Chapter Five: Analyzing the Marketing Environment

Marketing Environment Analysis Framework

In all marketing activities, the consumer is at the center. Anything that affects consumers affects marketers. Any change in one of these environments likely requires an adjustment to the firm's marketing mix. By identifying potential environmental trends, firms often can take proactive steps.

-because the consumer is in the center of the marketing effort, value-based marketing aims to provide greater value to consumers than competitors offer

-consider the business process from consumer pov

The Immediate environment

company capabilities, competition, corporate partners, physical environment

Company capabilities

-first factor that affects the consumer

-satisfy customer needs that match their core competencies

-is possible opportunities seem attractive, your must assess it in terms of existing competitors

Competitors

understand strengths and weaknesses of competitors and what they are doing to market themselves

Corporate partners

companies that work with the focal firm are corporate partners

-ex: automobile companies and tire manufacturers

physical environment

land, water, and living organisms,

-ex: ozone layer depletion, increase of emmissions and pollutants

energy trends

Firms are actively engaging in sustainable practices in terms of how they go about manufacturing products and provisioning services, as well as the types of products and services that they offer.

greener practices and greener consumers

when they undertake green marketing strategic efforts, firms work to supply customers with environmentally friendly, sustainable merchandise and services.

-not all green products and initiatives are inexpensive and the resulting business model is more complicated

greenwashing

exploiting a consumer by disingenuously marketing products or services as environmentally friendly, with the goal of gaining public approval and sales

macroenvironmental factors

aspects of the external environment that affect a company's business, such as the culture, demographics, social trends, technological advances, economic situation, and political/regulatory environment (CDSTEP)

Culture

shared meanings, beliefs, morals, values, and customs of a group of people

-two dimensions of culture that marketers must take into account as they develop their marketing strategies are the culture of the country and that of a region within a country

country culture

Artifacts, behavior, dress, symbols, physical settings, ceremonies, language differences, colors and tastes, and food preferences

-generally tricker to identify and navigate

regional culture

the influence of the area within a country in which people live

-affects many aspects of peoples lives, like dietary preferences and tastes

Demographics

indicate the characteristics of human populations and segments, especially those used to identify consumer markets

-age, gender, race, income

-marketing research firms provide this Info but firms can also do their own research

-shows a snapshot of typical customers in specific target markets

generational cohorts

People born during the same period and who share common life experiences.

gen alpha

first generation born in the 21st century and grew up with close interactions with mobile technology

-aka generation glass because of their screen time

gen z

aka generational natives because they were born into a world that already had a lot of tech

gen y

aka millennials, large population that does things later in life

gen x

first age of people whose both parents work and are now caring for both of their parents and their children

baby boomers

largest population of 50+ consumers

Income- Demographic

- U.S.: highest income groups are growing and middle and low income groups are declining; may be due to spectacular stock market performance in recent years, the maturing of the general population, the increase in dual-income households, and the higher overall level of education

Education- Demographic

- Higher level of education->better jobs and higher income

- for some products, marketers can combine edu level with other data such as occupation and income and obtain pretty accurate predictions of purchase behavior

- ex: full time college student with a part time job may have relatively little personal income but will spend their disposable dollars differently than a high school grad who works in a factory and earns a similar income

Gender- Demographics

- women today out perform men scholastically, earn higher grades, and graduate from HS and college at higher rates

- growing % of women married to men in the U.S. earn more than their husbands

- W more prominent in politics

- also their are more women gamers

- changes in status, attitudes, and behaviors affect the way many firms design and promote their products and services. More firms are careful of gender neutrality in positioning their products to attempt to transcend gender boundaries, especially thru increased interaction with their customers

Race and Ethnicity- Demographics

- immigration and increasing birthrates among various ethnic and racial groups, the U.S. continues to grow more diverse

- African American, Hispanic, and Asian communities are growing

- foreign-born Americans are drawn to NY, LA, San Fran, Miami, and Chicagooo

- Hispanics are taking over- soon will be 72 million

- African Americans: younger cohort

- Asian Americans: fastest growing minority; higher edu levels; have high spending power; many companies neglect this market but their culture is spreading with Avatar show and stuff-> more appealing now

Social Trends: Sustainability

- UN Sustainable Development Goals focus on social issues for basic needs and social structures

- to market their efforts: get certifications from various agencies, including International Fairtrade Cert Mark (cert that is granted t products that are determined to promote sustainable farming and provide higher prices and improves social and environmental standards for producers, typically in less developed countries

- Challenges for other marketers (fast fashion)

Social Trends: Health and Wellness

-child and adult obesity is doubling and tripling

- Children's food and Bev advert Initiative (CFBAI): commit to advertise only foods that meet certain nutritional standards to children younger than 12

- health guidelines

-new markets focused on healthy living

-mobile apps that support health and wellness

Social Trends: Efficient Utilization and Distribution of Food

- Market for diet related products

- lots of food waste in U.S.

- try to reduce hunger

- food deserts: areas and neighborhoods in which consumers, usually of lower socioeconomic state, have limited or no access to healthy food options; hard to try to eliminate

Technological Advances

- mobile devices enhance customer experience by making it easier to interact with the manufacturer or retailer or the customers, and they add a new channel of access , which makes new customers more loyal and more likely to spend more with a particular retailer

- AI: ability of info tech, machines, and computers to exhibit intelligence, such that they can learn continually from date and perform tasks and functions that previously would have required human interaction

- Robotics: taking human jobs, cleaning up spills; reducing cost of service

- Internet of Things (IoT): when multiple smart devices with internet connected sensors combine the data they collected to help consumers and companies consume more effectively (like how all Samsung products are connected)-> provides date to their companies to optimize their inventory, predict need for maintenance

- Privacy Concerns: lots of accessibility to ur stuff but the internet is becoming more safe; ppl still get hacked tho

economic situation

macroeconomic factor that affects the way consumers buy merchandise and spend money, both in a marketer's home country and abroad

economic situation: Inflation

- persistent increase in prices of g&s- a dollar buys less than it used to

economic situation: foreign currency fluctuations

- changes in value of a countrys currency relative to the curremcy of another country

- can influence consumer spending when € > $, then Europeans like to buy Amer products. But when € < $, Americans like to buy Euro products

economic situation: Interest rates

- cost of borrowing money; the cost to the customer or the fee the bank charges those customers for borrowing the money.

- if IR goes up, consumers have an incentive to save more bc they earn more for loaning the bank their money; when IR go down, consumers borrow more

Political/Legal Environment

- comprises political parties, government organizations, and legislation and laws

- orgs must fully understand and comply with any legislation regarding fair competition, consumer protection, or industry specific regulation

- prohibiting monopolies or alliances that would damage competitive marketplace which fosters fair pricing practices for all suppliers and consumers

Which framework for analysis is comprised of a company's capabilities, competitors, corporate partners, and the physical environment?

immediate environment

A firm's immediate environment is comprised of its own capabilities, competitors, corporate partners, and the physical environment.

By 2030, it is expected the Hispanic population in the U.S. will reach more than ________ million

72

Multicultural Americans now represent approximately 38.4 percent of the population with Hispanics making up 18.7 percent. By 2030 the Hispanic population in the United States is expected to reach more than 72 million.

No federal advertising guidelines regulate the marketing of unhealthy food to children. Some companies, like Burger King and General Mills, voluntarily commit to

advertising only foods that meet certain nutritional standards to children younger than 12 years of age.

Large, well-known companies such as General Mills and Burger King participate in the Children's Food and Beverage Advertising Initiative (CFBAI), which means that they commit to advertise only foods that meet certain nutritional standards to children younger than 12 years of age.

Now that the oldest ________Blank are collecting Social Security, it is clear this cohort will be the largest population of 50-plus consumers the United States has ever seen.

Baby Boomers

Now that the oldest Boomers are collecting Social Security, it is clear that this cohort will be the largest population of 50-plus consumers the United States has ever seen.

The ability of marketers to use mobile applications to target and reach their customers more effectively is an example of which macroenvironmental factor?

technological advances

Technological advances have accelerated vastly, improving the value of products and services. Consumers have constant access to the Internet, through services such as WiFi, mobile hotspots, 4G, and LTE. Smartphones using the iOS or Android systems allow for greater computing, data storage, and communication capabilities.

The ________Blank mark is a certification that is granted to products that are determined to promote sustainable farming and provide higher prices and improved social and environmental standards for producers, typically in developing countries.

FairtradeCorrect

The Fairtrade mark is a certification that is granted to products that are determined to promote sustainable farming and provide higher prices and improved social and environmental standards for producers, typically in developing countries.

What term refers to the strategic effort by firms to supply customers with environmentally friendly, sustainable merchandise and services?

green marketing

Green marketing involves a strategic effort by firms to supply customers with environmentally friendly sustainable merchandise and services.

What piece of legislation prohibited the manufacture or sale of adulterated or fraudulently labeled food and drug products?

Federal Food and Drug Act

The Federal Food and Drug Act of 1906 prohibited the manufacture or sale of adulterated or fraudulently labeled food and drug products. See Exhibit 5.6 in the text.

What term represents the cost of borrowing money?

interest rates

Interest rates represent the cost of borrowing money. When customers borrow money from a bank, they agree to pay back the loan, plus the interest that accrues. The interest, in effect, is the cost to the customers or the fee the bank charges those customers for borrowing the money.

What is the most likely result of inflation?

Consumers will switch from lower-priced brands to more expensive ones.

Consumers will buy less food.

Consumers will buy more discretionary items

Consumers will switch to less expensive options for necessities.

Consumers will purchase more products overall.

Consumers will switch to less expensive options for necessities.

Inflation refers to the persistent increase in the prices of goods and services. Increasing prices cause the purchasing power of the dollar to decline and the dollar buys less than it used to. When inflation increases, consumers probably don't buy less food, but they may shift their expenditures from expensive steaks to less expensive hamburgers.

Culture, demographics, social issues, technological advances, economic situations, and the political/regulatory environment are all factors that make up which element of the marketing environment?

macroenvironmental factors

Marketers must understand the macroenvironmental factors affecting their businesses, namely, the culture, demographics, social issues, technological advances, economic situation, and political/regulatory environment.

Netflix and other global firms have successfully bridged the cultural gap by producing advertising that appeals to the same target market across

countries.

Netflix and other global firms have successfully bridged the cultural gap by producing advertising that appeals to the same target market across countries. The pictures and copy are the same. The only thing that changes is the language.

Although the trend of wealthy households outpacing both poor and middle classes is worldwide, it is particularly prominent in

the United States.

Although the trend of wealthy households outpacing both poor and middle classes is worldwide, it is particularly prominent in the United States.

Bosch Appliances engages in partnerships with its suppliers, component part makers, unions, transport companies, and dealerships—collectively known as its

corporate partners.

Few firms operate in isolation. For example, appliance manufacturers collaborate with suppliers of sheet metal, component part makers, unions, transport companies, and retailers to produce and market their products successfully. Parties that work with the focal firm are its corporate partners.

Your text describes the macroenvironmental factors that operate in the external environment by which acronym?

CDSTEPCorrect

In addition to understanding their customers, the company itself, their competition, and their corporate partners, marketers must understand the macroenvironmental factors that operate in the external environment, namely, the culture, demographics, social trends, technological advances, economic situation, and political/regulatory environment, or CDSTEP.

Many urban areas have neighborhoods that are usually of low socioeconomic status and have no access to affordable fresh food options. These areas are

food deserts.

Food deserts are areas and neighborhoods in which consumers, usually of lower socioeconomic strata, have limited or no access to healthy, affordable fresh food options.

Individuals born in 2010 or later are called

Generation Alpha.

Generation Alpha (Gen α), the newest generation, is still young; its oldest members were born in 2010. As the first generation born entirely in the 21st century, these children are growing up in close interaction with mobile technology and voice assistants.

Which group of consumers in the U.S. has an increasing influence on mainstream culture with buying power that has reached $1.2 trillion?

Asian American

Furthermore, Asian Americans have a lot of spending power, with an average household income 39 percent higher than the U.S. median. Although the buying power of Asian Americans has reached $1.3 trillion, many companies still fail to reach the demographic segments that constitute this group effectively.

is (are) at the center of the marketing environment.

ConsumersCorrect

The consumer is at the center of all marketing efforts because one of the goals of value-based marketing is to provide greater value to consumers than competitors offer.

What is a macroenvironmental factor included in the CDSTEP acronym?

technological advances

Macroenvironmental factors include culture, demographics, social trends, technological advances, economic situation, and political/regulatory environment, or CDSTEP.