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Analyzing the Marketing Environment


Explain how changes in the demographic and economic environments affect marketing decisions. ... Know that the very wealthy can indulge their tastes ... – PowerPoint PPT presentation

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Title: Analyzing the Marketing Environment

Analyzing the Marketing Environment
Chapter 1
Chapter 3
Rest Stop Previewing the Concepts
  • Describe the environmental forces that affect the
    companys ability to serve its customers.
  • Explain how changes in the demographic and
    economic environments affect marketing decisions.
  • Identify the major trends in the firms natural
    and technological environments.
  • Explain the key changes in the political and
    cultural environments.
  • Discuss how companies can react to the marketing

Case Study
McDonalds Responding to Change
  • Challenges
  • Faced shifting consumer lifestyles and a sales
    growth slump of 3 between 1997 and 2000. Posted
    first quarterly loss in 2002.
  • McDonalds was losing share to the fast casual
    restaurant segment because consumers wanted
    healthier, better-tasting food in more upscale,
    fashionable surroundings.
  • Named as the defendant in a highly publicized law
  • Response Introduced Plan to Win in early 2003.
  • Plan to Win
  • Focused on consistent products and reliable
    servicecore competencies.
  • Introduced the Its what I eat and what I do. .
    . Im loving it ad campaign and revamped Web
    site to help consumers understand how to live
    balanced, active lives. Involved nutrition
    experts in menu redesign.
  • Added upscale restaurants, such as McCafe coffee
    shops and offered healthier food options Go
    Active! Adult Happy Meal white meat McNuggets
    various salads.
  • Results Increased sales by 42 while profits

Marketing Environment
  • Consists of actors and forces outside of the
    organization that affect managements ability to
    build and maintain relationships with target
  • The marketing environment is made the actors and
    forces outside marketing that affect marketing
    managements ability to develop and maintain
    successful relationships with its target
  • Studying the environment allows marketers to take
    advantage of opportunities as well as to combat
  • Marketing intelligence and research are used to
    collect information about the environment.

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.

The Microenvironment
  • Company itself
  • Suppliers
  • Marketing intermediaries
  • Customers
  • Competitors
  • Publics

Figure 4.1 The microenvironment
The Microenvironment
  • The company itself
  • Areas/departments inside of a company.
  • Affects the marketing departments planning
  • All departments must think consumer and work
    together to provide superior customer value and

The Microenvironment
  • Suppliers
  • Provide resources needed to produce goods and
  • Important link in the value delivery system.
  • Most marketers treat suppliers like partners.

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

The Microenvironment
  • Customers
  • Five types of markets that may purchase a
    companys goods and services.
  • Consumer
  • Business
  • Reseller
  • Government
  • International

The Microenvironment
  • Competitors
  • Those who serve a target market with products and
    services that are viewed by consumers as being
    reasonable substitutes for the firms products or
  • Company must seek to gain strategic advantage
    against these organizations.

The Microenvironment
  • Publics
  • Any group that has an interest in or impact on an
    organizations ability to achieve its objectives.
  • Financial public
  • Media public
  • Government public
  • Citizen-action public
  • Local public
  • General public
  • Internal public

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.

The companys macroenvironment
The Macroenvironment
  • Forces in the macroenvironment can be categorized
  • Demographic
  • Economic
  • Natural
  • Technological
  • Political
  • Cultural

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 at home and abroad.

Demographic Environment
  • The changing age structure of the U.S. population
    is the single most important demographic trend.
  • Baby boomers, Generation X, and the Millennials
    are key generational groups.

Demographic Environment
  • Baby boomers
  • 78 million born between 1946 and 1964.
  • Nearly 30 of population.
  • Spend 2.3 trillion annually and hold ¾ of the
    nations financial assets.
  • Spend 30 billion annually on anti-aging products
    and services strong market for financial
    services, new housing, travel, etc.
  • Are likely to postpone retirement.

Demographic Environment
  • Generation X
  • 49 million born between 1965 and 1976.
  • Defined by shared experiences
  • Increased parental divorce rates and more
    employed mothers made Generation X the first of
    the latchkey kids.
  • Gen X developed a more cautious economic outlook
    due to recessions and downsizing that were common
    when they grew up.

Demographic Environment
  • Generation X
  • Cares about the environment.
  • Prizes experience, not acquisition.
  • Family comes first, career second.
  • Skeptical of marketing messages researches
    purchases carefully, uses communities to share
  • Represents close to 1.4 trillion in annual
    purchasing power.

Demographic Environment
  • Millennials
  • 83 million born between 1977 and 2000larger than
    baby boomer segment.
  • Includes tweens, teens, and young adults.
  • Ethnically diverse.
  • Fluent with computer and digital technology.
  • Personalization and product customization are key
    to marketing success.

Demographic Environment
  • The American family and household makeup is
  • Traditional households are in decline
  • Married couples with children 23
  • Non-traditional households are growing
  • Married without children 29
  • Single parents 16
  • Non-family households 32
  • Special needs of non-traditional households are
    increasingly being considered by marketers.

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 are moving to micropolitan areas.
  • More people telecommute
  • 1 in 10 people now work out of their home.
  • Home office segment is being targeted.

Demographic Environment
  • Better educated population
  • 1980
  • 69 of people over age 25 completed high school
    17 had completed college.
  • 2004
  • 86 of people over age 25 completed high school
    28 had completed college.
  • Increasing demand for quality products,
    books/magazines, computers, travel, etc.

Demographic Environment
  • Increasing white-collar population
  • 19501985
  • White-collar workers increased from 41 to 54,
    while blue-collar workers decreased from 47 to
  • 19831999
  • Professionals and managers increased from 23 to
    greater than 30.
  • 20042012
  • Professionals should increase by 21 while
    manufacturing is expected to decline by 5.

Demographic Environment
  • Increasing diversity
  • The United States is an ethnic salad bowl.
  • Ethnic segments will continue to grow as a
    percentage of the U.S. population.
  • Marketers target specially designed ads,
    products, and promotions at ethnic groups.
  • Marketing efforts are increasing toward
  • Gay and lesbian consumers.
  • People with disabilities.

Economic Environment
  • Consists of factors that affect consumer
    purchasing power and spending patterns.
  • Changes in income
  • 1990sconsumption frenzy, record debt
  • 2000ssqueezed consumer
  • Marketers focus on offering greater value
  • Income distribution
  • Upper class getting wealthier
  • Middle class shrinking in size
  • Working class
  • Underclass remain poor

European Union enlargement and integration
  • Goal to achiever economic integration among
    member states
  • Established in 1993 by the Treaty on European
    Union (The Maastricht Treaty)
  • Largest economy in the world
  • GDP of 11.6 million
  • 35 of worlds GDP
  • Worlds largest exporter
  • Worlds second largest importer

Income distribution
Upper income
Middle income
Lower income
How should we market to the
very wealthy?
  • Remember the wealthy are just like us
  • Recognize that the super-rich are not
    one culture
  • Know that the very wealthy can indulge their
  • To sell to the rich, you must know how and where
    they live, where they go, what they do

Natural environment trends
  • Growing shortage of raw materials
  • Increased cost of energy
  • Increased pollution and climate change
  • Government intervention in natural resource

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

Technological Environment
  • Most dramatic force shaping our destiny.
  • Changes rapidly, creating new markets and
    opportunities and/or danger of products becoming
  • Challenge is to make practical, affordable new
  • Safety regulations result in higher research
    costs and longer time between product
    conceptualization and introduction.

Trends in the technological environment
  • Fast pace of technological change
  • Increased regulation

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.

Public policy implications
  • Laws are created at different levels
  • Member states vary in the extent to which they
    comply with EU legislation
  • Regulations are constantly changing

Marks Spencer participates
in cause-related marketing
Cultural Environment
  • The institutions and other forces that affect a
    societys basic values, perceptions, preferences,
    and behaviors.
  • Core beliefs and values are passed on from
    parents to children and are reinforced by
    schools, churches, business, and government.
  • Secondary beliefs and values are more open to
  • Marketers may be able to change secondary
    beliefs, but NOT core beliefs.

Cultural Environment
  • Societys major cultural views are expressed in
    peoples views of
  • Themselves
  • Others
  • Organizations
  • Society
  • Nature
  • The universe

Cultural characteristics affecting
marketing decision making
  • Persistence of cultural values
  • Shifts in secondary cultural values
  • Peoples views of themselves
  • Peoples views of others
  • Peoples views of organisations
  • Peoples views of society
  • Peoples views of nature
  • Peoples views of the universe

Consumer segments related to views of self
  • I am expressive
  • I am driven
  • I am at capacity
  • I am rock steady
  • I am down to earth
  • I am sophisticated
  • I measure twice
  • I am devoted

Responding to the Marketing Environment
  • Reactive responses
  • Many firms simply react to changes in the
    marketing environment.
  • Proactive responses
  • Some firms attempt to manage the marketing
    environment via aggressive actions designed to
    affect the publics and forces in the marketing

Responding to the Marketing Environment
  • Examples of proactive responses
  • Hiring lobbyists
  • Running advertorials
  • Pressing law suits
  • Filing complaints
  • Forming agreements to control channels

Rest Stop Reviewing the Concepts
  • Describe the environmental forces that affect the
    companys ability to serve its customers.
  • Explain how changes in the demographic and
    economic environments affect marketing decisions.
  • Identify the major trends in the firms natural
    and technological environments.
  • Explain the key changes in the political and
    cultural environments.
  • Discuss how companies can react to the marketing