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The five major environmental forces in a marketing decision are

11/11/2021 Client: muhammad11 Deadline: 2 Day

Marketing: An Introduction

Thirteenth Edition

Chapter 3

Analyzing the Marketing Environment

Learning Objectives (1 of 4)

3-1. Describe the environmental forces that affect the company’s ability to serve its customers.

3-2. Explain how changes in the demographic and economic environments affect marketing decisions.

3-3. Identify the major trends in the firm’s natural and technological environments.

This chapter describes the environmental forces that affect the company’s ability to serve its customers, explains how changes in the demographic and economic environments affect marketing decisions, and identifies the major trends in the firm’s natural and technological environments.

Learning Objectives (2 of 4)

3-4. Explain the key changes in the political and cultural environments.

3-5. Discuss how companies can react to the marketing environment.

This chapter further explains the key changes in the political and cultural environments and discusses how companies can react to the marketing environment.

First Stop: Kellogg Losing Its Snap, Crackle, and Pop?

Kellogg’s cereal brands have helped define the American breakfast experience. As American lifestyles and breakfast-eating behaviors have changed, Kellogg has lost some of its snap, crackle, and pop.

Kellogg is the world’s largest cereal maker. But as demographic, cultural, lifestyle, and other shifts in the marketing environment change how people eat breakfast, mighty Kellogg finds itself battling to bring modern breakfast eaters back to its table.

Learning Objective 3-1

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

Marketing Environment

Outside forces that affect marketing management’s ability to build and maintain successful relationships with target customers

Microenvironment: Actors close to the company that affect its ability to serve its customers

Macroenvironment: Larger societal forces that affect the microenvironment

Marketing environment refers to the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. The marketing environment consists of a microenvironment and a macroenvironment.

The microenvironment consists of the actors close to the company that affect its ability to serve its customers.

The macroenvironment consists of the larger societal forces that affect the microenvironment.

Figure 3.1 - Actors in the Microenvironment

This figure shows the six major forces in the company’s macroenvironment.

Each of these forces are discussed in greater detail in the following slides.

The Company

Interrelated groups in a company form the internal environment

Departments share the responsibility for understanding customer needs and creating customer value.

In designing marketing plans, marketing management takes other company groups into account—groups such as top management, finance, research and development (R&D), purchasing, operations, human resources, and accounting. All of these interrelated groups form the internal environment.

With marketing taking the lead, all departments—from manufacturing and finance to legal and human resources—share the responsibility for understanding customer needs and creating customer value.

Suppliers (1 of 2)

Provide the resources needed by the company to produce its goods and services

Supplier problems seriously affect marketing

Supply shortages or delays

Labor strikes

Price trends of key inputs

Suppliers form an important link in the company’s overall customer value delivery network. They provide the resources needed by the company to produce its goods and services.

Supplier problems can seriously affect marketing. Marketing managers must watch supply availability and costs. Supply shortages or delays can cost sales in the short run and damage customer satisfaction in the long run. Rising supply costs may force price increases that can harm the company’s sales volume.

Suppliers (2 of 2)

Honda has developed healthy, long-term supplier relationships.

Through close teamwork, Honda has developed healthy, long-term supplier relationships. Strategic suppliers are considered extensions of Honda, to the benefit of both partners.

Marketing Intermediaries (1 of 2)

Marketing intermediaries help the company to promote, sell, and distribute its products to final buyers.

Resellers

Physical distribution firms

Marketing services agencies

Financial intermediaries

Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers.

Physical distribution firms help the company to stock and move goods from their points of origin to their destinations.

Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets.

Financial intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods.

Marketing Intermediaries (2 of 2)

Coca-Cola provides its retail partners with much more than just soft drinks. It also pledges powerful marketing support.

Competitors

Marketers must gain strategic advantage by positioning products strongly against competitors.

No single strategy is best for all companies.

The marketing concept states that, to be successful, a company must provide greater customer value and satisfaction than its competitors do. Thus, marketers must do more than simply adapt to the needs of target consumers. They also must gain strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of consumers.

No single competitive marketing strategy is best for all companies. Each firm should consider its own size and industry position compared with those of its competitors. Large firms with dominant positions in an industry can use certain strategies that smaller firms cannot afford. However, small firms can also develop winning strategies.

Publics

Publics: any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives

Financial

Media

Government

Citizen action

Local

General

Internal

Financial publics influence the company’s ability to obtain funds.

Media publics carry news, features, and editorial opinions.

Government publics: Management must take government developments into account.

Citizen-action publics: A company’s marketing decisions may be questioned by consumer organizations, environmental groups, etc.

Local publics include neighborhood residents and community organizations.

General public: The general public’s image of the company affects its buying.

Internal publics include workers, managers, volunteers, and the board of directors.

Customers

Five types of customer markets

Consumer markets

Business markets

Reseller markets

Government markets

International markets

Consumer markets consist of individuals and households that buy goods and services for personal consumption.

Business markets buy goods and services for further processing or for use in their production process.

Reseller markets buy goods and services to resell at a profit.

Government markets consist of government agencies that buy goods and services to produce public services.

International markets consist of buyers in other countries, including consumers, producers, resellers, and governments.

Figure 3.2 - Major Forces in the Company’s Macroenvironment

This figure shows the six major forces in the company’s macroenvironment.

Each of these forces are discussed in greater detail in the following slides.

Learning Objective 3-1 Summary

Company’s microenvironment

Company, suppliers, marketing intermediaries

Competitors, publics, customers

Forces in the company’s macroenvironment

Demographic

Economic

Natural

Technological

Political and cultural

The company’s microenvironment consists of actors close to the company that combine to form its value delivery network or that affect its ability to serve customers. It includes the company’s internal environment—its several departments and management levels—as it influences marketing decision making.

Marketing channel firms—suppliers, marketing intermediaries, physical distribution firms, marketing services agencies, and financial intermediaries—cooperate to create customer value. Competitors vie with the company in an effort to serve customers better. Various publics have an actual or potential interest in or impact on the company’s ability to meet its objectives. Finally, five types of customer markets exist: consumer, business, reseller, government, and international markets. The macroenvironment consists of larger societal forces that affect the entire microenvironment.

The six forces making up the company’s macroenvironment are demographic, economic, natural, technological, political/social, and cultural forces. These forces shape opportunities and pose threats to the company.

Learning Objective 3-2

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

Demographic Environment (1 of 3)

Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics.

Marketers analyze:

Changing age and family structures

Geographic population shifts

Educational characteristics

Population diversity

Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. Marketers analyze several important factors that affect the marketing environment.

The first factor is the changing age and family structures. The U.S. population contains several generational groups. These include the Baby Boomers, Generation X, Generation Y or Millennials, and Generation Z. These are discussed in more detail on the next slide.

The second factor is the changing American household. More people are divorcing or separating, choosing not to marry, marrying later, or marrying without intending to have children. Marketers must increasingly consider the special needs of nontraditional households because they are now growing more rapidly than traditional households. Each group has distinctive needs and buying habits.

The third factor is geographic shifts in population. Population shifts interest marketers because people in different regions buy differently. For example, people in the Midwest buy more winter clothing than people in the Southeast.

And the final factor is increasing diversity. Marketers face increasingly diverse markets as their operations become more international in scope. Some major companies also explicitly target gay and lesbian consumers.

Demographic Environment (2 of 3)

The U.S. population contains several generational groups:

Baby Boomers

Generation X

Millennials (or Generation Y)

Generation Z

The U.S. population contains several generational groups. These include the Baby Boomers, Generation X, Generation Y or Millennials, and Generation Z.

Baby boomers: The 78 million people born during the years following World War II and lasting until 1964.

Generation X: The 49 million people born between 1965 and 1976 in the “birth dearth” following the baby boom.

Millennials (or Generation Y): The 83 million children of the baby boomers born between 1977 and 2000.

Generation Z: People born after 2000 (although many analysts include people born after 1995) who make up the kids, tweens, and teens markets

Demographic Environment (3 of 3)

GE’s Artistry appliance line is designed to target Millennials.

GE’s Artistry appliance line is designed to capture the fast-growing segment of tech-design-savvy but price-conscious Millennials who are buying and equipping their first homes.

Economic Environment

Economic factors affect consumer purchasing power and spending

Changes in consumer spending

Differences in income distribution

The economic environment consists of economic factors that affect consumer purchasing power and spending patterns.

Economic factors can have a dramatic effect on consumer spending and buying behavior. Consumers have now adopted a back-to-basics sensibility in their lifestyles and spending patterns that will likely persist for years to come. They are buying less and looking for greater value in the things they do buy. In turn, value marketing has become the watchword for many marketers. Marketers in all industries are looking for ways to offer today’s frugal buyers greater value.

Marketers should pay attention to income distribution as well as income levels. Over the past several decades, the rich have grown richer, the middle class has shrunk, and the poor have remained poor. This distribution of income has created a tiered market. Many companies aggressively target the affluent, while other firms target those with more modest means. Still other companies tailor their marketing offers across a range of markets, from the affluent to the less affluent.

Learning Objective 3-2 Summary

Demographic environment

Age and family structures

Geographic population shifts

Education characteristics

Population diversity

Economic environment

Changes in consumer spending and income distribution

Demography is the study of the characteristics of human populations. Today’s demographic environment shows a changing age structure, shifting family profiles, geographic population shifts, a better-educated and more white-collar population, and increasing diversity. The economic environment consists of factors that affect buying power and patterns. The economic environment is characterized by more frugal consumers who are seeking greater value—the right combination of good quality and service at a fair price. The distribution of income also is shifting. The rich have grown richer, the middle class has shrunk, and the poor have remained poor, leading to a two-tiered market.

Learning Objective 3-3

Identify the major trends in the firm’s natural and technological environments.

Natural Environment

Physical environment and natural resources needed as inputs by marketers or affected by marketing activities

Environmental sustainability concerns have grown steadily over the past three decades.

Trends:

Shortages of raw materials

Increased pollution

Increased government intervention

The natural environment involves the physical environment and the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Marketers should be aware of several trends in the natural environment.

The first involves growing shortages of raw materials. Firms making products that require scarce resources face large cost increases, even if the materials remain available. The second trend is increased pollution. The third trend is increased government intervention in natural resource management. The governments of different countries vary in their concern and efforts to promote a clean environment.

Today, enlightened companies adopt practices that support environmental sustainability. This refers to the effort to create a world economy that the planet can support indefinitely.

Technological Environment (1 of 2)

New technologies create new markets and opportunities.

Radio-frequency identification (RFID) is technology to track products through various points in the distribution channel.

Government agencies investigate and ban potentially unsafe products.

New technologies can offer exciting opportunities for marketers. Many firms use radio-frequency identification, or RFID, technology to track products through various points in the distribution channel. New technologies create new markets and opportunities. Companies that do not keep up will soon find their products outdated.

Government agencies investigate and ban potentially unsafe products. Regulations have resulted in much higher research costs and longer times between new product ideas and their introduction. Marketers should be aware of these regulations when applying new technologies and developing new products.

Technological Environment (2 of 2)

Disney is taking RFID technology to new levels with its cool new MagicBand RFID wristband.

Wearing a MagicBand at The Walt Disney World Resort opens up a whole new level of Disney’s famed magic. After registering for cloud-based MyMagic+ services, with the flick of your wrist you can enter a park or attraction, buy dinner or souvenirs, or even unlock your hotel room.

Learning Objective 3-3 Summary

Natural environment

Shortage of raw materials and high pollution levels

Government intervention

Environmental sustainability

Technological environment

Radio-frequency identification (RFID)

Government regulation

The natural environment shows three major trends: shortages of certain raw materials, higher pollution levels, and more government intervention in natural resource management. Environmental concerns create marketing opportunities for alert companies. The technological environment creates both opportunities and challenges. Companies that fail to keep up with technological change will miss out on new product and marketing opportunities.

Learning Objective 3-4

Explain the key changes in the political and cultural environments.

Political Environment

Forces that influence or limit various organizations and individuals in a society

Laws, government agencies, and pressure groups

The political environment refers to laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society.

Major U.S. Legislation Affecting Marketing

Legislation regulating business is intended to protect

companies from each other

consumers from unfair business practices

the interests of society against unrestrained business behavior

Business legislation has been enacted for a number of reasons. The first is to protect companies from each other. The second purpose of government regulation is to protect consumers from unfair business practices. The third purpose is to protect the interests of society against unrestrained business behavior

Major U.S. Legislation Affecting Marketing: 1990-2010 (1 of 2)

Legislation Purpose
Children’s Television Act (1990) Limits the number of commercials aired during children’s programs
Nutrition Labeling and Education Act (1990) Requires that food product labels provide detailed nutritional information
Telephone Consumer Protection Act (1991) Establishes procedures to avoid unwanted telephone solicitations
Americans with Disabilities Act (1991) Makes discrimination against people with disabilities illegal
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved

This table lists legislation enacted from 1990 – 2010 that affects marketing.

A complete list of laws, starting with the Sherman Antitrust Act of 1890, can be found in Table 3.1 of this chapter.

Major U.S. Legislation Affecting Marketing: 1990-2010 (2 of 2)

Legislation Purpose
Children’s Online Privacy Protection Act (2000) Prohibits online collection of information from children without parental consent Allows parents to review information collected from their children
Do-Not-Call Implementation Act (2003) Collects fees from telemarketers for the enforcement of a Do-Not-Call Registry
CAN-SPAM Act (2003) Regulates the distribution and content of unsolicited commercial e-mail
Financial Reform Law (2010 Created the Bureau of Consumer Financial Protection: Writes and enforces rules for the marketing of financial products to consumers
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved

This table lists legislation enacted from 1990 – 2010 that affects marketing.

A complete list of laws, starting with the Sherman Antitrust Act of 1890, can be found in Table 3.1 of this chapter.

Socially Responsible Behavior

Socially responsible companies actively seek out ways to protect the long-run interests of consumers and the environment.

Companies develop policies, guidelines, and other responses to complex social responsibility issues.

Socially responsible firms actively seek out ways to protect the long-run interests of their consumers and the environment. Almost every aspect of marketing involves ethics and social responsibility issues. Companies are now developing policies, guidelines, and other responses to complex social responsibility issues.

Enlightened companies encourage their managers to look beyond what the regulatory system allows and simply “do the right thing.”

Cause-Related Marketing (1 of 2)

Companies use cause-related marketing to

Exercise their social responsibility

Build more positive images

Primary form of corporate giving

Controversy—strategy for selling more rather than a strategy for giving

To exercise their social responsibility and build more positive images, many companies are now linking themselves to worthwhile causes. Cause-related marketing has become a primary form of corporate giving.

Critics worry that cause-related marketing is more a strategy for selling than a strategy for giving. Thus, companies using cause-related marketing might find themselves walking a fine line between increased sales and an improved image and charges of exploitation.

Cause-Related Marketing (2 of 2)

AT&T joined forces with competitors Verizon, Sprint, and T-Mobile to spearhead the “It Can Wait” campaign.

AT&T joined forces with competitors Verizon, Sprint, and T-Mobile to spearhead the “It Can Wait” campaign, which urges people of all ages to take the pledge to never text and drive.

Cultural Environment (1 of 3)

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

Persistence of cultural values

Core beliefs and values have a high degree of persistence.

Secondary beliefs and values are more open to change.

The cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors. Society shapes basic beliefs and values. People grow up in a particular society that shapes their basic beliefs and values. They absorb a worldview that defines their relationships with others. Cultural characteristics can affect marketing decision making.

People in a given society hold many beliefs and values. Their core beliefs and values have a high degree of persistence and are passed on from parents to children and are reinforced by schools, churches, businesses, and government. For example, most Americans believe in individual freedom, hard work, getting married, achievement, and success. These beliefs shape more specific attitudes and behaviors found in everyday life.

Secondary beliefs and values are more open to change and include people’s views of themselves, others, organizations, society, nature, and the universe. Believing in marriage is a core belief; believing that people should get married early in life is a secondary belief. Marketers have some chance of changing secondary values but little chance of changing core values.

Cultural Environment (2 of 3)

Shifts in secondary cultural values of people’s views about

Themselves

Others

Organizations

Society

Nature

Universe

Cultural characteristics that can affect marketing decision making are the persistence of cultural values and shifts in secondary cultural values, such as people’s views of themselves, others, organizations, society, and nature.

People’s views of themselves: People vary in their emphasis on serving themselves versus serving others.

People’s views of others: More “cocooning” – staying home, eating home-cooked meals

People’s views of organizations: Decline of loyalty toward companies

People’s views of society: Patriots defend it, reformers want to change it, and malcontents want to leave it.

People’s views of nature: Some feel ruled by it, in harmony with it, or seek to master it.

People’s views of the universe: Renewed interest in spirituality and development of more permanent values—family, community, earth, faith

Cultural Environment (3 of 3)

Yogi appeals to tea drinkers with a more spiritual view of themselves, their lives, and their teas.

People’s self-views: Yogi appeals to tea drinkers with a more spiritual view of themselves, their lives, and their teas. Yogi Sweet Tangerine Positive Energy tea “energizes and elevates mood.” “How good can you feel?”

Learning Objective 3-4 Summary

Political environment

Laws, government agencies, and pressure groups

Legislation affecting marketing

Socially responsible behavior

Cultural environment

Core and secondary beliefs

Shifts in secondary cultural values

The political environment consists of laws, agencies, and groups that influence or limit marketing actions. The political environment has undergone changes that affect marketing worldwide: increasing legislation regulating business, strong government agency enforcement, and greater emphasis on ethics and socially responsible actions. The cultural environment consists of institutions and forces that affect a society’s values, perceptions, preferences, and behaviors. The environment shows trends toward new technology enabled communication, a lessening trust of institutions, increasing patriotism, greater appreciation for nature, a changing spiritualism, and the search for more meaningful and enduring values.

Learning Objective 3-5

Discuss how companies can react to the marketing environment.

Responding to the Marketing Environment

Reactive firms passively accept the marketing environment and do not try to change it.

Proactive firms develop strategies to change the environment.

They take aggressive actions to affect the publics and forces in their marketing environment.

Many companies view the marketing environment as an uncontrollable element to which they must react and adapt. They passively accept the marketing environment and do not try to change it.

Other companies take a proactive stance toward the marketing environment. Rather than assuming that strategic options are bounded by the current environment, these firms develop strategies to change the environment. These firms take aggressive actions to affect the publics and forces in their marketing environment.

Marketing management cannot always control environmental forces. In many cases, it must settle for simply watching and reacting to the environment. For example, a company would have little success trying to influence geographic population shifts, the economic environment, or major cultural values. But whenever possible, smart marketing managers take a proactive rather than reactive approach to the marketing environment.

Learning Objective 3-5 Summary

Responding to the marketing environment

Reactive firms

Proactive firms

Companies can passively accept the marketing environment as an uncontrollable element to which they must adapt, avoiding threats and taking advantage of opportunities as they arise. Or they can take a proactive stance, working to change the environment rather than simply reacting to it. Whenever possible, companies should try to be proactive rather than reactive.

Learning Objectives (3 of 4)

3-1. Describe the environmental forces that affect the company’s ability to serve its customers.

3-2. Explain how changes in the demographic and economic environments affect marketing decisions.

3-3. Identify the major trends in the firm’s natural and technological environments.

Learning Objectives (4 of 4)

3-4. Explain the key changes in the political and cultural environments.

3-5. Discuss how companies can react to the marketing environment.

This chapter further explains the key changes in the political and cultural environments and discusses how companies can react to the marketing environment.

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