marketing 7 lecture 1 analyzing the marketing environment

Analyzing the Analyzing the Marketing Marketing

EnvironmentEnvironment

Marketing 7

Lecture 1

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall

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

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

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

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

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

Rest Stop:Rest Stop: Previewing the ConceptsPreviewing the Concepts


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Price of Complacency

• Beginnings: Xerox invented the plain paper office copier nearly 50 years ago and came to dominate the market.

• The Changing Environment: Xerox failed to adapt to new customer needs for digital document management systems, rather than copiers. The sales force was ill-equipped to detail with info technology managers. Stock prices plummeted and Xerox was on the brink of bankruptcy in 2001.

The Revitalization of XeroxFirst Stop

Rethinking, Reinventing

• Redefined Mission: To be the “World’s leading document-management technology and services enterprise.”

• Customer Focus: Focus group research aids in new product development; top managers serve as Customer Officer of the Day; 100 innovative offerings introduced in last few years.

• Corporate Image: New logo was chosen to symbolize Xerox’s strengths while portraying firm as modern, innovative, and flexible.


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Marketing Environment

• Consists of actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers.Studying the marketing environment allows

marketers to take advantage of opportunities as well as to combat threats.

Marketing intelligence and research are used to collect information about the environment, including customers and the competition.


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

• Macroenvironment: Larger societal forces that affect the microenvironment.

Marketing Environment


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The Microenvironment

• Company itself

• Suppliers

• Marketing intermediaries

• Customer markets

• Competitors

• Publics


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• The company itself: Areas/departments inside of a

company.Affects the marketing department’s

planning strategies.All departments must “think consumer”

and work together to provide superior customer value and satisfaction.



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• Suppliers: Important link in the overall customer

value delivery system.Provide resources needed to produce

goods and services.Most marketers treat suppliers like

partners in creating and delivering customer value.



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• Marketing intermediaries: Help the company to promote, sell, and

distribute its goods to final buyers.• Resellers• Physical distribution firms• Marketing services agencies• Financial intermediaries



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• Competitors: Marketers must seek to gain strategic

advantage against competitive organizations.

Size of firm and industry position will influence choice of strategy.



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• Publics: Any group that has an actual or potential

interest in or impact on an organization’s ability to achieve its objectives. • Financial public • Media public• Government public• Citizen-action public

• Local public• General public• Internal public


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• Customers: Companies may target any or all of the

types of markets that may purchase a company’s goods and services.• Consumer• Business• Reseller• Government• International



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The Macroenvironment

• The company and all of the other actors operate in a larger macroenvironment of forces that shape opportunities and pose threats to the company.


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The Macroenvironment

• Forces in the macroenvironment can be categorized as:DemographicEconomicNaturalTechnologicalPoliticalCultural


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• Demography: The study of human populations in terms

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

Marketers track changing age and family structures, geographic population shifts, educational characteristics, and population diversity here and abroad.

Demographic Environment


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• The changing age structure of the U.S. population is the single most important demographic trend.Baby boomers, Generation X, and the

Millennials are key generational groups.



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• Baby boomers: 78 million people born between 1946 and

1964; nearly 25% of population.Wealthiest generation in history; account for

50% of consumer spending and hold ¾ of the nation’s financial assets.

Recent recession has hit baby boomers hard, eating into nest eggs and retirement prospects.

Boomers “think young;” strong targets for financial services.


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• Generation X:49 million born between 1965 and 1976.Defined by shared experiences:

• Increased parental divorce rates and more employed mothers made Generation X the first of the latchkey kids.

• Less materialistic; prize experiences.• Skeptical of marketing.• Most educated generation to date.• Spend carefully; face economic pressures.



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• Millennials (Gen Y/Echo Boomers):83 million born between 1977 and 2000—

larger than baby boomer segment. Includes tweens, teens, and young adults.$733 billion in purchasing power.Ethnically diverse.Fluent with digital technology.Personalization and product customization

are key to marketing success.



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• The American family and household makeup is changing:Traditional households are in decline:

• Married couples with children = 23%Non-traditional households are growing:

• Married without children = 29%• Single parents = 16%• Non-family households = 32%

Special needs of non-traditional households are increasingly being considered by marketers.


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• Better educated population:1980:

• 69% of people over age 25 completed high school; 17% had completed college.

2007:• 84% of people over age 25 completed high

school; 27% had completed college.Demand for quality products, books,

magazines, computers, travel, etc. has increased as a result.



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• Increasing white-collar population1983-2007:

• Professionals and managers increased from 23% to greater than 35%.

2006-2016:• Professionals should increase by 23%

while manufacturing is expected to decline by more than 10%.



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• Increasing diversity:The United States is an ethnic “salad

bowl.”• Ethnic segments will continue to grow as a

percentage of the U.S. population.• Marketers target specially designed ads,

products, and promotions at ethnic groups.Marketing efforts are increasing toward:

• Gay and lesbian consumers.• People with disabilities.



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• Geographic shifts in population:13% of U.S. residents move each year.General shift toward the Sunbelt states.City to suburb migration continues.More people are moving to suburbs and

“micropolitan” areas.Marketers court increasing numbers of

telecommuters.



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Economic Environment

• Changes in income 1990s—consumption

frenzy, record debt Economic crisis leads

to consumer frugality.

• Value marketing is key to success.

• Income distribution Upper class is getting

wealthier. Middle class is shrinking. Underclass remain poor.

• Income distribution has created a tiered market.

• Consists of factors that affect consumer purchasing power and spending patterns.


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Natural Environment

• Involves natural resources that are needed as inputs by marketers or that are affected by marketing activities.

• Key trends include:Shortage of raw materials. Increased pollution. Increased government intervention.

• Many firms now focus on creating environmentally-sustainable strategies.


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• Most dramatic force shaping our destiny.

• Changes rapidly, creating new markets and opportunities and/or danger of products becoming obsolete.

• Challenge is to make practical, affordable new products.

• Government bans unsafe products and sets safety standards, resulting in higher research costs, and longer time to market for new products.

Technological Environment


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Political Environment

• Includes laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society.

• Marketing activities face: Increasing legislation.Changing government agency enforcement. Increased emphasis on ethics and socially

responsible behavior (including cause-related marketing).


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Cultural Environment

• The institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors.Core beliefs and values are passed on from

parents to children and are reinforced by schools, churches, businesses, and government.

Secondary beliefs and values are more open to change.

• Marketers may be able to change secondary beliefs, but NOT core beliefs.


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Cultural Environment

• Society’s major cultural views are expressed in people’s views of:ThemselvesOthersOrganizationsSocietyNatureThe universe


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Responding to theMarketing Environment

• Reactive responses:Many firms are passive & simply react to

changes in the marketing environment.

• Proactive responses: Some firms attempt to manage the

marketing environment via aggressive actions designed to affect the publics and forces in the marketing environment.


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Responding to theMarketing Environment

• Examples of proactive responses:Hiring lobbyistsRunning “advertorials”Pressing lawsuitsFiling complaints with regulatorsForming agreements to control channels


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

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

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

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

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

Rest Stop: Reviewing the Concepts

marketing 7 lecture 1 analyzing the marketing environment

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