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The Marketing Environment

Challenges

Shifting consumer lifestyles

Low ratings of food and service quality

Atmosphere not upscale Image of being unclassy,

uncultured and uncool to younger target markets

Preview Case: McDonald’s – Challenges and Reactions

Marketing Initiatives

Focus on core competency of consistent products and reliable service

Upscale alternative including “McCafe” and “Bistro Gourmet”

Healthier food options with elimination of “supersize” and introduction of Go Active! Adult Happy Meal

The Marketing Environment

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

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.

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

ActorsActors

1. The company2. Suppliers3. Marketing

intermediaries4. Customers5. Competitors6. Publics

Microenvironment -Company’s Internal Environment

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

ActorsActors

1. The company2. Suppliers3. Marketing

intermediaries4. Customers5. Competitors6. 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

ActorsActors

1. The company2. Suppliers3. Marketing

intermediaries4. Customers5. Competitors6. Publics

Microenvironment –Marketing Intermediaries

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

The five types of customer markets

Consumer Business Reseller Government International

Microenvironment

ActorsActors

1. The company2. Suppliers3. Marketing

intermediaries4. Customers5. Competitors6. Publics

Microenvironment –Customer Markets

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

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

ActorsActors

1. The company2. Suppliers3. Marketing

intermediaries4. Customers5. Competitors6. Publics

A group that has an actual or potential interest in or impact on an organization

Seven publics include: Financial Media Government Citizen-action Local General Internal

Microenvironment

ActorsActors

1. The company2. Suppliers3. Marketing

intermediaries4. Customers5. Competitors6. Publics

Macroenvironmental Forces

Macroenvironment

Demographic Economic Natural

Technological Political Social-Cultural

Demographic Environment

DemographyThe study of human populations in terms of

size, density, location, age, gender, race, occupation and other statistics

Demographic Environment

Worldwide Population GrowthWorldwide Population Growth

Age Structure of the PopulationAge Structure of the Population

Household PatternsHousehold Patterns

Educational GroupsEducational Groups

Geographical Shifts in PopulationGeographical Shifts in Population

Shift from Mass Market to MicromarketsShift from Mass Market to Micromarkets

Ethnic MarketsEthnic Markets

EconomicDevelopment

EconomicDevelopment

Changes in Income:Value Marketing

Changes in Income:Value Marketing

Changing ConsumerSpending Patterns

Changing ConsumerSpending Patterns

KeyEconomic

Concerns forMarketers

KeyEconomic

Concerns forMarketers

Economic Environment

Natural Environment

Natural Environment: Involves the natural resources that are needed

as inputs by marketers or that are affected by marketing activities

TrendsShortages of raw materials Increased pollution Increased government intervention

Technological Environment 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

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

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 and charitable organization

Demonstrates social responsibility Helps build positive brand image

Themselves Identify with

brands for self-expression

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

Cultural Environment Includes people’s views of…

Responding to the Marketing Environment 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.

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 technologyChanging technology

GlobalizationGlobalization

DeregulationDeregulation

PrivatizationPrivatization

EmpowermentEmpowerment

CustomizationCustomization

ConvergenceConvergence

DisintermediationDisintermediation