to their competitive interests. Key considerations include: Legislation. Laws generally attempt to protect companies from each other to create more competition that in turn creates more value for the consumer. Laws also aim at protecting consumers from unfair and sometimes dangerous business practices. Laws sometimes seek to protect society as a whole from practices that endanger whole communities or other publicly owned resources such as rivers, forests, and parks. Enforcement . The effect of laws depends upon the emphasis given to enforcing them within the regulatory agency responsible for administering the law. Regulation varies in intensity with political agendas of sitting presidents and budget allocations. Public interest groups too affect the degree of legislative activity and administrative enforcement. Increased Emphasis on Ethics . At both the grassroots and corporate level, more US companies are showing a greater concern for more ethical conduct and more socially responsible action. Discussion Note: Ethical companies often enjoy better consumer relations and public image. Bottom line contributions can be defensive. For example, when Johnson & Johnson behaved responsibly after the Tylenol poisonings, they did not suffer expensive lawsuits and were able to recapture all of their original market share when the product was re-introduced.
- #17 Technological Environment This CTR relates to the material on pp. 87-92. Cultural Environment The key elements of the cultural macroenvironment include: Persistence of Cultural Values. Core beliefs and values are relatively enduring and must be considered by marketers positioning products. For example, product innovations that conflict with core values are unlikely to be adopted. Shifts in Secondary Values. These change over time and change more often than core values and may provide positioning opportunities. Cultural values are expressed in people’s views on the following: View of Themselves. People vary in their emphasis on how important serving themselves is compared to serving others. Personal ambition and materialism have increased significantly over time in the US. View of Others. Recently, there has been a trend toward more altruistic behavior, at least among some segments of the population. Discussion Note: You might link ambition and altruism to baby boomers and baby busters, respectively. It wont’ hold up forever, but might generate class participation. View of Organizations. Most people are willing to work for large companies but also believe that the companies are out for themselves. View of Society. Trends like “Buy American” are reflects of this view. View of Nature. This trend has changed over the last few decades from dominate and control to coexist and preserve. View of Universe. Linked in the US to religious observance, this trend has seen an overall decline among most and a simultaneous passionate activism among a small, but powerful group, usually called the “religious right.”