Chapter Three
Roadmap:
Previewing the Concepts
1. Describe the environmental forces that affect the company’s ability to serve its customers.
2. Explain how changes in the demographic and economic environments affect marketing
decisions.
3. Identify the major trends in the firm’s natural and technological environments.
4. Explain the key changes in the political and cultural environments.
Copyright 2007, Prentice Ha ll, Inc.
3-3 Challenges
Faces shifting consumer
lifestyles and preferences for healthier foods.
Low ratings of food and
service quality.
Atmosphere not upscale. Image is perceived as
being uncultured, uncool, and unclassy by younger target markets.
McDONALD’S – Facing New
McDONALD’S – Facing New
Challenges
Challenges
Case Study
Case Study
Marketing Initiatives
Focus on core competencyof consistent products and reliable service.
Offers upscale alternatives
including McCafe and Bistro Gourmet.
Eliminates “supersize,”
offers healthier food
Marketing Environment
Consists of actors and forces outside the
organization that affect management’s ability to build and maintain relationships with
target customers.
– Studying the environment allows marketers to take advantage of opportunities as well as to combat threats.
Copyright 2007, Prentice Ha ll, Inc.
3-5
Marketing Environment
Includes:
– Microenvironment: actors close to the
company that affect its ability to serve its customers.
– Macroenvironment: larger societal forces that affect the microenvironment.
• Considered to be beyond the control of
Marketing Environment
Actors in the microenvironment
include:
– The company itself – Suppliers
– Marketing intermediaries – Customers
Copyright 2007, Prentice Ha ll, Inc.
3-7
The Microenvironment
Company’s Internal Environment:
–
Areas
inside
a company.
–
Affects the marketing department’s
planning strategies.
–
All departments must “think
consumer” and work together to
The Microenvironment
Suppliers:
– Provide resources needed to produce goods and services.
– Important link in the “value delivery system.”
Copyright 2007, Prentice Ha ll, Inc.
3-9
The Microenvironment
Marketing intermediaries:
– Help the company to promote, sell, and distribute its goods to final buyers
• Resellers
The Microenvironment
Customers:
– Five types of markets that purchase a company’s goods and services.
• Consumer • Business • Reseller
Copyright 2007, Prentice Ha ll, Inc.
3-11
The Microenvironment
Competitors:
– Those who serve a target market with
products and services that are viewed by consumers as being reasonable
substitutes.
Publics:
– Any group that has an interest in or impact on an organization's ability to achieve its objectives.
• Financial public • Media public
• Government public • Citizen-action public • Local public
• General public
Copyright 2007, Prentice Ha ll, Inc.
3-13
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
The Macroenvironment
Forces in the macroevironment can be
categorized as:
– Demographic – Economic
– Natural
– Technological – Political
Copyright 2007, Prentice Ha ll, Inc.
3-15
Demographic Environment
Demographics:
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
Demographic Environment
The changing age structure of the U.S.
population is the single most important
demographic trend.
Copyright 2007, Prentice Ha ll, Inc.
3-17
Demographic Environment
Baby Boomers:
– 78 million born between 1946 and 1964. – Equal 28% of population.
– Earn more than 50% of all personal income.
– Almost 25% belong to racial or ethnic minority.
– Spend a lot on anti-aging products and services.
Demographic Environment
Generation X
:
– 45 million born between 1965 and 1976. – Defined by shared experiences:
• Increasing divorce rates.
• More of their mothers employed. • First generation of latchkey kids.
Copyright 2007, Prentice Ha ll, Inc.
3-19
Demographic Environment
Generation Y:
– 72 million born between 1977 and 1994. – Have large amount of disposable income. – Comfortable with computer technology. – Tend to be impatient and “Now-Oriented.” – Many product lines targeted at those who
are part of Generation Y:
• Teen and young adult games
Demographic Environment
Changing American family and
household makeup:
– Married couples with children = 34%, and falling.
– Married couples and people living with other relatives = 22%.
– Single parents = 12%.
Copyright 2007, Prentice Ha ll, Inc.
3-21
Demographic Environment
Geographic Shifts in Population:
– 14% of U.S. residents move each year. – General shift toward the Sunbelt states. – City to suburb migration continues.
– More people moving to “micropolitan” areas.
– More people telecommute.
Demographic Environment
Better Educated Population:
– 1980:
• 69% of people over age 25 completed high school.
• 17% had completed college.
– 2003:
• 85% of people over age 25 completed high school.
Copyright 2007, Prentice Ha ll, Inc.
3-23
Demographic Environment
Greater White-Collar Population – 1950 – 1985:
• White-collar workers increased from 41% to 54% while blue-collar workers decreased from 47% to 33%.
– 1983 – 1999:
• Professionals and managers increased from 23% to greater than 30%.
– 2002 – 2012:
Demographic Environment
Increasing diversity:
– U.S. is a “salad bowl” mixing together
various groups, each of which retains its ethnic and cultural differences.
• Ethnic segments are growing as a
percentage of the U.S. population and growth is projected to continue.
Copyright 2007, Prentice Ha ll, Inc.
3-25
Economic Environment
Changes in Income – 1980s –
consumption frenzy – 1990s – “squeezed
consumer”
– 2000s – value marketing
Income Distribution – Upper class
– Middle class – Working class – Underclass
Consists of factors that affect consumer
Natural Environment
Involves natural resources that are
needed as inputs by marketers or that
are affected by marketing activities.
Factors include:
– Shortages of raw materials. – Increased pollution.
Copyright 2007, Prentice Ha ll, Inc.
3-27
Technological Environment
Most dramatic force shaping our destiny. Changes rapidly.
Creates new markets and opportunities. Challenge is to make practical, affordable
products.
Safety regulations result in higher research
costs and longer time between
Political Environment
Includes laws, government agencies, and
pressure groups that influence or limit
various organizations and individuals in a given society.
Areas of concern:
– Increasing legislation.
– Changing government agency enforcement. – Increased emphasis on ethics and socially
Copyright 2007, Prentice Ha ll, Inc.
3-29
Cultural Environment
The institutions and other forces that affect a
society’s basic values, perceptions, preference, and behaviors.
– Core beliefs and values 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.
Cultural Environment
Society’s major cultural views are
expressed in people’s views of:
– Themselves – Others
– Organizations – Society
– Nature
Copyright 2007, Prentice Ha ll, Inc.
3-31
Responding to the
Marketing Environment
Environmental Management
Perspective
– Taking a proactive approach to managing the environment by taking aggressive
(rather than reactive) actions to affect the publics and forces in the marketing
Responding to the
Marketing Environment
Manage the environment by:
– Hiring lobbyists
– Running “advertorials” – Pressing law suits
– Filing complaints
Copyright 2007, Prentice Hall, Inc. 3-33
Rest Stop:
Reviewing the Concepts
1. Describe the environmental forces that affect the company’s ability to serve its customers.
2. Explain how changes in the demographic and economic environments affect marketing
decisions.
3. Identify the major trends in the firm’s natural and technological environments.
4. Explain the key changes in the political and cultural environments.