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Marketing EnvironmentsMarketing Environments
Professor Chip Besio
Cox School of Business
Southern Methodist University
Outline
The Company’s Environment — Macro- and Micro-Environments and their composition
Analysis of the Environment — S.W.O.T.
The Company’s Micro Environment - The 5 CsThe “5 Cs” can be used as a framework
to describe and analyze the company’s immediate environment Company Customers Competitors Channels Constituents
Company’s Internal EnvironmentCompany’s Internal Environment - functional areas such as top management, finance, and manufacturing, marketing, etc.
CustomersCustomers - buyers in markets that purchase a company’s goods and services
CompetitorsCompetitors - those who serve the target market with similar products/ services
The Company’s Micro Environment
Channels (Suppliers, Distributors, Channels (Suppliers, Distributors, Wholesalers and Retailers)Wholesalers and Retailers) - Provide the resources needed to produce goods and services and help the company to promote, sell, and distribute to final buyers
Constituents (stakeholders)Constituents (stakeholders) - any group that perceives itself having an interest in the company’s ability to achieve its objectives
The Company’s Micro Environment
Micro Environment -The MarketThe immediate environment for the
company is the market(s) in which it offers goods and/or services
Company
Competitors
Customers
Market
Constituents
Types of Markets
CompanyCompany
ConsumerMarkets
InternationalMarkets
GovernmentMarkets
BusinessMarkets
ResellerMarkets
Source: Prentice Hall
Micro Environment - Channels of DistributionThe market operates within a broader
framework which we call the channel of distribution
The channel of distribution involves a coordinated effort among different firms to offer products to an end user
Micro Environment - Channels of DistributionThe channel of distribution
Company
Competitors
Customers/ Intermediaries
Suppliers
Market
Channel of Distribution
End Users
Constituents
The Company’s Macro Environment Beyond the channel of distribution there are
other environmental factors that impact on the company and its market
Among them are: Society/CultureSociety/Culture - e.g., dual income households
are less likely to prepare meals in the home EconomyEconomy - e.g., recession reduces discretionary
spending by consumers, as well as investments by competitors and suppliers
Natural Environment – e.g., resources needed by marketers
The Company’s Macro Environment Among them are (continued):
DemographicsDemographics - e.g., the aging population dictates that more incontinence products will be needed in the future
Legal/RegulatoryLegal/Regulatory - e.g., EPA regulations regarding hazardous waste disposal could affect the demand for motor oil and batteries
TechnologyTechnology - e.g., low cost, high speed computers could allow quicker, more effective dissemination of information to the sales people and widely dispersed business units
Social/Cultural EnvironmentThe institutions
and other forces that affect a society’s basic values, perceptions, preference, and behaviors.
Social/Cultural EnvironmentCore 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.
Social/Cultural Environment Yankelovich Monitor has identified
eight major consumer value themes:1. Paradox
2. Trust not
3. Go it alone
4. Smarts really count
5. No sacrifices
6. Stress hard to beat
7. Reciprocity is the way to go
8. Me 2
www.yankelovich.com
ThemselvesThemselves
OthersOthers
OrganizationsOrganizations
SocietySociety
NatureNature
The UniverseThe Universe
Social/Cultural EnvironmentSociety’s Major Cultural Views Are Expressed
in People’s Views of:
Economic Environment
Changes in Income 1980’s – consumption
frenzy 1990’s – “squeezed
consumer” 2000’s – value marketing
Income Distribution Upper class Middle class Working class Underclass
Consists of factors that affect consumer purchasing power and spending patterns.
The Hourglass Economy
Natural Environment
Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities.
Factors Impacting the Natural Environment
Shortages of Raw Materials
Increased Pollution
Increased Government Intervention
Environmentally Sustainable Strategies
Demography
Demographics: The study of human populations in terms of
size, density, location, age, gender, race, occupation, and other statistics.
Marketers track changing age and family structures, geographic population shifts, educational characteristics, and population diversity.
Changing American Family
Household makeup: Married couples with children = 34%, and
falling Married couples and people living with other
relatives = 22% Single parents = 12% Single persons and adult “live-togethers” =
32%
Geographic Shifts in Population
16% of U.S. residents move each yearGeneral shift toward the Sunbelt statesCity to suburb migration continuesMore people moving to “micropolitan”
areasMore people telecommute
Better Educated Population1980:
69% of people over 25 completed high school 17% had completed college
2002: 84% of people over 25 completed high school 27% had completed college
Currently, ⅔ of high school grads start college
Increasing DiversityU.S. is a “salad bowl”
Various groups mixed together, each retaining its ethnic and cultural differences
Increased marketing to: Growing ethnic communities Gay and lesbian consumers People with disabilities
Political Environment
Includes Laws, Government Agencies, and Pressure Groups that Influence or Limit Various Organizations and Individuals In a Given Society.
Increasing Legislation
Changing GovernmentAgency Enforcement
Increased Emphasis on Ethics& Socially Responsible Actions
Technological EnvironmentMost
dramatic force now shaping our destiny.
Technological Environment Changes rapidly. Creates new markets
and opportunities. Challenge is to make
practical, affordable products.
Safety regulations result in higher research costs and longer time between conceptualization and introduction of product.
The Company’s Macro EnvironmentThe broader corporate environment
Economy
Legal/RegulatoryTechnology
Social/Cultural Demographics
Company
Competitors
Customers/ Intermediaries
Suppliers
Market
Channel of Distribution
End Users
Constituents
Environmental Management Perspective Taking a proactive approach to managing
the microenvironment and the macro-environment to affect changes that are favorable for the company. How? Hire lobbyists , run “advertorials”, file law suits and complaints, and form agreements.
Responding to the Marketing Environment
Source: Prentice Hall
Environmental Analysis S.W.O.T.
What Is S.W.O.T. Analysis?
S.W.O.T. analysis groups observations of the company and its environment into:
Internal StrengthsStrengths WeaknessesWeaknesses
External OpportunitiesOpportunities ThreatsThreats
What Is S.W.O.T. Analysis? Strengths and weaknesses are factors specific
to company which contribute to either good performance (strengths) or poor performance (weaknesses).
Microsoft example: Strengths - Scale, excellent development capability;
Windows OS as a basis for development and product tie-ins; reputation with end users for ease of use
Weaknesses - Reputation for “vaporware;” broad scope makes focus on niches difficult
What Is S.W.O.T. Analysis? Opportunities and threats are based on the
activities in the company’s environment by others, including customers, competitors and suppliers and other constituents.
Examples include: Opportunities - Increasing computing power; increasing
penetration of PCs and handhelds; increasing availability and speed of internet access; bundling different software products
Threats - Government antitrust action; power of Intel as dominant supplier of microprocessors; investment by telephone and cable companies in internet “distribution”
What Is S.W.O.T. Analysis?
The same information can often be viewed as either an opportunity or a threat
Consider the company’s current position and determine the most likely effect (positive or negative) of the information
Why Is S.W.O.T. Analysis Important?
S.W.O.T. analysis is a useful tool for for assessing both the company and its environment
Identify ProblemIdentify Problem
Analyze Problem in
Pieces
Analyze Problem in
Pieces
Develop Recommend
-ations
Develop Recommend
-ations
S.W.O.T. AnalysisS.W.O.T. Analysis