Principles of Marketing
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Fall 2009 - MKTG 220
 Dr. Abdullah Sultan
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Copyright 2007, Prentice Hall, Inc.
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If Marketing is about managing profitable
customer relationships, why do companies
fail in this task?
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Marketing Environment
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Consists of actors and forces outside the
organization that affect management’s ability to
build and maintain relationships with target
customers.
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Studying the 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.
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Marketing Environment
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Includes:
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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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Considered to be beyond the control of the organization.
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Segmentation
Product Distribution
Price
Promotion
Target
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Macroenvironment
Factors
Segmentation
Microenvironment
Factors
Product Distribution
Price
Promotion
Target
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Marketing Environment
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Actors in the microenvironment include:
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The company itself
Suppliers
Marketing intermediaries
Customers
Competitors
Publics
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The Microenvironment
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Company’s Internal Environment:
 Areas inside 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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The Microenvironment
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Suppliers:
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Provide resources needed to produce goods and
services.
Important link in the “value delivery system.”
Most marketers treat suppliers like partners.
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The Microenvironment
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Marketing intermediaries:
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Help the company to promote, sell, and distribute
its goods to final buyers
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Resellers
Physical distribution firms
Marketing services agencies
Financial intermediaries
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The Microenvironment
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Customers:
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Five types of markets that purchase a company’s
goods and services.
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Consumer
Business
Reseller
Government
International
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The Microenvironment
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Competitors:
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Those who serve a target market with products
and services that are viewed by consumers as
being reasonable substitutes.
Company must gain strategic advantage against
these organizations.
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The Microenvironment
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Publics:
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Any group that has an interest in or impact on an
organization's ability to achieve its objectives.
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Financial public
Media public
Government public
Citizen-action public
Local public
General public
Internal public
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The Macroenvironment
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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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The Macroenvironment
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Forces in the macroevironment can be
categorized as:
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Demographic
Economic
Natural
Technological
Political
Cultural
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Demographic Environment
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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 population
diversity.
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Demographic Environment
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The changing age structure of the population
is the single most important demographic
trend.
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USA: Baby boomers, Generation X, and
Generation Y are the key groups.
Kuwait: Grandparents, Parents, and You.
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Demographic Environment
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Baby Boomers:
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78 million born between 1946 and 1964 (45 years
and above).
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.
Are likely to postpone retirement.
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Demographic Environment
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Generation X:
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45 million born between 1965 and 1976 (33 years
to 44 years).
Defined by shared experiences:
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Increasing divorce rates.
More of their mothers employed.
First generation of latchkey kids (kids who stay at home
with little parental supervision).
Care about the environment.
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Demographic Environment
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Generation Y:
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72 million born between 1977 and 1994 (15 to 32
years).
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:
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Teen and young adult games
Clothes, furniture, food
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Demographic Environment
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Increasing diversity:
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Kuwait is a “salad bowl” mixing together various
groups, each of which retains its ethnic and
cultural differences.
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Ethnic segments are growing as a percentage of the
Kuwait population and growth is projected to continue.
Increased marketing efforts towards:
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Asians and people from Lebanon/Syria/Egypt
Young people with purchasing power (demand)
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Economic Environment
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Consists of factors that affect consumer purchasing
power and spending patterns.
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Changes in Income
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1980s – consumption
frenzy
1990s – “squeezed
consumer”
2000s – value marketing
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Income Distribution
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Upper class
Middle class
Working class
Underclass
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Natural Environment
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Involves natural resources that are needed
as inputs by marketers or that are affected by
marketing activities.
Factors include:
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Shortages of raw materials.
Increased pollution.
Increased government intervention.
Trend toward more environmentally sustainable
strategies (e.g., recyclable packages, more
energy-efficient operations).
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Technological Environment
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Most dramatic force shaping our destiny.
Changes rapidly.
Creates new markets and opportunities (e.g., K-Net,
RFID technology).
Challenge is to make practical, affordable products.
When old industries ignore new technologies, old
businesses decline.
Companies that do not keep up with technology will
miss new products and opportunities.
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Political Environment
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Includes laws, government agencies, and pressure
groups that influence or limit various organizations
and individuals in a given society.
Areas of concern:
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Increasing legislation.
Changing government agency enforcement.
Increased emphasis on ethics and socially responsible
behavior.
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Cultural Environment
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The institutions and other forces that affect a
society’s basic values, perceptions, preference, and
behaviors.
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Core beliefs and values are passed on from parents to
children and are reinforced by schools, mosques, business,
and government.
Secondary beliefs and values are more open to change.
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Marketers may be able to change secondary beliefs, but NOT
core beliefs.
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Responding to the
Marketing Environment
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Environmental Management Perspective
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Taking a proactive approach to managing the
environment by taking aggressive (rather than
reactive) actions to affect the publics and forces in
the marketing environment.
Example: NBK social programs (anti-drugs,
exercise)
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Question?
1)
Do you believe that taking a proactive
approach to manage the marketing
environment is more effective than a
reactive approach? Why?