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The Marketing Environment 1 The Marketing Environment 1

Preview Case: Mc. Donald’s – Challenges and Reactions n Challenges n Shifting consumer lifestyles Preview Case: Mc. Donald’s – Challenges and Reactions n Challenges n Shifting consumer lifestyles n Low ratings of food and service quality n Atmosphere not upscale n Image of being unclassy, uncultured and uncool to younger target markets n Marketing Initiatives n Focus on core competency of consistent products and reliable service Upscale alternative including “Mc. Cafe” and “Bistro Gourmet” Healthier food options with elimination of “supersize” and introduction of Go Active! Adult Happy Meal n n

The Marketing Environment n Marketing Environment ğ The actors and forces outside marketing that The Marketing Environment n Marketing Environment ğ The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers

Marketing Environment n Marketing environment includes: ¨ Microenvironment - actors close to the company Marketing Environment n 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.

Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics ¨ Marketing must consider other parts of the organization including finance, R&D, purchasing, operations and accounting ¨ Marketing decisions must relate to broader company goals and strategies

Microenvironment Company’s Internal Environment Microenvironment Company’s Internal Environment

Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics n Firms and individuals providing resources to the company and its competitors to produce goods and services. Marketers must watch supply availability and price trends of key inputs ¨ Effective partnership relationship management with suppliers is essential ¨

Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics ¨ Firms that help the company to promote, sell and distribute goods to final buyers ¨ Include resellers, physical distribution firms, marketing services agencies and financial intermediaries ¨ Effective partner relationship management is essential

Microenvironment – Marketing Intermediaries n n Resellers ğ Distribution channel firms that help the Microenvironment – Marketing Intermediaries n n Resellers ğ Distribution channel firms that help the company to find customers or to make sales to them. Physical distribution firms ğ Help the company to stock and move goods from their origins to their destinations Marketing service agencies ğ Help the company target and promote its products such as marketing research firms, ad agencies etc. Financial intermediaries ğ Help finance transactions and insure against risks such as banks, insurance companies

Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics ¨ The five types of customer markets n Consumer n Business n Reseller n Government n International

Microenvironment – Customer Markets n n n Consumer markets ğ Individuals & households that Microenvironment – Customer Markets n n n Consumer markets ğ Individuals & households that buy goods & services for personal consumption Business markets ğ Buy goods & services for further processing in their production process Resellers markets ğ Buy goods & services in order to resell them at a profit Government markets ğ Buy goods & services in order to produce public services or transfer them to those that need them International markets ğ Buyers of all types in foreign countries

Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics n n Those who serve a target market with similar products/services Conducting competitor analysis is critical for success of the firm A marketer must monitor its competitors’ offerings to create strategic advantage ¨ No single competitive strategy is best for all companies ¨

Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors Microenvironment Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics ¨A group that has an actual or potential interest in or impact on an organization ¨ Seven publics include: n Financial n Media n Government n Citizen-action n Local n General n Internal

Macroenvironmental Forces Demographic n Economic n Natural n Technological n Political n Social-Cultural n Macroenvironmental Forces Demographic n Economic n Natural n Technological n Political n Social-Cultural n

Demographic Environment n Demography ¨ The study of human populations in terms of size, Demographic Environment n Demography ¨ The study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics

Demographic Environment Worldwide Population Growth Age Structure of the Population Household Patterns Geographical Shifts Demographic Environment Worldwide Population Growth Age Structure of the Population Household Patterns Geographical Shifts in Population Educational Groups Shift from Mass Market to Micromarkets Ethnic Markets

Economic Environment Econo mic Develo pment Chang es in Incom e: Value Changi Marketi Economic Environment Econo mic Develo pment Chang es in Incom e: Value Changi Marketi ng ng Consu mer Spendi ng Key Economic Concerns for Marketers

Natural Environment n Natural Environment: ¨ Involves the natural resources that are needed as Natural Environment n Natural Environment: ¨ Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities n Trends ¨ Shortages of raw materials ¨ Increased pollution ¨ Increased government intervention

Technological Environment n Rapidly changing force which creates many new marketing opportunities but also Technological Environment n Rapidly changing force which creates many new marketing opportunities but also turns many existing products extinct ¨ Faster pace of technological change; products are outdated at a rapid pace. ¨ Almost unlimited opportunities being developed daily in health care, space industry, robotics, and bio-genetic field. ¨ Challenge is not only technical, but also commercial – make practical, affordable versions of products. ¨ Increased regulation concerning product safety, individual privacy, and other areas that affect technological changes.

Political Environment n Consists of laws, government agencies and pressure groups that influence or Political Environment n Consists of laws, government agencies and pressure groups that influence or limit various organizations and individuals in a given society ¨ Legislation affecting businesses worldwide has increased ¨ Laws protect companies, consumers and the interests of society ¨ Increased emphasis on socially responsible actions

Cultural Environment n Made up of institutions and other forces that affect a society’s Cultural Environment n Made up of institutions and other forces that affect a society’s basic values, perceptions, preferences and behaviors.

Cause-Related Marketing Marketers create link between brand charitable organization n Demonstrates social responsibility n Cause-Related Marketing Marketers create link between brand charitable organization n Demonstrates social responsibility n Helps build positive brand image n

Cultural Environment Includes people’s views of… Themselves § Identify with brands for selfexpression Others Cultural Environment Includes people’s views of… Themselves § Identify with brands for selfexpression Others § Recent shift from “me” to “we” society Organizations § Trend of decline in trust and loyalty to companies Society § Patriotism on the rise Nature § “lifestyles of health and sustainability” consumer segment Universe § Includes religion and spirituality

Responding to the Marketing Environment n Environmental Management Perspective ¨ Taking a proactive approach Responding to the Marketing Environment n 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. n By hiring lobbyists, running advertorials, press law suits, file complaints, and forming agreements. “There are three kinds of companies: those who make things happen, those who watch things happen, and those who wonder what’s happened. ”

The marketplace isn’t what it used to be… Changing technology Globalization Deregulation Privatization Empowerment The marketplace isn’t what it used to be… Changing technology Globalization Deregulation Privatization Empowerment Customization Convergence Disintermediation