3 -1 Chapter 5 Analyzing the Marketing Environment

3 -1 Chapter 5 Analyzing the Marketing Environment Copyright 2000 Prentice Hall ﺱ

3 -2 The objectives Of this Chapter is to • Describe the environmental forces that affect the company’s ability to serve its customers. • Explain how changes in the demographic and economic environments affect marketing decisions. • Identify the major trends in the firm’s natural and technological environments. • Explain the key changes in the political and cultural environments. • Discuss how companies can react to the marketing environment. Copyright 2000 Prentice Hall ﺱ

3 -3 Identifying and Responding to the Major Macr The substantial speedup of international transportation, • communication, and financial transactions, leading to the rapid growth of world trade and investment, especially tripolar trade (North America, Western Europe, Far East) The movement of manufacturing capacity and skills to lower cost • countries. The rising economic power of several Asian countries in world markets. • The rise of trade blocks such as the European Union and NAFTA • signatories. Copyright 2000 Prentice Hall ﺱ

3 -4 Identifying and Responding to the Major Macr The severe debt problems of a number of countries, along with the • increasing fragility of the international financial system. The increasing use of barter and countertrade to support • international transactions. The move toward market economies in formerly socialist countries • along with rapid privatization of publicly owned companies. The rapid dissemination of global lifestyles. • The gradual opening of major new markets, namely China, India, • eastern Europe, the Arab countries, and Latin America. Copyright 2000 Prentice Hall ﺱ

3 -5 Identifying and Responding to the Major Macr The increasing tendency of multinationals to transcend their • locational and national characteristics and become transnational firms. The increasing number of cross-border corporate strategic • alliances–for example, MCI and British Telecom, and Texas Instruments and Hitachi. The increasing ethnic and religious conflicts in certain countries • and regions. The growth of global brands in autos, food, clothing, electronics. • Copyright 2000 Prentice Hall ﺱ

Objectives 3 -6 Tracking Trends & Identifying Opportunities in the Marketing • Environments: Macroenvironment -- BIG Picture – Microenvironment -- Closer-In – Internal environment -- you & me – Copyright 2000 Prentice Hall ﺱ

3 -7 THE MARKETING ENVIRONMENT • • • THE MARKETING ENVIRONMENT • INTRODUCTION • INTERNAL ENVIRONMENT INTRODUCTION • EXTERNAL ENVIRONMENT INTERNAL ENVIRONMENT • SWOT ANALYSIS EXTERNAL ENVIRONMENT SWOT ANALYSIS Copyright 2000 Prentice Hall ﺱ

3 -8 Copyright 2000 Prentice Hall ﺱ

Marketing Environment 3 -9 • Marketing: • We have discussed before the meaning of Marketing and we said that marketing is. • Environment: • What do we mean by the environment? Copyright 2000 Prentice Hall ﺱ

Marketing Environment 3 -10 • Marketing Environment- consists of the Environment actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers. • Includes: – Microenvironment - forces close to the company that affect its ability to serve its customers. – Macroenvironment - larger societal forces that affect the whole microenvironment. Copyright 2000 Prentice Hall ﺱ

3 -11 But, the Business World is like an Orange. . . … you’ve got to peel away a few layers to get to the good stuff! Copyright 2000 Prentice Hall ﺱ

3 -12 Peeling the “Orange” Demographic Economic Logistics R& D ng i et Target Consumers Ac co u nt on cti ing Price Publics e nc Place du Pro Suppliers Product a Fin k ar M Promotion Engi neer Political Legal Technological Natural Intermediaries ing ng asi ch Pur Competitors © Bruce C. Bailey 1998 Copyright 2000 Prentice Hall ﺱ Social Cultural

The Marketing Environment 3 -13 Demographic Company Economic Cultural Publics Company Suppliers Customers Competitors Natural Political Intermediaries Technological Copyright 2000 Prentice Hall ﺱ

The Microenvironment 3 -14 Company Publics Forces Affecting a Company’s Ability to Serve Its Customers Suppliers Intermediaries Competitors Customers Copyright 2000 Prentice Hall ﺱ

The Company’s Microenvironment 3 -15 • Company’s Internal Environment- functional Environment areas such as top management, finance, and manufacturing, etc. • Suppliers - provide the resources needed to produce goods and services and are an important link in the “value delivery system”. • Marketing Intermediaries - help the company to promote, sell, and distribute its goods to final buyers. Copyright 2000 Prentice Hall ﺱ

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 against whom a company must gain strategic advantage. • Publics - any group that perceives itself having an interest in a company’s ability to achieve its objectives. Copyright 2000 Prentice Hall ﺱ 3 -16

Types of Customer Markets International Markets Consumer Markets Company Government Markets Business Markets Reseller Markets Copyright 2000 Prentice Hall ﺱ 3 -17

Types of Publics 3 -18 Financial i. e. Banks Media i. e. Newspapers Government i. e. Regulations Citizen-Action i. e. Consumer Groups Local i. e. Neighborhood Residents General Public Internal i. e. Employees Copyright 2000 Prentice Hall ﺱ

The Macroenvironment 3 -19 Demographic Cultural Forces that Shape Opportunities and Pose Threats to a Company Political Economic Natural Technological Copyright 2000 Prentice Hall ﺱ

The Company’s Macroenvironment 3 -20 • Demographic - studies populations in terms of age, gender, race, occupation, location and other statistics. • Economic - factors that affect consumer purchasing power and spending patterns. • Natural - natural resources needed as inputs Natura by marketers or that are affected by marketing activities. Copyright 2000 Prentice Hall ﺱ

Key U. S. Demographic Trends 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 Caucasian, 13% African-American, 72% Hispanic & 3% Asian 11% Copyright 2000 Prentice Hall ﺱ 3 -21

Demographic Environment Worldwide Population Growth Population Age Mix Ethnic Markets Educational Groups Household Patterns Geographical Shifts in Population Shift from Mass to Micromarkets Copyright 2000 Prentice Hall ﺱ 3 -22

Economic Environment 3 -23 Changes in Income Economic Development Inflation and Recession Key Economic Concerns for Marketers Changing Consumer Spending Patterns Copyright 2000 Prentice Hall ﺱ

Economic Environment Income Distribution Subsistence economies Raw-material-exporting economies Industrializing economies Industrial economies Savings, Debt, & Credit Availability Copyright 2000 Prentice Hall ﺱ 3 -24

Inflation 3 -25 • Prices rise with no wage increase Purchasing Power decreases • Increase profit margins by increasing efficiency • Consumers reaction: – Search for lowest prices – Rely on coupons and sales Copyright 2000 Prentice Hall ﺱ

Recession 3 -26 • Income, production and employment fall • Reduced demand for goods and services Copyright 2000 Prentice Hall ﺱ

Recession Marketing Strategies 3 -27 ® Improve existing products ® Maintain customer services ® Introduce new products ® Emphasize top-of -the line products Copyright 2000 Prentice Hall ﺱ

Natural Environment 3 -28 Shortag es of Raw Material s Increas ed Pollutio n Factors Affecting the Natural Environment Govern mental Interve ntion Copyright 2000 Prentice Hall ﺱ

The Company’s Macroenvironment 3 -29 • Technological - forces that create new technologies, creating new product and market opportunities. • Political - laws, agencies and groups that influence and limit organizations and individuals in a given society. • Cultural - institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors. Copyright 2000 Prentice Hall ﺱ

Technological Environment Rapid Pace of Change Unlimited Opportunities Issues in the Technological Environment Increased Regulation Practical, Affordable Products Copyright 2000 Prentice Hall ﺱ 3 -30

Technological & Resource Factors • New technology helps firm cope with other environmental factors • New technology helps firm carrying out and easuapply of research • Information technology helps economic growth Copyright 2000 Prentice Hall ﺱ 3 -31

Political Environment 3 -32 Some Trends in the Political Environment Include: Increasing Legislation Designed to Protect Groups Changing Government Agency Enforcement Increasing Emphasis on Ethics and Socially Responsible Actions Copyright 2000 Prentice Hall ﺱ

Political-Legal Environment Regional Groupings • European Union (EU) – NAFTA – Consumerism & SIG’s • MADD/SADD – Ethics & Social Responsibility • Increased Legislation & Enforcement • Copyright 2000 Prentice Hall ﺱ 3 -33

Cultural Environment 3 -34 Of Oneself Of the Universe Cultural Values Of Nature of a Society Of Society Copyright 2000 Prentice Hall ﺱ Of Others Of Organizations

Responding to the Marketing Environmental Management Perspective • Taking a proactive approach to – managing the microenvironment and the macroenvironment by taking aggressive (rather than passive) actions to affect the publics and forces in the marketing environment. How? Hire lobbyists , run – “advertorials”, file law suits and complaints, and form agreements. Copyright 2000 Prentice Hall ﺱ 3 -35

Rest Stop: Reviewing the Concepts 3 -36 • Describe the environmental forces that affect the company’s ability to serve its customers. • Explain how changes in the demographic and economic environments affect marketing decisions. • Identify the major trends in the firm’s natural and technological environments. • Explain the key changes in the political and cultural environments. • Discuss how companies can react to the marketing environment. Copyright 2000 Prentice Hall ﺱ