Marketing Chapter 02

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Marketing Chapter 02

  1. 1. Chapter 2: “Environment of Marketing” Joel R. Evans & Barry Berman Marketing, 10e: Marketing in the 21st Century
  2. 2. Chapter Objectives <ul><li>To examine the environment within which marketing decisions are made and marketing activities are undertaken </li></ul><ul><li>To differentiate between those elements controlled by a firm’s top management and those controlled by marketing, and to enumerate the controllable elements of a marketing plan </li></ul><ul><li>To enumerate the uncontrollable environmental elements that can affect a marketing plan and study their potential ramifications </li></ul><ul><li>To explain why feedback about company performance and the uncontrollable aspects of its environment and the subsequent adaptation of the marketing plan are essential for a firm to a attain its objectives </li></ul>
  3. 3. Environment of Marketing <ul><li>5 Parts of Environment </li></ul><ul><li>Controllable Factors </li></ul><ul><li>Uncontrollable Factors </li></ul><ul><li>Organization’s Level of Success/Failure in Reaching Objectives </li></ul><ul><li>Feedback </li></ul><ul><li>Adaptation </li></ul>Organization’s Level of Success Controllable Factors Uncontrollable Factors Feedback Adaptation
  4. 4. Environment of Marketing Uncontrollable Factors Independent Media Technology Economy Government Suppliers & Distributors Competition Consumers Controllable Factors Organization’s Level of Success or Failure in Reaching Its Objectives By Top Management By Marketing (1) (2) (3) (4) Feedback A - Total offering of the organization B - Impact of uncontrollable factors Adaptation (5) B A
  5. 5. Types of Environments <ul><li>Macroenvironment refers to the broad demographic, societal, economic, political, and technological forces that an organization faces. </li></ul><ul><li>Microenvironment refers to the forces close to an organization that have a direct impact on its ability to serve its customers </li></ul>
  6. 6. Top Management Controls <ul><li>1. Line of Business </li></ul><ul><li>General category </li></ul><ul><li>Functions </li></ul><ul><li>Geographic coverage </li></ul><ul><li>Type of ownership </li></ul><ul><li>Specific business </li></ul><ul><li>2. Overall Objectives </li></ul><ul><li>Sales </li></ul><ul><li>Profit </li></ul><ul><li>Long-run existence </li></ul><ul><li>Consumer acceptance </li></ul><ul><li>5. Corporate Culture </li></ul><ul><li>Customer-service orientation </li></ul><ul><li>Time orientation </li></ul><ul><li>Flexibility </li></ul><ul><li>Risk/innovativeness </li></ul><ul><li>Centralized/ decentralized </li></ul><ul><li>Interpersonal contact </li></ul><ul><li>Promotions from within </li></ul><ul><li>4. Role of Other Business Functions </li></ul><ul><li>Production </li></ul><ul><li>Finance </li></ul><ul><li>Accounting </li></ul><ul><li>Engineering </li></ul><ul><li>Purchasing </li></ul><ul><li>R & D </li></ul><ul><li>3. Role of Marketing </li></ul><ul><li>Importance in company </li></ul><ul><li>Functions </li></ul><ul><li>Integration </li></ul>
  7. 7. Marketing Directs <ul><li>1. Selection of Target Market </li></ul><ul><li>Size </li></ul><ul><li>Characteristics </li></ul><ul><li>Desires </li></ul><ul><li>2. Marketing Objectives </li></ul><ul><li>Image </li></ul><ul><li>Sales </li></ul><ul><li>Profit </li></ul><ul><li>Differential advantages </li></ul><ul><li>3. Marketing Organizations </li></ul><ul><li>Functions </li></ul><ul><li>Types </li></ul><ul><li>5. Performance Assessment </li></ul><ul><li>Day-to-day </li></ul><ul><li>Periodic </li></ul><ul><li>4. Marketing Mix </li></ul><ul><li>Product </li></ul><ul><li>Distribution </li></ul><ul><li>Promotion </li></ul><ul><li>Price </li></ul>
  8. 8. Factors Controlled by Marketers: The Target Market <ul><li>The target market is the customer group to which an organization appeals. </li></ul><ul><li>Market segmentation involves subdividing a market into clear subsets of customers with similar needs. It is often used in choosing a target market. </li></ul>
  9. 9. Functional Organizations Vice-President of Marketing Product Planning Manager Physical Distribution Manager Marketing Research Manager Promotion Manager Sales Manager Other Functional Managers
  10. 10. Product-Oriented Organizations Vice-President of Marketing Product Planning Manager Other Functional Managers Manager Product A Manager Product B Brand Manager 1 Brand Manager 2 Brand Manager 1 Brand Manager 2
  11. 11. Market-Oriented Organizations Vice-President of Marketing Sales Manager Other Functional Managers Regional Sales Manager East Regional Sales Manager North Regional Sales Manager West Regional Sales Manager South Sales Manager Final Consumers Sales Manager Organi- zational Consumers Sales Manager Final Consumers Sales Manager Organi- zational Consumers Sales Manager Final Consumers Sales Manager Organi- zational Consumers Sales Manager Final Consumers Sales Manager Organi- zational Consumers
  12. 12. Differential Advantages <ul><li>Differential advantages consist of the firm’s unique features that attract consumers and include: </li></ul><ul><ul><li>A distinctive image </li></ul></ul><ul><ul><li>New products or features </li></ul></ul><ul><ul><li>Product quality </li></ul></ul><ul><ul><li>Customer service </li></ul></ul><ul><ul><li>Low prices </li></ul></ul><ul><ul><li>Availability </li></ul></ul>
  13. 13. Marketing Mix <ul><li>The marketing mix consists of four elements: product, distribution, promotion, and price. </li></ul>Marketing Mix Product Price Promotion Distribution
  14. 14. Uncontrollable Factors <ul><li>Consumers </li></ul><ul><li>Changing characteristics </li></ul><ul><li>Interpersonal influences </li></ul><ul><li>Decision process </li></ul><ul><li>Organizations </li></ul><ul><li>Competition </li></ul><ul><li>Structure </li></ul><ul><li>Marketing strategies </li></ul><ul><li>Domestic/foreign </li></ul><ul><li>Company size </li></ul><ul><li>Generic </li></ul><ul><li>Channel </li></ul><ul><li>Independent Media </li></ul><ul><li>Print </li></ul><ul><li>Television </li></ul><ul><li>Radio </li></ul><ul><li>News organizations </li></ul><ul><li>Technology </li></ul><ul><li>Advances </li></ul><ul><li>Compatibility </li></ul><ul><li>Acceptance </li></ul><ul><li>Economy </li></ul><ul><li>Rate of growth </li></ul><ul><li>Costs </li></ul><ul><li>Inflation rate </li></ul><ul><li>Unemployment </li></ul><ul><li>Suppliers & Distributors </li></ul><ul><li>Characteristics </li></ul><ul><li>Practices </li></ul><ul><li>Resource shortages </li></ul><ul><li>Government </li></ul><ul><li>Federal </li></ul><ul><li>State & local </li></ul><ul><li>Politics </li></ul>Factors Not Controlled by Top Management or Marketers
  15. 15. Types of Competition <ul><li>Monopoly: When one firms sells a good or service and has a lot of control over its marketing plan. </li></ul><ul><li>Oligopoly: When a few firms, usually large ones, account for most industry sales and would like to engage in nonprice competition. </li></ul><ul><li>Monopolistic Competition: If there are several firms in an industry, each trying to offer a unique marketing mix-based on price. </li></ul><ul><li>Pure Competition: When many firms sell virtually identical goods or services and they are unable to create differential advantages. It occurs rarely. </li></ul>
  16. 16. Gross Domestic Product (GDP) A country’s economic growth is reflected by changes in its GDP . GDP is the total annual value of goods and services produced in a country less net foreign investment .
  17. 17. Real Income <ul><li>Real Income is the amount earned in a year adjusted by the rate of inflation. </li></ul><ul><li>Both inflation and unemployment affect purchases. </li></ul>
  18. 18. Marketing Myopia <ul><li>It is an ineffective marketing approach. </li></ul><ul><li>It is a shortsighted, narrow-minded view of marketing and its environment </li></ul><ul><li>Avoid myopia by thoroughly studying and adapting to the environment . </li></ul>
  19. 19. Chapter Summary <ul><li>This chapter examines the environment within which marketing decisions are made and enacted. </li></ul><ul><li>It differentiates between those elements controlled by a firm’s top management and those controlled by marketing, and it enumerates the controllable elements of a marketing plan. </li></ul><ul><li>The chapter also notes the uncontrollable environmental elements that can affect a marketing plan and studies their potential ramifications </li></ul><ul><li>It explains why feedback about company performance and the uncontrollable aspects of its environment and the subsequent adaptation of the marketing plan are essential for a firm to attain objectives. </li></ul>

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