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Principles of Marketing: An Asian

Perspective

Instructor Supplements
Created by Geoffrey da Silva

The Marketing Environment

2012 Principles of Marketing: An Asian Perspective

Chapter 3 Outline
3.1
3.2
3.3

The Companys Microenvironment


The Companys Macroenvironment
Responding to the Marketing Environment

2012 Principles of Marketing: An Asian Perspective

Opening Case
McDonalds: On a Customer-Focused Mission

2012 Principles of Marketing: An Asian Perspective

3.1
The Companys Microenvironment

3.1

2012 Principles of Marketing: An Asian Perspective

3.1 The Companys Microenvironment

Marketing Environment
A

companys marketing environment consists of the actors and


forces outside marketing that affect marketing managements ability
to build and maintain successful relationships with target customers.
The

microenvironment consists of the actors close to the company


that affect its ability to service its customers.
The

macroenvironment consists of larger societal forces that affect


the microenvironment.

2012 Principles of Marketing: An Asian Perspective

3.1 The Companys Microenvironment

Actors in the Microenvironment

2012 Principles of Marketing: An Asian Perspective

3.1 The Companys Microenvironment

The Company
Top management
Finance
R&D
Purchasing

All the interrelated


groups form the
internal environment.
All groups should work
in harmony to provide
superior customer
value and relationships

Operations
Accounting
9

2012 Principles of Marketing: An Asian Perspective

3.1 The Companys Microenvironment

Suppliers
Suppliers provide the
resources needed by the
company to produce its goods
and services.
Marketing managers must
watch supply availability
supply shortages or delays,
labor strikes, and other events
that can cost sales in the short
run and damage customer
satisfaction in the long run.
Marketing managers also
monitor the price trends of their
key inputs.
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3.1 The Companys Microenvironment

Marketing Intermediaries
Marketing intermediaries
help the company to
promote, sell, and distribute
its products to final buyers.
Marketers recognize the
importance of working with
their intermediaries as
partners rather than simply
as channels through which
they sell their products.

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3.1 The Companys Microenvironment

Types of Marketing Intermediaries

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3.1 The Companys Microenvironment

Marketing Intermediaries
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.

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3.1 The Companys Microenvironment

Marketing Intermediaries
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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3.1 The Companys Microenvironment

Carrefour opened its first


hypermarket in Tokyo, Japan,
in 2000. It is a key reseller in
Asia.
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3.1 The Companys Microenvironment

Partnering with marketing intermediaries CocaCola provides Subway with much more than just soft
drinks. It also pledges powerful marketing support.

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3.1 The Companys Microenvironment

Customers
Consumer markets
Business markets
Reseller markets
Government markets
International markets
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3.1 The Companys Microenvironment

Customers
The company may target any or all of these five customer markets.
Consumer

markets: 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.

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3.1 The Companys Microenvironment

Customers
Reseller

markets: buy goods and services to resell at a profit.

Government

markets: made up of government agencies that buy


goods and services to produce public services.
International

markets: buyers in other countries, including


consumers, producers, resellers, and governments.

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3.1 The Companys Microenvironment

Competitors
Marketers 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.

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3.1 The Companys Microenvironment

Publics
Financial publics

General public

Media publics

Internal publics

Government publics
Citizen-action publics
Local publics

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3.1 The Companys Microenvironment

Publics
A public is any group that has an actual or potential interest in or
impact on an organizations ability to achieve its objectives.
Financial

Media

publics influence the companys ability to obtain funds.

publics carry news, features, and editorial opinions.

Government

publics. Management must take government


developments into account.

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3.1 The Companys Microenvironment

Publics
Local

publics include neighborhood residents and community


organizations.
General

public. The general publics image of the company affects its

buying.
Internal

publics include workers, managers, volunteers, and the


board of directors.

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3.1 The Companys Microenvironment

Reviewing the Key Concepts


Describe the environmental forces that affect the companys ability to
serve its customers

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3.2
The Companys Macroenvironment

3.2

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3.2 The Companys Macroenvironment

Major Forces in the Companys Macroenvironment

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3.2 The Companys 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.
NATURAL
DEMOGRAPHIC
ENVIRONMENT
ENVIRONMENT

ECONOMIC
ENVIRONMENT

Macro
Environment

TECHNOLOGICAL
ENVIRONMENT
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POLITICAL/LEGAL
ENVIRONMENT

CULTURAL
ENVIRONMENT

3.2 The Companys Macroenvironment

Demographics

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3.2 The Companys Macroenvironment

Demographics
Demography is the study of human populations in terms of size,
density, location, age, gender, race, occupation, and other statistics.
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.

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3.2 The Companys Macroenvironment

The Demographic Environment

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3.2 The Companys Macroenvironment

Demographics and Business

Chinese regulations limiting families to


one child have resulted in whats been
known as the six-pocket syndrome.
Chinese children are being showered
with attention and luxuries, creating
opportunities for marketers.
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3.2 The Companys Macroenvironment

Changing Age Structure of the Population


In general, the three largest age groups are the baby boomers,
Generation X, and Millennials.
The Baby Boomers
Baby boomers are people born postWorld War II between 1946 and
1964.
Generation X
This is the generation of people born between 1965 and 1976. They are
called Generation X because they lie in the shadow of the boomers.
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3.2 The Companys Macroenvironment

Generation X
Generation Xers like the young
parents shown here tend to value
a better quality of life and family more.

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3.2 The Companys Macroenvironment

Generation Y
The Millennials (or Generation Y)
are born between 1977 and 2000.
These are children of the baby boomers.
The echo boom has created a large
teen and young adult market.

The keitai, or mobile phone, is the most common


technological object in modern Japan, used by
many Japanese youths as a daily communicating
device in their lives.
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3.2 The Companys Macroenvironment

To target Millennials with their built-just-forthem preferences, Toyota positioned the Scion
on personalization. Personalization begins here
what moves you?
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3.2 The Companys Macroenvironment

Generational marketing is
important in segmenting people by
lifestyle of life state instead of age.
Question: Do marketers need to
create separate products and
marketing programs for each
generation?

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3.2 The Companys Macroenvironment

Geographic Shifts in Population


In 2008, the world had, for the first time, more of its population living
in towns and cities than in the rural areas.
In Asia, there is a migration from rural to urban cities.
A major trend emerging from this urban migration is a growing number
of single-person households.

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3.2 The Companys Macroenvironment

Better-Educated Population

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3.2 The Companys Macroenvironment

A Better-Educated, More White-Collar More Professional


Population
The world population is becoming better educated.
The rising number of educated people will increase the demand for
quality products, books, magazines, travel, personal computers, and
Internet services.
The workforce also is becoming more white-collar

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3.2 The Companys Macroenvironment

More diversity

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3.2 The Companys Macroenvironment

Increasing Diversity
Countries vary in their ethnic and racial makeup.
At one extreme is Japan, where almost everyone is Japanese.
At the other extreme is the U.S., with people from virtually all
nations.
Marketers are facing increasingly diverse markets, both at home and
abroad, as their operations become more international in scope.

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3.2 The Companys Macroenvironment

Islamic banking

Increasing diversity The


growth in Islamic banking caters
to the Muslim market where the
notion of interest, earned and
charged, is considered
incongruent with their faith.
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3.2 The Companys Macroenvironment

Reviewing the Key Concepts


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

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3.2 The Companys Macroenvironment

Economic Environment

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3.2 The Companys Macroenvironment

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

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3.2 The Companys Macroenvironment

The Economic Environment

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3.2 The Companys Macroenvironment

The Economic Environment


To capture Indias growing middle
class, Tata Motors introduced the
small, affordable Tata Nano.
Can you imagine a car within the
reach of all? asks this advertisement.
Now you can.

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3.2 The Companys Macroenvironment

Changes in Income
Marketers should pay attention to income distribution as well as
average income.
At the top are upper-class consumers whose spending patterns are
not affected by current economic events and who are a major market
for luxury goods.
There is a comfortable middle class that is somewhat careful about
its spending but can still afford the good life some of the time.

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3.2 The Companys Macroenvironment

Changes in Income
The working class must stick close to the basics of food, clothing, and
shelter and must try hard to save.
Finally, the underclass (persons on welfare and many retirees) must
count their pennies when making even the most basic purchases.

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3.2 The Companys Macroenvironment

Targeting at Different Income Segments

Different companies appeal to different income segments. While Daiso targets at the
value-for-money mass market, Levis offerings cover a range to target at various
segments.
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3.2 The Companys Macroenvironment

Changing Consumer Spending Patterns

Food, housing, and transportation take up the bulk of household


incomes.

However, consumers at different income levels have different


spending patterns.

As family income rises, the percentage spent on food declines,


the
percentage spent on housing remains about constant (except
for
utilities such as gas, electricity, and public services, which
decrease), and both the percentage spent on most other
categories and that devoted to savings increase.

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3.2 The Companys Macroenvironment

Changing Consumer Spending Patterns

The affordable bento lunch box


proved to be a hit during the global
recession with Japanese consumers
tightening their belts and foregoing
brand-name luxuries.
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3.2 The Companys Macroenvironment

Natural environment

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3.2 The Companys Macroenvironment

Natural environment
Involves the natural resources that are needed as inputs by marketers or
that are affected by marketing activities.
Trends include shortages of raw materials, increased pollution, increased
government intervention and a greater attention to environmentally
sustainable strategies.

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3.2 The Companys Macroenvironment

The Natural environment

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3.2 The Companys Macroenvironment

The Natural environment

In response to ecological concerns, Levi


Strauss and Co. designed the Levis
Eco jeans made of 100 percent organic
cotton. The product tag is made of 100
percent recycled paper.
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3.2 The Companys Macroenvironment

The Natural environment

Singapores Changi Airport embarks on a green


movement by having recycling points throughout
the airport
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3.2 The Companys Macroenvironment

The Natural environment


Companies are recognizing the link between a healthy ecology and a
healthy economy.
They are learning that environmentally responsible actions can also
be good for business.
Indeed, a new measure consumers use to evaluate businesses is
their commitment to environmental sustainability.
Essentially, companies should not take away more than what they
add to the worlds resources and environment.

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3.2 The Companys Macroenvironment

The Natural environment

Wal-Mart is committed to sustainable


development by reducing its use of
plastic bags and donating food that
otherwise would be discarded.
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3.2 The Companys Macroenvironment

Technological Environment
Technology is the
most dramatic force
in changing the
marketplace. It
creates new
products and
opportunities, and
kills off older
products.

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3.2 The Companys Macroenvironment

The Technological Environment

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3.2 The Companys Macroenvironment

Reviewing the Key Concepts


Identify the major trends in the firms natural and technological
environments.

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3.2 The Companys Macroenvironment

Political/Legal Environment
Political environment
laws, government
agencies, and pressure
groups that influence or
limit various organizations
and individuals in a given
society

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3.2 The Companys Macroenvironment

The Political Environment

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3.2 The Companys Macroenvironment

Legislation Regulating Businesses


Business legislation has three main purposes:
a)to protect companies from unfair competition
b)to protect consumers from unfair business practices, and
c)to protect the interests of society from unbridled business behaviour

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3.2 The Companys Macroenvironment

Counterfeit Products

The popularity of counterfeit brands


in Asia has proven to be a growing
problem for companies. Purses and
bags like these are easily available
in markets in Asia.
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3.2 The Companys Macroenvironment

Legislation Regulating Businesses

Besides counterfeit products, some shops in Asia


also take on international names or similar versions
of them as seen in a Hard Rock Caf in India above
and a Giormani store in Hong Kong below.
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3.2 The Companys Macroenvironment

Legislation Regulating Businesses

Resembling a
combination of Google
and Baidu, Goojje is
Shanghais imitation of
Google to compete
against the worlds
leading search engine.

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3.2 The Companys Macroenvironment

Socially Responsible Behaviour


Enlightened companies encourage their managers to look
beyond what the regulatory system allows and simply do the
right thing.
These socially responsible firms actively seek out ways to
protect the long-run interests of their consumers and the
environment.

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3.2 The Companys Macroenvironment

Socially Responsible Behaviour

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3.2 The Companys Macroenvironment

Socially Responsible Behaviour

Google shocked the business


world on 12 January 2010,
when it publicly announced it
was no longer willing to abide
by its 2006 deal with the
Chinese government after it was
the target of hacker attacks the
company attributed to China.
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3.2 The Companys Macroenvironment

Cause Related Marketing


To exercise their social responsibility
and build more positive images,
companies are linking themselves
to worthwhile causes.

Cause-related marketing The Pepsi Refresh


Project is awarding $20 million in grants to fund
hundreds of worthwhile ideas by individuals and
communities that will refresh the world.
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3.2 The Companys Macroenvironment

Cultural Environment

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3.2 The Companys Macroenvironment

Cultural Environment
Cultural environment consists of institutions and other forces that
affect a societys basic values, perceptions, and behaviors
People grow up in a particular society that shapes their basic beliefs and
values.
They absorb a world view that defines their relationships with others

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3.2 The Companys Macroenvironment

The Cultural Environment

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3.2 The Companys Macroenvironment

Persistence of Cultural Values


Core beliefs and values persist because they are passed on from
parents to children and are reinforced by schools, churches,
business, and government.
Secondary beliefs and values are more open to change.
Marketers want to predict cultural shifts in order to spot new
opportunities or threats.

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3.2 The Companys Macroenvironment

Shifts in Secondary Core Values

Previously a communist country, Christmas is


celebrated commercially in China even though
Christianity is not one of the countrys main
religions.

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3.2 The Companys Macroenvironment

Major Cultural Values are expressed in terms of


Peoples view of themselves
- People vary in their emphasis on serving themselves versus
serving others.
Peoples view of others
- More cocooning staying home, home cooked meals

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3.2 The Companys Macroenvironment

Peoples Views of Others

Asian consumers tend to be


particularly susceptible to
external influences. In Korea,
keeping up with the Kims is a
serious business, and a childs
first birthday is a major
celebration.
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3.2 The Companys Macroenvironment

Major Cultural Values are expressed in terms of


Peoples view of organizations
- Decline of loyalty toward companies
Peoples view of society
- Patriots defend it
- Reformers want to change it
- Malcontents want to leave it

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3.2 The Companys Macroenvironment

Major Cultural Values are expressed in terms of


Peoples view of nature
- Some feel ruled by it
- Some feel in harmony with it
- Some seek to master it
Peoples view of the universe
- Renewed interest in spirituality
- Developed more permanent value
family, community, earth, faith, ethics

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3.2 The Companys Macroenvironment

Peoples view of nature

Organically grown products


including rice cakes, tea, chilli, fruit,
vegetables, and meat are slowly
becoming popular in Asia
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3.2 The Companys Macroenvironment

Reviewing the Key Concepts


Explain the key changes in the political and cultural environments.

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3.3
Responding to the Marketing Environment

3.3

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3.3 Responding to the Marketing Environment

Many companies think the marketing environment is an uncontrollable


element to which they have to adapt.
Other companies take an environmental management perspective
to affect the publics and forces in their environment.
Marketing managers should take a proactive rather than reactive
approach to the marketing environment.

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3.3 Responding to the Marketing Environment

UNCONTROLLABLE

React and adapt


to forces in the
environment

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PROACTIVE

Aggressive
actions to affect
forces in the
environment

REACTIVE

Watching and
reacting to
forces in the
environment

3.3 Responding to the Marketing Environment

Reviewing the Key Concepts


Discuss how companies can react to the marketing environment.

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Thank
you