MKTG 3310 Chapter 3 Notes and Concepts PDF

lOMoARcPSD|24121749 Chapter 3 Notes and Concepts Principles Of Marketing (Auburn University) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by Mackenzie Fitts ([email protected]) lOMoARcPSD|24121749 Chapter 3 - Analyzing the Marketing Environme...

lOMoARcPSD|24121749 Chapter 3 Notes and Concepts Principles Of Marketing (Auburn University) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by Mackenzie Fitts ([email protected]) lOMoARcPSD|24121749 Chapter 3 - Analyzing the Marketing Environment Marketing environment: consists of the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers “Marketers must be environmental trend trackers & opportunity seekers” 2 special aptitudes of marketers: ○ Disciplined methods for collecting information→ marketing research, marketing intelligence, & marketing analytics ○ Develop insights about the marketing environment The Microenvironment & Macroenvironment Microenvironment: consists of the actors close to the company that affect its ability to engage and serve its customers -- the company, suppliers, marketing intermediaries, customer markets, competitors, and publics The Company -in designing marketing plans, marketing management takes other groups into account such as top management, finance, research & development, purchasing, operations, human resources, and accounting … FORM THE INTERNAL ENVIRONMENT → top management: sets company’s mission, objectives, broad strategies, and policies →marketing managers: make decisions within these broader strategies and plans → all departments share the responsibility for understanding customer needs & creating customer value Suppliers → form an important link in company’s overall customer value delivery network Provide resources needed by the company to produce its goods and services Problems can affect marketing ○ Shortages, delays, natural disasters, etc. can cause cost sales in the short run & damage customer satisfaction in the long run ○ Rising supply costs may force price increases that can harm company’s sale volume Example: IKEA Marketing Intermediaries Marketing intermediaries: help the company promote, sell, and distribute its products to final buyers. It includes resellers, physical distribution firms, marketing services agencies, and financial intermediaries. Resellers: distribution channel firms that help the company find customers or make sales Downloaded by Mackenzie Fitts ([email protected]) lOMoARcPSD|24121749 to them (include wholesalers & retailers that buy and resell merchandise) Physical distribution firms: help the company stock & move goods from their point of origin to their destinations Marketing services agencies: the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets Financial intermediaries: include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying & selling of goods. Competitors Marketing concept→company must provide greater customer value & satisfaction than its competitors Marketers must gain strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of consumers Each firm should consider its own size & industry position compared with those of its competitors Publics Public: any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives There are 7 types: 1. Financial publics: this group influences the company’s ability to obtain funds. (Banks, investment analysts, & stockholders) 2. Media publics: this group carries news, features, editorial options, and other content. (TV stations, newspapers, magazines, and blogs, and other social media) 3. 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 4. 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 stay in touch with consumer and citizen groups 5. Internal publics: this group includes workers, managers, volunteers, and the board of directors. Large companies use newsletters and other means to inform and motivate their internal publics. When employees feel good about the companies they work for, this positive attitude spills over to external publics 6. General public: company needs to be concerned about the general public’s attitude toward its products and activities. The public’s image of the company affects its buying behavior 7. Local publics: this group includes local community residents & organizations. Large companies usually work to become responsible members of the local communities in Downloaded by Mackenzie Fitts ([email protected]) lOMoARcPSD|24121749 which they operate Customers → most important actors in the company’s microenvrionment 5 types of customer markets 1. Consumer markets: consist of individuals and households that buy goods and services for personal consumption 2. Business markets: buy goods and services for further processing or use in their production process 3. Reseller markets: buy goods and services to resell at a profit 4. Government markets: consist of government agencies that buy goods and services to produce public services or transfer the goods and services to others who need them 5. International markets: consist of these buyers in other countries including consumers, producers, resellers, and governments Macroenvironment: consists of the larger societal forces that affect the microenvironment -demographic, economic, natural, technological, political, and cultural forces “Changes in demographics mean changes in markets, so they are very important to marketers” The Demographic Environments Demography: study of human populations in terms of size, density, location, age, gender, race occupation, and other statistics → important b/c it involves people… and people make markets Marketers… Analyze changing age & family structures Geographic population shift Education characteristics Population diversity The Changing Age Structure of the Population → most important demographic trend in the US 4 Largest Generational Groups 1. The Baby Boomers a. People born during the post-WW2 baby boom from 1946-1964 b. Wealthiest generation in US history c. Constitute a profitable market for financial services, new housing and home remodeling, new cars, travel and entertainment, eating out, health and fitness products, and etc. d. Appreciate marketers who appeal to their youthful thinking, rather than their advancing age Downloaded by Mackenzie Fitts ([email protected]) lOMoARcPSD|24121749 2. Generation X a. “Birth dearth” … people born between 1965-1980 (lie in the shadows of the boomers) b. Sometimes overlooked “in between” consumer group c. Less materialistic i. Prize experience, not acquisition d. More skeptical bunch i. They are sensible shoppers who research products heavily before they consider a purchase ii. Prefer quality to quantity iii. Tend to be less receptive to overt marketing pitches iv. Receptive to ads that make fun of convention or tradition e. Once they find a brand, they tend to be most loyal f. They are fully connected and embrace benefits of technology g. Firmly into careers and are the most educated generation to date h. Possess hefty annual purchasing powers 3. Millennials a. (also called Generation Y or echo boomers) people born between 1981-1997 & children of the baby boomers b. Technology is a way of life i. First generation to grow up with lots of technology ii. Engage with brands mostly online c. They seek authenticity, value and opportunities to shape their own brand experiences and share them with others d. Tend to be frugal, practical, connected, mobile, impatient 4. Generation Z a. Young people born between 1997-2018 b. Represent tomorrow’s markets-- forming brand relationships that will affect their buying well into the future c. Fluent and comfortable with digital technologies i. Have always had it growing up … “take it for granted” d. More than half of them do product research before buying a product or having parents buy it for them e. More than half prefer shopping online in ranging categories f. Social media marketing plays a crucial marketing role for older Gen Zers g. Companies must market responsibly to this group to avoid risks of children’s privacies The Changing American Family Traditional household: husband, wife, and children Marketers must consider needs of nontraditional households because they are growing Downloaded by Mackenzie Fitts ([email protected]) lOMoARcPSD|24121749 more rapidly than traditional households More women are working, while husbands stay at home ○ In recent ads, fathers are now portrayed as caring and capable dads Geographic Shifts in Population Over the past decade, US population has shifted from the Snowbelt states to the Sunbelt states ○ West & South have grown, while Midwest & Northeast have lost population This interests marketers because people in different regions buy differently Telecommuting market (working at home some of the time) Educated Population Job growth is now strongest for professional workers and weakest for manufacturing workers US is becoming better educated The rising number of educated professionals affects not just what people buy, but also how they buy Increasing Diversity Ethnicity Gay & lesbian consumers Individuals with disabilities ○ Most are active consumers As population grows more diverse, marketers will continue to diversify their marketing programs to take advantage of opportunities in fast-growing segments The Economic Environment Economic environment: consists of economic factors that affect consumer purchasing power and spending patterns → these factors can have a dramatic effect on consumer spending & buying behavior Today, post-recession era, consumer spending is on the rise ○ Americans are retaining enthusiasm for frugality As the economy improves, consumers will continually indulge in luxuries and bigger ticket purchases, just more sensibly ○ Looking for greater value in the things they buy Although cutting costs & offering selected discounts can be important to marketing tactics, smart marketers understand making cuts in wrong places can damage long-term brand images and customer relationships Balance brand’s value proposition with current times while also enhancing its long-term equity Marketers should pay attention to changes in major economic variables that have a large Downloaded by Mackenzie Fitts ([email protected]) lOMoARcPSD|24121749 impact on marketplace ○ Income ○ Cost of living ○ Savings & borrowing patterns The Natural Environment Natural environment: involves the physical environment & the natural resources that are needed as inputs by marketers or that are affected by marketing activities Unexpected happenings in physical environment can affect companies and their marketing strategies Companies should prepare for dealing with natural occurences Environmental sustainability concerns have grown steadily over several decades There are several trends in natural environment ○ Shortage of raw materials ○ Increased pollution ○ Government intervention Environmental Protection Agency (EPA): created in 1970 to create and enforce pollution standards and conduct pollution research Environmental sustainability: developing strategies and practices that create a world economy that the planet can support indefinitely → means meeting present needs without compromising the ability of future generations to meet their needs. Some companies even make this part of their mission Many companies are responding to consumer demands with more environmentally responsible products Companies are also learning that what’s good for customer well-being and the planet can also be good business The Technological Environment Technological environment: Affects every aspect of how consumers learn about, shop for, buy, and experience brands Digital age gives marketers exciting opportunities for understanding consumers, creating new products, and engaging consumers in more direct & meaningful ways Every new technology replaces an older technology When old industries fight or ignore new technologies, their businesses decline The Consumer Product Safety Commission (CPSC): establishes safety standards for consumer products and penalizes companies that fail to meet them The Political Environment: Downloaded by Mackenzie Fitts ([email protected]) lOMoARcPSD|24121749 Political environment: consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society Public policy: sets of laws and regulations that limit business for the good of society as a whole Regulations are always changing ○ Marketers must work hard to keep up with changes with regulations and their interpretatiions Business legislation has been enacted for a number of reasons: Downloaded by Mackenzie Fitts ([email protected]) lOMoARcPSD|24121749 1. Protect companies from each other a. Passed to define and prevent unfair competition 2. Protect consumers from unfair business practices 3. Protect the interests of the society against unrestrained business behavior a. Ensures that firms take responsibility for the social costs of their production or products Because government agencies have some discretion in enforcing the laws, they can have major impact on a company’s marketing performance Socially Responsible Behavior → look beyond the regulatory system and do the right thing Every aspect of marketing involves ethics and social responsibility Cause-Related Marketing Many companies are now linking themselves to worthwhile causes ○ Ex: AT&T joined with Verizon, Sprint, and T-Mobile to campaign “It can wait.” for texting and driving Some companies are founded on cause-related missions Has become primary form of corporate giving Can make good economic sense for company Critics worry that cause-related marketing is more a strategy for selling, than a strategy of giving If handled well… the company gains an effective marketing tool while building a more positive image The Cultural Environment Cultural environment: consists of institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors People grow up in a particular society that shapes their basic beliefs and values & absorb a worldview that defines their relationships with others that can affect market decision making Persistence of Core Values Core values have a high degree of persistence ○ Passed from parents to children that are reinforced by schools, businesses, religion, and government Ex: believing in marriage Secondary beliefs & values are more open to change ○ Marketers have some chance of changing secondary values more Ex: believing people should get married early in life Downloaded by Mackenzie Fitts ([email protected]) lOMoARcPSD|24121749 Cultural swings can take place ○ Marketers want to predict cultural shifts to spot new opportunities and threats Major cultural values of a society are expressed in people’s views of themselves, others, organizations, society, nature, and the universe People’s Views of Themselves People vary in emphasis on serving themselves vs. serving others Some seek personal pleasure, fun, change, and escape Others seek self-realization through religion, recreation, or avid pursuit of careers or life goals People use products, brands, and services as a means of self-expression & they buy products and services that match their views of themselves People’s Views of Others Consumers tap digitally into networks of friends and online brand communities to learn about, buy products, & shape and share brand experience Important for brands to participate in this network too People’s Views of Organizations People are willing to work for major organizations and expect them to carry out society’s work Sharp decrease in confidence and loyalty toward America’s business and political organizations and institutions Many see work not as a source of satisfaction, but as a required chore to earn money to enjoy their nonwork hours People’s Views of Society People’s orientation to their society influences their consumption patterns and attitudes toward the marketplace People’s Views of Nature People have recognized that nature is finite and fragile; it can be destroyed or spoiled by human activities Renewed love of things natural has created a sizable market of consumers who seek out everything from natural, organic, and nutritional consumers People’s Views of the Universe Although some may be moving away from traditional religion, most seek more permanent values such as family, community, earth and faith. Changing spiritualism affects consumers in everything from TV shows & books they Downloaded by Mackenzie Fitts ([email protected]) lOMoARcPSD|24121749 read, to the products and services they buy Responding to the Market Environment Many companies view marketing environment as an uncontrollable element to which they must react and adapt & passively accept it without trying to change it ○ Analyze environmental forces to avoid threats and take advantage of opportunities the environment provides PROACTIVE STANCE ○ Firms develop strategies to change the environment Products often create and shape new industries and their structures ○ Firms take aggressive actions to affect the publics and forces in their marketing environment Some hire lobbyists to influence legislation affecting their industries and stage media events to gain favorable press coverage ○ By taking action… companies can often overcome seemingly uncontrollable environmental events Downloaded by Mackenzie Fitts ([email protected])