CHAPTER 3
The Marketing
Environment
Roadmap: Previewing the Concepts
 Describe the environmental forces that affect
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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.
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McDONALD’S – Facing Challenges
Challenges
 Faces shifting consumer
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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.
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Marketing Initiatives
 Focus on core competency

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of consistent products and
reliable service.
Offers upscale alternative
including McCafe and
Bistro Gourmet.
Eliminates “supersize,”
offers healthier food
options, and introduces Go
Active! Adult Happy Meal.
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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.
– Marketing intelligence and research are used to
collect information about the environment.
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Figure 3-1
Actors in the Microenvironment
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The Microenvironment
 Company’s Internal Environment:
– Areas 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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The Microenvironment
 Suppliers:
– Provide resources needed to produce
goods and services.
– Important link in the “value delivery
system.”
– Most marketers treat suppliers like
partners – relationship management of
suppliers is critical.
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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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Marketing in Action
Partnering with Intermediaries
Coca-Cola’s partnership
efforts help intermediaries
to market more effectively.
Coca-Cola shares
research results related to
the beverage market, such
as consumer preference
and demographic data.
They’ve even analyzed
creative aspects of drivethrough menu board
design that could be
improved.
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The Microenvironment
 Customers:
– Five types of markets
that purchase a firm’s
goods and services.
 Consumer
 Business
 Reseller
 Government
 International
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The Microenvironment
 Competitors:
– 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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Marketing in Action
Promoting Strategic Advantages
Comparative advertising
is often used to promote
a company’s or brand’s
strategic advantage.
Comparative advertising
may name or show a
specific competitor, or
refer to the competition
indirectly via comparisons
to “other brands” or “the
leading brand.”
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The Microenvironment
 Publics:
– Any group that
has an interest
in or impact on
an organization's
ability to achieve
its objectives.
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 Types of Publics:
– Financial
– Media
– Government
– Citizen-action
– Local
– General
– Internal
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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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Figure 3-2
Forces in the Macroenvironment
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Demographic Forces
 Demographics:
– The study of human
populations in terms
of size, density,
location, age,
gender, race,
occupation, and
other statistics.
 Free demographic
information can be
found on the Web.
http://www.census.gov
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Demographic Forces
 Marketers track changing age and
family structures, geographic
population shifts, educational
characteristics, and population
diversity.
– The changing age structure of the U.S.
population is the single most important
demographic trend.
– Baby boomers, Generation X, and
Generation Y are the key groups.
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Demographic Forces
 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.
– Are likely to postpone
retirement.
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Marketing in Action
Targeting Boomers’
Needs
As baby boomers age,
their desire for vitality
and continued good
health will become
increasingly important.
Many marketers are
already attempting to
satisfy these needs by
developing new goods,
drugs, and services.
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Demographic Forces
 Generation X:
– Born between 1965
and 1976.
– Defined by shared
experiences.
– Cynical of frivolous
marketing pitches.
– Cares about the
environment.
– Prize experience, not
acquisition.
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 Generation Y:
– Born between 1977
and 1994.
– Large disposable
income.
– Comfortable with
technology.
– Tend to be impatient
and “Now-Oriented.”
– Targeted by many
product lines.
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Marketing in Action
Reaching Out to
Generation Y
The ad shown at left
plays to the fact that
brands successfully
targeting Gen Y are
those that are perceived
as hip and popular.
It also recognizes that
Gen Y’s composition is
more racially diverse,
with 1 in 3 members
considering themselves
to be non-Caucasian.
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Demographic Forces
 Changing American family and
household makeup:
– Married couples with children equal 34%,
and this percentage is falling.
– Married couples and people living with
other relatives equals 22%.
– Single parents equal 12%.
– Single persons and adult “live-togethers”
(also called nonfamily households) = 32%
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Marketing in Action
Changing American Household
Dream
Dinners was
created to
help working
women who
haven’t time
to prepare or
cook dinner
themselves,
but who want
their families
to eat well.
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Demographic Forces
 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.
 1 in 5 people now work out of their
home.
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Demographic Forces
 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.
 27% had completed college.
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Demographic Forces
 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:
 Professionals should increase by 25% while
manufacturing is expected to increase 3%.
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Let’s Talk!
How might age-related
generational characteristics
affect Walt Disney World?
What about changes in the
composition of households?
Education and work force status?
Explain.
http://disneyworld.disney.go.com/wdw/parks/parkOverview?id=ParkOverviewPage
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Demographic Forces
 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.
– Increased marketing efforts towards:
 Gay and lesbian consumers
 People with disabilities
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Marketing in Action
Diversity Related Marketing
Specialty
consultants
are often
hired to
research
and target
diverse
markets.
http://www.outnowconsulting.com/index.htm
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Economic Forces
 Consists of factors that affect consumer
purchasing power and spending patterns.
 Changes in Income
– 1980s –
consumption frenzy
– 1990s – “squeezed
consumer”
– 2000s – value
marketing
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 Income Distribution
–
–
–
–
Upper class
Middle class
Working class
Underclass
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Marketing in Action
Disney’s Two-Tiered Market
Distinctly different items are targeted to each market.
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Natural Forces
 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.
– Increased government intervention.
– Environmentally sustainable strategies.
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Marketing in Action
Environmental Sustainable Practices
Some firms have adopted
biodegradable packaging
alternatives as part of
their environmentally
sustainable
practices.
Mondi Business
Paper is one such
firm – note that the
paper itself is 100% recycled.
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Technological Forces
Video Snippet
Technological forces are
dramatically shaping our
destiny. Watch the clip to
learn how consumers’
usage of the WWW
has impacted the
promotional efforts
of American Express.
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Technological Forces
 Technology changes rapidly, creating new
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
markets and opportunities for some, while
making other products obsolete.
Challenge is to make practical, affordable
products.
Safety regulations result in higher research
costs and a longer time period between
conceptualization and introduction of a
product.
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Let’s Talk!
Genetically modified or
cloned foods have met
with strong resistance in
Europe.
How do you feel about
eating genetically altered
or cloned foods?
How else might genetic
engineering advances create new opportunities?
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Political Forces
 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
responsible behavior.
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Marketing in Action
Diet Canada Dry – Cause-Related Marketing
Canada Dry donated
$ .10 to the Juvenile
Diabetes Research
Foundation of
Canada for every 2
liter bottle & 12 pack
sold during the
promotional period.
Learn more about
the multi-tiered
campaign by visiting
the Web site.
http://www.opticom-marketing.com/case-study-canada-dry.php
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Cultural Forces
The institutions and other forces that
affect a society’s basic values,
perceptions, preferences, and
behavior.
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Cultural Forces
 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.
– Marketers may be able to change
secondary beliefs, but NOT core beliefs.
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Cultural Forces
 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
 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 environment.
 Manage the environment by:
–
–
–
–
–
Hiring lobbyists
Running “advertorials”
Pressing law suits
Filing complaints
Forming agreements to control channels
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Rest Area: Reviewing the Concepts
 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 2007, Prentice-Hall Inc.
3-43