Chapter Three

The Marketing Environment

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Marketing Environment

Consists of actors and forces outside the organization that affect management’s ability to build and maintain relationships with target customers.– Studying the environment allows marketers to

take advantage of opportunities as well as to combat threats.

– Marketing intelligence and research are used to collect information about the environment.

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Marketing Environment

Includes:–Microenvironment: actors close to the

company that affect its ability to serve its customers.

–Macroenvironment: larger societal forces that affect the microenvironment.• Considered to be beyond the control of

the organization.

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Marketing Environment

Actors in the microenvironment include:– The company itself– Suppliers–Marketing intermediaries– Customers– Competitors– Publics

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The Microenvironment

Company’s Internal Environment:

–Areas inside a company.

–Affects the marketing department’s planning strategies.

–All departments must “think consumer” and work together to provide superior customer value and satisfaction.

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The Microenvironment

Suppliers: – Provide resources needed to produce

goods and services.– Important link in the “value delivery

system.”–Most marketers treat suppliers like

partners.

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The Microenvironment

Marketing intermediaries: – Help the company to promote, sell, and

distribute its goods to final buyers• Resellers• Physical distribution firms• Marketing services agencies• Financial intermediaries

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The Microenvironment

Customers: – Five types of markets that purchase a

company’s goods and services.• Consumer• Business• Reseller• Government• International

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The Microenvironment

Competitors: – Those who serve a target market with

products and services that are viewed by consumers as being reasonable substitutes.

– Company must gain strategic advantage against these organizations.

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Publics: – Any group that has an interest in or impact

on an organization's ability to achieve its objectives. • Financial public• Media public• Government public• Citizen-action public• Local public• General public• Internal public

The Microenvironment

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The Macroenvironment

The company and all of the other actors operate in a larger macroenvironment of forces that shape opportunities and pose threats to the company.

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The Macroenvironment

Forces in the macroevironment can be categorized as:– Demographic– Economic– Natural– Technological– Political– Cultural

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Demographic Environment

Demographics: The study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics.–Marketers track changing age and family

structures, geographic population shifts, educational characteristics, and population diversity.

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Demographic Environment

The changing age structure of the population is the single most important demographic trend.

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Demographic Environment

Changing American family and household makeup:–Married couples with children = 34%, and

falling.–Married couples and people living with

other relatives = 22%.– Single parents = 12%.– Single persons and adult “live-togethers”

(also called nonfamily households) = 32%

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Demographic Environment

Geographic Shifts in Population:– 14% of U.S. residents move each year.– General shift toward the Sunbelt states.– City to suburb migration continues.–More people moving to “micropolitan”

areas.–More people telecommute.• 1 in 5 people now work out of their

home.

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Demographic Environment

Better Educated Population:– 1980:• 69% of people over age 25 completed

high school.• 17% had completed college.

– 2003:• 85% of people over age 25 completed

high school.• 27% had completed college.

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Demographic Environment

Increasing diversity:– U.S. is a “salad bowl” mixing together

various groups, each of which retains its ethnic and cultural differences.• Ethnic segments are growing as a

percentage of the U.S. population and growth is projected to continue.

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Economic Environment

Changes in Income Income Distribution– Upper class– Middle class– Working class– Underclass

Consists of factors that affect consumer purchasing power and spending patterns.

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Natural Environment

Involves natural resources that are needed as inputs by marketers or that are affected by marketing activities.

Factors include:– Shortages of raw materials.– Increased pollution.– Increased government intervention.– Environmentally sustainable strategies.

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Technological Environment

Most dramatic force shaping our destiny. Changes rapidly. Creates new markets and opportunities. Challenge is to make practical, affordable

products. Safety regulations result in higher research

costs and longer time between conceptualization and introduction of product.

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Political Environment

Includes laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society.

Areas of concern:– Increasing legislation.– Changing government agency enforcement.– Increased emphasis on ethics and socially

responsible behavior.

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Cultural Environment

The institutions and other forces that affect a society’s basic values, perceptions, preference, and behaviors.– Core beliefs and values are passed on from

parents to children and are reinforced by schools, churches/mosques, business, and government.

– Secondary beliefs and values are more open to change.• Marketers may be able to change secondary

beliefs, but NOT core beliefs.

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Cultural Environment

Society’s major cultural views are expressed in people’s views of:– Themselves– Others– Organizations– Society– Nature– The universe

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Responding to theMarketing Environment

Environmental Management Perspective– Taking a proactive approach to managing

the environment by taking aggressive (rather than reactive) actions to affect the publics and forces in the marketing environment.