Chapter
2
The Dynamic Marketing
Environment
After studying this chapter you should be able to explain:
The concept of environmental marketing.
How external environmental forces affect marketing.
How external factors (markets, suppliers, intermediaries)
affect marketing.
How nonmarketing resources affect a firm’s marketing.
Chapter 2 Theme:
• Looking for opportunities while avoiding
threats in the marketplace…
Key Factors that Help or Hurt
Company Success:
• Company’s Internal Environment
• Company’s External Marketing Environment
• Includes:
– Microenvironment - forces close to the company that affect
its ability to serve its customers.
– Macroenvironment - larger (typically uncontrollable) forces
that affect most companies
Two Levels of External Forces have an
Effect on Marketing:
• Micro influences consist of suppliers,
marketing intermediaries, and customers.
• Macro influences include demographics,
economic conditions, culture, and laws.
Six Interrelated Macroenvironmental
Forces can Affect an Organization’s
Marketing Program:
•
•
•
•
•
•
Demographics
Competition
Political and legal forces
Economics conditions
Social and cultural forces
Technology
Macroenvironment MNEMONICS
Mac’s
Dog
Can’t
Pee on
Every
Single
Tree
Or: DCPEST
Environmental Monitoring
• Environmental Monitoring (Scanning) is
the process of:
– gathering information regarding the
external environment,
– analyzing that information, and
– forecasting the impact of whatever trends
the analysis suggests.
Macroenvironmental Forces
Economic
condition
s
Demographics
Competition
COMPANY’S
MARKETING
PROGRAM
Social
and cultural
forces
Technology
Political
and legal
forces
Demographics
•
•
•
•
•
Age
Income
Gender
Education
Race/Ethnicity
Some Key U.S.Demographic Trends
Changing Age Structure
Population is aging; many divisions
Changing American Family
Later marriage, fewer children, working
women, and nontraditional households
Geographic Shifts
Moving to the Sunbelt, suburbs,
“micropolitan areas”
Better-Educated & More White-Collar
Increased college attendance
and white-collar workers
Race/Ethnicity
• What’s happening in U.S. in regards to
race/ethnicity?
• Increasing Diversity……..
• NM is a window to the future. . . .
Social Forces
Changing Minorities
• Major Ethnic Groups as a percent of total:
2001: Wht/NH (71.0) Black (12.9) Hispanic (12.1)
2005: Wht/NH (69.3) Black (13.1) Hispanic (13.3)
2020: Wht/NH (63.8) Black (13.8) Hispanic (17.0)
2050: Wht/NH (52.8) Black (14.7) Hispanic (24.3)
Source: www.census.gov January 13, 2000
Social Forces
Changing Age Structure
Median Age of Resident Population
1980-2050
38.5
40
35
30
30
31.4
32.8
34.3
39.3
35.7
25
20
1980 1985 1990 1995 2000 2005 2010
Social Forces
Changing Age Structure
1990
Source: www.census.gov January 27, 2004
Social Forces
Changing Age Structure
2000
Source: www.census.gov January 27, 2004
Social Forces
Changing Age Structure
2025
Source: www.census.gov January 27, 2004
Social Forces
Changing Family Structure
Percent of Families
With Father, Mother, and Children
90
90
85
80
75
70
65
60
55
50
72
68
1955
1985
2000
Social Forces
Population Growth
2035
2030
2025
2020
2015
2010
2005
2000
1995
1990
360
340
320
300
280
260
240
220
200
1985
U.S. Population Growth
1980-2035
Most Recent Population Estimate:
• What is the population of the United States?
• Approximately 313 Million people
•
(As of Feb. 6, 2012)
Age Distribution of the U.S.
Population
(78 million people born 1946-1964)
One of the most powerful forces shaping the
marketing environment, 30% of population
(45 million people born 1965-1976)
More skeptical, cynical of frivolous
marketing pitches promising easy success
(72 million people born 1977-1994)
Fluent and comfortable with computer,
digital, and Internet technology (Net-Gens)
Importance of Age
• Why are Baby-Boomers so important to
Marketers?
• 76 million of them
• Who are Baby-Busters / Gen. X-er’s?
• Generation Y
Economic Conditions
• The Business Cycle - 3 stages:
– Prosperity
– Recession
– Recovery
Learn it on your own...
Economic Conditions
Inflation - Increase in prices of goods and services.
Interest Rates - How do they affect marketers?
Donnie’s Z-28 purchase
Political and Legal Forces
• Monetary and Fiscal Policies
• Social Legislation and Regulation
Social and Cultural Forces
• Environmental Consciousness
• Changing Gender Roles
– Changing back some though. . . . More manly men.
• A Premium on Time
• Physical Fitness and Health
Technological Environment
• Faster pace of technological change; products are
outdated at a rapid pace.
• Almost unlimited opportunities being developed daily
in health care, space industry, robotics, and bio-genetic
field.
• Challenge is not only technical, but also commercial –
make practical, affordable versions of products.
Technological Forces
• Some of the most dramatic technological changes
occurring now are:
– the declining cost and size, and increasing power,
of microprocessors;
– the convergence of television, personal computer,
and telephone technologies;
– the pervasive trend toward “connectedness”
through the World Wide Web;
– the emergence of biotechnology as a key
component of the economy.
Environmental Monitoring
• Environmental Monitoring (Scanning) is
the process of:
– gathering information regarding the
external environment,
– analyzing that information, and
– forecasting the impact of whatever trends
the analysis suggests.
Additional
Environmental
Monitoring
Examples
KOSS Corporation (1981)
• Show tape (10 min.)
• What happened to KOSS?
What’s going on in the
Macroenvironment that Sirius/XM Needs
to be aware of? (opportunities/Threats)