Marketing - Chapter 3

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A Global

Perspective
Philip Kotler
Gary Armstrong
Swee Hoon Ang
3 Siew Meng Leong
Chin Tiong Tan
Oliver Yau Hon-
Ming
The Marketing PowerPoint slides adapted by
Peggy Su

Environment

Copyright © 2009 Pearson Education South Asia Pte Ltd 3-1


Learning Objectives
After studying this chapter, you should be able to:
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
5. Discuss how companies can react to the marketing
environment

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Chapter Outline
1. The Company’s Microenvironment
2. The Company’s Macroenvironemnt
3. Responding to the Marketing Environment

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The Marketing Environment
• The marketing environment includes the
actors and forces outside marketing that affect
marketing management’s ability to build and
maintain successful relationships with
customers.

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The Marketing Environment
Marketing Environment
• The microenvironment consists of the actors close
to the company that affect its ability to serve its
customers, the company, suppliers, marketing
intermediaries, customer markets, competitors, and
publics.

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The Marketing Environment
Marketing Environment
• The macroenvironment consists of the larger societal
forces that affect the microenvironment.
• Demographic
• Economic
• Natural
• Technological
• Political
• Cultural

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The Company’s Microenvironment

• The company • Customers


• Suppliers • Competitors
• Marketing intermediaries • Publics

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The Company’s Microenvironment
The Company
Internal environment includes:
• Top management
• Finance
• R&D
• Purchasing
• Operations
• Accounting

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The Company’s Microenvironment
Suppliers
• Provide the resources to produce goods and
services
• Treated as partners to provide customer value

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The Company’s Microenvironment
Marketing Intermediaries
• Help the company to promote, sell, and distribute its
products to final buyers
• Include:
• Resellers
• Physical distribution firms
• Marketing services agencies
• Financial intermediaries

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The Company’s Microenvironment
Marketing Intermediaries
• Resellers are the distribution channel firms that help the company
find customers or make sales to them. These include:
• Wholesalers
• Retailers
• Physical distribution firms are the distribution channel firms that
help the company to stock and move goods from their points of
origin to their final destination.

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The Company’s Microenvironment
Marketing Intermediaries
• Marketing service agencies are the marketing
research firms, advertising agencies, media firms, and
marketing consulting firms that help the company
target and promote its products to the right markets.
• Financial intermediaries include banks, credit
companies, insurance companies, and other
businesses that help finance transactions or insure
against the risks associated with the buying and
selling of goods.

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The Company’s Microenvironment
Customers
• Customer markets
consist of individuals and
households that buy goods
and services for personal
consumption.
• Business markets buy
goods and services for
further processing or for
use in their production
process.
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The Company’s Microenvironment
Customers
• Reseller markets buy goods and services to
resell at a profit.
• Government markets buy goods and
services to produce public services or transfer
goods and services to others who need them.
• International markets consist of buyers in
other countries including consumers,
producers, resellers, and governments.

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The Company’s Microenvironment
Competitors
• Firms must gain strategic advantage by positioning their
offerings against competitors’ offerings.
• Each firm should consider its own size and industry
position compared to those of its competitors.

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The Company’s Microenvironment
Publics
• Any group that has an actual or potential
interest in or impact on an organization’s
ability to achieve its objectives:
• Financial publics • Local publics
• Media publics • General public
• Government publics • Internal publics
• Citizen-action publics

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The Company’s Microenvironment
Publics
• Financial publics influence the company’s
ability to obtain funds—banks, investment
houses, and stockholders.
• Media publics carry news, features, and
editorial opinion—newspapers, magazines,
and radio and television stations.
• Government publics influence product safety
and truth in advertising.

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The Company’s Microenvironment
Publics
• Citizen-action publics include consumer
organizations, environment groups, and
minority groups
• Local publics include neighborhood residents
and community organizations
• General publics influence the company’s
public image
• Internal publics include workers, managers,
volunteers, and directors
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The Company’s Macroenvironment
• Demographic environment
• Economic environment
• Natural environment
• Technological environment
• Political environment
• Cultural environment

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The Company’s Macroenvironment
Demographic Environment
• Demography is the study of human populations in
terms of size, density, location, age, gender, race,
occupation, and other statistics.
• Demographic environment is important because it
involves people, and people make up markets.
• Demographic trends include age, family structure,
geographic population shifts, educational
characteristics, and population diversity.

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The Company’s Macroenvironment
Demographic Environment
Changing Age Structure of the Population
• Generational marketing is important in segmenting
people by lifestyle of life state instead of age.

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The Company’s Macroenvironment
Demographic Environment
Changing Age Structure of the Population
• Baby boomers include people born between
1946 and 1964
• Includes most affluent Asians

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The Company’s Macroenvironment
Demographic Environment
Changing Age Structure of the Population
• Generation X includes people born between
1965 and 1976. They tend to:
• Have high divorce rates
• Are concerned about the environment
• Respond to socially responsible companies
• Are less materialistic
• Emphasize quality of life
• Consumer organizations, environment groups,
and minority groups

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The Company’s Macroenvironment
Demographic Environment
Changing Age Structure of the Population
• Generation Y includes people born between 1977
and 1994.
• The Internet generation

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The Company’s Macroenvironment
Demographic Environment
The Changing Asian Family
More people are:
• Divorcing or separating
• Choosing not to marry
• Choosing to marry later
• Marrying without intending to have
children
• Higher divorce rates
• Increased number of working women
• More stay-at-home dads

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The Company’s Macroenvironment
Demographic Environment
Geographic Shifts in Population
• Trends include:
• Migratory movements between and within
countries
• Moving from rural to metropolitan areas
• Changes in where people work
• Telecommuting
• Home office
• Divorce or separation

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The Company’s Macroenvironment
Demographic Environment
Changes in the Workforce
Trends include:
• More educated
• More white collar
• More professional

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The Company’s Macroenvironment
Demographic Environment
Increasing Diversity
• Markets are becoming more diverse
• International
• National
• Trends include:
• Ethnicity
• Gay and lesbian
• Disabled

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The Company’s Macroenvironment
Economic Environment
• Economic environment consists of factors that
affect consumer purchasing power and spending
patterns.
• Subsistence economies consume most of their own
agriculture and industrial output.
• Industrial economies are richer markets.

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The Company’s Macroenvironment
Economic Environment
Changes in Income
• Value marketing involves ways to offer financially
cautious buyers greater value—the right combination
of quality and service at a fair price.

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The Company’s Macroenvironment
Economic Environment
Changes in Income
• Income distribution
• Upper-class consumers
• Middle-class consumers
• Working-class consumers
• Underclass consumers

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The Company’s Macroenvironment
Economic Environment
Changes in Consumer Spending Patterns
Ernst Engel—Engel’s Law
• As income rises:
• Percentage spent on food declines
• Percentage spent on housing remains constant
• Percentage spent on savings increases

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The Company’s Macroenvironment
Natural Environment
• Natural environment involves the natural resources
that are needed as inputs by marketers or that are
affected by marketing activities.
• Trends
• Shortages of raw materials
• Increased pollution
• Increased government intervention
• Environmentally sustainable strategies
• Green marketing

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The Company’s Macroenvironment
Technological Environment
• Most dramatic force in changing the marketplace with many
positive and negative effects
• Rapid change
• Provides new markets and new opportunities
• Internet
• Medicine
• Miniaturization
• Weapons
• Credit cards
• Communication

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The Company’s Macroenvironment
Political Environment
• Political environment consists of laws, government
agencies, and pressure groups that influence or limit
various organizations and individuals in a given
society.

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The Company’s Macroenvironment
Political Environment
• Legislation regulating business
• Public policy to guide commerce—sets of laws and
regulations that limit business for the good of society
at large
• Increasing legislation to:
• Protect companies
• Protect consumers
• Protect the interests of society

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The Company’s Macroenvironment
Political Environment
Increased Emphasis on Ethics
and Socially Responsible
Actions
• Socially responsible
behavior occurs when firms
actively seek out ways to
protect the long-term © Yukinobu Zengame

interests of their consumers


and the environment
• Cause-related marketing

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The Company’s Macroenvironment
Cultural Environment
• The cultural environment consists of institutions and
other forces that affect a society’s basic values,
perceptions, and behaviors.

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The Company’s Macroenvironment
Cultural Environment
Persistence of Cultural Values
• Core beliefs and values have a high degree of
persistence, are passed on from parents to children,
and are reinforced by schools, churches, businesses,
and government.
• Secondary beliefs and values are more open to
change.

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The Company’s Macroenvironment
Cultural Environment
Shifts in Secondary Cultural Values
• Major cultural values of a society are expressed
in people’s view of:
• Themselves
• Others
• Organization
• Society
• Nature and the universe

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The Company’s Macroenvironment
Cultural Environment
Shifts in Secondary Cultural Values
• People’s view of themselves
• Yankelovich Monitor’s consumer segments:
• Do-It-Yourselfers—recent movers
• Adventurers
• People’s view of others

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The Company’s Macroenvironment
Cultural Environment
Shifts in Secondary Cultural Values
• People’s view of organizations
• People’s view of society
• Patriots defend it
• Reformers want to change it
• Malcontents want to leave it

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The Company’s Macroenvironment
Cultural Environment
Shifts in Secondary Cultural Values
• People’s view of nature
• Some feel ruled by it
• Some feel in harmony with it
• Some seek to master it
• People’s view of the universe
• Renewed interest in spirituality

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Responding to the Marketing
Environment
Views on Responding
• Uncontrollable
• Reacting and adapting to forces in the environment
• Proactive
• Taking aggressive actions to affect forces in the environment
• Reactive
• Watching and reacting to forces in the environment

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