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Analyzing the
Marketing
Environment
Chapter 3
Rest Stop: Previewing the Concepts
1.
2.
3.
4.
5.
Describe the environmental forces that affect
the company’s ability to serve its customers.
Explain how changes in the demographic and
economic environments affect marketing
decisions.
Identify the major trends in the firm’s 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
3-2
First Stop
The Revitalization of Xerox
•
•
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
•
•
•
Rethinking, Reinventing
Redefined Mission: To be the
“World’s 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
Xerox’s strengths while
portraying firm as modern,
innovative, and flexible.
3-3
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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3-4
Marketing Environment
• Microenvironment:
Actors close to the company that
affect its ability to serve its customers.
• Macroenvironment:
Larger societal forces that affect the
microenvironment.
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3-5
The Microenvironment
• Company itself
• Suppliers
• Marketing intermediaries
• Customer markets
• Competitors
• Publics
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3-6
The Microenvironment
• 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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3-7
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.
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3-8
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
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3-9
The Microenvironment
• 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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3 - 10
The Microenvironment
• 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
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
company’s goods and services.
• Consumer
• Business
• Reseller
• Government
• International
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3 - 12
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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3 - 13
The Macroenvironment
• Forces in the macroenvironment can
be categorized as:
 Demographic
 Economic
 Natural
 Technological
 Political
 Cultural
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3 - 14
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.
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3 - 15
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 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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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.
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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.
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3 - 24
Economic Environment
• Consists of factors that affect
consumer purchasing power and
spending patterns.
• Changes in income • Income distribution
1990s—consumption
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.
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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.
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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:
 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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3 - 31
Responding to the
Marketing Environment
• Examples of proactive responses:
 Hiring
lobbyists
 Running “advertorials”
 Pressing lawsuits
 Filing complaints with regulators
 Forming agreements to control channels
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3 - 32
Rest Stop: Reviewing the Concepts
1.
2.
3.
4.
5.
Describe the environmental forces that affect
the company’s ability to serve its customers.
Explain how changes in the demographic and
economic environments affect marketing
decisions.
Identify the major trends in the firm’s 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
3 - 33