Chapter 3
The Marketing Environment
Previewing the Concepts—Chapter Objectives
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.
JUST THE BASICS
Chapter Overview
Although the first two chapters of the text provide an overview of all of the important
topics in marketing and set the stage for the remainder of the topics covered, this third
chapter starts going into detail on the first step of the marketing process—understanding
the environment in which the company operates.
The chapter describes the major micro- and macroenvironments in which the company
operates. The microenvironments dealt with will build on the customer and partner
relationships developed in prior chapters; they include the other company departments, as
well are those companies in the supply chain, the value chain, and the customers
themselves. Interested publics are also discussed.
The macroenvironment includes demographic changes, and the economic, natural,
technological, political, and cultural environment. All of these forces need to be studied
continuously to ensure that the company’s business and product portfolios are still
meeting the needs of its customer base.
Chapter Outline
1.
Introduction
a.
McDonald’s has been losing share to what the industry calls “fast-casual”
restaurants because consumers today want more choices.
b.
Americans are seeking healthier eating options. As the market leader,
McDonald’s often bears the brunt of criticism.
c.
McDonald’s has strived to realign itself with the changing marketing
environment, and it appears to be paying off.
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d.
e.
f.
g.
Marketers need to be good at building relationships with customers, others
in the company, and external partners.
A company’s marketing environment consists of the actors and forces
outside marketing that affect marketing management’s ability to build and
maintain successful relationships with target customers.
More than any other group in the company, marketers must be the trend
trackers and opportunity seekers. They have disciplined methods—
marketing intelligence and marketing research—for collecting information
about the marketing environment. They also spend more time in the
customer and competitor environments.
A company’s marketing environment consists of the actors and forces
outside marketing that affect marketing management’s ability to build and
maintain successful relationships with target customers.
Use Key Term Marketing Environment here.
Use Chapter Objective 1 here.
h.
i.
j.
There are both opportunities and threats in the marketing environment.
The microenvironment consists of the actors close to the company that
affect its ability to service its customers.
The macroenvironment consists of the larger societal forces that affect the
microenvironment.
Use Key Terms Microenvironment and Macroenvironment here.
2.
The Company’s Microenvironment
a.
Figure 3-1 shows all of the players affecting the company from a micro
point of view.
b.
Relationships with all these actors must be developed so that marketing
management can successfully create customer value and satisfaction.
Use Figure 3-1 here.
The Company
c.
All the interrelated functional groups within the company form the internal
environment.
d.
Marketing management must take these other groups into account:
1.
Top management sets the mission, objectives, broad strategies, and
policies.
2.
Finance finds the money to carry out the marketing plans.
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3.
4.
5.
6.
R&D designs safe and attractive products.
Purchasing gets the supplies and materials needed.
Operations produces and distributes the product.
Accounting measures revenues and costs, and helps marketing
understand how well it is achieving objectives.
e.
All these departments must work in concert and according to the
“marketing concept” to “think consumer.”
Suppliers
f.
Suppliers are an important link in the company’s value delivery system.
g.
Marketing managers must pay attention to the availability of supplies,
because shortages, delays, and strikes could damage customer satisfaction.
h.
Suppliers today are frequently treated as partners in creating and
delivering value to customers.
Marketing Intermediaries
i.
Marketing intermediaries help companies promote, sell, and distribute
goods to final buyers.
Use Key Term Marketing Intermediaries here.
j.
k.
They include resellers, physical distribution firms, marketing services
agencies, and financial intermediaries.
1.
Resellers are distribution channel firms that help the company find
customers or make sales to them. They include wholesalers and
retailers, who buy and resell merchandise.
2.
Physical distribution firms assist the company in stocking and
moving goods from their points of origin to their destinations.
3.
Marketing services agencies perform some of the marketing
functions such as market research, advertising, and media selection
and placement.
4.
Financial intermediaries include banks, credit companies,
insurance companies and others that help finance transactions or
insure against risks.
Marketing intermediaries are also important links in the value delivery
system.
Customers
l.
There are five types of customer markets that must be studied.
1.
Consumer markets are made up of individuals and households that
buy goods and services for personal consumption.
2.
Business markets buy the goods and services for further processing
or for use in their production process.
3.
Reseller markets buy goods and services to resell at a profit.
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4.
5.
Government markets consist of government agencies that buy
goods and services to produce public services, or transfer the
goods to others who need them.
International markets are made up of and of the above types of
customers in other countries.
Competitors
m.
Marketers must know their competitors’ strengths so that they can develop
positioning strategies that differentiate their own products against the
competitors’.
n.
No single competitive strategy will work for all companies.
Publics
o.
A public is any group that has an actual or potential interest in or impact
on an organization. There are seven types of publics:
Use Key Term Public here.
Use Discussing the Issues 1 here.
1.
2.
3.
4.
5.
6.
7.
Financial publics influence the company’s ability to obtain funds.
Media publics carry news, features, and editorial opinions.
Government publics may develop and enforce regulations on
product safety, truth in advertising, and other matters.
Citizen-action publics are consumer organizations, environmental
groups, minority groups, etc. that may question a company’s
decisions.
Local publics include neighborhood residents and community
organizations.
General publics may be concerned about a company’s products
and activities.
Internal publics include workers, managers, etc. who need to feel
good about their company.
Applying the Concept
Describe the microenvironment for the School of Business at your University. What
internal departments must the school interact with? Who are the customers and
competitors? Do you know if there are any marketing intermediaries? What publics might
be interested in what the School of Business is doing?
3.
The Company’s Macroenvironment
a.
Figure 3-2 shows the macroenvironmental forces that affect a company in
the way of shaping opportunities and posing threats.
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Use Figure 3-2 here.
Demographic Environment
b.
Demography is the study of human populations in terms of size, density,
location, age, gender, race, occupation, and other statistics.
Use Key Term Demography here.
Use Chapter Objective 2 here.
Use Discussing the Issues 2 here.
c.
d.
e.
f.
g.
This is interesting to marketers because it involves people; it is people that
make up markets.
The world population totals 6.4 billion, and will pass 8.1 billion people by
the year 2030.
A growing population means growing human needs to satisfy. Market
opportunities could grow if purchasing power is growing as well.
Marketers track changing age and family structures, geographic
population shifts, educational characteristics, and population diversity.
In the United States, the single most important demographic trend is the
changing age structure of the population.
1.
The baby boomers were born between 1946 and 1964, and account
for 28 percent of the population. There are 78 million baby
boomers, who have become one of the most powerful forces
shaping the U.S. marketing environment.
2.
Generation X is a “birth dearth” generation, numbering 49 million
people born between 1965 and 1976. They tend to be cautious in
their economic outlook because they grew up in a time of recession
and corporate downsizing.
3.
Generation Y’s members were born between 1977 and 1994, and
number about 72 million. This generation is still developing their
buying preferences and behaviors.
Use Key Terms Baby Boomers, Generation X, and Generation Y here.
Use Figure 3-3 here.
Use Marketing at Work 3-1 here.
h.
i.
Marketers must decide whether to develop marketing plans and strategies
based on generational differences.
The traditional family is being redefined.
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1.
2.
Married couples with children now make up only about 34% of
U.S. households; married couples without children make up 28%;
single parents comprise 16%; 32% are nonfamily households.
The number of working women has increased greatly from 1950
when it was about 30% of the U.S. workforce to just over 60%
today.
Let’s Discuss This
Most of the students’ parents will be from the Baby Boom generation. Discuss how the
students’ upbringing and daily lives may have differed from what their parents
experienced in their own upbringing, and what those differences mean for marketers.
j.
k.
l.
m.
n.
o.
p.
There are also great geographic shifts in populations, both between and
within countries.
1.
In the United States, there has been a shift toward the Sunbelt
states over the last two decades.
2.
Marketers are interested in these kinds of shifts because people in
different regions buy differently.
3.
The shift in where people live has also shifted where they work.
The U.S. population is becoming better educated.
1. In 2003, 84% of the population over age 25 had completed
high school, and 27% completed college, up from 69% and
17% in 1980.
2. The rising number of educated people will increase demand
for quality products, books, magazines, travel, personal
computers, and Internet services.
There are also more white-collar workers in the United States.
Ethnic and racial make up varies among countries.
1. Japan is at one extreme with the United States at the other.
2. The U.S. population is 68% white, 14% Hispanic, 13%
African American, and 4% Asian; the remaining 1% is
made up of American Indian, Eskimo and Aleut peoples.
3. Many companies design products and promotions to appeal
to the diverse ethnic and racial groups.
The gay and lesbian markets are also being recognized as important to
marketers.
Another attractive market segment is that of the 54 million people with
disabilities.
As the population grows more diverse, marketers will continue to
diversify their marketing programs to take advantage of that diversity.
Use Linking the Concepts here.
Use Application Questions 1 here.
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Economic Environment
q.
The economic environment consists of factors that affect consumer
purchasing power and spending patterns.
Use Key Term Economic Environment here.
r.
s.
t.
u.
Nations vary greatly in their levels and distribution of income.
1.
Subsistence economies consume most of their own agricultural and
industrial output. They represent few marketing opportunities.
2.
Industrial economies are at the other extreme, and represent rich
markets for many kinds of goods.
Incomes change all the time, and marketers need to track those changes.
1.
The 1990s saw a consumption frenzy fueled by income growth,
federal tax reductions, rapid increases in housing values, and a
boom in borrowing.
2.
The 1990s then saw a recession hit, and consumers started to spend
more carefully.
3.
In the early 2000s, consumers face the age of the “squeezed
consumer.” Consumers must repay debts during a time of
increased household and family expenses. They spend more
carefully.
Marketers also need to pay attention to income distribution.
1.
At the top of income distribution in the United States are the
upper-class consumers, who are generally not affected by current
economic events.
2.
The middle class is comfortable, but is somewhat careful in their
spending.
3.
The members of the working class stick to the basics of food,
clothing, and shelter.
4.
The underclass members are those on welfare and many retirees
who must count pennies to make even the most basic purchases.
Ernst Engel, over a century ago, noted that people shifted their spending as
their income rose. This is now known as Engel’s laws and is noted in
Table 3-1.
Use Key Term Engel’s Laws here.
Use Table 3-1 here.
Use Discussing the Issues 3 here.
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v.
w.
Changes in major economic variables have a large impact on the
marketplace.
With adequate warning, companies can take advantage of changes in this
environment.
Natural Environment
x.
The natural environment involves the natural resources that are needed as
inputs by marketers, or that are affected by marketing activities.
Use Key Term Natural Environment here.
Use Chapter Objective 3 here.
Use Focus on Ethics here.
Use Discussing the Issues 4 here.
y.
z.
Environmental concerns have grown over the last three decades. There are
several trends that should be tracked:
1.
Shortages of raw materials: both renewable (forests, food) and
nonrenewable (oil, coal, minerals) resources pose serious
problems.
2.
Increased pollution is a problem worldwide.
3.
Increased government intervention in management of natural
resources varies by country.
Companies are developing environmentally sustainable strategies and
practices in an effort to develop an economy that can be supported
indefinitely.
Use Marketing at Work 3-2 here.
Technological Environment
aa.
The technological environment is a dramatic force in the marketplace
today creating new markets and opportunities.
Use Key Term Technological Environment here.
bb.
cc.
dd.
The United States leads the world in research and development spending,
$312 billion in 2005.
Many companies are adding marketing people to R&D teams to obtain a
stronger marketing orientation.
Safety is an increasing concern as technology becomes more complex.
1.
The U.S. Food and Drug Administration (FDA) has regulations to
test new drugs.
2.
The Consumer Product Safety Commission sets safety standards
for products.
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3.
Marketing must be aware of and adhere to regulations that affect
developing new products.
Political Environment
ee.
The political environment consists of laws, government agencies, and
pressure groups that influence or limit various organizations and
individuals in a given society.
Use Key Term Political Environment here.
Use Chapter Objective 4 here.
ff.
gg.
hh.
ii.
jj.
kk.
ll.
mm.
nn.
Regulation can encourage competition and ensure fair markets.
Governments develop public policy to help guide markets.
Legislation affecting business has been increasing.
1.
The United States has laws covering competition, fair trade
practices, environmental protection, product safety, truth in
advertising, consumer privacy, packaging and labeling, pricing,
and other issues. Table 3-2 lists many of the most important laws.
2.
The European Commission is also establishing a framework of
laws covering many of these same issues.
Business legislation is enacted to protect companies from each other; to
protect consumers from unfair business practices; and to protect the
interests of society.
Government agencies have discretion in how they enforce the laws that
are passed.
Marketers need to track laws at the local, state, national, and international
levels.
Enlightened companies ask their managers to be socially responsible over
and above existing laws.
E-commerce has created an entirely new set of legal and ethical issues.
Online privacy issues are a great concern.
Many companies are exercising social responsibility through causerelated marketing.
Use Table 3-2 here.
Use Discussing the Issues 5 here.
Cultural Environment
oo.
The cultural environment is made up of institutions and other forces that
affect a society’s basic values, perceptions, preferences, and behaviors.
Use Key Term Cultural Environment here.
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pp.
qq.
rr.
ss.
People are affected by the worldview that their society adheres to that
defines their relationships with others.
Cultural values are persistent; these beliefs shape specific attitudes and
behaviors.
1.
Core beliefs and values are passed on from parents to children.
2.
Secondary beliefs are more open to change.
Cultural swings do take place. Marketers want to predict these shifts in
order to react to both opportunities and threats.
The major cultural values of a society are expressed in the following
views:
1.
People’s views of themselves.
2.
People’s views of others.
3.
People’s views of organizations.
4.
People’s views of society.
5.
People’s views of nature.
6.
People’s views of the universe.
Use Linking the Concepts here.
Use Application Questions 2 here.
Let’s Discuss This
How does the view you hold about yourself affect how you buy your clothing and what
you buy?
4.
Responding to the Marketing Environment
a.
Many companies think the marketing environment is an uncontrollable
element to which they have to adapt.
b.
Other companies take an environmental management perspective to affect
the publics and forces in their environment.
c.
Marketing managers should take a proactive rather than reactive approach
to the marketing environment.
Use Key Term Environmental Management Perspective here.
Use Chapter Objective 5 here.
Use Marketing at Work 3-3 here.
Use Discussing the Issues 6 here.
Use Application Questions 3 here.
Use Under the Hood/Focus on Technology here.
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Travel Log
Discussing the Issues
1. List the actors in a company’s microenvironment. How might the goals of the publics
in a company’s microenvironment be opposed to one another? How would opposing
goals among a company’s relevant publics impact its strategy?
Actors include the company, suppliers, marketing intermediaries, customers, competitors,
and publics. Publics include financial, media, government, citizen-action, local, general,
and internal. For some companies, publics may have differing perspecitives or goals.
For example, a textile company may upset its local publics but please its financial publics
by closing a manufacturing plant. Such opposing goals can make it diffiuclt to make
decisions without alienating potential customers.
2. List the six primary forces shaping a company’s macroenvironment. Which do you
think has the largest impact on a retail clothing store? Which has the largest impact
on a not-for-profit organization serving the homeless? Why?
The six forces are demographic, economic, natural, technological, political, and cultural.
Student responses will vary for the second question.
3. The changing structure of the American family has a tremendous impact on the
opportunities for, and threats to, a company. Explain how a grocery store could
change its positioning to appeal to each of the following segments: married couples
with children, single parents, and adults living alone.
Student responses will vary. However, each response should include a discussion of how
the segments are different and how a store might alter the marketing mix to appeal to
each segment.
4. Americans are becoming more concerned about the natural environment. Explain
how this trend might affect a company that markets packaging for (a) candy bars, (b)
tires, (c) gas-powered lawnmowers, and (d) electrical power. Suggest some effective
responses to the concerns that consumers might have about these products.
Student responses will vary. In general, the trend encourages companies to conserve and
use as many renewable resources as possible. Companies also want to avoid actions that
will alienate the public or invite additional government intervention.
5. Identify a cause-related marketing campaign. Does the link between the product and
the cause make you more likely to purchase the product? Does the campaign change
your opinion of the company?
Student responses will vary based on personal experience and opinion.
6. Identify a company that you believe is taking a proactive, rather than reactive,
approach to dealing with the marketing environment. What specific actions do they
take to influence their environment? What benefits have resulted form those actions?
Student responses will vary.
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Application Questions
1. For educational institutions, the number, quality, and characteristics of its student
body are heavily impacted by changes in the size and structure of the general
population. Discuss how your school is likely to be impacted by the following trends:
an aging population, a growing population, a changing definition of the family,
geographic shifts in population, a more white-collar workforce, and increasing ethnic
and cultural diversity. For those trends that have a negative impact, what strategy
would you recommend for mitigating the negative influence?
Students should comment on the impact each demographic change will have. For
example, an aging population may mean more “non-traditional” students for some
schools. That may mean more flexible schedules and changing demand for particular
courses. For schools already serving primarily non-traditional students, the impact will
differ. It may mean higher enrollments and more demand for classes.
2. In small groups, brainstorm several new technologies emerging in today’s market.
What older technologies might these newer options replace? What can the marketers
selling products relying on outdated technologies do to maintain their share of the
market?
Student responses will vary.
3. Select two of the shifts in secondary cultural values that are discussed in the text. For
each value, identify a company that has benefited from the shift and one whose
position has worsened. For those organizations that have not fared as well under the
shift, what can they do to better adjust to this trend?
Student responses will vary.
Under the Hood
The FTC recently hosted a public workshop on Radio Frequency Identification (RFID) to
discuss all of the technology’s applications as well as its potential pitfalls. At the
workshop, one speaker commented that RFID “promises to reform, if not revolutionize,
many corners of the marketplace.” As discussed in the chapter, RFID is already a part of
many consumers’ daily lives. And, as companies like Wal-Mart and Gillette embrace the
technology, RFID is truly changing the way suppliers and retailers work together.
At the FTC workshop, Simon Langford, Manager of RFID Strategy for Wal-Mart,
offered his thoughts on the benefits of RFID. Review his presentation online at
http://www.ftc.gov/bcp/workshops/rfid/langford.pdf and answer the following questions:
1. How does RFID help strengthen Wal-Mart’s relationships with its many partners?
By increasing communication and efficiency and making operations more transparent,
Wal-Mart can work more closely with its partners to meet joint goals.
2. What are some of the benefits for Wal-Mart? For Wal-Mart’s suppliers?
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In addition to the benefits mentioned above, Wal-Mart benefits by having stock on hand
when needed and by delivering lower prices and better value to customers. Suppliers
benefit by having a clearer picture of demand and better ability to serve Wal-Mart’s
needs.
3. How does RFID technology increase value and satisfaction for Wal-Mart’s
customers?
By lowering prices (key to Wal-Mart’s value proposition) and keeping stock on hand to
meet consumer demand, Wal-Mart delivers value and satisfaction.
4. How might consumer privacy concerns impact the widespread acceptance of
RFID technology?
Student responses will vary. Privacy concerns may limit the use of RFID
technology. Wary consumers may demand that companies be transparent in their use of
the technology, posting warnings and offering alternatives for those uninterested in
having RFID as a part of products and services that they buy.
Focus on Ethics
How many times has your family purchased a new computer in the past five years? As
computers become more and more powerful, regular updating of computer equipment has
become common. Have you ever wondered where all of the old computers and monitors
go? Concerns over decreasing raw materials, increasing pollution levels, and global
warming have gained momentum over the last several years. While many companies
have been accused of polluting the environment, some have used society’s concern over
the natural environment to differentiate themselves from competitors. Dell recently
initiated a program for businesses and consumers to recycle and reuse old computers,
monitors, keyboards, and mice. For a fee of $15.00 per 50 pounds of weight, Dell sends
someone to your door to pick up old components. Dell then recycles or resells the old
computer equipment, sparing landfills from the hazardous materials contained in much of
today’s computer equipment.
1. Assume that the price paid by the owners of the old computer equipment does not
cover Dell’s cost of recycling. What benefits might Dell gain from the recycling
program that would justify the expense?
Goodwill in the community and a better corporate image, in addition to the free
promotion offered by news reports and word of mouth, might validate the expense of the
program.
2. What actions might government take if concerned about the disposal of unwanted
computer equipment elevated? Are Dell’s proactive recycling efforts enough, in
your opinion, to keep regulators at bay?
Government agencies might regulate the disposal of computer equipment or assess fees
when computers are purchased in anticipation of their disposal.
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3. Might Dell’s computer recycling program help to differentiate it from other
computer manufacturers? How much influence would a recycling program like
the one described above for Dell computer have on your decision to buy a
computer from a particular company?
Student responses will vary. Students should consider the long-term sustainability of the
program and how it impacts consumer impressions of the company.
GREAT IDEAS
Barriers to Effective Learning
1.
2.
3.
This is an intense chapter, and it presents a whole lot of information that might
make some students’ heads swim. If it hasn’t happened before, this is where
students really begin to get the picture that marketing managers need to be very
analytical. Presenting the in-depth discussion of current macro trends as
something that needs to be understood but not memorized helps.
Students will also be anxious about how a marketing manager successfully tracks
these kinds of forces. Explaining the use of purchased marketing and economic
reports, and what market researchers do for a living, helps relieve that anxiety.
As usual, examples of companies who successfully adapt to changing forces and
factors will help students internalize the messages in this chapter.
Student Projects
1.
2.
3.
4.
5.
6.
List two examples of how the technological environment has helped marketers.
Should the United States regulate advertising for things that are purported to be
bad for you, such as cigarettes and alcohol? How about for fast food?
Find an example of a company that you believe has an environmental
management perspective. What is it doing to be proactive toward its environment?
Describe the process you went through to discover the company’s perspective.
After reading the material in the chapter on the demographic environment and
projected trends, pick a company or industry of your choice and cite what you
believe to be the five most important demographic trends that will impact the
company’s or the industry’s future. Explain why you picked the trends that you
did.
Visit several McDonald’s restaurants in your area. How is the company doing in
the Back to Basics part of their turnaround plan?
Break into groups in class and role-play bringing a new product to market that the
R&D department has just developed. There should be a person for each of these
roles: R&D, Marketing, Finance, Purchasing, Suppliers, and a Marketing
Intermediary. Each should argue from their own point of view and for the needs
of each of their organizations. Report your findings and your impressions to the
class.
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7.
8.
9.
Interview your parents, or others of the baby boom generation about their values
and what they are interested in purchasing. Do their answers match what is in the
textbook? Share your insights with the class.
Considering that twenty years ago personal computers, compact disc players,
DVD players, and the World Wide Web were basically unknown, how have these
devices or phenomena impacted marketing? How have they changed our culture?
What do you think is impacting our culture the most today?
Collect ten advertisements and comment on how they apply to the cultural
environment (use the areas suggested by the chapter as a place to begin). What
effect do cultural values and beliefs have on consumption? Relate this approach to
what you learned about the marketing concept and value delivery in the previous
chapters.
Interactive Assignments
Small Group Assignment
1. Form students into groups of three to five. Each group should read the opening
vignette to the chapter on McDonald’s. Each group should answer the following
questions:
a. Describe the environmental forces that McDonald’s faced as its sales
growth began slumping in 1997.
b. How did McDonald’s choose to respond to those environmental changes?
c. How might changes in the American family structure affect a company
such as McDonald’s?
Each group should share its findings with the class.
Individual Assignment
1. Read the opening vignette to the chapter. Think about the answers to the following questions:
a. How might increasing levels of education have impacted McDonald’s
growth?
b. What in McDonald’s turnaround plan addressed changing income levels?
c. Was McDonald’s being reactive or proactive in its approach to its
changing marketplace?
Share your findings with the class.
Think-Pair-Share
1. Consider the following questions, formulate and answers, pair with the student on
your right, share your thoughts with one another, and respond to questions from
the instructor.
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a. What is the difference between the microenvironment and macroenvironment with respect to marketing?
b. What does a marketing intermediary do?
c. How many publics can you name for your college or university?
d. What generation are you in? How would you describe your generation?
e. If you were going to attempt to sell to the 65+ generation, what would be a
key to selling successfully to this generational group?
f. Which technological force will impact marketing the most in the near
future? What technological force has impacted you the most? Comment.
g. Do you think the Internet should be regulated? Why or why not? Do you
buy online? Why or why not?
h. List five cultural values in our society. Why are these values important to
our society? (If you are from a foreign society, list five cultural values
from that society. What are the differences?)
Outside Example
You’ve probably not heard of Isgro Pastries. It is a small, local bakery in South
Philadelphia, part of that city’s famed Italian Market. Not heard of that, either? Well, the
Italian Market in Philadelphia is the country’s largest and oldest outdoor market area,
with over 100 vendors selling produce, meats, flowers, kitchen wares, some clothing, and
many other items.
Isgro’s, like most of the vendors here, has been in the same family for generations; in
fact, in 2004 it celebrated its 100th anniversary. The residential area around the Italian
Market is still largely populated by Italians, although people from many other cultures are
beginning to move in. For instance, there is now a very large Vietnamese population in
the area, and there is even a large Vietnamese shopping center across the street from the
entrance to the Italian Market.
Philadelphia is a major metropolitan area, but it is still largely a city of small
neighborhoods. It retains much of its colonial atmosphere, with the “Old City” home to
many historic events, such as the signing of the Declaration of Independence and the
location of the temporary national capital before Washington, D.C. was established. In
many areas it can almost seem that time has passed Philadelphia by, except when you
visit its vibrant Center City area, home to major corporations and law firms, a dazzling
concert hall for its world-renowned orchestra, and restaurants that can be counted among
the world’s best.
But back to the Italian Market and Isgro’s. Although the Market and this particular
vendor are still crowded year round, the neighborhood is in the process of
“gentrification”—which is defined as “the process of renewal and rebuilding
accompanying the influx of middle-class or affluent people into deteriorating areas that
often displaces earlier, usually poorer residents.” Displacing many of the older Italian
families, who have seen their offspring move away are lawyers, doctors, and other
professionals. They are moving into refurbished row homes and warehouses turned into
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loft condominiums that are driving up the value of these homes to previously unheard of
levels. Think about this when you answer the questions below; you can visit the two Web
sites, www.bestcannoli.com for Isgro’s and www.phillyitalianmarket.com for the Italian
Market.
1. What might this population shift—gentrification—mean to both the Italian
Market and Isgro’s?
2. How do you suggest these two entities market themselves to keep their ethnic
heritage, yet change with the times?
3. The Italian Market sells fresh food that is ripe today—most of the produce won’t
last more than a couple of days. How might this impact the fast-paced life of
today’s American family?
4. How have the Italian Market, Isgro’s, and the other vendors listed begun to utilize
technology to increase their market?
Classroom Exercise/Homework Assignment
Nokia has been an extremely successful company, launching new cell phone technology
usually well ahead of its competition. It’s hit some bumps recently as the economic
environment has stagnated, but overall, this is a company that knows how to develop and
sell technology. Visit the Nokia Web site at www.nokia.com and review the material
there.
1.
Look at the ads on the homepage and the information about Club Nokia.
What generation is Nokia targeting?
Clearly, Nokia knows that its growth is going to be coming from Generation Y. Its ads on
its homepage show young people, and images young people would relate to. Although
Club Nokia is not yet active in the United States, again, it is targeted at the young. It
offers games, cartoons, movies and alternate tones and graphics, something the Baby
Boom generation, for example, is not going to be that interested in.
2.
Nokia seems to be interested in preserving their natural environment.
Why?
Although Nokia may well be interested in preserving nature, one of their first FAQs
answers says that their recycling efforts are managed on a national level, because
“legislation and recycling efforts vary by country.” Plus, they bury this information
several levels down. You have to go to “Investor Information,” then “2002,” and only
then can you find their environmental efforts. It appears that their interest in the natural
environment may be purely based on the political environment(s) they face.
3.
How has the economic environment impacted Nokia?
Nokia's third-quarter 2005 group net sales increased by 18% compared to the third
quarter 2004. At constant currency, group net sales would have increased by 23%. All
four of Nokia's business groups contributed to this year-on-year sales growth. In the third
quarter 2005, the total mobile device volume achieved by Nokia Mobile Phones,
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Multimedia and Enterprise Solutions business groups reached 66.6 million units,
representing 29.5% year-on-year growth.
Strong volume growth in China continued to be driven by sales across the range of
Nokia's broad product portfolio through an extensive distribution system. In Asia Pacific,
strong sequential volume growth reflected Nokia’s ability to capitalize on strong market
growth, particularly in the fastest growing market, India, where Nokia retained market
share and industry-leading position. In Europe/Middle East/Africa, sequential growth
largely reflected continuing strong overall market growth in the Middle East, Africa and
Russia. In Latin America, Nokia's third-quarter volumes declined sequentially, reflecting
lower volumes in the market overall and a lower Nokia share. North America remained a
challenging environment for Nokia.
Classroom Management Strategies
This will be the first time students will have thought about the marketing environment
and what it means to companies in their marketing efforts. The concept of understanding
consumer needs and wants will be totally foreign to them at worst, and at best a novel
concept. Once the students begin to see the complexity of the marketing environment,
however, there will be a tendency for their eyes to glaze over. As usual, working through
several examples for each concept will help tremendously.
1. College is a place to break things down into their component parts to study
them in isolation. The section on the company’s microenvironment may well
be the first time the students will have looked at marketing as needing to pay
attention to anything other than marketing concepts. At least 15 minutes
should be devoted to this topic in class. The difficult concepts will most
likely be in the areas of marketing intermediaries and publics; spending
sufficient time on these two topics will make the following chapters that much
easier.
2. The majority of the class time, 30 to 40 minutes, should be spent on the
macroenvironment. There is a tremendous amount of information in this
section, particularly in the section describing the demographic environment.
It’s helpful here to link some of these concepts back to what they learned in
sociology courses, or, if the students have not taken any of the social sciences,
you can point out how they interact with business. The next most intense part
of this section is the political environment and the sheer number of laws
passed that affect marketers. The cultural environment section is a good time
to tie in principles of psychology.
3. Finally, the last part of the class will be spent on Responding to the Marketing
Environment. You can have some fun with the Marketing at Work
“YourCompanySucks.com” while at the same time having a serious
discussion about the concepts of managing your environment, rather than
reacting to it.
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