Marketing Environments

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Marketing Environments

• Professor Chip Besio
• Cox School of Business
• Southern Methodist University

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Outline

• The Companys Environment Macro- and
  Micro-Environments and their composition
• Analysis of the Environment S.W.O.T.

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The Companys Micro Environment - The 5 Cs

• The 5 Cs can be used as a framework to describe
  and analyze the companys immediate environment
• Company
• Customers
• Competitors
• Channels
• Constituents

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The Companys Micro Environment

• Companys Internal Environment - functional areas
  such as top management, finance, and
  manufacturing, marketing, etc.
• Customers - buyers in markets that purchase a
  companys goods and services
• Competitors - those who serve the target market
  with similar products/ services

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The Companys Micro Environment

• Channels (Suppliers, Distributors, Wholesalers
  and Retailers) - Provide the resources needed to
  produce goods and services and help the company
  to promote, sell, and distribute to final buyers
• Constituents (stakeholders) - any group that
  perceives itself having an interest in the
  companys ability to achieve its objectives

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Micro Environment -The Market

• The immediate environment for the company is the
  market(s) in which it offers goods and/or services

Competitors
Company
Customers
Market
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Types of Markets
Source Prentice Hall
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Micro Environment - Channels of Distribution

• The market operates within a broader framework
  which we call the channel of distribution
• The channel of distribution involves a
  coordinated effort among different firms to offer
  products to an end user

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Micro Environment - Channels of Distribution

• The channel of distribution

Competitors
End Users
Suppliers
Company
Customers/ Intermediaries
Channel of Distribution
Market
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The Companys Macro Environment

• Beyond the channel of distribution there are
  other environmental factors that impact on the
  company and its market
• Among them are
• Society/Culture - e.g., dual income households
  are less likely to prepare meals in the home
• Economy - e.g., recession reduces discretionary
  spending by consumers, as well as investments by
  competitors and suppliers
• Natural Environment e.g., resources needed by
  marketers

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The Companys Macro Environment

• Among them are (continued)
• Demographics - e.g., the aging population
  dictates that more incontinence products will be
  needed in the future
• Legal/Regulatory - e.g., EPA regulations
  regarding hazardous waste disposal could affect
  the demand for motor oil and batteries
• Technology - e.g., low cost, high speed computers
  could allow quicker, more effective dissemination
  of information to the sales people and widely
  dispersed business units

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Social/Cultural Environment

• The institutions and other forces that affect a
  societys basic values, perceptions, preference,
  and behaviors.

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Social/Cultural Environment

• Core beliefs and values are passed on from
  parents to children and are reinforced by
  schools, churches, business, and government.
• Secondary beliefs and values are more open to
  change.

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Social/Cultural Environment

• Yankelovich Monitor has identified eight major
  consumer value themes
• Paradox
• Trust not
• Go it alone
• Smarts really count
• No sacrifices
• Stress hard to beat
• Reciprocity is the way to go
• Me 2
• www.yankelovich.com

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Social/Cultural Environment

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Economic Environment
Consists of factors that affect consumer
purchasing power and spending patterns.

• Changes in Income
• 1980s consumption frenzy
• 1990s squeezed consumer
• 2000s value marketing

• Income Distribution
• Upper class
• Middle class
• Working class
• Underclass

The Hourglass Economy
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Natural Environment

• Involves the natural resources that are needed as
  inputs by marketers or that are affected by
  marketing activities.

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Factors Impacting the Natural Environment
Shortages of Raw Materials
Increased Pollution
Increased Government Intervention
Environmentally Sustainable Strategies
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Demography

• Demographics
• The study of human populations in terms of size,
  density, location, age, gender, race, occupation,
  and other statistics.
• Marketers track changing age and family
  structures, geographic population shifts,
  educational characteristics, and population
  diversity.

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Changing American Family

• Household makeup
• Married couples with children 34, and falling
• Married couples and people living with other
  relatives 22
• Single parents 12
• Single persons and adult live-togethers 32

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Geographic Shifts in Population

• 16 of U.S. residents move each year
• General shift toward the Sunbelt states
• City to suburb migration continues
• More people moving to micropolitan areas
• More people telecommute

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Better Educated Population

• 1980
• 69 of people over 25 completed high school
• 17 had completed college
• 2002
• 84 of people over 25 completed high school
• 27 had completed college
• Currently, ? of high school grads start college

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Increasing Diversity

• U.S. is a salad bowl
• Various groups mixed together, each retaining its
  ethnic and cultural differences
• Increased marketing to
• Growing ethnic communities
• Gay and lesbian consumers
• People with disabilities

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Political Environment
Includes Laws, Government Agencies, and Pressure
Groups that Influence or Limit Various
Organizations and Individuals In a Given Society.
Increasing Legislation
Changing Government Agency Enforcement
Increased Emphasis on Ethics Socially
Responsible Actions
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Technological Environment

• Most dramatic force now shaping our destiny.

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Technological Environment

• Changes rapidly.
• Creates new markets and opportunities.
• Challenge is to make practical, affordable
  products.
• Safety regulations result in higher research
  costs and longer time between conceptualization
  and introduction of product.

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The Companys Macro Environment

• The broader corporate environment

Economy
Social/Cultural
Demographics
Competitors
End Users
Suppliers
Company
Customers/ Intermediaries
Channel of Distribution
Market
Legal/Regulatory
Technology
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Responding to the Marketing Environment

• Environmental Management Perspective
• Taking a proactive approach to managing the
  microenvironment and the macro-environment to
  affect changes that are favorable for the
  company. How? Hire lobbyists , run
  advertorials, file law suits and complaints,
  and form agreements.

Source Prentice Hall
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Environmental Analysis S.W.O.T.
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What Is S.W.O.T. Analysis?

• S.W.O.T. analysis groups observations of the
  company and its environment into
• Internal
• Strengths
• Weaknesses
• External
• Opportunities
• Threats

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What Is S.W.O.T. Analysis?

• Strengths and weaknesses are factors specific to
  company which contribute to either good
  performance (strengths) or poor performance
  (weaknesses).
• Microsoft example
• Strengths - Scale, excellent development
  capability Windows OS as a basis for development
  and product tie-ins reputation with end users
  for ease of use
• Weaknesses - Reputation for vaporware broad
  scope makes focus on niches difficult

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What Is S.W.O.T. Analysis?

• Opportunities and threats are based on the
  activities in the companys environment by
  others, including customers, competitors and
  suppliers and other constituents.
• Examples include
• Opportunities - Increasing computing power
  increasing penetration of PCs and handhelds
  increasing availability and speed of internet
  access bundling different software products
• Threats - Government antitrust action power of
  Intel as dominant supplier of microprocessors
  investment by telephone and cable companies in
  internet distribution

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What Is S.W.O.T. Analysis?

• The same information can often be viewed as
  either an opportunity or a threat
• Consider the companys current position and
  determine the most likely effect (positive or
  negative) of the information

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Why Is S.W.O.T. Analysis Important?

• S.W.O.T. analysis is a useful tool for for
  assessing both the company and its environment

Identify Problem
Analyze Problem in Pieces
Develop Recommend-ations
S.W.O.T. Analysis