Chapter 3: Analysing the marketing
environment
Adapting the fast-changing environment
3rd popular website
We watch 6 Billion hours of video on YouTube every month
1 Billion people across the world use YouTube every month
400 hours of video are uploaded to YouTube every minute
Adapting the fast-changing environment
Low quality High quality
Short clip Full-length
Homemade Real video
producer
Though PCs Every available
screen
One way Interactive
Topic Outline
1. The Company’s Microenvironment
2. The Company’s Macroenvironment
3. Responding to the Marketing Environment
The marketing environment
• The marketing environment includes the
actors and forces outside marketing that affect
marketing management’s ability to build and
maintain successful relationships with
customers
The marketing environment
Microenvironment 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
Macroenvironment consists of the larger
societal forces that affect the microenvironment
—demographic, economic, natural,
technological, political, and cultural forces.
Microenvironment
The Company
• Top management Finance CEO
• Finance
• R&D
• Purchasing Mkt Operation
• Operations
• Accounting
Purchasin
R&D g
Suppliers
• Provide the resources to produce goods and
services
• Treat as partners to provide customer value
Marketing Intermediaries
• Help the company to promote, sell and
distribute its products to final buyers
Types of Marketing Intermediaries
Physical
Resellers distribution
firms
Marketing
Financial
services
intermediaries
agencies
Competitors
• Firms must gain strategic advantage by
positioning their offerings against competitors’
offerings
Competitor
Publics
• Any group that has an actual or potential interest in
or impact on an organization’s ability to achieve its
objectives
– Financial publics
– Media publics
– Government publics
– Citizen-action publics
– Local publics
– General public
– Internal publics
Customers
Consumer Business Reseller
Government International
Macroenvironment
consists of the larger societal forces that affect the
microenvironment—demographic, economic,
natural, technological, political, and cultural forces.
Demographic Environment
Demography: the study of human populations--
size, density, location, age, gender, race,
occupation, and other statistics
• Demographic environment: involves people,
and people make up markets
• Demographic trends: shifts in age, family
structure, geographic population, educational
characteristics, and population diversity
Demographic Environment
• Baby Boomers
– Born 1946 to 1964
– rethinking the purpose and value of their work,
responsibilities, and relationships.
– spending more carefully and planning to work
longer
– the wealthiest generation in U.S. history
Baby Boomers
25% 20%
75% 80%
Demographic Environment
• Generation X includes people born between
1965 and 1976
– High parental divorce rates
– Cautious economic outlook
– Less materialistic
– Family comes first
Generation X
49% 11%
81% 95%
Demographic Environment
• Millennials (gen Y or echo boomers) include
those born between 1977 and 2000
– Most financially strapped generation
– Higher unemployment and saddled with more
debt
– Comfortable with technology
Generation Y
Demographic Environment
Generational marketing is important in
segmenting people by lifestyle of life state
instead of age
Demographic Environment
Changing American Family
More people are:
• Divorcing or separating
• Choosing not to marry
• Choosing to marry later
• Marrying without intending to have children
• Increasing number of working women
• Increasing number of stay-at-home dads
Demographic Environment
• Changes in the Workforce
– More educated
– More white collar
Increasing Diversity
Markets are becoming more diverse
– International
– National
• Includes:
– Ethnicity
– Gay and lesbian
– Disabled
Increasing Diversity
$712 bil $220 bil
Economic Environment
Economic environment consists of factors that
affect consumer purchasing power and
spending patterns
• Industrial economies are richer markets
• Developing economies offers outstanding
marketing opportunities
• Subsistence economies consume most of
their own agriculture and industrial output
Changes in Consumer Spending
Value marketing: offering financially cautious
buyers greater value— the right combination
of quality and service at a fair price
Natural Environment
Natural environment: natural resources that are
needed as inputs by marketers or that are
affected by marketing activities
• Trends
– Increased shortages of raw materials
– Increased pollution
– Increased government intervention
– Increased environmentally sustainable
strategies
Technological Environment
• Most dramatic force in changing the
marketplace
• New products, opportunities
• Concern for the safety of new products
Example
Political and Social Environment
Political environment consists of laws,
government agencies, and pressure groups
that influence or limit various organizations
and individuals in a given society
Political and Social Environment
• Legislation regulating business
– Increased legislation
– Changing government agency enforcement
• Increased emphasis on ethics
– Socially responsible behavior
– Cause-related marketing
Cultural Environment
Cultural environment consists of institutions
and other forces that affect a society’s basic
values, perceptions, and behaviors
People in a given society hold many beliefs and
values.
Persistence of Cultural Values
Core beliefs and values are persistent and are
passed on from parents to children and are
reinforced by schools, churches, businesses,
and government
Secondary beliefs and values are more open to
change and include people’s views of
themselves, others, organization, society,
nature, and the universe
Shifts in Secondary Cultural Values
• People’s view of themselves
– People use products, brands and services as a means of
self-expression & buy products/services that match their
views of themselves
People’s view of themselves
Shifts in Secondary Cultural Values
• People’s view of others
– More “cocooning”: less go out with others
and stay home to enjoy entertainment
Shifts in Secondary Cultural Values
• People’s view of organizations
– Decline of loyalty toward companies
• People’s view of society
– Patriots defend it
– Reformers want to change it
– Malcontents want to leave it
Shifts in Secondary Cultural Values
• People’s view of nature
– Some feel ruled by it
– Some feel in harmony with it
– Some seek to master it
• People’s view of the universe
– Renewed interest in spirituality
– Developed more permanent values
– family, community, earth,
– spirituality, ethics
Responding to the Market Environment
• Views of Responding
Uncontrollable Proactive Reactive
• React and • Aggressive • Watching and
adapt to actions to reacting to
forces in the affect forces forces in the
environment in the environment
environment
Xerox case
Xerox case
• For many years, Xerox was synonymous for “photocopy.” And
in certain respects, it still is. But that has become more of a
detriment than a benefit. As new technologies quickly and
dramatically reduced the need for copying hard documents in
the late 1990s, Xerox found itself in trouble. This case
illustrates how Xerox made some bold and difficult decisions to
both cut costs and redefine the nature of its business. Today,
Xerox is more about business services and solutions than it is
about copying documents. With a much broader market that
has various growth opportunities, Xerox has the potential to
remain one of the top business-to-business corporations.
Xerox case
1. What microenvironmental factors have affected Xerox’s
performance since the late 1990s?
2. What macroenvironmental factors have affected
Xerox’s performance during that same period?
3. By focusing on the business services industry, has Xerox
pursued the best strategy? Why or why not?
4. What alternative strategy might Xerox have followed in
responding to the first signs of declining revenues and
profits?
5. Given Xerox’s current situation, what recommendations
would you make to Burns for the future of Xerox?
END
