Kotler 2020, Chapter 3: Analyzing the Marketing Environment PDF

Chapter 3 – Analysing the marketing environment Mini contents Company case - Philips: analysing the marketing environment in the Middle East The marketing environment The company's micro-environment The company's macro-environment Company case - Flying in the future? Business travellers,....

Chapter 3 – Analysing the marketing environment Mini contents Company case - Philips: analysing the marketing environment in the Middle East The marketing environment The company's micro-environment The company's macro-environment Company case - Flying in the future? Business travellers,. punctuality and environmental impact Real Marketing - Unilever's Knorr: ways toward a sustainable future The Western world dominates the consumption and culture spheres - but for how long? ○ Responding to the marketing environment: proactive and reactive attitudes Real Marketing - In the social media age: when the dialogue gets nasty Chapter preview In Chapters 1 and 2 you learned about the basic concepts of marketing and the steps in the marketing process for building profitable relationships with targeted consumers. In this chapter, you'll discover that marketing operates in a complex and changing environment. Other actors in this environment - suppliers, intermediaries, customers, competitors, publics, and others - may work with or against the company. Major environmental forces demographic, economic, ecological, technological, political and cultural- shape marketing opportunities, pose threats and affect the company's ability to build customer relationships. To develop effective marketing strategies, you must first understand the environment in which marketing operates. To start, let's look at Philips, one of the world's biggest electronics companies and one of the most recognized and respected brands. Their lighting products have been found in homes all around the world. However, the markets Philips Lighting is operating in are subject to constant change. The storied company discovered that a continuous and sophisticated assessment of the factors that influence and shape the marketing environment is paramount. Learning objectives After reading this chapter, you should be able to: 1. Describe the environmental forces that affect a 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 a firm's ecological and technological environments. 4. Explain the key changes in the political and cultural environments. 5. Discuss how companies can react to the marketing environment COMPANY CASE Philips: analysing the marketing environment in the Middle East Koninklijke Philips N.V. was founded by Anton and Gerard Philips in 1891 in Eindhoven to manufacture carbon filament lamps. Among their first major clients were early electricity companies, who included the provision of lamps in their power supply contracts. The company, now better known as Philips, is one of the world's biggest electronics companies and one of the world's most respected brands. It has evolved into a global player and today employs a workforce of 113,687 around the world. A market leader in medical diagnostic imaging, patient monitoring systems, energy-efficient lighting, and life- style solutions for personal well-being, Philips manu- factures more than 50,000 products across 100 coun- tries, in which it also operates sales and service outlets In 2019, the firm reported sales of € 19,482 billion. But Philips has also stayed true to its roots today, it is the world leader in lighting products manufacturing Philips Lighting is no. 1 in the world market for lighting but as the marketing environment constantly changes Philips has realized that assessing multiple factors for change is vital to the understanding of current and future shifts. On September 23, 2014, Philips announced that it would separate its healthcare and lighting businesses into two new companies in order to better tailor its offerings to the specific customer segments and leverage the Philips brand. Giving independence to the lighting solutions business, Philips claims, will better enable it to expand its global leadership position and venture into adjacent market opportunities. Both companies are supposed to be able to make the appropriate investments to boost growth and drive profitability, ultimately generating significantly more value for their customers, employees, and shareholders. Since the 198os, Philips has participated intensively in the concentration of the lighting sector by purchasing smaller national companies such as Companie des Lampes (France), AEG (Germany), and Polam Pila (Poland). It has also developed different joint ventures; for example, with Westinghouse Lamps, Kono Sylvania, and EBT China. Today, Philips Lighting is no. 1 in the world market for lighting, ahead of competitors like Osram, Halonix, and Crompton. Their lighting products (light bulbs and lamps) are found all around the world, not only everywhere at home, but also in many profes- sional applications, including 30 per cent of offices, 65 per cent of the world's top airports, 30 per cent of hospitals, 35 per cent of cars, and 55 per cent of major football stadiums. For 124 years, Philips has been a leader in building and shaping markets with meaningful innovations including the radio, audio cassette, video cassette recorder (VCR), compact disc (cD), and digital versatile disc (DVD). In order to succeed in its markets, Philips must carefully and continuously analyse the marketing environment. At the beginning of the 21st century, Philips needed a new and coherent marketing strategy for the entire Middle East region, which had been identified as one of the key markets by the company. In order to better address macroeconomic factors and regional preferences, Philips wanted to develop a more integrated and less fragmented marketing strategy for the region. The first objective was to select the most attractive markets in the region. Over the years, Philips has developed a statistical model that displays a correlation between a country's demand for lighting and its GDP per capita. The company has identified this correla- tion after careful analysis of GDp growth rate data and their corresponding sales figures. During discussions with agents and distributors in many countries, Philips was completely dependent on its information about the market size. If Philips miscalculated market size, it missed market opportunities. The key reason why this model was developed was so that the company could crosscheck market estimations of its agents and distrib- utors. The developed model showed that the demand for lamps and bulbs is a basic need for a country, and as soon as a country starts developing (which is indicated by the increase in GDP), this basic need increases. However, as the country's wealth increases. the growth in the demand slows down, because basic lighting needs are covered at later stages of economic development. In order to find the most attractive markets, Philips Lighting used the model and combined it with market data of the Middle East that contained population, GNP growth, and GNP per capita. They multiplied the demand for lighting per capita by the number of inhabit- ants in a country. Looking at the regions, Israel and Kuwait had the highest GDP per capita, but their popu- lation size was rather small. On the other hand, Iraq and Iran were (and still are) large markets for lighting, but they are very tough to enter because of their politically difficult situations. However, the Philips Lighting Middle East managers did not use market size as the only selection criterion for priority; instead, the model was used as a starting point for discussions with agents and distributors in the respective countries. If the Philips sales in large lighting markets were very low, this would indicate a low PhilipS market share. This would lead to a discussion with local agents and distributors about how to increase the regional Philips market shares in cooperation with the local distributor. Today, the lighting market is impacted by multiple factors, three of which are particularly important. The first is the macroeconomic situation, which is influenced and shaped by factors such as inflation rate and GDP, and which is influencing new construction and, consequently, the number of lighting installa- tions. This key driver was used as a main indicator by Philips in its model KO screen markets in the Middle East. Another important element used was, and still is, country-specific energy efficiency regulations and future lighting product portfolios. For example, in an increase in energy awareness, which are redefining 2014 the UAE government announced an energy effi- ciency regulation on lighting products, which bans the sale of inefficient standard bulbs while also seeking to reduce carbon dioxide emissions. Government action limiting certain energy sources - key being nuclear power due to events over the last years -results in additional demands for energy-efficient products Such as LEDs. For example, Dubai's government has started an initiative in 2014 to switch all lighting in government buildings to LED, which is more energy- efficient and can be digitally controlled. It is these such projects that have helped Philips to grow in the region. Philips has managed to assess these factors which heavily influence and shape the marketing environment for change. The company's ability to understanding current and probable future shifts in the lighting market has driven its continuous growth in this region, making it the market leader in Middle Eastern countries such as the Emirates, where it has a 38.5 per cent market share; trailed by Osram, with 22.6 per cent; and General Electric with 16.3 per cent.1 The marketing environment Marketing environment – The actors and forces outside marketing that affect marketing management's ability to build and maintain successful relationships with target customers. Micro-environment – The actors close to the company that affect its ability to serve its customers-the company, suppliers, marketing interme- diaries, customer markets, competitors and publics. A company's marketing environment consists of the actors and forces outside marketing that afect marketing management s ability to build and maintain successful relationships with target customers. More than any other group in a company, marketers must be the environmental trend- -trackers and opportunity-S -seekers. And this is a round- the- clock-job rather than one done during office hours. Ii's about putting out feelers to pick up what is happening in the marketplace: what people are saying about products, brands and competitors, and best practice that may emerge in context inherently different from the one where smart marketers apply it, Although every manager in an organization needs to observe the outside environment, marketers have two special aptitudes. They have disciplined methods marketing research and marketing intelligence for collecting information about the marketing environment. They also spend more time in customer and competitor environments. By carefully studying the environment, marketers can adapt their strategies to meet new marketplace challenges and opportunities. The marketing environment is made up of a micro- environment and a macro- environment. The micro-environment 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. The company maintains relationships with these actors and can influence their behaviour to an extent. The macro-environment consists of the larger societal forces that affect the micro-environment - demographic, economic, ecological, technological, political and cultural forces, We look first at the company's micro-environment. Macro-environment – The larger societal forces that affect the micro-environment demographic, economic, ecological, technological, political, and cultural forces. The company's micro-environment The micro-environment includes all of the actors close to the company that affect, posi- tively or negatively, its ability to create value for, and relationships with, its customers Figure 3.1 shows the major actors in the marketer's micro-environment. Marketing success will require building relationships with other company departments, suppliers, NGOs that promote sustainability, marketing intermediaries, customers, competitors, politicians, journalists and other publics, which combine to make up the company's value delivery network. The micro- environment is more obvious than the macro- environment anybody running= a supermarket, a coffee shop, or a hair saloon will be reminded about the micro- environment more or less on a daily basis. The micro-environment is a lot about relations, inside and outside the company. Marketers must work in harmony with other company departments to create customer value and relationships. Companies (and not only marketers) must also partner with other firms in the company's value delivery network. In designing marketing plans, marketing management takes other company groups into account - e.g. top management, finance, R&D, HR, operations and accounting. All of these interrelated groups form the internal environment. Top management sets the company's mission, objectives, broad strategies and policies. Marketing managers make decisions within the strategies and plans made by top management. As we discussed in Chapter 2, marketing managers must work closely with other company departments. Other departments have an mpact on the marketing department's plans and actions. And under the marketing concept all departments in the company must 'think consumer'. They should work in harmony to provide superior customer value and relationships. Suppliers Suppliers form an important link in the company's overall customer value delivery system They provide the resources needed by the company to produce its goods and services Supplier problems can seriously affect marketing. Marketing managers must watch suppl, availability and costs. Supply shortages or delays, labour strikes and other events can hit sales in the short term and damage customer satisfaction in the long run. Rising supply costs may force price increases that can harm the company's margins, sales volume and profit- ability. Most marketers today treat their suppliers as partners in creating and delivering customer value. Marketing intermediaries Marketing intermediaries help the company to promote, sell and distribute its products final buyers They include marketing channels, marketing services agencies and financial intermediaries. Marketing channel firms include wholesalers and retailers who buy and resell merchandise. Selecting and partnering with resellers is not easy. No longer do manufac- turers have many small. independent resellers from which to choose. They now face large and growing reseller organizations such as ICA, Elgiganten and Byggmax -/ companies that frequently have enough power to dictate terms or even shut smaller manufacturers out of large markets. Marketing channels help the company to 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 to 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. Like suppliers, marketing intermediaries form an important component of the company's overall value delivery system. Thus, today's marketers recognize the importance of working with their intermediaries as partners rather than simply as channels through which they sell their products. Although Apple has hundreds of its own retail locations throughout the world it also uses the services of authorized resellers who help the firm sell its products all over the world. In this arrangement, Apple's products are sold at identical prices both in its stores and in those of authorized resellers. Apple considers these authorized resellers as partners. The organization is co-funding the renovation of resellers' stores to follow Apple's own corporate identity and retail formula and make demo units display consistent with Apple's specifica tions. Apart from those who sell its products, Apple also has another set of intermediaries called authorized service providers. These are companies or individuals who represent organizations in providing repair and maintenance services to its customers. These intermediaries could belong to either of two categories, depending on the scale of the services that could be handled: authorized service providers or limited service providers. Apple gives its partners reimbursements for labour, travel, and parts, where applicable. It also gives them comprehensive access to products, upgrade information, service, troubleshooting, on-the-spot technical support for certified technicians, etc. In addition, the partners beneft from inclusion in the Apple resource locator system, whereby they are displayed on Apple's website for customers looking for nearby service providers. Put simply, it looks like everything run by Apple through exercisings strict control over the retail environments in which Apple products are sold, Apple can accomplish the goal of maintaining a consistent brand experience while not having to invest in their own, direct marketing channels. Principal actors in the company's micro-environment: - Marketing intermediaries - Suppliers - Competitors - customers - The company - publics Competitors 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 posi- tioning 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 domi- nant positions in an industry Can use certain strategies that smaller firms cannot afford. But being large is not enough. There are winning strategies for large firms, but there are also losing ones. And small frms can develop strategies that give them better rates of return than large firms enjoy. Following the practices of competitors is a key part of the micro-environment Public – Anygroup that has an actual or potential interest in or impact on an organization's ability to achieve its objectives. Publics The company's marketing environment also includes various publics. A public is any group that has an actual or potential interest in or impact on an organization's ability to achieve its objectives Seven types of publics may be identified: Financial publics. This group influences the company's ability to obtain funds. Banks, investment houses and stockholders are the major financial publics. Many companies see investor relations (IR) as a key strategic priority. Poor relations with investors does not only mean it is d ifficult to acquire or borrow additional money if needed it also means a steady flow of criticism on the company' S strategic priorities and operations Shareholders in general want to maximise profits and dividends - if the company makes other priori- ties, it has to convince the financial publics Media publics. This group carries news, features and editorial opinion. It includes newspapers, magazines, Internet forums, radio and television stations, bloggers, etc, In building relationships with a segment of consumers, the channels provided through the radio and magazines to particular listeners and readers can be very useful. Government publics. Management must take government developments into account Marketers must often consult the company's lawyers on issues of product safety, truth in  advertising and other matters. In most countries, there are certain laws that restrict organizational decision-making. Citizen-action publics. A company's marketing decisions may be questioned by consumer organizations, environmental groups, minority groups and others. Its public relations department can help it to stay in touch with consumer and citizen groups. Local publics. This group includes neighbourhood residents and community organizations. Large companies usually appoint a community relations officer to deal with the community, attend meetings, answer questions and contribute to worthwhile causes. Poor relations with the local public may be very troublesome for the company and restrict its market opportunities. General public. A company needs to be concerned about the general public's attitude towards its products and activities. The public's image of the company affects its position and acceptance among buyers and other stakeholders. Internal publics. This group includes workers – who may be organized through unions – managers, volunteers and the board of directors. When employees feel good about their company, the positive attitude spills over to external publics, and strengthens the image that employees and consumers project about the company. Customers As we’ve emphasized throughout, customers are the most important actors in the company's micro- environment. The aim of the entire value delivery system is to serve target customers and create strong relationships with then. Thee company might target any or all of five types of customer markets. 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 for use in their production process, whereas reseller markets buy goods and services to resell at a profit. Government markets are made up of government agencies that buy goods and services to produce public services or transfer the goods and services to others who need them. Non-profit markets, also called civil society markets, are becoming increasingly are important, as it has been realized that neither politics nor for- profit companies can solve societal challenges such as alienation, pressure on the workforce, commercialization and exclu- services that contribute to economic stability and mobility, hence promoting a sustainable sion. Civil society can play a vital role in building healthy communities by providing critical society. They also strengthen communities in other important ways. Frequently, non- profit leaders are the voice of the people they serve and may balance politicians and their agendas, These five types of markets may be local, domestic or international markets. Over tire, inter- national markets have been more available to any type of company. The European Commis sion (EC) has made some effort to reduce barriers across ECcountries and create a market in which the nationality of companies doing business with each other is not an issue. Influential forces in the company's macro-environment: - Ecological forces - Technological forces - Economic forces - Political forces  - Demographic forces - Cultural forces The company's macro-environment The company and all of the other actors operate in a larger macro-environment of forces that shape opportunities and pose threats to the company. The macro-environment consists of broader forces that affect the actors in the micro environment, and companies normally have no, or very limited influence On forces in the macro- environment. Changes normally start somewhere and spread through the macro- environment. New tech- nologies may be created by a specific company, and then change the rules of the game in a particular industry. Economic change and sustainability awareness are not the effects of a specific company's actions or an event, but rather a typical macro trend that has an influence on just about any business When a local book store closes due to lack of a realistic viability prospect, it's an effect of digitization, cheap transport and changes in consumer behaviour all of them belonging to the macro-environment. Keeping an eye on the macro-environment is a natural part of everyday life for companies that want to stay ahead of competition. As the company is unlikely to have any significant influence on these forces, it is very impor- tant that companies scan the macro-environment to stay in touch with what is happening. Figure 3.2 shows the six major forces in the company's macro-environment. In the remaining sections of this chapter, we examine these forces and show how they affect marketing. Demography – The study of human populations in terms of size, density, location, age, gender, occupation and other statistics. Demographic environment Demography is the study of human populations in terms of size, density, location, age, gender, occupation and other statistics. The demographic environment is of 1 major interest to marketers because changes in demographics - n the nature of human populations - mean changes in markets. The biggest demographic change is perhaps the changing age structure of the population. Over time, emographic changes often turn out to be dramatic. so they are very important to marketers. Changing population age structures The world population iS growing at a fast pace. In 2019 there were 7.7 billion people and projections indicate that the global population could grow to around 8.5 billion in 2030, 9.7 billion in 2050, and 10.9 billion in 2100.3 The world's large and highly diverse population poses both opportunities and challenges, and the unevenly distributed population growth will fundamentally influence the way markets and market opportunities emerge and grow. More than a quarter ofa century ago, to curb its skyrocketing population the Chinese govern- ment passed regulations limiting families to one child each. As a result, Chinese children have been showered with attention and luxuries under what's known as the 'six-pocket syndrome`, with as many as six adults two parents and four doting grandparents- indulging the whims of an only child. These children now range in age from new-borns to late twenties, and they affect markets for everything from children's products to financial services, restaurants and luxury gOods, Parents with only one child at home now spend about 40 per cent of their income on their cherished offspring, creating huge market opportunities for marketers, and for children's educational products in particular." Despite the one-child principle, China's population of 1.4 billion people is still growing, although slower than before. In 1969, the yearly growth rate in China was 2.85 per cent; in 2014 it was 0.59; in 2019 0,43.5 The growth decline is expected to be negative starting in the 2030s, resulting in China representing around 15 per cent of the world population in 2045 and 14 per cent in 2050, down from 22 to 23 per cent in the 1980s and 19905, and the median age increasing from 22 years in the early 19 8os to 48 years in 2050.6 That's quite a dramatic demographic change. In Western countries birth rates are low, and if it weren't for the increasing life expectancy and immigration many countries would face decreasing numbers of citizens. The problem is not as serious in the Nordic countries as it is in southern Europe: the birth rate in Sweden is around 1.8 children per woman, which is not far off the figure of 2.1 that is considered to be the replacement level; Spain (138) and Italy (1,34) are a long way behind.7 One explanation for this is the generous transfer systems that make it possible for many employees to combine maternity or paternity leave with a decent living standard and long-term career progress. Obviously, birth rates are important for marketers since they give lots of information on sOcio- economic standards, growth in population, and future market opportunities. Such indica- tions or key measures are very useful for marketers since they will make it easier to follow what is going on in the larger environment. Baby boomers – The78 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. Generation Y (Millennials) – The 83 million children of the baby boomers born between 1977 and 2000. Baby boomers Baby boomer refers to people born during the demographic birth boom following World War I. Definitions vary but in general the baby boomers cohort is defined as individuals born between 1945 and the very early 1960s. In general, baby boomers are associated with a rejection or redefinition of traditional values, and they came of age during turbulent period with the 1968 movement, high economic rates of growth but later stagflation, a strong emergence and growth of a youth culture with popular culture including music, apparel, etc. It has been suggested that baby boomers are in a state of denial regarding their own aging, and are leaving an undue economic burden on their children for their retirement and care. Many baby boomers have nOW retired and have in aggregate terms greater purchasing power and more time than younger consumers. Generation X The Generation X-ers - definitions vary but in most cases they include people born between the early 1960s and the mid- to late 1970s are defined as much by their shared experiences as by their age.10 Generation X-ers have been found to be particularly individualistic and have a critical mindset when it comes to commercialism and marketing." They have been subjected to a lot more advertising and marketing than earlier generations, and they are more sceptical of advertising that insults their intelligence, embarrasses competitors and over- emphasizes what is cool'. Thus, from a marketing viewpoint, the Generation X-ers are a sceptical bunch. They tend to research products before they consider a purchase, and they tend to be less receptive to overt marketing pitches. However, once labelled as the MTY generation and viewed as slackers who whined about boring and badly paid jobs, the Generation X-ers have grown up and are now well established in society. The Generation X-ers are displacing the lifestyles, culture and materialistic values of the baby boomers. The emergence and development of Generation X-ers and their critical view on marketing emphasises the need for marketers to be creative and stay one step ahead of consumers. Generation Y/ Millennials Generation Y (also called the Millennials) are those born between the late 1970s and the mid- 1990s (also here, definitions vary), and they are changing the way we look upon consumer and labour markets in many respects. 12 Their utter fluency and comfort with digital technology is only one of many jigsaw pieces in the Generation Y puzzle. These individuals have grown up in a branded society overcrowded with commercial messages and a never-ending supply of choices and opportunities. On consumer markets, they are demanding, aware of their rights and generally not very loyal. They see brands as an integrated part of consumption and personal image-building. Thus, personal branding, which is easily managed through social media, comes naturally to them. Virtual networking, new communication technologies and intensive feedback are normal parts of their everyday life. Employers are increasingly asked by Generation Y employees to offer a good work environment, attractive terms and the opportunity for personal development, thus reflecting Generation Y's need for self-realization not only in relation to consumption but also at work. In today's transparent society, having the right employees appears to be increasingly important. Thus, recruiting employees that fit the organization's strategy and culture is necessary. However, promoting the employer's attractiveness shouldn't be taken to far- therisk of over-promising is a reality. According to a recent study, only 19 percent of co-workers globallythink their experiences of their employer matches up to the employer brand image of the employer.'* These changes and tendencies cannot be explained by the age of Generation Y individuals alone. A number of changes at different levels society, the market environment and the way organizations are responding to the emerging situation – are together creating a new set of circumstances for individuals whose attitudes, priorities and choices are presenting an important challenge – and opportunity – to companies. Generation Z – People born after 2000 (although many analysts include people born after 1995) who make up the kids, tweens and teens markets The 90s generation, Generation Z and beyond Young consumers represent tomorrow's markets- they are now forming brand relationships that will affect their buying well into the future. Generation Z includes young people born after 2000 (although many analysts include people born after 1995). Even more than Genera- tion Y, the defining characteristic of Generation Z-ers is their utter fluency and comfort with digital technologies. Generation Z takes smartphones, tablets, Internet-connected game consoles, wireless Internet., and digital and social media for granted they've always had them - making this group highly mobile, connected, and social, The differences compared to earlier generations should not be exaggerated, though. Studies show that also people born in the 1970s and 198os are comfortable with digital technologies but using Generation Z as a reference point for where consumer behaviour ends up in the future may be a smart move. Today's kids are notoriously fickle and hard to pin down. The key is to engage these young consumers and let them help to define their brand experiences. For example, to engage young consumers more deeply, The North Face even invites them to help design its outdoor apparel and gear. Generational marketing Do marketers need to create separate products and marketing programmes for each genera- tion? Some experts warn that marketers need to be careful about turning off one generation each time they craft a product or message that appeals effectively to another. Others caution that each generation spans decades of time and many socio-economic levels. Defining people by their birth date may be less effective than segmenting them by their lifestyle, life stage or the common values they seek in the products they buy. Over time, a multitude of consumption styles has emerged within each age group, so age alone may not be sufficient to segment a market, unless the product is generic by nature. We will discuss many other ways to segment markets in Chapter 8. One thing is clear, though: there is potential in using generational differences in marketing but as with any type of categorization, there is a risk that it offends consumers. It could be particularly sensible to apply marketing directed at small children or retired people; emphasising the latter's great age is seldom appreciated. And one has to be sensitive towards how it looks in various cultures. Living arrangements and how children relate to adults, and the other way round, vary significantly across the globe. Changing family structures The traditional household in the Scandinavian model consists of a husband, a wife and children, For some time other family constellations have been making an impact from a structural point of view but also through increased cultural acceptance. In recent decades in particular the ideal of the two- or three- child family has been losing some of its lustre. More people are divorcing or separating, choosing not to marry, are single live-alones or adult live-togethers of one or both sexes, marrying later or marrying without intending to have children. Marketers must increasingly consider the special needs of non-traditional house holds, because they are now growing more rapidly than traditional households. ach group has distinctive needs and buying habits, In Scandinavia, for instance, the number of people preferring to live alone is increasing – a huge market potential for companies with products and offers that appeal to this group. The number of working women has also increased greatly, a change that began earlier in Sweden than in most other countries Meanwhile, more men are staying home with their children on paternity leave, managing the household while their wives go to work Companies are now adapting their marketing to reflect the changing dynamics of families. For example, whereas fathers were once ignored or portrayed as dolts in family-oriented ads, today's advertisers are showing more caring and capable dads. One recent Samsung Galaxy phone ad, for instance, features a dad swaddling and calming his newborn son while mom runs errands. When the anxious mom calls home to check in, the newly minted swaddle master replies, 'We're having a dudes' day here. We're fiiine. You take the weekend if you want to.' Other ads reflect the evolving diversity in modern American households. For example Campbell Soup's recent Your Father commercial - part of the brand's 'Made for Real. Real Life* campaign - features a real-life same-sex couple feeding their son Campbell's Star Wars soup as they mimic Darth Vader's famous Star Wars line 'T am your father'`. The commercial, like others in the campaign, aligns the brand with the company's purpose: "Real food that matters for life's moments', Similarly, General Mills ran a series of commercials for Cheerios featuring an interracial couple and their daughter portraying typical young family scenarios - from the daughter pouring Cheerios on her sleeping dad's chest after learning that Cheerios are good for your heart to her negotiating for a new puppy after learning that she is going to have a baby brother. Said a General Mills marketer, 'At Cheerios, we know there are many kinds of families and we celebrate them all.' These examples from around the world show how marketers may take advantage of knowledge about how family definitions are evolving. Geographic shifts in population Shifts in population take place all over the world, and marketers must follow the develop- ments in order to explore business opportunities. In Scandinavia, as in most other countries,. people have been moving from rural to metropolitan areas for a century or more. Although movements the other way have taken Place during some periods, they haven't stopped the strong urbanization tendency that characterizes most countries. It is likely that the migration to big cities continues, but marketers need to know how the population patterns evolve. On the one hand, bigger cities offer a rich labour market, restaurants, diversions and commu- nity organizations, but on the other hand they also struggle with population crush, traffic jams, and high living costs when it comes to buying or renting a house or an apartment. The shift in where people live has also caused a shift in where they work. For example, the migration towards suburban areas has resulted in an increase in the number of people who 'telecommute' - work at home or in a remote office. This trend has created a soHo (small office/home office) market. Even though many co-workers prefer the social setting of the employer 's office and most employers are restrictive when it comes to letting co-workers work from their home (or other) offices, it's still an interesting market and as such an example of how changes in the macro-environment translates into marketing opportunities. The Corona pandemic forced billions of people across the globe to explore the opportunities of remote working and contributed significantly to making it an option for many companies and their employees. Population shifts interest marketers because people in different regions buy differently. For example, people in northern Sweden buy more reindeer meat per capita than people in other parts of Sweden; people in Skåne and Stockholm drink more alcohol;1s and people in Skåne dine out more often because of a more continental climate and buying habits Although urbanization has been going on for more than a century, the shifts have not been uniform. In the 1950s and 1960s there was a massive exodus of inhabitants and retail busi- nesses from the cities to the suburbs, and the rise of the motor car led to the emergence of the shopping mall. Politicians were very generous in giving over land to malls, as they were afraid of being at a competitive disadvantage in relation to other cities. Still, there are many examples of city areas where politicians give strong support to establishing shopping malls in order to increase economic activity and attract people from adjacent areas. Then, in the 1990s there was another shift that contributed to the revitalization of city centres. By moving commercial activity to the suburbs and to shopping malls, city centres had become unattrac- tive to stores and investors; after 6 pm the risk of criminal activity increased as there were fewer people around. But by encouraging restaurants, clubs and stores, and discouraging or excluding car traffic altogether, city centres once again became attractive places - to work in for going out after work, and to live in. A better-educated, more white-collar and more professional population Consumers are becoming better educated and more aware of their rights, and they also have more tools available to compare prices and offers.2 These changes, facilitated and accelerated through digitization, have contributed to a new attitude towards using consumer power in dealing with companies and organizations, whether they are letting hotel rooms, selling food or fashion items, or providing university education. The workforce is also becoming more white-collar, and traditional blue-collar jobs now often require computer skills and training in handling advanced machines and other equipment. Car mechanics increasingly need advanced computer skills for troubleshooting, and they must be able to discuss the often costly - repairs with increasingly demanding customers Being a lift repairer used to be a job with lot of freedom and little surveillance by head office. However, with GPS technology, advanced repair equipment and pressure on efficiency and profitability, the situation has changed. After having implemented new systems at a major lift manufacturer, about half the old workforce decided to quit their jobs in the after-sales service department, and efficiency improved by 50-100 per cent.2 Blue-collar workers are increasingly inclined to change jobs as their competence level increases, and they get better paid as their employer becomes more dependent upon them.22 Increasing diversity Countries vary in their ethnic and racial makeup. At one extreme is Japan, where almost everyone is Japanese. At the other extreme is the United States, with people from virtually all origins. The United States has often been called a melting pot, where diverse groups from many nations and cultures have melted into a single, more homogenous whole. In diverse areas, various groups of people mix together but to a varying degree want to maintain their diversity by retaining and valuing important ethnic and cultural differences. In addition, marketers face increasingly diverse markets as their operations become more international in scope. Many large companies such as Procter & Gamble, Walmart, McDonald's and Southwest Airlines target specially designed products, ads, and promotions to one or more groups in order to take advantage of the diversity. Economic environment Economic environment – Economic factors that affect consumer purchasing power and spending patterns. The economic environment consists of factors that affect consumer purchasing power and spending patterns. Like other environments discussed in this chapter, the economic environ- ment can offer both opportunities and threats, and change that provides an opportunity to one company could be damaging to another, as when economic downturns make life difficult for providers of expensive holidays, dining, and events, while those offering value for money gain market shares. As a result, as discussed in Chapter 1, some consumers have now adopted a back-to-basics sensibility in their lifestyles and spending patterns that willikely persist for years to come. They are buying less and looking for greater value in the things they do buy as a consequence of more sustainability concerns. In turn, value marketing has become the watchword for many marketers. Marketers in all industries are looking for wayS to offer today's more financially frugal buyers greater value just the right combination of product quality and good service at a fair price. You'd expect value pitches from the sellers of everyday products. For example, many Coop and ICA stores offer value pricing for frequently bought products Marketers must pay close attention to major trends and consumer spending patterns both across and within their world markets. Nations vary greatly in their levels and distribution of income Some countries have industrial economies, which constitute rich markets for many different kinds of goods. At the other extreme are subsistence economies they consume most of their Own agricultural and industrial output and offer few market opportunities. In between are developing economies which can offer outstanding marketing opportunities for the right kinds of products. The following are some of the major economic trends that affect marketing opportunities in Scandinavia, in particular. Changes in income and spending The relationship bet ween income and spending is not as straightfor ward as one might think. It various with the state of the economy and shifts in consumer behaviour such as increased sustainability concerns. The frenetic spending and high expectations of good years will sooner or later reach an end - there has been no boom period in history that lasted forever The economic downturns in 2008-2009 and 2020 hit those individuals, companies and nations that had over-consumed in the past more than others and many tapped- -out' consumers i in different countries had to repay debts accrued during earlier spending splurges, coping with increased mortgage and household expenses, and saving ahead for their retirement. Consumer spending patterns Food, housing, and transportation use up most of a household's income; however, consumes at different income levels have different spending patterns. Some of these differences were noted over a century ago by the German economist Ernst Engel, who studied how people shifted their spending as theirincome rose. He found that as family income rises, the percentage spent on food declines, the percentage spent on housing remains about constant percentage spent on most other categories and that devoted tos savings increase Engel's laws (except for such utilities as gas, electricity and public services, which decrease), and both the have generally been supported by later studies, Changes in major economic variables such as income cost of living, interest rates and savings and borrowing patterns have a large impact on the marketplace Companies watch these vari- ables by using economic forecasting. Businesses do not want to be wiped out by an economic downturn or caught short in a boom. With adequate warning, they can take advantage of changes in the economic environment. Changing cost structures The economic environment is not only about consumer spending it is also about cost structures. These are constantly changing, and companies must make an effort to track cost structures in different markets continually. Many companies are likely to face serious problems if the country from which they source their products becomes more expensive than other coun- tries as a result of concern over salaries, staff rights and increasing living standards, although these are clearly advantageous for the people of that country. Companies sourcing from low- cost countries in particular may find that attempts to improve quality, workplace conditions and their corporate social responsibility image result in higher costs thus requiring them to look for other countries to source from in order to stay competitive. Ecological environment The ecological environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Today's enlightened companies are developing environmentally sustainable strategies in an effort to create a world economy that the planet can support indefinitely, Environmental concerns have grown steadily during the past few decades, and especially in ecent years, In many cities around the world, air and water pollution have reached dangerous levels. Worldwide concern about climate change continues to mount, and many environmentalists fear we will soon be buried in our own garbage. Increased emphasis on sustainability is the foremost important topic of today's society. Regardless of whether we are talking about climate change, declining biological diversity, child labour, or corruption, sustainability issues are of such key importance today that they concern all organizations, consumers and other societal stakeholders. Sustainability is thus a concept against which all the question formulations of companies and organizations can be set: i.e. choice of suppliers, strategies for recruiting and retaining co-workers, product development, choice marketing channels, marketing campaigns, and communication strategies. Companies need to deal seriously with this issue and there are no easy ways of doing it hotels, airlines, food suppliers and fashion companies need to consider and fundamentally rethink the way their products and services affect the environment. Educated and informed consumers, as well as critical journalists and other stakeholders, will not be satisfied with anything but solutions that substantially contribute to lower emissions and more environ- mentally friendly ways of producing goods and services. Most organizations in Scandinavia, with the exception of small enterprises, now have one or more members of staff working solely on sustainability issues. That's the only way to make sure sustainability concerns are integrated into most companies decision-making and operations Companies that neglect sustainability in their decision-making are being watched by various stakeholders and will experience difficulties obtaining consumer purchase power, at least in markets and segments where sustainability are important considerations. Grassroots-driven information, whereby critical consumers create, share and manage information in various social media channels, make information about poor corporate practices spread faster than before. Some industries are scrutinized particularly closely by environmentalists and others who care about the ecological implications of our consumption-oriented society. Airlines would have a difficult time even without the ecological considerations, fighting with low-cost providers, increased demands on security, fluctuating fuel prices, and the Corona pandemic. The ecological effects of air travel are severe Despite significant reductions in fuel consump- tion, a roundtrip from Stockholm to New York (a distance of approximately 4,000 km each way) means more than a ton in CO2 emissions per economy-class traveller with first-class travel and transfer in Zürich the effect is more than 7 tons. As a comparison, a typical petrol- driven family car – Volvo V9o T4- contributes about 2,700 kg of COzin a year (at 15,000 km; 180 g/km), and may transport a driver and four passengers. However, many airlines take the ecological concerns seriously. The fashion industry has been subjected to a lot of criticism since the production of cheap clothing substantially taxes natural resources. For instance, the production of a pair of jeans may require about 10,000 litres of water, not including the ecological effect of transport to Swedish consumers. Some fashion companies, e.g. H&M and Lindex, have responded by introducing an ecological product line, but with varying success, and H&M gives the oppor- tunity to recycle worn-out clothes. In food retailing, the increasing supply of Fair Trade, KRAV-labelled, ecologically and locally produced goods contributes to consumer and societal well-being. Government intervention in natural resource management is likely to increase in years to come. The governments of different countries vary in their concern for and effort spent promoting a clean environment, the pursuit of which may imply a reduction in the opportuni- ties to create economic growth. An increasing number of countries are implementing meas ures to reduce pollution and ecological impact. They have to do this to reduce the long-term ecological damage in their countries, but also to stay attractive among consumers, retail chains and investors. Even though some poorer nations do little as regards pollution because they lack the funds needed or the political will, the acceptance of neglecting the ecological environment is low. Countries, industries and companies that neglect sustainability are less attractive to source from, and companies that take corporate social responsibility seriously are likely to avoid sourcing from suppliers that do not take sustainability issues seriously. Much effort is being spent on reducing the ecological impact 'cleaner' aircraft engines, recyclable or biodegradable packaging products, cleaner fuel technologies, wind turbine technology, solar cell heating and cooling, recycled materials and components, and better pollution controls. However, unfortunately, even a substantial reduction in ecological impact cannot reverse the serious impact on the environment of our consumption-oriented society. So although companies are seeking to do more than taking appropriate measures and are learning that environmentally responsible actions can also be goog for business, there is no final solution in sight to the sustainability issue. The truth is that many companies success is dependent upon the production of goods and services that are not very environmentally friendly. The technological environment The technological environment is perhaps the most dramatic force now shaping our destiny. Technology has helped to create such wonders as antibiotics, robotic surgery, smartphones, and the Internet. It also has released such horrors as nuclear missiles and assault rifles. In addition, it has created such mixed blessings as the automobile, television, and credit cards,. Our attitude towards technology depends on whether we are more impressed by its wonders or its blunders. Technological innovations have both harmed the environment and contributed to making it significantly cleaner. New technologies can offer exciting opportunities for marketers. For example, what would you think about having tiny transmitters implanted in all the products you buy that would allow tracking of the products from their point of production through use and disposal? How about a bracelet with a chip inserted that would let you make and pay for purchases, receive personalized specials at retail locations, or even track your whereabouts or those of friends? Or how about 'beacon' technology that would do all those things using your smartphone? On the one hand, such technologies would provide many advantages to both buyers and sellers. On the other hand, they could be a source of concern. Many firms are using RFID (Radio Frequency Identi fication) technology to track products and customers at various points. For example, Walmart has strongly encouraged suppliers shipping products to its distribution centres to apply RFID tags to their pallets. Many retailers have installed item- level RFID systems in their stores. Fashion and accessories maker Burberry even uses chips that are imbedded in items and linked to smartphones to provide personalized, interactive experiences for customers in its stores and at catwalk shows,23 and Disney - along with other amusement parks-is taking RFID technology to new levels with its cool MagicBand RFID wristband. Political environment – Laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society. Political and social environment Marketing decisions are strongly affected by developments in the political environment. The political environment consists o laws, government agencies and pressure groups that influ- ence or limit various organizations and individuals in a given society. Even the most liberal advocates of the free-market system agree that the system works best with at least some regulation. Safety belts in cars, catalytic converters to reduce emissions from cars, pubs and clubs that close at 3 a.m., and a smoking ban in offices and restaurants are a few of the many examples of changes that were implemented by politicians against the will of a major or at least significant part of a country's citizens. After a while, people understood the meaning of the changes and began to accept and even like them. Well-conceived regulation can encourage competition and ensure fair markets for goods and services.Thus.governments develop public policy to guide commerce sets of1 laws and regu- lations that limit business for the good of society as a whole. Almost every marketing activity is subject to a wide range of laws and regulations. Beyond regulation, most companies want to be socially responsible. Check the website of almost any company and you`ll find long lists of positive attitudes and environmentally responsible actions. Even though many large companies provide a sustainability report, there is reason to question the practices they engage in. Many companies are far less engaged in sustainability than they want to be perceived as being, a phenomenon called greenwashing, something we`ll come back to in Chapter 5. Marketers need to know about the major laws protecting competition, consumers, and society. They need to understand these laws that apply at the local, state, national, and international levels. Legislation affecting business around the world has increased steadily over the years. The European Commission has been active in establishing a new framework of laws covering competitive behaviour, product standards, product liability and commercial transactions for Eu nations - the implementation of laws in the Eu coun. tries is then ensured by national competition authorities. Commercial competition legisla, tion has at least two purposes: first, to protect companies from each other by defining and preventing unfair competition; second, to protect consumers from unfair business prac. tices such as selling shoddy products, invading consumer privacy or teling lies in adver. tising; third, to protect the interests of society against unrestrained business activities. Profitable business activity does not always create a better quality of life, Regulations are created to ensure that firms take responsibility for the social costs of their production or products. International marketers wilencounter dozens, or even hundreds, of agencies set up to enforce trade policies and regulations. In the United States, Congress has established federal regulatory agencies, such as the Federal Trade Commission (FTc), the Food and Drug Administration (FDA), the Federal Communications Commission, the Federal Energy Regulatory Commission, the Federal Aviation Administration, the Consumer Product Safety Commission, the Environmental Protection Agency, and hundreds of others. Because such government agencies have some discretion in enforcing the laws, they can have a major impact on a company's marketing performance New laws and their enforcement are likely to continue to increase. Business executives must watch these developments when planning their products and marketing programmes. Increased emphasis on ethics and socially responsible behaviour Written regulations cannot possibly cover all potential marketing abuses, and existing laws are in some cases difficult and demanding on resources to enforce. However, beyond written laws and regulations, business is also governed by social codes and rules of professional ethics. Enlightened companies encourage their managers to look beyond what the regulatory system allows and simply do the right thing These socially responsible firms actively seek out ways to protect the long term interests of their consumers and the environment. Such an approach S second nature for companies that employ sustainability approach. Almost every aspect of marketing involves ethics and social responsibility. Unfortunately because these issues usually involve conflicting interests, well-meaning people can honestly disagree about the right course of action in a given situation. Thus, many indus- trial and professional trade associations have suggested codes of ethics. And more companies are now developing policies, guidelines and other responses to complex social responsibility issues. It remains a major responsibility to make sure that policies are followed, not only developed. Online, mobile, and social media marketing has created a new set of social and ethical issues. Critics worry most about online privacy issues. There has been an explosion in the amount of personal digital data available. Users themselves supply some of it. They volun tarily place highly private information on social media sites such as Facebook or LinkedIn or on genealogy sites that are easily searched by anyone with a computer or a smartphone However, much of the information is systematically developed by businesses seeking to learn more about their customers, often without consumers realizing that they are under the microscope. Legitimate businesses track consumers online browsing and buying behaviour and collect, analyse and share digital data from every move consumers make at their online sites. Critics worry that these companies may now know too much and might use digital data to take unfair advantage of consumers. Although most companies fully disclose their Internet privacy policies, and most try to use data to benefit their customers, abuses do occur. Cultural environment – Institutions and other forces that affect society's basic values, perceptions, pretences, and behaviours. Cultural environment The cultural environment is made up of institutions and other forces that: affect a society's basic values, perceptions, preferences and behaviours. Cultural factors strongly affect how people think and how they consume, so marketers are keenly interested in the cultural environment. People grow up in a particular society that shapes their basic beliefs and values. They absorb a world view that defines their relationships with others. The following cultural characteris- tics can affect marketing decision-making. The persistence of cultural values People in a given society hold many beliefs and values. Their core beliefs and values are generally strongly held. For example, most Swedes believe in working, and paying taxes, getting help from society if it's needed, being honest, and having freedom in terms of where they live and their religious and political views, These beliefs shape the more specific attitudes and behaviours found in everyday life. Core beliefs and values are passed on from parents to children and are reinforced by schools, business and government. Secondary beliefs and values are more open to change. Voting for a political party is an example where secondary beliefs play a big role. Most people have core beliefs and values that make it very difficult to convince them to vote for a party with an ideology that represents values inconsistent with these core beliefs and values. Now marketers and political parties are to an increasing extent adopting marketing strategies, and have some success in changing secondary values but little chance of changing core values. It is not uncommon for people who face a life situation very different from the one they grew up with to change their minds and vote for a political party other than they used to vote for however, they are not likely to adopt secondary values that are fundamentally inconsistent with their earlier ideas. So although core values are fairly persistent, cultural swings do take place and these provide an opportunity for marketers. Consider the impact of popular music groups, film stars and other celebrities on hairstyling and clothing habits among young people around the world. They may have more impact than the direct measurable effects on, for example, sales of products that appear in television programmes. For instance, Sex and the City, produced between 1998 and 2004, is a sitcom featuring four 35- to 40-year-old women who live glamorous lives in New York City, has been found to have had a significant impact on the culture among young females at the time the show was originally aired.27 The focus on career among the four Sex and the City characters may be typically American, but the fact that they are all females runs counter to the image of traditional family values, with a career-oriented husband and a wife who is less SO. The high incidence of short- term relationships with men in Sex and the City is fundamentally inconsistent with traditional American values. Marketers want to predict cultural shifts in order to spot new opportunities or threats. Several firms offer futures' fore- casts in this connection. On terms of consumer behaviour, dealing with futures forecasts and scenarios as well as comparing the company's major or domestic markets with other markets may be a very clever way of understanding the company and its key customers. People's views of themselves People vary in their emphasis on serving themselves as against serving others. Some people seek personal pleasure, wanting fun, change and escape. Others seek self-realization through religion, recreation or the avid pursuit of careers or other life goals. People use products, brands and services as means of self- expression, and they buy products and services that match their perception of themselves. People don't always see themselves as others see them, but as they are the ones making the buying decision, understanding their self-perception is key for marketers. Consider the case of Do-It-Yourself-ers (DIY-ers). DIY-ers not only tackle home improvement projects on their own, but they also view the experience as a form of self-expression. They view their homes as their havens, especially when it's time to kick back and relax. Undertaking decorating, refurbishing and car maintenance projects to save money and have fun, DIY-ers view their projects as personal victories over the high-priced marketplace. Marketers can therefore target their products and services based on such self-views. People's views of others People's attitudes towards and interactions with others shift over time. In recent decades, observers have noted several shifts in people's attitudes towards others. For example, many trend trackers have seen a new wave of cocooning', in which people are going out less with ot hers and are staying at home more to enjoy the creature comforts of hearth and home – from the networked home office to home entertainment centres. This trend suggests less demand for theatre going and greater demand for home improvement, home office and home entertainment products. Moreover, in recent years, some analysts have voiced concerns that the digital age would result in diminished human interaction, as people buried themselves in social media pages or emailed and sent texts rather than interacting personally. Instead today's digital technologies seem to have launched an era of what one trend watcher calls 'mass mingling'. Rather than interacting less, people are using social media and mobile communications to connect more than ever. Basically, the more people meet, network, text and socialize online, the more likely they are to eventually meet up with friends and followers in the real world. In addition, the demand for live experiences -speeches, concerts cinema going, etc. has increased in many countries. With everything being available ae online, only such live experiences will stand out. This trend has been going on for a while in some industries- e.g.concerts have become more popular; accordingly, the income mix of musicians and other performers has shifted from a strong emphasis on recorded material to concerts and other live experiences. These days, even when people are together, they are often 'alone together'. Groups of people may sit or walk in their own little bubbles, intensely connected to tiny screens and keyboards. One expert describes the latest communication skill as 'maintaining eye contact with someone while you text someone else; it's hard but i it can be done,' she says. "Technolog y-enabled are able to be with one another, and also "elsewhere," connected to wherever we want to be,' Whether the new technology-driven communication is a blessing or a curse is a matter of much debate. Isn't the case that young people in particular are great multi-task-ers and older people might be a bit envious? Or are the new ways of communicating undermining real conversa- tions that build trust and personal relationships? Whatever result one believes in, this new way of interacting strongly affects how companies market their brands and communicate with customers. Consumers increasingly tap digitally into networks of friends and online brand communities to learn about and buy products and to shape and share brand experiences. As a result, it is necessary for companies to participate in the conversations in social media. People's views of organizations People vary in their attitudes towards corporations, government agencies, trade unions, universities, and other organizations. By and large, people are willing to work for major organizations and expect them, in turn, to carry out society's work. In many parts of the world, there has been a decrease in confidence in - and loyalty towards - business and political organizations and institutions. In the workplace, there has been an overall decline in organizational loyalty. In Scandinavia, these tendencies have not been very strong and most people have a great degree of confidence in businesses. The increased sustainability orientation and attempts to make various stakeholders happy with what the company is doing have resulted in a relatively high confidence in Scandinavian businesses, confirmed by the low corruption level see Chapter 5. People's views of society People vary in their attitudes towards their society - patriots defend it, reformers want to change it, and malcontents want to leave it, People's orientation to their society in luences their consumption patterns and attitudes towards the marketplace. In the Us, one annual consumer survey shows that some brands are hig hly associated with patriotism, such as Jeep, Coca-Cola, Disney, Levi Strauss, Harley-Davidson, Gillette, and Apple. Marketers respond with renewed 'Made in America pitches and ads with patriotic themes. Recently, around the flag and carrying the patriotic song lyrics of Tm proud to be an American' on the label. In a July 4 holiday, Coca-Cola launched a limited- edition can, decorated in red, white, and blue similar manner, Apple kicked off a $100 million 'Made in. America' push with the introduction of a new high-end Mac Pro personal computer. The Mac Pro, 'the most powerful Mac ever,' is built in Austin, Texas, with components made domestically. Such campaigns wouldn't work in Europe, and particularly not in Sweden. 'T'm proud to be a Swede' would raise criticism. Even in the more patriotic Us, criticism is strong. Waving the red, white, and blue can be viewed as corny or as a token attempt to cash in on the nation's emotions. Moreover, some critics note that Apple's Made in America' push hasn't had much real impact. The Mac Pro contributes less than one per cent of Apple's total revenues, and more than 70 per cent of the company' 'S revenues come from its iPhone and iPad products, both built in China. When fOr once a product is made in the us, why is that worth emphasizing? Marketers must take care when appealing to patriotism and other strong national emotions. This underlines that societies are different and marketers have to follow such differences and how they develop over time. People's views of nature People vary in their attitudes towards the natural world - some feel ruled by it, others feel in harmony with it, and still others seek to master it. A long-term trend has been people's growing mastery over nature through technology and the belief that nature is bountiful. More recently, however, people have recognized that nature is finite and fragile; it can be destroyed or spoiled by human activities. This renewed love of things natural has created a sizable market of consumers who seek out everything from natural, organic, and nutritional products to fuel-efficient cars and flights run on bio- fuel, offered by Scandinavian Airlines, for example. These consumers make up a sizable and growing market. For example, food producers have also found fast-growing markets for natural and organic products. Sales of sustainable, all-natural food products grow at high rates - but the companies have to be careful: attempts to compromise with customer promises to save money or take the easy way out will sooner or later be noticed and result in harm to employees, customers and other stakeholders. Responding to the marketing environment: proactive and reactive attitudes Someone once observed, 'There are three kinds of companies: those who make things happen, those who watch things happen, and those who wonder what's happened.'3o Rather than simply watching and reacting, companies should take proactive steps with respect to the marketing environment. Many companies view the marketing environment as an uncon- trollable element to which they must react and adapt. They passively accept the marketing environment and do not try to change it. They analyse the environmental forces and design strategies that will help the company avoid the threats and take advantage of the opportuni ties the environment provides. This reflects a reactive attitude - however, the attitudes of successful organizations are proactive, and these companies take a proactive stance towards the marketing environment by seeing changes as opportunities rather than threats. Rather than simply watching and reacting, aggressive actions are taken to affect the publics and forces in their marketing environment. Such companies hire lobbyists to influence legislation affecting their industries, and stage media events to gain favourable press coverage. They form contractual agreements to better control their distribution channels and make sure product exposition, marketing and distribution are performed properly. By taking action, companies can often overcome seemingly uncontrollable environmental events. The increased opportunities for consumers to express their Opinions on the Internet are viewed by some companies as something over which they have no control; others work proactively to prevent Or to counter negative word of mouth expressions. However, 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 will take a proactive rather than reactive approach to the marketing environment. In the box below, you'1l find examples of how companies have dealt with things that happen in their environments. SUMMARY This chapter examines the environments of marketing and how companies analyse these environments to better understand the marketplace and consumers. Companies must constantly watch and manage the marketing environment in order to seek opportuni- ties and ward off threats. The marketing environment consists of all the actors and forces influencing the company's ability to transact business effectively with its target market. The company's micro-environment consists of other actors close to the company. It includes the company's internal environment -its several departments and management levels suppliers and marketing interme- diaries, including resellers, physical distribution firms, marketing services agencies and financial intermediaries. Four types of customer markets include consumer, business, government and non-profit markets, and all these types have become increasing ly international. Competitors create pressure on the company to perform better, and various publics have an actual or potential interest in, or impact on, the company's ability to meet its objectives. The macro-environment consists of larger societal forces that affect the entire micro-environment. The six macro-environmental forces making up the company's macro-environment consist of demographic, economic, ecological, technological, political and cultural forces, These forces shape opportunities for - and pose threats to-the company. Demography is the study of the characteristics of human populations. Today's demo graphic environment shows a changing age structure, shifting family profiles, geographic population shifts, a better-educated and more white-collar popula- tion and increasing diversity. The economic environ- ment consists of factors that affect buying power and patterns: today consumers are more concerned about value, and consumer spending patterns are shifting, reflecting changed attitudes and market opportuni- ties but also changes in the distribution of income. The ecological environment shows trends such as shortages of certain raw materials, higher pollution levels and more government intervention - changes that create marketing opportunities for alert, proactive companies. The technological environment creates both opportuni- ties and challenges. Companies that fail to keep up with technological change will miss out on new product and marketing opportunities. The political environment consists of laws, agencies and groups that influence or limit marketing actions - proactive companies track what key Swedish, European and other politicians of leading countries say and look beyond the next election in trying to understand what is going on. The cultural environment is made up of institutions and forces that affect a society's values, perceptions, preferences and behaviour. Typical changes here are the slow but obvious transition in Swedish society from a collectivist culture a couple of decades ago to an individualistic culture where every consumer wants to create their own life experience and destiny. This fundamentally changes market opportunities and means that companies must deliver meaningful and enduring values. Companies can be reactive and passively accept the marketing environment as an uncontrollable element to which they must adapt, avoiding threats and taking advantage of opportunities as they arise; or they can take a proactive stance, working to change the envi- ronment rather than simply reacting to it. Whenever possible, companies should try to be proactive rather than reactive. KEY TERMS Baby boomers Cultural environment Demography Economic environment Generation X Generation Y Generation Z Macro-environment Marketing environment Marketing intermediaries Micro-environment Political environment Public