Download Marketing January 22

The Marketing
Environment
Chapter 4
Objectives
Know the environmental forces
that affect the company’s ability
to serve its customers.
Realize how changes in the
demographic and economic
environments affect marketing
decisions.
4-1
Objectives
Identify the major trends in the
firm’s natural and technological
environments.
Know the key changes in the
political & cultural environments.
Understand how companies can
react to the marketing
environment.
4-2
c
Volkswagen
“Millennial fever” set
the stage to bring
back the VW Beetle
VW’s investment:
$ 560 million
Demand quickly
outstripped supply
The new VW beetle
enjoyed crossgenerational appeal
Earned many awards
VW’s Beetle now
accounts for over 25%
of company sales
Discussion: Is VW’s next nostalgia venture, the “flower-power”
Microbus, as likely to succeed?
4-3
Key Environments
Marketing Environment
 The actors and forces that
affect a firm’s ability to
build and maintain
successful relationships
with customers.
4-4
Key Environments
Aspects of the marketing
environment:
 Microenvironment:

Actors close to the company
 Macroenvironment

Larger societal forces
4-5
Figure 4-1:
Actors in the
Microenvironment
4-6
The Microenvironment
Departments within the company
impact marketing planning.
4-7
The Microenvironment
Suppliers help to create and deliver
customer value.
 Treat suppliers as partners.
4-8
The Microenvironment
Marketing intermediaries help to sell,
promote, and distribute goods.
 Intermediaries take
many forms.
 Resellers
 Physical
distribution firms
 Marketing services
agencies
 Financial
intermediaries
4-9
The Microenvironment
Customer markets must be studied.
Market types





Consumer
Business
Government
Reseller
International
4 - 10
The Macroenvironment
Successful companies
provide better customer
value than the competition
 Size and industry position
help to determine the
competitive strategy.
4 - 11
The Microenvironment
Various publics must also
be considered.
 Government
 Media
 Financial
 Local
 General
 Internal
 Citizen Action Groups
4 - 12
Figure 4-2:
Major Macroenvironmental
Forces
4 - 13
The Macroenvironment
Key Demographic Trends
 World population
growth
Now 6.2 billion
 Projected to
reach 7.9 billion
by 2025

4 - 14
The Macroenvironment
Key Demographic Trends
 Changing age structure

The U.S. population consists
of seven generational groups.
• Baby boomers, Generation X
and Generation Y are key
groups.

Distinct segments typically
exist within these generational
groups.
4 - 15
The Macroenvironment
Key
Generations
Baby boomers
Generation X
Generation Y
Born between 1946
and 1964
Represent 28% of the
population; earn 50%
of personal income
Many mini-segments
exist within the
boomer group
Entering peak earning
years as they mature
Lucrative market for
travel, entertainment,
housing and more
4 - 16
Discussion Question
The “graying of America”
refers to the fact that as baby
boomers get older, the
average age of the U.S.
population increases.
Today, baby boomers are a
great target for exotic travel.
Think ahead to 20 years in
the future. For what types of
products and services will
baby boomers represent a
prime target?
4 - 17
The Macroenvironment
Key
Generations
Baby boomers
Generation X
Generation Y
Born between 1965
and 1976
First latchkey children
Maintain a cautious
economic outlook
Share new cultural
concerns
Represent $125 billion
in annual purchasing
power
Will be primary buyers
of most goods by 2010
4 - 18
Discussion Question
Generation X has been
described in the past as
“working to live” rather
than “living to work.”
Do you think that this
statement reflects
Generation X’s true
priorities in life?
Why or why not?
4 - 19
The Macroenvironment
Key
Generations
Baby boomers
Generation X
Generation Y
Born between 1977 and
1994
72 million strong;
almost as large a group
as their baby boomer
parents
New products,
services, and media
cater to Generation Y
Computer, Internet and
digitally saavy
Challenging target for
marketers
4 - 20
Figure 4-3:
Seven U.S. Generations
4 - 21
The Macroenvironment
Key Demographic Trends
 Changing American
household
 Geographic population
shifts
 Better-educated, more
white-collar workforce
 Increasing Diversity
4 - 22
Marriage
1970
2000
% never
married
ages 30-34
Men <
10%
Men 30%
Women
6%
Women 22%
Median age of
marriage
Men 23
Men 26
Women
21
Women 25
4 - 23
Geographic Mobility
Population Growth
The number of adults aged 55 to 64 will increase
47.6 % from 2000 to 2010
16% of U.S. residents move each year
More than 50% of baby boomers live in these 9
states as of 2000
California, Texas, New York, Florida, Pennsylvania,
Illinois, Ohio, Michigan, New Jersey
4 - 24
The Macroenvironment
The Economic Environment
 Affects consumer
purchasing power
and spending
patterns.
 U.S. consumers
now spend carefully
and desire greater
value.
4 - 25
The Macroenvironment
The Economic Environment
 Two types
of national
economies:
 subsistence
 industrial
4 - 26
2000 Median Household income
All
African-American
Hispanic
Caucasian
Asian-Pacific Islander
$37,000
$29,500
$28,600
$48,100
$54,100
4 - 27
2004 Mean Household income
All
African-American
Hispanic
Caucasian
Asian-Pacific Islander
$60,500
$40,700
$45,900
$65,300
$76,700
4 - 28
The Macroenvironment
The Natural Environment
 Concern for the natural
environment has grown
steadily, increasing the
importance of these trends:



Shortage of raw materials
Increased pollution
Increased governmental
intervention
4 - 29
China Looming
China second largest consumer of oil
(after the U.S.) Currently at 8%
China has been responsible for nearly
two-fifths of the increase in global
consumption since 2000.
China's surge in energy demand is also
the main reason for the doubling in the
world price of coal over the past year. Last
year China consumed 40% of all the coal
and 30% of all the steel in the world.
4 - 30
The Macroenvironment
Many companies use recycling to help
protect natural resources
4 - 31
The Macroenvironment
Key Technological Trends
 The technological environment
is characterized by rapid
change.
 New technologies create new
opportunities and markets but
make old technologies obsolete.
 The U.S. leads the world in
research and development
spending.
4 - 32
The Macroenvironment
The Political Environment
 Includes laws,
governmental
agencies, and
pressure groups
that impact
organizations and
individuals.
4 - 33
The Macroenvironment
The Political Environment
 Key trends include:
Increased legislation to protect
businesses as well as consumers.
 Changes in governmental agency
enforcement.
 Increased emphasis on ethical
behavior and social responsibility.

4 - 34
The Macroenvironment
Cause-related marketing is one method
of demonstrating social responsibility
4 - 35
The Macroenvironment
The Cultural Environment
 Is composed of institutions and
other forces that
affect a society’s
basic values,
perceptions,
preferences,
and behaviors.
4 - 36
The Macroenvironment
The Cultural Environment
Core beliefs are
persistent
 Passed from parents
to children; reinforced
by society
 Shape attitudes and
behavior
Secondary cultural
values change and
shift more easily
Society’s cultural values
are expressed through
people’s views of:






Themselves
Others
Organizations
Society
Nature
The Universe
4 - 37
Responding to the
Marketing Environment
Reactive:
Passive Acceptance and Adaptation
 Companies design strategies that avoid
threats and capitalize upon opportunities.
Proactive:
Environmental Management
 Use of lobbyists, PR, advertorials, lawsuits,
complaints, and contractual agreements to
influence environmental forces.
4 - 38
Objectives
Be able to define the
consumer market and
construct a simple model of
consumer buyer behavior.
Know the four major factors
that influence consumer
buyer behavior.
4 - 39
Objectives
Understand the major types of
buying decision behavior and
the stages in the buyer decision
process.
Be able to describe the
adoption and diffusion process
for new products.
4 - 40
c
Harley-Davidson
Harley “Hogs”
account for 1/5 of
U.S. cycle sales
Sales have
exceeded supply
for years
1986-2000: Four
stock splits,
increase of
7,100%
Fiercely loyal
clientele revolves
around 7 core
customer types
Harley owners use
their bikes to express
their lifestyle and
attitudes
Advertising reflects
the Harley mystique
4 - 41
7 core customer types
Adventure
loving
traditionalist
Sensitive
pragmatist
Stylish Status
Seekers
Laid-back
campers
Classy
capitalists
Cool-headed
loners
Cocky misfits
All wanted
Independence,
Freedom and
Power
4 - 42
Definitions
Consumer Buying Behavior
 Buying behavior of individuals and
households that buy products for
personal consumption.
Consumer Market
 All individuals/households who buy
products for personal consumption.
4 - 43
Figure 6-1:
Model of Buyer Behavior
4 - 44
Model of
Consumer Behavior
Stimulus Response Model
 Marketing and other stimuli enter the
buyer’s “black box” and produce
certain choice / purchase responses.
 Marketers must figure out
what is inside of the buyer’s
“black box” and how stimuli
are changed to responses.
?
4 - 45
Figure 6-2:
Factors Influencing
Consumer Behavior
4 - 46
Characteristics Affecting
Consumer Behavior
Key Factors
Cultural
Social
Personal
Psychological
Culture
Subculture
 Hispanic
consumers
 African Americans
 Asian Americans
 Mature consumers
Social Class
4 - 47
Characteristics Affecting
Consumer Behavior
Hispanics
 35 million consumers
purchase $425 billion
worth of goods and
services.
 Expected to grow 64%
in 20 years.
 Spanish media makes
group easy to reach.
 Brand loyal group.
4 - 48
Sears uses the Fiesta mobile to visit
Hispanic neighborhoods regularly
4 - 49
Characteristics Affecting
Consumer Behavior
African Americans
 35 million consumers
purchase $527 billion
worth of goods and
services.
 Growing more affluent /
sophisticated.
 Price and brand name
conscious; quality and
selection are important.
 Certain media target this
group.
4 - 50
Hallmark offers an Afrocentric line of greeting
cards called Mahogany. What other brands have
been targeted specifically to African Americans?
4 - 51
Characteristics Affecting
Consumer Behavior
Asian Americans
 10 million consumers
purchase $229 billion
worth of goods and
services.
 Fastest growing, most
affluent subculture.
 Many nationalities
comprise this group.
 Consumer packaged
goods firms now target
this group more heavily.
4 - 52
Characteristics Affecting
Consumer Behavior
Mature Consumers
 75 million consumers age 50+will grow to 115
million within 25 years.
 Mature consumers
control 50% of all
discretionary income.
 Attractive market for
travel, restaurant, and
cosmetics products,
among others.
4 - 53
Characteristics Affecting
Consumer Behavior
Key Factors
Cultural
Social
Personal
Psychological
Groups
 Membership
 Reference

Aspirational
groups
 Opinion leaders

Buzz marketing
Family
 Kids can influence
Roles and Status
4 - 54
Characteristics Affecting
Consumer Behavior
Key Factors
Cultural
Social
Personal
Psychological
Age and life-cycle
Occupation
Economic situation
Lifestyle
 Activities, interests, and
opinions
 Lifestyle segmentation
Personality and selfconcept
 Brand personality
4 - 55
Lifestyles:
Jeep targets
people who
want to “leave
the civilized
world behind”
What other
types of images
could be used
to appeal to this
lifestyle?
4 - 56
Figure 6-3:
VALS Lifestyle Classification
Learn more about
VALS and take the
VALS survey online
by clicking the web
link icon below.
4 - 57
Characteristics Affecting
Consumer Behavior
Brand Personality Dimensions
Sincerity
Excitement
Ruggedness
Competence
Sophistication
4 - 58
Think about Tide
detergent.
What brand
personality
seems to
describe Tide
best?
Can you think of
examples of
brands that fit
each personality
type?
4 - 59
Characteristics Affecting
Consumer Behavior
Key Factors
Cultural
Social
Personal
Psychological
Motivation
 Needs provide motives
 Motivation research
 Maslow’s hierarchy of
needs
Perception
 Selective attention,
selective distortion,
selective retention
Learning
 Drives, stimuli, cues,
responses and
reinforcement
Beliefs and attitudes
4 - 60
Figure 6-4:
Maslow’s Hierarchy
4 - 61
The milk
moustache
campaign
changed
attitudes
toward milk.
4 - 62
Figure 6-5:
Types of Buying Behavior
4 - 63
Figure 6-6:
The Buyer Decision Process
4 - 64
The Buyer Decision Process
Stages
Need recognition
Information search
Evaluation of
alternatives
Purchase decision
Postpurchase
behavior
Needs can be
triggered by:
 Internal stimuli
Normal
needs
become strong
enough to drive
behavior
 External stimuli
Advertisements
Friends
of friends
4 - 65
Attempt to stimulate need recognition
4 - 66
The Buyer Decision Process
Stages
Need recognition
Information search
Evaluation of
alternatives
Purchase decision
Postpurchase
behavior
Consumers exhibit
heightened attention or
actively search for
information.
Sources of information:




Personal
Commercial
Public
Experiential
Word-of-mouth
4 - 67
The Buyer Decision Process
Stages
Need recognition
Information search
Evaluation of
alternatives
Purchase decision
Postpurchase
behavior
Evaluation procedure
depends on the
consumer and the buying
situation.
Most buyers evaluate
multiple attributes, each
of which is weighted
differently.
At the end of the
evaluation stage,
purchase intentions are
formed.
4 - 68
The Buyer Decision Process
Stages
Need recognition
Information search
Evaluation of
alternatives
Purchase decision
Postpurchase
behavior
Two factors
intercede between
purchase
intentions and the
actual decision:
 Attitudes of others
 Unexpected
situational factors
4 - 69
The Buyer Decision Process
Stages
Need recognition
Information search
Evaluation of
alternatives
Purchase decision
Postpurchase
behavior
Satisfaction is key:
 Delighted consumers
engage in positive
word-of-mouth.
 Unhappy customers
tell on average 11
other people.
 It costs more to attract
a new customer than it
does to retain an
existing customer.
Cognitive dissonance
4 - 70
Buyer Decision Process for
New Products
New Products
 Good, service or
idea that is
perceived by
customers as new.
4 - 71
Buyer Decision Process for
New Products
Stages in the Adoption
Process
 Marketers should help
consumers move from
awareness to adoption.
4 - 72
Buyer Decision Process
for New Products
Stages in the Adoption Process
Awareness
Evaluation
Interest
Trial
Adoption
4 - 73
Buyer Decision Process for
New Products
Individual Differences
in Innovativeness
 Consumers can be
classified into five
adopter categories,
each of which behaves
differently toward new
products.
4 - 74
Figure 6-7:
Adopter Categories Based
on Relative Time of Adoption
4 - 75
Buyer Decision Process for
New Products
Product Characteristics
and Adoption
 Five product
characteristics
influence the
adoption rate.
4 - 76
Buyer Decision Process
for New Products
Product Characteristics
Relative Advantage
Compatibility
Complexity
Divisibility
Communicability
4 - 77
Discussion Question
Describe how each
of the five productrelated innovation
characteristics will
influence the rate of
the adoption for this
product.
4 - 78
Buyer Decision Process for
New Products
International Consumer Behavior
 Values, attitudes and behaviors differ greatly
in other countries.
 Physical differences exist that require
changes in the marketing mix.
 Customs vary from country to country.
 Marketers must decide the degree to which
they will adapt their marketing efforts.
4 - 79
Segmentation, Targeting,
and Positioning
Chapter 8
Objectives
Be able to define the three steps
of target marketing: market
segmentation, target marketing,
and market positioning.
Understand the major bases for
segmenting consumer and
business markets.
4 - 81
Objectives
Know how companies identify
attractive market segments
and how they choose a target
marketing strategy.
Comprehend how companies
position their products for
maximum competitive
advantage.
4 - 82
Procter &
c Gamble
Sells multiple
brands within the
same product
category for a
variety of products
Brands feature a
different mix of
benefits and
appeal to different
segments
Has also identified
different niches
within certain
segments
Tide offers seven
different product
formulations to
serve different
niches’ needs
4 - 83
Definition
Market Segmentation:
 Dividing a market into distinct
groups with distinct needs,
characteristics,
or behavior who
might require
separate products
or marketing
mixes.
4 - 84
Figure 8-1:
Steps in Market
Segmentation, Targeting,
and Positioning
4 - 85
Market Segmentation
Key Topics
Segmenting
Consumer Markets
Segmenting
Business Markets
Segmenting
International
Markets
Requirements for
Effective
Segmentation
Geographical
segmentation
 Marketing mixes are
customized
geographically
Demographic
segmentation
Psychographic
segmentation
Behavioral
segmentation
Using multiple
segmentation variables
4 - 86
Market Segmentation
Geographic
Segmentation Variables
World Region
or Country
U.S. Region
State
City
City or
Metro Size
Neighborhood
Density
Climate
4 - 87
Discussion Question
Geographical climate is
a legitimate means of
segmentation for many
products or services.
Name several examples of
products for which need
(and demand) would vary
on a geographical basis.
4 - 88
Market Segmentation
Key Topics
Segmenting
Consumer Markets
Segmenting
Business Markets
Segmenting
International
Markets
Requirements for
Effective
Segmentation
Geographical segments
Demographic
segmentation
 Most popular type
 Demographics are closely
related to needs, wants
and usage rates
Psychographic
segmentation
Behavioral
segmentation
Using multiple
segmentation variables
4 - 89
Market Segmentation
Demographic
Segmentation Variables
Age
Gender
Family size
Family life cycle
Income
Race
Occupation
Education
Religion
Generation
Nationality
4 - 90
What type of demographic segmentation
is reflected by this ad?
4 - 91
Market Segmentation
Key Topics
Segmenting
Consumer Markets
Segmenting
Business Markets
Segmenting
International
Markets
Requirements for
Effective
Segmentation
Geographic segments
Demographic
segmentation
Psychographic
segmentation
 Lifestyle, social class,
and personality-based
segmentation
Behavioral
segmentation
Using multiple
segmentation
variables
4 - 92
Swatch targets
those with an
active lifestyle
4 - 93
Market Segmentation
Key Topics
Segmenting
Consumer Markets
Segmenting
Business Markets
Segmenting
International
Markets
Requirements for
Effective
Segmentation
Geographic segments
Demographic
segmentation
Psychographic
segmentation
Behavioral
segmentation
 Typically done first
Using multiple
segmentation
variables
4 - 94
Market Segmentation
Behavioral
Segmentation Variables
Occasions
Benefits
User Status
User Rates
Loyalty Status
Readiness Stage
Attitude Toward
the Product
4 - 95
Occasion segmentation: Altoids’ “Love
Tin” is a “curiously strong valentine”
4 - 96
Checkout Direct
offers retailers &
manufacturers an
excellent method
of reaching
segments of
heavy users, as
well as users of
the direct
competition.
4 - 97
Market Segmentation
Key Topics
Segmenting
Consumer Markets
Segmenting
Business Markets
Segmenting
International
Markets
Requirements for
Effective
Segmentation
Geographic segments
Demographic
segmentation
Psychographic
segmentation
Behavioral
segmentation
Using multiple
segmentation
variables
 Prizm
4 - 98
Discussion Question
Visit PRIZM’s “You are
where you live”
website.
Enter the zip code(s) of
your choice.
Were you
surprised by
what you
found?
4 - 99
Example Market segments for J.C.
Penney Conservative
 Size: 23% of population
16% of sales
 Age: 35-55 years old
 Values: Conservative
values satisfied with
present status
 Employment: Has job, or
career
 Income: Limited
disposable income
 Benefits sought: Pricedriven, reacts to sales,
wants easy care and
comfort, Not interested in
fashion, Defines value as
Price, Quality, Fashion
4 - 100
Traditional
 Size: 38% of population
40% of total sales
 Age: 25-49 years old
 Values: Traditional values
Active, busy, independent,
self-confident
 Employment: Family-and
job/career-oriented
 Income: Considerable
income
 Benefits sought: Wants
traditional styling, seeks
clothes that last, Interested
in newness, Defines value
as Quality, Fashion, Price
4 - 101
Update
 Size: 16% of
population 24% of
total sales
 Age: 25-49
 Values: Contemporary
values Active, busy,
independent, very selfconfident
 Employment: Familyand job/ careeroriented
 Income: considerable
income
 Benefits sought:
Wants newness in
color and style, Shops
often, Defines value as
Fashion, Quality, Price
4 - 102
Example Toothpaste Benefit segments
Sensory
Segment
Sociable
Segment
Worrier
Segment
Independent
4 - 103
Sensory Segment
Principle benefit
sought: Flavor and
product appearance
Demographic
strengths: Children
Special behavior
characteristics: Users
of spearmint-flavored
toothpaste
Brands: Colgate
Lifestyle
characteristics:
Hedonistic
4 - 104
Sociable Segment
Principle benefit sought:
Brightness of teeth
Demographic strengths:
Teens, young people
Special behavior
characteristics:
Smokers
Brands: Macleans, Ultra
Brite
Lifestyle characteristics:
Active
4 - 105
Worrier Segment
Principle benefit sought:
Decay prevention
Demographic strengths:
Large Families
Special behavior
characteristics: Heavy
users
Brands: Crest
Lifestyle characteristics:
Conservative
4 - 106
Independent Segment
Principle benefit
sought: Price
Demographic
strengths: Men
Special behavior
characteristics:
Heavy users
Brands: Cheapest
Brand
Lifestyle
characteristics:
Value oriented
4 - 107
Market Segmentation
Key Topics
Segmenting
Consumer Markets
Segmenting
Business Markets
Segmenting
International
Markets
Requirements for
Effective
Segmentation
Demographic segmentation
 Industry, company size,
location
Operating variables
 Technology, usage status,
customer capabilities
Purchasing approaches
Situational factors
 Urgency, specific
application, size of order
Personal characteristics
 Buyer-seller similarity,
attitudes toward risk, loyalty
4 - 108
Market Segmentation
Key Topics
Geographic segmentation
Segmenting
Consumer Markets
Segmenting
Business Markets
Segmenting
International
Markets
Economic factors
Requirements for
Effective
Segmentation
 Location or region
 Population income or level of
economic development
Political and legal factors
 Type / stability of
government, monetary
regulations, amount of
bureaucracy, etc.
Cultural factors
 Language, religion, values,
attitudes, customs,
behavioral patterns
4 - 109
Market Segmentation
Key Topics
Segmenting
Consumer Markets
Segmenting
Business Markets
Segmenting
International
Markets
Requirements for
Effective
Segmentation
Measurable
 Size, purchasing power, and
profile of segment
Accessible
 Can be reached and served
Substantial
 Large and profitable enough
to serve
Differentiable
 Respond differently
Actionable
 Effective programs can be
developed
4 - 110
Target Marketing
Evaluating Market Segments
 Segment size and growth
 Segment structural attractiveness
Level of competition
 Substitute products
 Power of buyers
 Powerful suppliers

 Company objectives and resources
4 - 111
Figure 8-2:
Target Marketing
Strategies
4 - 112
Target Marketing
Choosing a TargetMarketing Strategy
Requires Consideration of:





Company resources
The degree of product variability
Product’s life-cycle stage
Market variability
Competitors’ marketing
strategies
4 - 113
Target Marketing
Socially Responsible Targeting
 Some segments are at special risk:
Children
 Inner-city
minority
consumers
 Internet
shoppers

 Controversy occurs when the methods
used are questionable.
4 - 114
Positioning
Positioning:
 The place the product
occupies in
consumers’ minds
relative to competing
products.
 Typically defined by
consumers on the
basis of important
attributes.
4 - 115
Positioning
Choosing a Positioning Strategy:
 Identifying possible competitive
advantages -- many potential
sources of differentiation exist:
Products
 Services
 Channels
 People
 Image

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Porsche is
positioned on
the basis of
performance
and freedom.
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Positioning
Choosing a Positioning Strategy:
 Choosing the right competitive
advantage

How many differences to promote?
• Unique selling proposition
• Positioning errors to avoid

Which differences to promote?
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Positioning errors
Underpositioning
Overpositioning
ConfusedPositioning
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Positioning
Criteria for Meaningful Differences
Important
Distinctive
Superior
Communicable
Preemptive
Affordable
Profitable
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Figure 8-3:
Possible Value Propositions
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Discussion Question
View the ad at right.
Evaluate the level of
benefits and the price.
What value proposition
is being expressed?
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Positioning
Choosing a Positioning Strategy:
 Developing a positioning statement
Positioning
statements summarize the
company or brand positioning
EXAMPLE: To (target segment and
need) our (brand) is (concept) that
(point-of-difference).
 Communicating the chosen position
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Positioning
Choosing a Positioning Strategy:
 Communicating and delivering the
chosen position
Entire marketing mix must support the
chosen strategy
 May require changes to the product,
pricing, distribution or promotion.

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