Chapter 3 - Analyzing The Marketing Environment PDF

CHAPTER 3 Analyzing the Marketing Environment Dr. Amena Shahid  3.1 Describe the environmental forces that affect the company’s ability to serve its customers. Todays Lecture 3.2 Explain how changes in the demographic and economic environments affec...

CHAPTER 3 Analyzing the Marketing Environment Dr. Amena Shahid  3.1 Describe the environmental forces that affect the company’s ability to serve its customers. Todays Lecture 3.2 Explain how changes in the demographic and economic environments affect marketing decisions. 3.3 Identify the major trends in the firm’s natural and technological environments. 3.4 Explain the key changes in the political and cultural environments. 3.5 Discuss how companies can react to the marketing environment. ( reading assignment) EXAMPLE MICROSOFT:  Focus on Cloud Solutions: Products like Azure and Office 365 meet the demand for digital and remote work. Adapting to the  Support Hybrid Work: Tools like Microsoft Teams help Fast-Changing businesses collaborate effectively.  Commit to Sustainability: Microsoft aims to be carbon Marketing negative by 2030 to address environmental concerns.  Use AI and Data: Integrating AI in products like Azure AI Environment and Office tools improves efficiency and user experience. Microsoft stays competitive by focusing on innovation, sustainability, and customer needs.  Marketing All the internal and external factors that drive and Environment influence an organization's marketing activities Immediate environment that directly influence its operations Microenvironment and performance. Components: Customers, competitors, suppliers, marketing intermediaries, employees, and stakeholders. Marketing Example: A supplier increasing prices can directly affect a company’s production costs. Environment Macroenvironme Larger external forces that affect the entire market and are nt beyond a company's control. Components: Political, Economic, Social, Technological, Environmental, and Legal (PESTEL factors). Example: A change in government regulations or an economic downturn can impact market demand for products. Actors in the Microenvironment  Actors in the Microenvironment 1. The Company: Example: Tesla’s internal R&D team collaborates with its marketing department to design and promote innovative electric cars. 2. Suppliers: Example: Apple relies on suppliers like Foxconn to provide components for iPhones, ensuring timely production and delivery. 3. Marketing Intermediaries: Example: Amazon acts as a key intermediary for third-party sellers, helping them reach customers worldwide. 4. Competitors: Example: Pepsi competes directly with Coca-Cola for market share in the soft drink industry, leading to promotional and pricing strategies. 5. Publics: Example: A non-profit environmental group monitors Starbucks’ sustainability practices and influences public perception of the brand. 6. Customers: Example: Nike focuses on athletes and fitness enthusiasts, creating products and campaigns that meet their needs and build brand loyalty. Actors in the Macroenvironment  Actors in the Macroenvironment 1. Political: Example: A change in government regulations, such as the EU’s strict data privacy law (GDPR), forces companies like Facebook to adapt their operations to comply with new standards. 2. Economic: Example: During an economic recession, companies like Walmart thrive as customers seek affordable products, increasing demand for low-priced goods. 3. Social/Cultural: Example: The rising preference for healthier lifestyles has led companies like McDonald's to introduce salads, fruit options, and plant-based burgers. 4. Technological: Example: Amazon uses advanced technologies like Artificial Intelligence (AI) and automation in its warehouses to improve efficiency and delivery times. 4. Environmental: Example: Companies like Patagonia focus on sustainability by using recycled materials in their products and promoting eco-friendly practices. 5. Legal: Example: Pharmaceutical companies like Pfizer must comply with FDA regulations to ensure the safety and efficacy of their medications before selling them in the market. Demographic and economic environments  Demographic Changes Impact Target Markets: Shifts in age, gender, and family size influence product demand and marketing strategies.  Example: As the millennial generation values convenience, companies like HelloFresh market meal kits to meet their busy lifestyles.  Economic Changes Affect Purchasing Power: Economic growth or downturns influence consumers’ spending habits, leading businesses to adjust pricing and product offerings.  Example: During a recession, Walmart focuses on promoting its “Everyday Low Prices” to attract budget-conscious consumers. Natural and Technological environments.  Sustainability and Environmental Concerns: Companies are adopting eco-friendly practices to reduce their environmental impact due to rising concerns about climate change and resource depletion. Example: Patagonia uses recycled materials and promotes sustainable production methods to appeal to eco-conscious consumers.  Rapid Technological Innovation: Advancements in artificial intelligence (AI), automation, and big data are transforming industries and improving efficiency. Example: Amazon leverages AI for personalized recommendations and uses robotics in warehouses to optimize operations. Growing Focus on Renewable Energy: Firms are investing in renewable energy sources like solar and wind to reduce costs and reliance on non-renewable resources. Example: Google powers its data centers with 100% renewable energy to support environmental goals and reduce carbon emissions. Changes in the political and cultural environments  Shifts in Government Policies and Regulations: Changes in trade policies, taxation, and regulations impact business operations and strategy. Example: Tesla benefits from government incentives for electric vehicles in countries promoting green energy initiatives.  Cultural Shifts and Changing Consumer Values: Evolving cultural trends influence consumer preferences, requiring businesses to adapt products and messaging. Example: Unilever promotes diversity and inclusivity through campaigns like Dove’s “Real Beauty,” addressing societal changes around body positivity.  Globalization and Geopolitical Tensions: Businesses must adapt to global political changes like tariffs, sanctions, or shifting alliances. Example: Apple adjusted its supply chain due to U.S.-China trade tensions to minimize  Case Study – In Class Activity Starbucks, a global coffee chain, noticed a demographic shift in its customer base, particularly with younger generations (Gen Z and Millennials). These groups increasingly preferred health-conscious, eco-friendly, and affordable options. Starbucks' traditional menu, known for high-calorie coffee drinks, was not appealing to this growing segment Questions:  Question 1What key demographic change did Starbucks face, and how did it impact their strategy? ( Group 5)  Question 2: How did Starbucks attract price-sensitive younger customers while maintaining loyalty? ( Group 6)