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Chapter 2 Marketing environment 1 Objectives • Identify the six components of the marketing environment. • Explain the types of competition marketers face and the steps necessary for developing a competitive strategy. • Describe how government and other groups regulate marketing activities and how marketers can influence the politicallegal environment. 2 Objectives • Outline the economic factors that affect marketing decisions and consumer buying power. • Discuss the impact of the technological environment on a firm’s marketing activities. • Explain how the social-cultural environment influences marketing. 3 Objectives • Describe the role of marketing in society and identify the two major social issues in marketing. • Identify the four levels of the social responsibility pyramid. 4 The Marketing Environment The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. • The marketing environment is made up of –External environment –Internal environment 5 Micro-environment The actors close to the company that affect its ability to serve its customer – the company, suppliers, marketing intermediaries, customers markets, competitors, and publics. customers Marketing intermediaries suppliers competitors Marketing publics 6 Microenvironment Actors • The company 1 • Suppliers 2 • Marketing intermediaries 3 • Customers 4 • Competitors 5 • Publics Marketers must watch supply availability and pricing Effective partnership relationship management with suppliers is essential 7 Microenvironment Actors • The company Help to promote, sell and distribute goods to final buyers Include 1 • Suppliers resellers, physical distribution firms, 2 • Marketing intermediaries 3 • Customers 5 • Competitors 6 • Publics marketing services agencies, and financial intermediaries Effective partner relationship management is essential 8 Microenvironment Actors 1 • The company 2 • Suppliers 3 • Marketing intermediaries 4 • Customers 5 • Competitors 6 • Publics The five types of customer markets Consumer Business Reseller Government International 9 Microenvironment Actors 1 • The company 2 • Suppliers 3 • Marketing intermediaries 4 • Customers 5 • Competitors 6 • Publics Conducting competitor analysis is critical for success of the firm A marketer must monitor its competitors’ offerings to create strategic advantage 10 Competitor analysis P&G’s Current and Planned Strategy Kao’s Strengths (+) and Weaknesses (-) Uni-Charm’s Strengths (+) and Weaknesses (-) Target Market(s) Upscale, modern parents who can afford disposable diapers Same as for P&G Same as for P&G, but also budget-conscious segment that includes cloth diaper users (+) Product Improved fit and absorbency (+); brand name imagery weak in Japan () Brand familiarity (+), but no longer the best performance (-) Two brands—for different market segments and more convenient package with handles (+) Place Distribution through independent wholesalers to both food stores and drugstores (+), but handled by fewer retailers () Close relations with and control over wholesalers who carry only Kao products (+); computerized inventory reorder system () Distribution through 80% of food stores in best locations (-); shelf space for two brands () Promotion …………………………………. ………………………………… ………………………….. Price …………………………………. ………………………………… ………………………….. Microenvironment Actors 1 • The company A group that has an actual or potential interest in or impact on an organization 2 • Suppliers Seven publics include: 3 • Marketing intermediaries 4 • Customers 5 • Competitors 6 • Publics ● ● ● ● ● ● ● Financial Media Government Citizen-action Local General Internal 12 Macro-environment The larger social forces that affect the micro-environment – demographic, economic, natural, technological, political, and culture forces. Natural forces Technological forces Economic forces Demographic forces Political forces Marketing Cultural forces 13 Macro-environment Demographic Environment “The study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics” Age structure of the population ○ 0-14 years: 32.6% (male 13,172,641; female 12,548,346) ○ 15-64 years: 62.9% (male 25,102,754; female 24,519,698) ○ 65 years and over: 4.5% (male 1,510,280; female 2,033,288) (2006 est.) Geographic shifts in population ○ people move to the cities in search of employment and a higher standard of living Education (a better-educated, more whit-collar, more professional population) Changing in marital states (more single people) The changing Egyptian family Sub-cultures ○ Egyptians 94%, Nubians, Berbers, Bedouin Arabs 4%, Other 2% http://meria.idc.ac.il/journal/2003/issue4/jv7n4a2.html http://en.wikipedia.org/wiki/Demographics_of_Egypt 14 Veterans 1920 -1945 2463 - 2488 65+ Baby Boomer 64-45 Generation X 1946 - 1965 2485 - 2508 1966 - 1980 2509 - 2533 44-30 Generation Y 29-10 1981 - 2000 2524 - 2543 Macro-environment Economic Environment “Factors that affect consumer buying power and spending patterns” Value Marketing has become the watchword for many marketers. They are looking for ways to offer today’s more financially cautious buyers greater value. ● Marketers should pay attention to income distribution as well as average income. ○ Upper-class consumers, whose spending patterns are not affected by current economic events. ○ The middle class is somewhat careful about its spending, but can still afford the good life some of the time. ○ The working class must stick close to the basics of food, clothing, and shelter. ○ The underclass must count their pennies when making even the most basic purchases. Consumers at different income levels have different spending patterns. 16 The Macro-environment • The Economic Environment • Two types of national economies: o subsistence o industrial 17 Macro-environment Natural Environment: “Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities” Trends Shortages of raw materials Air and water may seem to be infinite resources, but some groups see long-run dangers. Increased pollution Industry will almost always damage the quality of the natural environment. Increased government intervention The governments of different countries vary in their concern and efforts to promote a clean environment. 18 The Macroenvironment Many companies use recycling to help protect natural resources “Environmental Sustainable Strategies” 19 Macro-environment Technological Environment “Forces that create new technologies, creating new products and market opportunities” The most dramatic force shaping our destiny New technologies create new markets and opportunities. However, every new technology replaces on older technology. Marketers should watch the technological environment closely. 20 • Web sites like iTunes and Amazon.com are now offering customers the option of downloading movies right to their iPods and computers. Do you think DVDs will suffer the same fate as videocassettes? Macro-environment Political and Legal 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 22 Macro-environment Social and Cultural Environment Made up of institutions and other forces that affect a society’s basic values, perceptions, preferences and behaviors. 23 Internal environment Company 4 P’s - Owners and Shareholders - Product - Board of Directors - Price - Employees - Place - Organizational Culture - Promotion Social responsibility in the Marketing Many companies view the marketing environment as an uncontrollable element in which they must react and adapt. They passively accept the marketing environment and do not try to change it. Other companies take a proactive stance toward the marketing environment. (Example: Cathay Pacific Airlines) 25