Principles of Marketing - Chapter 3: Analyzing the Marketing Environment
Analyzing the Marketing Environment
Introduction to the Marketing Environment
The marketing environment encompasses all external actors and forces that are outside of marketing's direct control but significantly influence marketing management's capacity to establish and maintain successful relationships with target customers.
Companies like Microsoft undergo dramatic transformations to align with new digital realities, aiming to empower individuals and organizations globally, irrespective of device or operating system, showcasing adaptability to a fast-changing environment.
Environmental Forces Affecting a Company's Ability to Serve Customers
The Microenvironment
The microenvironment consists of the immediate actors close to the company that directly influence its ability to serve its customers. These include:
The Company:
Marketing management must collaborate with various internal company departments when designing marketing plans.
Key departments include top management, finance, research and development (R&D), information technology, purchasing, operations, human resources, and accounting.
All these departments share responsibility for understanding customer needs and creating customer value.
Suppliers:
These provide the essential resources (inputs) required to produce the company's goods and services.
Effective marketing requires treating suppliers as vital partners in the overall value delivery network to ensure customer value.
Example: IKEA deeply involves its suppliers in the process of delivering affordable home furnishings, fostering a partnership to create a better everyday life for its customers.
Marketing Intermediaries:
These are firms that aid the company in promoting, selling, and distributing its products to final buyers.
They are crucial partners in the value delivery network.
Types of marketing intermediaries include:
Resellers: Wholesalers and retailers that buy and resell merchandise.
Physical distribution firms: Help the company stock and move goods from their points of origin to their destinations.
Marketing services agencies: 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: Banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with buying and selling goods.
Example: Apple supports its retail partners with technical assistance, signifying strong partnerships beyond just product supply.
Competitors:
To succeed, companies must gain a strategic advantage over competitors.
This involves positioning their offerings distinctively and strongly in the minds of target consumers.
Publics:
Any group that possesses an actual or potential interest in or impact on an organization’s ability to achieve its objectives.
Types of publics include:
Financial publics: Influence the company’s ability to obtain funds (e.g., banks, investment analysts, stockholders).
Media publics: Carry news, features, and editorial opinion (e.g., newspapers, magazines, television stations).
Government publics: Management must consider government developments (e.g., product safety, truth in advertising).
Citizen-action publics: Consumer organizations, environmental groups, minority groups, etc.
Local publics: Neighborhood residents and community organizations.
General public: The overall public image of the company affects its buying behavior.
Internal publics: Workers, managers, volunteers, and the board of directors. A positive attitude internally spills over to external publics.
Example: NatWest demonstrates commitment to local communities through generous giving to charities and social enterprises, impacting local publics positively.
Customers:
Customers are the most critical actors in the microenvironment, forming the core of the value delivery system.
The entire aim of the value delivery system is to serve target customers and foster strong relationships.
Types of customer markets:
Consumer markets: Individuals and households buying goods and services for personal consumption.
Business markets: Organizations buying goods and services for further processing or use in their production processes.
Reseller markets: Organizations buying goods and services to resell for a profit.
Government markets: Government agencies buying goods and services to produce public services or transfer them to others who need them.
International markets: Buyers in other countries, including consumers, producers, resellers, and governments.
The Macroenvironment
The macroenvironment comprises the larger societal forces that influence the entire microenvironment.
These forces include demographic, economic, natural, technological, political, and cultural factors.
Demographic and Economic Environment Impact on Marketing Decisions
The Demographic Environment
Demography is the scientific study of human populations concerning size, density, location, age, gender, race, occupation, and other statistical data.
The demographic environment is crucial because people constitute markets.
Key demographic trends affecting marketing decisions include:
Changing Age and Family Structures: The generational shifts are particularly significant.
Baby Boomers: Born between 1946 and 1964.
Generation X: Born between 1965 and 1980.
Millennials (Generation Y): Born between 1981 and 1996.
Generation Z: Born between 1997 and 2012.
Generation Alpha: Born after 2012.
Generational marketing emphasizes segmenting people by their lifestyle or life stage rather than merely their chronological age, recognizing that age often defines a shared set of experiences and values.
Geographic Population Shifts: Changes in where people live and work.
Example: The rise of remote working, facilitated by apps like Slack, allows for collaboration from anywhere, impacting geographic distribution and lifestyle.
A Better-Educated, More White-Collar, More Professional Population: Reflects shifts in educational attainment and professional employment.
Increasing Diversity: Markets are becoming more diverse.
This includes targeting consumers with disabilities.
Example: Toyota's