Value marketing has become the watchword for many marketers.

Marketing: An Introduction

Thirteenth Edition

Chapter 3

Analyzing the Marketing Environment

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Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved

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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.

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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.

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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.

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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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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.

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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.

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Learning Objective 3-1

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

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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

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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.

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Figure 3.1 - Actors in the Microenvironment

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Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved

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.

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The Company

Interrelated groups in a company form the internal environment

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

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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.

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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

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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.

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Suppliers (2 of 2)

Honda has developed healthy, long-term supplier relationships.

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

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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

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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.

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Marketing Intermediaries (2 of 2)

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

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Competitors

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

No single strategy is best for all companies.

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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.

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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

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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.

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Customers

Five types of customer markets

Consumer markets

Business markets

Reseller markets

Government markets

International markets

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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.

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Figure 3.2 - Major Forces in the Company’s Macroenvironment

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Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved

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.

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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

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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.

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Learning Objective 3-2

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

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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

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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.

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Demographic Environment (2 of 3)

The U.S. population contains several generational groups:

Baby Boomers

Generation X

Millennials (or Generation Y)

Generation Z

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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

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Demographic Environment (3 of 3)

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

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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.

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Economic Environment

Economic factors affect consumer purchasing power and spending

Changes in consumer spending

Differences in income distribution

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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.