Strategic Marketing
jenny2000000
chap3.pptx
Chapter 3 -Analyzing the Marketing Environment
Strategic Marketing, MASY1-GC 1230
First Stop: Microsoft: Adapting to the Fast-Changing Marketing Environment
Microsoft dominated the computer software world throughout the 1990s and much of the 2000s but struggled in the fast changing technology environment.
Microsoft has a new mission with a different focus.
“to empower every person and every organization on the planet to achieve more.”
Microsoft, the technology giant dominated the computer software world throughout the 1990s and much of the 2000s. Its Windows and Office products have long been must-haves in the PC market. But with the decline in stand-alone personal computers and the surge in digitally connected devices—everything from smartphones and tablets to internet-connected TVs—mighty Microsoft found itself struggling to find its place in a fast-changing environment. However, the tech giant has now reinvented itself as a relevant brand that consumers can’t live without in the post-PC era.
The new mission focuses not on devices and services but on outcomes. Rather than chasing competitors in mobile devices and operating systems, Microsoft now intends to lead them in productivity tools.
2
Marketing Environment
Outside forces that affect marketing management’s ability to build and maintain successful relationships with target customers
Microenvironment: Actors close to the company that affect its ability to serve its customers
Macroenvironment: Larger societal forces that affect the microenvironment
Marketing environment refers to the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. The marketing environment consists of a microenvironment and a macroenvironment.
The microenvironment consists of the actors close to the company that affect its ability to serve its customers.
The macroenvironment consists of the larger societal forces that affect the microenvironment.
3
The marketing environment
MACROENVIRONMENT
MICROENVIRONMENT
Actors in the Microenvironment
This figure shows the major actors in the marketer’s microenvironment.
Each of these actors are discussed in greater detail in the following slides.
5
The Company
Interrelated groups in a company form the internal environment
Departments share the responsibility for understanding customer needs and creating customer value.
In designing marketing plans, marketing management takes other company groups into account—groups such as top management, finance, research and development (R&D), purchasing, operations, human resources, and accounting. All of these interrelated groups form the internal environment.
With marketing taking the lead, all departments—from manufacturing and finance to legal and human resources—share the responsibility for understanding customer needs and creating customer value.
6
Suppliers
Provide the resources needed by the company to produce its goods and services
Supplier problems seriously affect marketing
Supply shortages or delays
Labor strikes
Price trends of key inputs
Suppliers form an important link in the company’s overall customer value delivery network. They provide the resources needed by the company to produce its goods and services.
Supplier problems can seriously affect marketing. Marketing managers must watch supply availability and costs. Supply shortages or delays can cost sales in the short run and damage customer satisfaction in the long run. Rising supply costs may force price increases that can harm the company’s sales volume.
7
Suppliers (CONT’D)
Home furnishings retailer IKEA knows the importance of building close relationships with its extensive network of suppliers.
“To us, our suppliers and service providers are some of our most important partners for development. Together we grow and expand our businesses, and explore new ways to do it in a socially and environmentally responsible way. We share the responsibility to make sure that the unique IKEA range is produced at the right time, right volume,
right quality, and at a low cost to an ever-expanding customer base. Thanks to our ambitious growth plans, we are always on the look-out for new partners that share our values and our ambitions to become people and planet positive.”
IKEA Supplier Statement, 2021
IKEA’s mission is to create a better everyday life for customers by offering trendy but simple and practical home furnishings at prices so low that as many people as possible can afford them. But before it can sell the billions of dollars’ worth of products its customers covet, IKEA must first develop a robust and reliable network of supplier–partners who can help it design and make all those products.
8
Marketing Intermediaries
Marketing intermediaries help the company to promote, sell, and distribute its products to final buyers.
Resellers (aka wholesalers and retailers)
Physical distribution firms
Marketing services agencies
Financial intermediaries
Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers.
Physical distribution firms help the company stock and move goods from their points of origin to their destinations.
Marketing services 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.
9
Marketing Intermediaries (CONT’D)
Coca-Cola provides its retail partners with much more than just soft drinks. It also pledges powerful marketing support.
10
Competitors
Direct and indirect competition
Marketers must gain strategic advantage by positioning products strongly against competitors.
No single strategy is best for all companies.
| Product | Direct Competition | Indirect Competition |
| Delta Shuttle | ||
| Kindle Reader | ||
| World Cup Soccer | ||
| Heineken Beer |
The marketing concept states that, to be successful, a company must provide greater customer value and satisfaction than its competitors do. Thus, marketers must do more than simply adapt to the needs of target consumers. They also must gain strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of consumers.
No single competitive marketing strategy is best for all companies. Each firm should consider its own size and industry position compared with those of its competitors. Large firms with dominant positions in an industry can use certain strategies that smaller firms cannot afford. However, small firms can also develop winning strategies.
11
Publics
Publics: any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives
Financial
Media
Government
Citizen action
Local
General
Internal
Financial publics influence the company’s ability to obtain funds.
Media publics carry news, features, and editorial opinions.
Government publics: Management must take government developments into account.
Citizen-action publics: A company’s marketing decisions may be questioned by consumer organizations, environmental groups, etc.
Local publics include neighborhood residents and community organizations.
General public: The general public’s image of the company affects its buying.
Internal publics include workers, managers, volunteers, and the board of directors.
12
Customers
Five types of customer markets
Consumer markets
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.
Reseller market
buy goods and services to resell at a profit.
Consumer markets consist of individuals and households that buy goods and services for personal consumption.
Business markets buy goods and services for further processing or use in their production process.
Reseller markets buy goods and services to resell at a profit.
Government markets consist of government agencies that buy goods and services to produce public services.
International markets consist of buyers in other countries, including consumers, producers, resellers, and governments.
13
Customers
Five types of customer markets (cont’d)
Government markets
government agencies that buy goods and services to produce public services.
International markets
buyers in other countries, including consumers, producers, resellers, and governments
Consumer markets consist of individuals and households that buy goods and services for personal consumption.
Business markets buy goods and services for further processing or use in their production process.
Reseller markets buy goods and services to resell at a profit.
Government markets consist of government agencies that buy goods and services to produce public services.
International markets consist of buyers in other countries, including consumers, producers, resellers, and governments.
14
Major Forces in the Company’s Macroenvironment
This figure shows the six major forces in the company’s macroenvironment.
Each of these forces are discussed in greater detail in the following slides.
15
Demographic Environment
Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics.
Marketers analyze:
Changing age and family structures
Geographic population shifts
Educational characteristics
Population diversity
Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. Marketers analyze several important factors that affect the marketing environment.
The first factor is the changing age and family structures. The U.S. population contains several generational groups. These include the Baby Boomers, Generation X, Generation Y or Millennials, and Generation Z. These are discussed in more detail on the next slide.
The second factor is the changing American household. More people are divorcing or separating, choosing not to marry, marrying later, or marrying without intending to have children. Marketers must increasingly consider the special needs of nontraditional households because they are now growing more rapidly than traditional households. Each group has distinctive needs and buying habits.
The third factor is geographic shifts in population. Population shifts interest marketers because people in different regions buy differently. For example, people in the Midwest buy more winter clothing than people in the Southeast.
And the final factor is increasing diversity. Marketers face increasingly diverse markets as their operations become more international in scope. Some major companies also explicitly target gay and lesbian consumers.
16
Demographic Environment (CONT’D)
The U.S. population contains several generational groups:
Baby Boomers: 1946-1964
Generation X: 1965-1976
Millennials (or Generation Y): 1977-2000
Generation Z: after 2000
The U.S. population contains several generational groups. These include the Baby Boomers, Generation X, Generation Y or Millennials, and Generation Z.
Baby boomers: The 78 million people born during the years following World War II and lasting until 1964.
Generation X: The 49 million people born between 1965 and 1976 in the “birth dearth” following the baby boom.
Millennials (or Generation Y): The 83 million children of the baby boomers born between 1977 and 2000.
Generation Z: People born after 2000 (although many analysts include people born after 1995) who make up the kids, tweens, and teens markets
17
February 12, 2021
Demographic Environment (CONT’D)
Targeting Gen Xers:
Lowe’s markets heavily to Gen X homeowners with ideas and advice on home-improvement projects and problems, urging them to “Never Stop Improving.”
With so much potential, many brands and organizations focus on Gen Xers as a prime target segment. For example, a full 82 percent of Gen Xers own their own homes, making them an important segment for home-and-hearth marketers. Home-improvement retailer Lowe’s markets heavily to Gen X homeowners, urging them to “Never Stop Improving.” Through ads, online videos, and a substantial social media presence, Lowe’s provides ideas and advice on a wide range of indoor and outdoor home-improvement projects and problems, providing solutions that make life simpler for busy Gen X homeowners and their families.
19
Economic Environment
Economic factors affect consumer purchasing power and spending
Changes in consumer spending
Differences in income distribution
The economic environment consists of economic factors that affect consumer purchasing power and spending patterns.
Economic factors can have a dramatic effect on consumer spending and buying behavior. Consumers have now adopted a back-to-basics sensibility in their lifestyles and spending patterns that will likely persist for years to come. They are buying less and looking for greater value in the things they do buy. In turn, value marketing has become the watchword for many marketers. Marketers in all industries are looking for ways to offer today’s frugal buyers greater value.
Marketers should pay attention to income distribution as well as income levels. Over the past several decades, the rich have grown richer, the middle class has shrunk, and the poor have remained poor. This distribution of income has created a tiered market. Many companies aggressively target the affluent, while other firms target those with more modest means. Still other companies tailor their marketing offers across a range of markets, from the affluent to the less affluent.
20
Economic environment: UNPRECEDENTED impact of Covid-19 pandemic
Economy comes to a full stop in March 2020, in an effort to slow the spread of the coronavirus
“Wallet” recession: consumers hang onto their savings, or eat through them
Driven by 17% unemployment and 40 million American jobs either furloughed or disappeared
Not the same level of demand that drives upward of 2/3 of the U.S. economy (lag effect)
Unprecedented $2 trillion stimulus plan approved to bolster the US economy
Included relief for small business loans, expanded unemployment benefits, and direct payments to households: uneven dispersion throughout the economy
Additional $1.4 trillion stimulus plan currently under consideration, for consumers
Source: “How the Impact of COVID-19 Is Changing Marketing”, Target Marketing, 6.22.20
Economic environment: UNPRECEDENTED impact of Covid-19 pandemic (CONT’D)
Densely populated urban centers may look and feel different for some time
Impact on these innovation centers that accelerate the economy may damper national and global growth
Strong growth in housing demand and prices in smaller metropolitan markets
Recessionary, savings-conscious mindset prevails
Consumers focused on more pricing benefits from brand loyalty, and less VIP experiences
Source: “How the Impact of COVID-19 Is Changing Marketing”, Target Marketing, 6.22.20
Source: “COVID-19 and the Great Reset”, McKinsey & Co., 9.10.20
Source: “COVID-19 and the Great Reset”, McKinsey & Co., 9.10.20
Natural Environment
Physical environment and natural resources needed as inputs by marketers or affected by marketing activities
Environmental sustainability concerns have grown steadily over the past three decades.
Trends:
Shortages of raw materials
Increased pollution
Increased government intervention
The natural environment involves the physical environment and the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Marketers should be aware of several trends in the natural environment.
The first involves growing shortages of raw materials. Firms making products that require scarce resources face large cost increases, even if the materials remain available. The second trend is increased pollution. The third trend is increased government intervention in natural resource management. The governments of different countries vary in their concern and efforts to promote a clean environment.
Today, enlightened companies adopt practices that support environmental sustainability. This refers to the effort to create a world economy that the planet can support indefinitely.
25
Technological Environment
New technologies create new markets and opportunities.
Digital Technology
Radio-frequency identification (RFID) is technology to track products through various points in the distribution channel.
Government agencies investigate and ban potentially unsafe products.
New technologies can offer exciting opportunities for marketers. Many firms use radio-frequency identification, or RFID, technology to track products through various points in the distribution channel. New technologies create new markets and opportunities. Companies that do not keep up will soon find their products outdated.
Government agencies investigate and ban potentially unsafe products. Regulations have resulted in much higher research costs and longer times between new product ideas and their introduction. Marketers should be aware of these regulations when applying new technologies and developing new products.
26
Technological Environment (CONT’D)
Disney is taking RFID technology to new levels with its cool new MagicBand RFID wristband.
Wearing a MagicBand at The Walt Disney World Resort opens up a whole new level of Disney’s famed magic. After registering for cloud-based MyMagic+ services, with the flick of your wrist you can enter a park or attraction, buy dinner or souvenirs, or even unlock your hotel room.
27
Political Environment
Forces that influence or limit various organizations and individuals in a society
Laws, government agencies, and pressure groups
The political environment refers to laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society.
28
Major U.S. Legislation Affecting Marketing
Legislation regulating business is intended to protect
companies from each other
consumers from unfair business practices
the interests of society against unrestrained business behavior
Business legislation has been enacted for a number of reasons. The first is to protect companies from each other. The second purpose of government regulation is to protect consumers from unfair business practices. The third purpose is to protect the interests of society against unrestrained business behavior
29
Major U.S. Legislation Affecting Marketing: 1990–2010
| Legislation | Purpose |
| Children’s Television Act (1990) | Limits the number of commercials aired during children’s programs |
| Nutrition Labeling and Education Act (1990) | Requires that food product labels provide detailed nutritional information |
| Telephone Consumer Protection Act (1991) | Establishes procedures to avoid unwanted telephone solicitations |
| Americans with Disabilities Act (1991) | Makes discrimination against people with disabilities illegal |
This table lists legislation enacted from 1990 – 2010 that affects marketing.
A complete list of laws, starting with the Sherman Antitrust Act of 1890, can be found in Table 3.1 of this chapter.
30
Major U.S. Legislation Affecting Marketing: 1990–2010 (CONT’D)
| Legislation | Purpose |
| Children’s Online Privacy Protection Act (2000) | Prohibits online collection of information from children without parental consent Allows parents to review information collected from their children |
| Do-Not-Call Implementation Act (2003) | Collects fees from telemarketers for the enforcement of a Do-Not-Call Registry |
| CAN-SPAM Act (2003) | Regulates the distribution and content of unsolicited commercial e-mail |
| Financial Reform Law (2010) | Created the Bureau of Consumer Financial Protection: Writes and enforces rules for the marketing of financial products to consumers |
This table lists legislation enacted from 1990 – 2010 that affects marketing.
A complete list of laws, starting with the Sherman Antitrust Act of 1890, can be found in Table 3.1 of this chapter.
31
Socially Responsible Behavior
Socially responsible companies actively seek out ways to protect the long-run interests of consumers and the environment.
Companies develop policies, guidelines, and other responses to complex social responsibility issues.
Socially responsible firms actively seek out ways to protect the long-run interests of their consumers and the environment. Almost every aspect of marketing involves ethics and social responsibility issues. Companies are now developing policies, guidelines, and other responses to complex social responsibility issues.
Enlightened companies encourage their managers to look beyond what the regulatory system allows and simply “do the right thing.”
32
Cause-Related Marketing
Companies use cause-related marketing to
Exercise their social responsibility
Build more positive images
Primary form of corporate giving
Controversy—strategy for selling more rather than a strategy for giving
To exercise their social responsibility and build more positive images, many companies are now linking themselves to worthwhile causes. Cause-related marketing has become a primary form of corporate giving.
Critics worry that cause-related marketing is more a strategy for selling than a strategy for giving. Thus, companies using cause-related marketing might find themselves walking a fine line between increased sales and an improved image and charges of exploitation.
33
Cause-Related Marketing (CONT’D)
Ben & Jerry’s three-part “linked prosperity” mission drives it to make fantastic ice cream.
Economic Mission: manage our Company for sustainable financial growth.
Social Mission: use our Company in innovative ways to make the world a better place
Product Mission: make fantastic ice cream – for its own sake
Under its three-part mission, Ben & Jerry’s wants to make fantastic ice cream (product mission), manage the company for sustainable financial growth (economic mission), and use the company “in innovative ways to make the world a better place” (social mission). Ben & Jerry’s backs its mission with actions.
34
Caramel Non-Dairy Frozen Dessert With Fudge Chips, Graham Cracker Swirls & Chocolate Cookie Swirls
Colin Kaepernick is serving up sweet justice with the non-dairiest compilation of cookies & caramel. This flavor honors Colin’s activism in pursuit of racial justice & his portion of the proceeds from Change the Whirled™ go to Know Your Rights Camp. Learn more at Know Your Rights Camp
Cultural Environment
Institutions and other forces that affect a society’s basic values, perceptions, and behaviors
Persistence of cultural values
Core beliefs and values have a high degree of persistence.
Secondary beliefs and values are more open to change.
The cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors. Society shapes basic beliefs and values. People grow up in a particular society that shapes their basic beliefs and values. They absorb a worldview that defines their relationships with others. Cultural characteristics can affect marketing decision making.
People in a given society hold many beliefs and values. Their core beliefs and values have a high degree of persistence and are passed on from parents to children and are reinforced by schools, churches, businesses, and government. For example, most Americans believe in individual freedom, hard work, getting married, achievement, and success. These beliefs shape more specific attitudes and behaviors found in everyday life.
Secondary beliefs and values are more open to change and include people’s views of themselves, others, organizations, society, nature, and the universe. Believing in marriage is a core belief; believing that people should get married early in life is a secondary belief. Marketers have some chance of changing secondary values but little chance of changing core values.
36
Cultural Environment (CONT’D)
Shifts in secondary cultural values of people’s views about
Themselves
Others
Organizations
Society
Nature
Universe
Cultural characteristics that can affect marketing decision making are the persistence of cultural values and shifts in secondary cultural values, such as people’s views of themselves, others, organizations, society, and nature.
People’s views of themselves: People vary in their emphasis on serving themselves versus serving others.
People’s views of others: More “cocooning” – staying home, eating home-cooked meals
People’s views of organizations: Decline of loyalty toward companies
People’s views of society: Patriots defend it, reformers want to change it, and malcontents want to leave it.
People’s views of nature: Some feel ruled by it, in harmony with it, or seek to master it.
People’s views of the universe: Renewed interest in spirituality and development of more permanent values—family, community, earth, faith
37
Cultural Environment (CONT’D)
Riding the natural and organic foods trend, Annie’s is out to create a happier and healthier world with nourishing products that are “forever kind to the planet.”
Annie’s is out to create a happier and healthier world with nourishing foods and responsible conduct that is “forever kind to the planet.” Annie’s products are made from simple, natural ingredients grown by its farm partners. The products contain “no artificial anything,” says the company. “If it’s not real, it’s not Annie’s.” The company works closely with its food-supply-system
partners to jointly raise the bar for sustainability and organics. Annie’s also makes sustainable practices a top priority with its packaging—more than 90 percent of Annie’s packaging by weight is recyclable.
38
CULTURAL ENVIRONMENT – SOCIAL JUSTICE, 2020
CULTURAL ENVIRONMENT – SOCIAL JUSTICE, 2021
TrainersForHire.com
Responding to the Marketing Environment
Reactive firms passively accept the marketing environment and do not try to change it.
Proactive firms develop strategies to change the environment.
They take aggressive actions to affect the publics and forces in their marketing environment.
Many companies view the marketing environment as an uncontrollable element to which they must react and adapt. They passively accept the marketing environment and do not try to change it.
Other companies take a proactive stance toward the marketing environment. Rather than assuming that strategic options are bounded by the current environment, these firms develop strategies to change the environment. These firms take aggressive actions to affect the publics and forces in their marketing environment.
Marketing management cannot always control environmental forces. In many cases, it must settle for simply watching and reacting to the environment. For example, a company would have little success trying to influence geographic population shifts, the economic environment, or major cultural values. But whenever possible, smart marketing managers take a proactive rather than reactive approach to the marketing environment.
41
PROCTER & GAMBLE, RESPONDING TO THE 2020 MARKETING ENVIRONMENT
Multimillion dollar push to address racial equality that also includes sponsoring two films from the Queen Collective on BET and a Time 100 Talks virtual event
P&G also set four benchmarks for itself:
Achieving 40% multicultural representation in the U.S.;
Accelerating its investments in Black-owned and -operated media companies, agencies and marketing suppliers;
Enacting reviews to ensure Black people — and all people — are represented fairly in its marketing and advertising;
Taking steps, including withholding budgets, to ensure its advertising doesn't appear near hateful or discriminatory content.
Source: “9 pivotal campaigns that show how marketing transformed in H1”, MarketingDive.com, 7.13.20
Ted talk: the covid-19 crisis is a chance to do capitalism differently
