Marketng chapter 4

The MarketingEnvironment

Chapter 4Chapter 4

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Objectives

Know the environmental forces that Know the environmental forces that affect the company’s ability affect the company’s ability to serve its customers.to serve its customers.

Realize how changes in the Realize how changes in the demographic and economic demographic and economic environments affect marketing environments affect marketing decisions.decisions.

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Objectives

Identify the major trends in the firm’s Identify the major trends in the firm’s natural and technological natural and technological environments.environments.Know the key changes in the political Know the key changes in the political & cultural environments.& cultural environments.Understand how companies can Understand how companies can react to the marketing environment.react to the marketing environment.

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““Millennial fever” set Millennial fever” set the stage to bring the stage to bring back the VW Beetleback the VW Beetle

VW’s investment: VW’s investment: $ 560 million $ 560 million

Demand quickly Demand quickly outstripped supplyoutstripped supply

cVolkswagenVolkswagen

The new VW beetle The new VW beetle enjoyed cross-enjoyed cross-generational appealgenerational appeal

Earned many awardsEarned many awards

VW’s Beetle now VW’s Beetle now accounts for over 25% accounts for over 25% of company salesof company sales

Discussion: Is VW’s next nostalgia venture, the “flower-power” Microbus, as likely to succeed?

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Key Environments

Marketing EnvironmentMarketing Environment The actors and forces that The actors and forces that

affect a firm’s ability to build affect a firm’s ability to build and maintain successful and maintain successful relationships with relationships with customers.customers.

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Key Environments

Aspects of the marketing Aspects of the marketing environment:environment: Microenvironment: Microenvironment:

Actors close to the companyActors close to the company MacroenvironmentMacroenvironment

Larger societal forcesLarger societal forces

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The Microenvironment

Departments within the company impact Departments within the company impact marketing planning.marketing planning.

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Suppliers help to create and deliver Suppliers help to create and deliver customer value.customer value. Treat suppliers as partners.Treat suppliers as partners.

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Marketing intermediaries help to sell, promote, Marketing intermediaries help to sell, promote, and distribute goods.and distribute goods. Intermediaries take Intermediaries take

many forms.many forms. ResellersResellers Physical Physical

distribution firmsdistribution firms Marketing services Marketing services

agenciesagencies Financial Financial

intermediariesintermediaries

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The Macroenvironment

Customer markets must be studied.Customer markets must be studied.

Market typesMarket types ConsumerConsumer BusinessBusiness GovernmentGovernment ResellerReseller InternationalInternational

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Successful companies Successful companies provide better customer provide better customer value than the competitionvalue than the competition Size and industry position Size and industry position

help to determine the help to determine the competitive strategy.competitive strategy.

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GovernmentGovernment MediaMedia FinancialFinancial

LocalLocal GeneralGeneral InternalInternal

Various publics must also Various publics must also be considered.be considered.

Citizen Action GroupsCitizen Action Groups

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Figure 4-1:

Actors in the Microenvironment

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Figure 4-2:

Major Macroenvironmental Forces

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Key Demographic TrendsKey Demographic Trends World population World population

growthgrowth Now 6.2 billionNow 6.2 billion Projected to Projected to

reach 7.9 billion reach 7.9 billion by 2025 by 2025

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Key Demographic TrendsKey Demographic Trends Changing age structureChanging age structure

The U.S. population consists The U.S. population consists of seven generational groups. of seven generational groups.

• Baby boomers, Generation X and Baby boomers, Generation X and Generation Y are key groups.Generation Y are key groups.

Distinct segments typically Distinct segments typically exist within these generational exist within these generational groups. groups.

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Born between 1946 and 1964Born between 1946 and 1964Represent 28% of the Represent 28% of the population; earn 50% of population; earn 50% of personal incomepersonal incomeMany mini-segments exist Many mini-segments exist within the boomer groupwithin the boomer groupEntering peak earning years Entering peak earning years as they matureas they matureLucrative market for travel, Lucrative market for travel, entertainment, housing and entertainment, housing and moremore

Baby boomersBaby boomers

Generation XGeneration X

Generation YGeneration Y

Key Key GenerationsGenerations

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The “graying of America” The “graying of America” refers to the fact that as baby refers to the fact that as baby boomers get older, the boomers get older, the average age of the U.S. average age of the U.S. population increases.population increases.

Today, baby boomers are a Today, baby boomers are a great target for exotic travel.great target for exotic travel.

Think ahead to 20 years in Think ahead to 20 years in the future. For what types of the future. For what types of products and services will products and services will baby boomers represent a baby boomers represent a prime target?prime target?

Discussion Question

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Born between 1965 and Born between 1965 and 19761976First latchkey childrenFirst latchkey childrenMaintain a cautious Maintain a cautious economic outlookeconomic outlookShare new cultural Share new cultural concernsconcernsRepresent $125 billion in Represent $125 billion in annual purchasing powerannual purchasing powerWill be primary buyers of Will be primary buyers of most goods by 2010most goods by 2010





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Generation X has been Generation X has been described in the past as described in the past as “working to live” rather “working to live” rather than “living to work.”than “living to work.”

Do you think that this Do you think that this statement reflects statement reflects Generation X’s true Generation X’s true priorities in life? priorities in life?

Why or why not?Why or why not?

Discussion Question

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Born between 1977 and Born between 1977 and 1994199472 million strong; almost as 72 million strong; almost as large a group as their baby large a group as their baby boomer parentsboomer parentsNew products, services, and New products, services, and media cater to Generation Ymedia cater to Generation YComputer, Internet and Computer, Internet and digitally saavydigitally saavyChallenging target for Challenging target for marketersmarketers





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Figure 4-3:

Seven U.S. Generations

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Key Demographic TrendsKey Demographic Trends Changing American Changing American household household Geographic population Geographic population

shifts shifts Better-educated, more Better-educated, more white-collar workforce white-collar workforce Increasing DiversityIncreasing Diversity

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Zoots Video Clip

Working women value products and services that are convenient to use or that save time.

BusinessNow

Click the picture above to play video

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The Economic EnvironmentThe Economic Environment Affects consumer Affects consumer

purchasing power purchasing power and spending and spending patterns.patterns.

U.S. consumers U.S. consumers now spend carefully now spend carefully and desire greater and desire greater value.value.

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The Economic EnvironmentThe Economic Environment Two types Two types of national of national economies: economies:

subsistencesubsistence industrialindustrial

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Key Economic Trends Key Economic Trends U.S. income distribution U.S. income distribution

is skewed.is skewed. Upper class, middle class, Upper class, middle class,

working class, underclass working class, underclass Rich:Rich: getting richer getting richer

Middle class:Middle class: shrinking shrinking Underclass:Underclass: still poor still poor

Consumer spending Consumer spending patterns are changing.patterns are changing.

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The Natural EnvironmentThe Natural Environment Concern for the natural Concern for the natural

environment has grown environment has grown steadily, increasing the steadily, increasing the importance of these trends:importance of these trends: Shortage of raw materialsShortage of raw materials Increased pollutionIncreased pollution Increased governmental Increased governmental

intervention intervention

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Many companies use recycling to help protect Many companies use recycling to help protect natural resourcesnatural resources

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Key Technological TrendsKey Technological Trends The technological environment is The technological environment is

characterized by rapid change.characterized by rapid change. New technologies create new New technologies create new

opportunities and markets but opportunities and markets but make old technologies obsolete.make old technologies obsolete.

The U.S. leads the world in The U.S. leads the world in research and development research and development spending.spending.

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The Political EnvironmentThe Political Environment Includes laws, Includes laws,

governmental governmental agencies, and agencies, and pressure groups pressure groups that impact that impact organizations and organizations and individuals. individuals.

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The Political EnvironmentThe Political Environment Key trends include:Key trends include:

Increased legislation to protect Increased legislation to protect businesses as well as consumers. businesses as well as consumers.

Changes in governmental agency Changes in governmental agency enforcement. enforcement.

Increased emphasis on ethical Increased emphasis on ethical behavior and social responsibility. behavior and social responsibility.

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Cause-related marketing is one method Cause-related marketing is one method of demonstrating social responsibilityof demonstrating social responsibility

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The Cultural EnvironmentThe Cultural Environment Is composed of institutions and Is composed of institutions and

other forces that other forces that affect a society’s affect a society’s basic values, basic values, perceptions, perceptions, preferences, preferences, and behaviors.and behaviors.

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Core beliefs are persistentCore beliefs are persistent Passed from parents Passed from parents

to children; reinforced to children; reinforced by societyby society

Shape attitudes and behaviorShape attitudes and behavior

Secondary cultural values change Secondary cultural values change and and shift more easilyshift more easily

Society’s cultural values Society’s cultural values are expressed through are expressed through people’s views of:people’s views of: ThemselvesThemselves OthersOthers OrganizationsOrganizations SocietySociety NatureNature The UniverseThe Universe

The Cultural EnvironmentThe Cultural Environment

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Responding to the Marketing Environment

Reactive:Reactive: Passive Acceptance and Adaptation Passive Acceptance and Adaptation Companies design strategies that avoid threats and Companies design strategies that avoid threats and

capitalize upon opportunities.capitalize upon opportunities.

Proactive:Proactive: Environmental ManagementEnvironmental Management Use of lobbyists, PR, advertorials, lawsuits, complaints, and Use of lobbyists, PR, advertorials, lawsuits, complaints, and

contractual agreements to influence environmental forces.contractual agreements to influence environmental forces.

Marketng chapter 4

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