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Marketing 7

Lecture 1

Analyzing the
Marketing
Environment

Rest Stop: Previewing the Concepts

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2.
3.
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5.

Describe the environmental forces that affect


the companys ability to serve its customers.
Explain how changes in the demographic and
economic environments affect marketing
decisions.
Identify the major trends in the firms natural
and technological environments.
Explain the key changes in the political and
cultural environments.
Discuss how companies can react to the
marketing environment.
Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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First Stop
The Revitalization of Xerox
Rethinking, Reinventing

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 illequipped to detail with info
technology managers. Stock
prices plummeted and Xerox
was on the brink of
bankruptcy in 2001.
Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

Redefined Mission: To be the


Worlds leading documentmanagement 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
Xeroxs 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


managements 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.
Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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Marketing Environment

Microenvironment:

Actors close to the company that


affect its ability to serve its customers.
Macroenvironment:
Larger societal forces that affect the
microenvironment.

Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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The Microenvironment

Company itself
Suppliers
Marketing intermediaries
Customer markets
Competitors
Publics
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The Microenvironment

The company itself:


Areas/departments

inside of a

company.
Affects the marketing departments
planning strategies.
All departments must think consumer
and work together to provide superior
customer value and satisfaction.
Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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The Microenvironment

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.
Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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The Microenvironment

Marketing intermediaries:
Help

the company to promote, sell, and


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

Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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The Microenvironment

Competitors:
Marketers

must seek to gain strategic


advantage against competitive
organizations.
Size of firm and industry position will
influence choice of strategy.

Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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The Microenvironment

Publics:
Any

group that has an actual or potential


interest in or impact on an organizations
ability to achieve its objectives.
Financial public
Media public
Government public
Citizen-action public

Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

Local public
General public
Internal public

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The Microenvironment

Customers:
Companies

may target any or all of the


types of markets that may purchase a
companys goods and services.
Consumer
Business
Reseller
Government
International

Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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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:
Demographic
Economic
Natural
Technological
Political
Cultural
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Demographic Environment

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.
Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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Demographic Environment

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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Demographic Environment

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 of
the nations 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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Demographic Environment

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.
Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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Demographic Environment

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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Demographic Environment

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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Demographic Environment

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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Demographic Environment

Increasing white-collar population


1983-2007:

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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Demographic Environment

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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Demographic Environment

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.
Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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Economic Environment

Consists of factors that affect

consumer purchasing power and


spending patterns.

Changes in income Income distribution


1990sconsumption
frenzy, record debt
Economic crisis leads
to consumer frugality.

Value marketing is
key to success.

Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

Upper class is getting


wealthier.
Middle class is shrinking.
Underclass remain poor.

Income distribution has

created a tiered market.


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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.
Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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Technological Environment

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.
Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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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).
Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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Cultural Environment

The institutions and other forces that affect a


societys 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

Societys major cultural views are


expressed in peoples views of:
Themselves
Others
Organizations
Society
Nature
The

universe

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Responding to the
Marketing 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 the
Marketing Environment

Examples of proactive responses:


Hiring

lobbyists
Running advertorials
Pressing lawsuits
Filing complaints with regulators
Forming agreements to control channels

Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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Rest Stop: Reviewing the Concepts

1.
2.
3.
4.
5.

Describe the environmental forces that affect


the companys ability to serve its customers.
Explain how changes in the demographic and
economic environments affect marketing
decisions.
Identify the major trends in the firms natural
and technological environments.
Explain the key changes in the political and
cultural environments.
Discuss how companies can react to the
marketing environment.
Copyright 2011, Pearson Education Inc. Publishing as PrenticeHall

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