Entering a Market: Entering a Market: Scanning The Market EnvironmentScanning The Market Environment

Chapter TenChapter Ten

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Market EnvironmentMarket Environment

• Forces outside of marketingForces outside of marketing

• that affect marketing management’s abithat affect marketing management’s abilitylity

• to to build build & & maintainmaintain successful relationshsuccessful relationsh

ips with target customers. ips with target customers.

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• Includes:Includes:– Microenvironment: Microenvironment: actors within the actors within the internal environmentinternal environment of the of the

company that affect its ability to serve its cucompany that affect its ability to serve its customers.stomers.

– Macroenvironment: Macroenvironment: larger societal forces that affect the microenvlarger societal forces that affect the microenv

ironment.ironment.•Considered to be beyond the control of the orgaConsidered to be beyond the control of the orga

nization.nization.

Market EnvironmentMarket Environment

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Factors in the Factors in the MicroenvironmentMicroenvironment

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• Suppliers:Suppliers:

– Provide resources Provide resources needed to produce needed to produce goods and services.goods and services.

– Important link in the Important link in the “value delivery “value delivery system.”system.”

– Most marketers treat Most marketers treat suppliers like partners.suppliers like partners.

The Company’s The Company’s MicroenvironmentMicroenvironment

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The Company’s The Company’s MicroenvironmentMicroenvironment

• Marketing Intermediaries: Marketing Intermediaries: – Help the company promote, sell, and Help the company promote, sell, and

distribute its goods to final buyersdistribute its goods to final buyers

•ResellersResellers

•Physical distribution firmsPhysical distribution firms

•Marketing services agenciesMarketing services agencies

•Financial intermediariesFinancial intermediaries

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5 Types of Customers5 Types of Customers

• Consumer markets Consumer markets

• Business markets (B to B)Business markets (B to B)

• Reseller marketsReseller markets

• Government marketsGovernment markets

• International markets International markets

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CompetitorsCompetitors

•Must understand competitor’s Must understand competitor’s strengthsstrengths

•Must differentiate firm’s products and Must differentiate firm’s products and offerings from those of competitorsofferings from those of competitors

•Competitive strategies should Competitive strategies should emphasize firm’s distinctive emphasize firm’s distinctive competitive advantage in competitive advantage in marketplace marketplace

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Types of Types of PublicsPublics

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The MacroenvironmentThe Macroenvironment

•The company and all of the other The company and all of the other actors actors

•operate in a larger operate in a larger macroenvironment of forces macroenvironment of forces

•that shape opportunities and that shape opportunities and pose threats to the company.pose threats to the company.

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The Company’s The Company’s MacroenvironmentMacroenvironment

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Demography Demography

•studying human populations in termstudying human populations in terms of s of size, density, location, age, gendsize, density, location, age, gender, raceer, race, and , and occupationoccupation

•helps to divide the population into helps to divide the population into mmarket segmentsarket segments and and target markets target markets

•One of the most frequently used clasOne of the most frequently used classification:sification: year of birth year of birth

The United States The United States as an exampleas an example

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The Seven U.S. GenerationsThe Seven U.S. Generations

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Changing American FamilyChanging American Family

•Household makeup:Household makeup:– Married couples with children = Married couples with children =

34%, and falling34%, and falling– Married couples and people living Married couples and people living

with other relatives = 22%with other relatives = 22%– Single parents = 12%Single parents = 12%– Single persons and adult “live-Single persons and adult “live-

togethers” = 32%togethers” = 32%

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Better Educated PopulationBetter Educated Population

• 1980:1980:– 69% of people over age 25 completed hig69% of people over age 25 completed hig

h schoolh school– 17% had completed college17% had completed college

• 2008:2008:– 84% of people over age 25 completed hig84% of people over age 25 completed hig

h schoolh school– 27% had completed college27% had completed college

• Currently, Currently, ⅔ of high school grads start colleg⅔ of high school grads start collegee

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Increasing DiversityIncreasing Diversity

•U.S. is a “salad bowl”U.S. is a “salad bowl”– Various groups mixed together, Various groups mixed together,

each retaining its each retaining its ethnic ethnic and and cultural cultural differencesdifferences

• Increased marketing to:Increased marketing to:– Gay and lesbian consumersGay and lesbian consumers– People with disabilitiesPeople with disabilities

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Benefits: Demographic studyBenefits: Demographic study

• Help marketers decide who their prHelp marketers decide who their product would benefit most and tailor oduct would benefit most and tailor their marketing plan to attract that their marketing plan to attract that segmentsegment..

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Economic EnvironmentEconomic Environment

• Changes in IncomeChanges in Income– 1980’s – 1980’s –

consumption frenzyconsumption frenzy– 1990’s – “squeezed 1990’s – “squeezed

consumer”consumer”– 2000’s – value 2000’s – value

marketingmarketing

• Income DistributionIncome Distribution– Upper classUpper class– Middle classMiddle class– Working classWorking class– UnderclassUnderclass

Consists of factors that affect consumer purchasing power and spending

patterns.

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Economic EnvironmentEconomic Environment

•Subsistence Subsistence econoeconomies: based more in mies: based more in agriculture agriculture and consand consume their own indusume their own industrial output.trial output.

• Industrial Industrial econoeconomies:mies:

have markets that have markets that are are diverse diverse and cand carry many differearry many different types of goods. nt types of goods.

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Natural EnvironmentNatural Environment

• Involves the Involves the natural resounatural resourcesrces that are needed as in that are needed as inputs by marketers or that puts by marketers or that are affected by marketing are affected by marketing activities.activities.

• Increased pollution, shortIncreased pollution, shortages (scarcity) of raw matages (scarcity) of raw materials and increased govererials and increased governmental intervention. nmental intervention.

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Technological Technological EnvironmentEnvironment

• Most Most dramatic dramatic force noforce now shaping our destiny.w shaping our destiny.

• Requires a company to Requires a company to sstay ahead oftay ahead of others and u others and update their own technolopdate their own technology as it becomes outdategy as it becomes outdated.d.

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Cultural EnvironmentCultural Environment

• The The institutions institutions and other forces and other forces that affect a that affect a society’s society’s basic basic valuesvalues, , perceptionsperceptions, , preferencepreference, and , and behaviorsbehaviors..

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Political EnvironmentPolitical Environment

Laws, Government Agencies, and Pressure Groups that Influence or Limit Various Organizations and Individuals In a Given Society.

Increasing Legislation

Changing GovernmentAgency Enforcement

Increased Emphasis on Ethics& Socially Responsible Actions

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Responding to the Marketing Responding to the Marketing EnvironmentEnvironment

• Environmental Management Perspective Environmental Management Perspective •Taking a Taking a proactiveproactive approach to managing approach to managing

the environment by taking the environment by taking aggressive aggressive (rather than reactive) actions to affect the (rather than reactive) actions to affect the publics and forces in the marketing publics and forces in the marketing environment. environment.

•This can be done by:This can be done by:– Hiring lobbyistsHiring lobbyists– Running “advertorials”Running “advertorials”– Pressing lawsuitsPressing lawsuits– Filing complaintsFiling complaints– Forming agreements to control channelsForming agreements to control channels

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PEST AnalysisPEST Analysis

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Political FactorsPolitical Factors

• stability of political environmentstability of political environment• gov't policy influencing or regulating businessgov't policy influencing or regulating business• government's position on marketing ethicsgovernment's position on marketing ethics• government's policy on the economygovernment's policy on the economy• government's view on culture and religiongovernment's view on culture and religion• gov't involved in trading agreements?gov't involved in trading agreements?

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Economic FactorsEconomic Factors

• Interest rates.Interest rates.• The level of inflationThe level of inflation• Employment level per capita. Employment level per capita. • Long-term prospects for the economyLong-term prospects for the economy• Gross Domestic Product (GDP) per capitGross Domestic Product (GDP) per capit

aa

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Sociocultural FactorsSociocultural Factors

• the dominant religionthe dominant religion• attitudes to foreign products and serviceattitudes to foreign products and service

ss• language impactlanguage impact• consumers' time for leisureconsumers' time for leisure• roles of men and women within societyroles of men and women within society• life expectancylife expectancy

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Technological FactorsTechnological Factors

• technology: cheaper and better producttechnology: cheaper and better productss

• more innovative products and servicesmore innovative products and services• distribution channel changed by techdistribution channel changed by tech• better communication methodsbetter communication methods

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ReadingReading

• PPage 36age 36

• WWho is the text aimed at?ho is the text aimed at?

• NNote down all nouns used without ote down all nouns used without articles.articles.– WWhy is no article used?hy is no article used?

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No article is usedNo article is used

• With most country namesWith most country names

• With uncountable nouns referring to With uncountable nouns referring to a general concepta general concept

• When referring to general plural nunsWhen referring to general plural nuns

• When referring to general plural or When referring to general plural or uncountable nouns qualified by an uncountable nouns qualified by an adjectiveadjective

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ListeningListening

• Listen and fill in blanks.Listen and fill in blanks.

• Do you agree with Tanya Liddell?Do you agree with Tanya Liddell?