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MARKETING ENVIRONMENT

Chapter 3

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Objectives

Understanding environmental forces. Company’s Micro-environment Company’s Macro-environment Responding to the marketing

environment

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Marketing ProcessUnderstanding the market place

and customer

needs and

wants

Design a

customer-

driven marke

ting strate

gy

Construct

marketing

program that deliver superi

or value

Build profita

ble relationship and

create customer

delight

Capture

value from the

customers

to create profits

Research customer and

the market place

Managing marketing

information and customer

data

Select customer to

serve: market segmentation and targeting

Decide on value

proposition: differentiation

and positioning

Product and service design:

building a strong brand

Price Create real value

Distributionmanage

demand and supply chain

Promotion Communicating

the value

Customer relationship

management: build strong relationship with chosen customers

Partner relationship

management : build a strong

relationship with

marketing partners

Create satisfied loyal customer

Capture customer life time value

Increase share of market and

share of customer

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The Marketing Environment

The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers.

The marketing environment is made up ofmicro-environment (The Company, Suppliers,

Marketing Intermediaries, Customers Markets,

Competitors, And Publics),and macro-environment (Demographic, Economic,

Natural, Technological, Political, And Culture Forces).

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Micro-environmentThe actors close to the company that affect its ability to

serve its customer – the company, suppliers, marketing intermediaries, customers markets, competitors, and publics.

Marketing

The company

suppliers

Marketing intermediaries

customers

competitors

publics

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Marketing must consider other parts of the organization including finance, R&D, purchasing, operations and accounting

Marketing decisions must relate to broader company goals and strategies

Microenvironment

Actors

1 •The company

2 •Suppliers

3 •Marketing intermediaries

4 •Customers

5 •Competitors

6 •Publics

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Marketers must watch supply availability and pricing

Effective partnership relationship management with suppliers is essential

Microenvironment

Actors

1 •The company

2 •Suppliers

3 •Marketing intermediaries

4 •Customers

5 •Competitors

6 •Publics

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Help to promote, sell and distribute goods to final buyers

Include resellers, physical distribution firms, marketing services

agencies, and financial intermediaries

Effective partner relationship management is essential

Microenvironment

Actors

1 •The company

2 •Suppliers

3 •Marketing intermediaries

4 •Customers

5 •Competitors

6 •Publics

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The five types of customer markets Consumer Business Reseller Government International

Microenvironment

Actors

1 •The company

2 •Suppliers

3 •Marketing intermediaries

4 •Customers

5 •Competitors

6 •Publics

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Conducting competitor analysis is critical for success of the firm

A marketer must monitor its competitors’ offerings to create strategic advantage

Microenvironment

Actors

1 •The company

2 •Suppliers

3 •Marketing intermediaries

4 •Customers

5 •Competitors

6 •Publics

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A group that has an actual or potential interest in or impact on an organization

Seven publics include:● Financial● Media● Government● Citizen-action● Local● General● Internal

Microenvironment

Actors

1 •The company

2 •Suppliers

3 •Marketing intermediaries

4 •Customers

5 •Competitors

6 •Publics

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Macro-environmentThe larger social forces that affect the micro-environment –

demographic, economic, natural, technological, political, and culture forces.

Marketing

Demographic forces

Economic forces

Natural forcesTechnological forces

Political forces

Cultural forces

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Macro-environment Demographic environment“The study of human populations in terms of size, density, location, age,

gender, race, occupation and other statistics”

Age structure of the population ○ 0-14 years: 32.6% (male 13,172,641; female 12,548,346)

○ 15-64 years: 62.9% (male 25,102,754; female 24,519,698)

○ 65 years and over: 4.5% (male 1,510,280; female 2,033,288)

(2006 est.)

Geographic shifts in population ○ people move to the cities in search of employment and a higher standard of living

Education (a better-educated, more whit-collar, more professional population)

Changing in marital states (more single people)

The changing Egyptian family Sub-cultures

○ Egyptians 94%, Nubians, Berbers, Bedouin Arabs 4%, Other 2%

http://meria.idc.ac.il/journal/2003/issue4/jv7n4a2.html

http://en.wikipedia.org/wiki/Demographics_of_Egypt

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Macro-environment Economic environment

“Factors that affect consumer buying power and spending patterns”

Value Marketing has become the watchword for many marketers. They are

looking for ways to offer today’s more financially cautious buyers greater

value.

Marketers should pay attention to income distribution as well as average

income.

○ Upper-class consumers, whose spending patterns are not affected by current

economic events.

○ The middle class is somewhat careful about its spending, but can still afford the

good life some of the time.

○ The working class must stick close to the basics of food, clothing, and shelter.

○ The underclass must count their pennies when making even the most basic

purchases.

● Consumers at different income levels have different spending patterns.

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The Macroenvironment

The Economic Environment

• Two types of national economies:o subsistenceo industrial

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Macro-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

Air and water may seem to be infinite resources, but some groups see

long-run dangers.

Increased pollution

Industry will almost always damage the quality of the natural environment.

Increased government intervention

The governments of different countries vary in their concern and efforts to promote a clean environment.

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The Macroenvironment

Many companies use recycling to help protect natural resources

“Environmental Sustainable Strategies”

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Macro-environment Technological environment“Forces that create new technologies, creating new

products and market opportunities”

The most dramatic force shaping our destiny

New technologies create new markets and opportunities. However, every new technology replaces on older technology.

Marketers should watch the technological environment closely.

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Macro-environment Political environment“Consists of laws, government agencies and pressure

groups that influence or limit various organizations and individuals in a given society”

Legislation affecting businesses worldwide has increased

Laws protect companies, consumers and the interests of society

Increased emphasis on socially responsible actions

○ Cause-Related Marketing

• Marketers create link between brand and charitable organization and worthwhile cause.

• Demonstrates social responsibility

• Helps build positive brand image

• Cause-related marketing has become a primary form of corporate giving. It lets companies “do well by doing good”

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The Macroenvironment

Cause-related Marketing is one method

of demonstrating social responsibility

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Macro-environment Cultural Environment

Made up of institutions and other forces that affect a society’s basic values, perceptions, preferences and behaviors.

Core beliefs

values are passed on from parents to children and are reinforced by schools, religion, business, and government.

Secondary beliefs

are more open to change.(Example: marriage)

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Macro-environment Cultural Environment Includes people’s views of…

ThemselvesIdentify with brands for self-expression

OthersRecent shift from “me” to “we” society

OrganizationsTrend of decline in trust and loyalty to companies

SocietyPeople vary in their attitudes toward their society - from patriots who defend

it, to reformers who want to change it, and those who want to leave it.

Nature“lifestyles of health and sustainability”

UniverseIncludes religion and spirituality

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Responding to the Marketing Environment Many companies view the marketing environment

as an uncontrollable element in 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. (Example: Cathay Pacific Airlines)