*Ch 3 - 0Copyright 2011 Pearson Education

*CHAPTER THREEAnalyzing the Marketing EnvironmentLecturer: Insert your name hereCh 1 -*Copyright 2011 Pearson EducationPresentation prepared by Annelie Moukaddem Baalbaki Principles of Marketing, Arab World Edition Philip Kotler, Gary Armstrong, Anwar Habib, Ahmed TolbaCopyright 2011 Pearson EducationCh 3 - 1

*Chapter Learning OutcomesTopic Outline

3.1 The Companys Microenvironment3.2 The Companys Macroenvironment3.3 Demographic Environment3.4 Economic Environment3.5 Natural Environment3.6 Technological Environment3.7 Political and Social Environment3.8 Cultural Environment3.9 Responding to the Marketing EnvironmentCh 3 - 2Copyright 2011 Pearson Education

The Marketing EnvironmentThe marketing environment includes the actors and forces outside marketing that affect marketing managements ability to build and maintain successful relationships with customers.Ch 3 - 3Copyright 2011 Pearson Education

The Companys MicroenvironmentA microenvironment consists of the actors close to the company that affect its ability to serve its customers, the company, suppliers, marketing intermediaries, customer markets, competitors, and publics.Ch 3 - 4Copyright 2011 Pearson Education

The Companys MicroenvironmentCh 3 - 5Copyright 2011 Pearson Education

The Companys Microenvironment Top management Finance R&D Purchasing Operations AccountingThe CompanyCh 3 - 6Copyright 2011 Pearson Education

The Companys Microenvironment Provide the resources to produce goods and services Treated as partners to provide customer valueSuppliersCh 3 - 7Copyright 2011 Pearson Education

The Companys MicroenvironmentMarketing Intermediaries help the company to promote, sell and distribute its products.Marketing IntermediariesCh 3 - 8Copyright 2011 Pearson Education

The Companys MicroenvironmentFirms must gain strategic advantage by positioning their offerings against competitors offerings.CompetitorsCh 3 - 9Copyright 2011 Pearson Education

The Companys MicroenvironmentPublics are any groups that have an actual or potential interest in or impact on an organizations ability to achieve its objectives. They include: Financial publics Media publics Government publics Citizen-action publics Local publics The general public Internal publicsCh 3 - 10Copyright 2011 Pearson Education

The Companys MacroenvironmentCh 3 - 11Copyright 2011 Pearson Education

Demographic EnvironmentDemography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. The demographic environment is important because it involves people, and people make up markets. Demographic trends include age, family structure, geographic population shifts, educational characteristics, and population diversity.DemographyCh 3 - 12Copyright 2011 Pearson Education

Demographic EnvironmentBaby boomers include people born between 1946 and 1964This generation accounts for about 30% of the Arab populationBaby boomers think young no matter how old they areBaby boomers are retiring later and working more after retirementChanging Age Structure of the PopulationCh 3 - 13Copyright 2011 Pearson Education

Demographic EnvironmentGeneration X includes people born between 1965 and 1976. This generation tends to display the following traits:SkepticismCautious economic outlookLess materialisticFamily comes firstResearch products before considering a purchaseGeneration XCh 3 - 14Copyright 2011 Pearson Education

Demographic EnvironmentMillennials (Generation Y or Echo Boomers) include those born between 1977 and 2000:Comfortable with technologyIncludesTweens (ages 812)Teens (1319)Young adults (20s)MillennialsCh 3 - 15Copyright 2011 Pearson Education

Demographic EnvironmentGenerational marketing is important in segmenting people by lifestyle, life stage and common values, rather than by age.Generational marketingCh 3 - 16Copyright 2011 Pearson Education

Demographic EnvironmentGender and age are often the basis for defining roles and responsibilities.Women are working more outside the house.Inherited values and traditions are taught to the next generation.Mothers are more involved in family decision making.The Changing Arab FamilyCh 3 - 17Copyright 2011 Pearson Education

Demographic EnvironmentExpatriates are coming to the Arab world lured by high income and a high standard of living.The nationals of most Gulf countries are now a minority population within their own countries.Geographic Shifts in PopulationCh 3 - 18Copyright 2011 Pearson Education

Demographic EnvironmentSince the global recession, unemployment rates have been rising across the Arab worldGovernments are reassessing their education policies and training programsEducation and EmploymentCh 3 - 19Copyright 2011 Pearson Education

Demographic EnvironmentIncreased DiversityMarkets are becoming more diverseInternationalNational

Includes:EthnicityLanguageCh 3 - 20Copyright 2011 Pearson Education

Economic EnvironmentThe economic environment consists of factors that affect consumer purchasing power and spending patterns. Industrial economies are richer markets. Subsistence economies consume most of their own agriculture and industrial output.Economic EnvironmentCh 3 - 21Copyright 2011 Pearson Education

Economic EnvironmentValue marketing involves ways to offer financially cautious buyers greater valuethe right combination of quality and service at a fair price.Changes in IncomeCh 3 - 22Copyright 2011 Pearson Education

Economic EnvironmentErnst EngelEngels LawAs income rises:the percentage spent on food declinesthe percentage spent on housing remains constantthe percentage spent on savings increases.Changes in Consumer Spending PatternsCh 3 - 23Copyright 2011 Pearson Education

Natural EnvironmentThe natural environment involves the natural resources that are needed as inputs by marketers, or that are affected by marketing activities.TrendsShortages of raw materialsIncreased pollutionIncrease government interventionEnvironmentally sustainable strategiesNatural EnvironmentCh 3 - 24Copyright 2011 Pearson Education

Technological EnvironmentThe technological environment is the most dramatic force in changing the marketplace. It creates new products and opportunities. Safety of new product always a concern.Ch 3 - 25Copyright 2011 Pearson Education

Political EnvironmentThe political environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society.Political EnvironmentCh 3 - 26Copyright 2011 Pearson Education

Political EnvironmentIncreased legislationChanging government agency enforcementLegislation Regulating BusinessCh 3 - 27Copyright 2011 Pearson Education

Political EnvironmentSocially responsible behaviorCause-related marketingIncreased Emphasis on Ethics and Socially Responsible ActionsCh 3 - 28Copyright 2011 Pearson Education

Cultural EnvironmentThe cultural environment consists of institutions and other forces that affect a societys basic values, perceptions, and behaviors.Cultural EnvironmentCh 3 - 29Copyright 2011 Pearson Education

Cultural EnvironmentCore beliefs and values are persistent and are passed on from parents to children and are reinforced by schools, mosques, businesses, and governments.

Secondary beliefs and values are more open to change and include peoples views of themselves, others, organizations, society, nature, and the universe.Persistence of Cultural ValuesCh 3 - 30Copyright 2011 Pearson Education

Cultural Environment Peoples view of themselves Peoples view of others Peoples view of organizations Peoples view of society Peoples view of nature Peoples view of the universeShifts in Secondary Cultural ValuesCh 3 - 31Copyright 2011 Pearson Education

Responding to the Marketing EnvironmentViews on RespondingCh 3 32Copyright 2011 Pearson Education

This work is protected by local and international copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from this site should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. Ch 3 - 33Copyright 2011 Pearson Education

*Note to Instructor

Discussion QuestionsWhat types of collaboration does there need to be between the departments? How might projects be integrated between marketing and finance? How might projects be integrated between marketing and information systems?

This question on finance could lead to a discussion about budgeting for marketing. The collaboration between marketing and IS could lead to discussions of market research, ordering systems, and customer relationship management systems.Note to Instructor

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

Physical distribution firms help the company to stock and move goods from their points of origin to their destinations. Distributors and agents are organizations based in the markets that generally have a contractual relationship with the principal company to buy their products and to distribute them in the local market.

Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consultancy 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.Note to Instructor

Students should note that the competition is just a click away with online purchasing. This link goes to Bizrateone of many comparison shopping sites online. Enter a product like coffee makers to see the competing products and retailers for this category.Note to Instructor

A good example of local publics is the BurJuman Breast Cancer Awareness campaign in UAE. It has run successfully for a number of years in partnershipwith Welcare Hospital. This campaign is supported by a number of major companies, including Kodak, ENOC/EPPCO, the Ministry of Social Affairs, TECOM Investments (Dubai Technology, Electronic Commerce, and Media Free Zone), Hertz, and GEMS (Global Education Management Systems). These organizations recognize the importance of community publics through their involvement in raising community awareness of this important health issue.Discussion QuestionsWhat type of information boomers might be seeking?

Emirates NDB is one of many companies in the financial sector which are successfully targeting the generation of people nearing or entering retirement.Note to Instructor

The Gen Xers are displacing the lifestyles, culture, and materialistic values of the baby boomers. Many companies are focusing on Gen Xers as a major target segment. For example, Dubai Islamic Bank targets its sharia-compliant Takaful product at this age group. The Al Islami Takaful Program is a sharia-compliant alternative to conventional life nsurance products. The appeal of Takaful programs is that they offer various plan options which combine savings and investments to suit particular customer needs, circumstances, and priorities. Dubai Islamic Bank promotes the plans by emphasizing the focus on offering investors peace of mind and taking care of the future of their loved ones. The Takaful programs include a provision for the payment of Takaful benefits to investors beneficiaries or heirs in the event of their death. Overall, the programs have particular appeal to those with families to support, by giving the investor comfort in the knowledge that the future of their loved ones is provided for. As thebanks marketing literature puts it:As an individual you have many dreamsA day when your child graduates from a prestigious universityA day when your child gets marriedA day when you relax in the comfort of your dream homeA day when you start leading a retired life with enough savings to take care of you and much more.

Emirates NDB is one of many companies in the financial sector which are successfully targeting the generation of people nearing or entering retirement.

Note to Instructor

One thing that all Millennials have in common is their utter fluency and comfort with computer, digital, and Internet technology. Whereas Gen X spent a lot of time in front of the TV, says one expert, the Millennials are always on. Theyre consumers of every imaginable means of communication: TV, radio, cell phone, Internet, video gamesoften simultaneously.Note to Instructor

Real Marketing 3.1 considers an example of how companies are responding to the changing habits and work patterns of customers and the cultural diversity of their markets. ExxonMobil, recognizing the importance of value-added services for customers visiting its numerous filling stations, opened a chain of convenience stores called On the Run. Located at key Esso and Mobil retail sites, the convenience stores have been successfully introduced to the Egyptian market. The aim of On the Run is to offer motorists and others fast-food, pastries, drinks, and convenience items. The key to the approachis the three terms fast, fresh and friendly. In Egypt, the On the Run concept is appealing to consumers who like to buy quality groceries on the go, particularly on their way to work, on their way home, and while traveling. In fact, the brand has become so strong that it attracts a large number of premium customers,who value freshness, speed, and quality of service.Note to Instructor

In the Gulf Cooperation Council (GCC) countries, there have been some unique changes to population patterns. Unlike many other countries, the nationals of most Gulf countries are now a minority population within their own countries. For example, UAE nationals represent no more than 8 percent of the total UAE population. In Saudi Arabia, Bahrain, and Oman nationals represent no more than 60 percent of the populations. The high level of immigration has resulted in enormous population growth: Populations of the GCC countries have jumped from 7,766 (million) in 1970 to 13,700 (million) in 1980, and to 41,154 (million) in 2008. 20 The highest annual growth rate took place during the period of 19751985, because the oil boom of the 1970s resulted in a large influx of foreign labor. More recently, the levels of growth have slowed. Between 2000 and 2005 population growth in the Gulf countries averaged 3.3 percent. Note to Instructor

Companies in the Arab world are targeting ethnic groups with specific products, services, and promotions. Western Union, for example, refined ethnic marketing and brought mobile remittances to the region. Labor migration and the money-transfer market are both booming. Immigrants send money to their families in their country of origin, through remittances. This boom results from an increase in economic migration, as more people travel to seek work and a better quality of life. The remittance market totals about US$290 billion globally, with an annual growth rate of 8 percent. In 2006 Arab world remittances totalled US$59 billion. Western Union has noticed that there are some differences between people of different nationalities. In general it finds that expatriates from South Asia or the Arab world are more price sensitive, while Europeans tend to look more for convenience, security, and speed. Western Union aims to work in a wide range of languages to tailor its marketing to each group, insuring that it offers the most suitable value proposition.Note to Instructor

Many companies in the Arab worldsuch as Debenhams and Neiman-Jashanmal department storesaggressively target the affluent. Otherssuch as Dirham storestarget those with more modest means. Still other companies tailor their marketing offers across a range of markets, from the affluent to the less affluent.

This graphic highlights a car targeted to Indias growing middle class.

Discussion QuestionsWhat changes might there be in your countrys income over the next year? What are positioned as value cars.The students might quote current economic declines or rises. The value cars will probably include some of the smaller cars by Kia, Ford, Honda, and Toyota.Note to Instructor

This Web link connects you to Masdar company in Abu Dhabi. The site shows you Masdars different units and Masdar City--a zero-waste, zero-emissions city. Masdar is a long term investment into a more sustainable future, reflecting the ambitious aims set out by Abu Dhabis leadership in its 2030 vision. Note to Instructor

New technologies create new markets and opportunities. However, every new technology replaces an older technology. Transistors hurt the vacuum-tube industry; xerography hurts the carbon-paper business; CDs hurt phonograph records; and digital photography hurts the film business. When old industries fought or ignored new technologies, their businesses declined. Thus, marketers should watch the technological environment closely. Companies that do not keep up will soon find their products outdated. And they will miss new product and market opportunities.

Dicussion QuestionAsk students what changes they have seen in technology in the past four years including medical products, communications, and media. They will most likely talk about the use of artificial organs and stem cell research, the growth of PDAs like the iPod, and the use of new media products including DVR or TiVo.Note to Instructor

Companies in the Arab world are slowly adopting cause-related marketing campaigns. As part of its social awareness initiative Making it Our Business, Dubai Chamber of Commerce and Industry collaborates with Vital Voices Global Partnership and the US Middle East Partnership for Breast CancerAwareness and Research, in the ongoing fight against breast cancer.Note to Instructor

Do-It-YourselfersRecent Movers:Active consumers also view the experience as a form of self-expression. They view their homes as their havensView their projects as personal victories over the high-priced marketplace. Adventurers:Rarely follow a single path or do the same thing twice.View the experience as far more exciting than the entertainment value.They are more likely to engage in activities most think are too dangerous.