In the immediate environment, what is the first factor that affects the consumer?

Presentation on theme: "Chapter 5 Analyzing the Marketing Environment"— Presentation transcript:

1 Chapter 5 Analyzing the Marketing Environment

2 Learning Objectives Learning Objective 5.1 Outline how customers, the company, competitors, and corporate partners affect marketing strategy. Learning Objective 5.2 Explain why marketers must consider their macroenvironment when they make decisions. Learning Objective 5.3 Describe the differences among the various generational cohorts. Learning Objective 5.4 Identify various social trends that impact marketing. LO5-1 Outline how customers, the company, competitors, and corporate partners affect marketing strategy. LO5-2 Explain why marketers must consider their macroenvironment when they make decisions. LO5-3 Describe the differences among the various generational cohorts. LO5-4 Identify various social trends that impact marketing. These are the learning objectives guiding the chapter and will be explored in more detail in the following slides.

3 A 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. Jump to Appendix 1 long image description

4 The Immediate Environment
The immediate environment includes the firm and its immediate influences, such as competition and corporate partners.

5 Successfully Leveraging Company Capabilities
Core competency Existing knowledge, facilities, patents, etc. applied to In the immediate environment, the first factor that affects the consumer is the firm itself. Successful marketing firms focus on satisfying customer needs that match their core competencies.  Ask students: What are Pepsi’s core competencies? What do they do well? Answer: They know how to bottle beverages, distribute them to stores, and promote their brand. Ask students: How have they capitalized on their core competencies in the face of changing market trends? Answer: The trend toward more diet-conscious consumers has led to the development of low-calorie alternatives to sodas. Both Coke and Pepsi understood the market had changed and introduced bottled water products with great success. In 2004, Americans consumed 23 gallons of bottled water per person—ten times as much as in 1980. New markets, new products, etc. ©M Hruby

6 Competitors Know strengths and weaknesses Proactive rather than reactive strategy Competition also significantly affects consumers in the immediate environment. It is therefore critical that marketers understand their firm’s competitors, including their strengths, weaknesses, and likely reactions to the marketing activities.

7 From factory to Retailer
Corporate Partners Firms are part of alliances Align with competitors, suppliers, etc. Just in Time Delivery Systems (JIT) From factory to Retailer Firms must work together to create a seamless system that delivers goods and services to customers when and where they want them. Many attribute a key reason for Wal-Mart’s success is their close relationships with their suppliers.

8 PROGRESS CHECK (1 of 2) What are the components of the immediate environment? 1. The company’s capabilities, competitors, and corporate partners.

9 Macroenvironmental Factors
This slide can be used to review this topic instead of the following slides, which provide more in-depth discussions.

10 Culture Country Culture Regional Culture
Subtler aspects can be difficult to navigate Sometimes best answer is to establish universal appeal within specific identities of country culture Regional Culture For national and global chains, particularly important to cater to regional preferences McDonald’s – slightly different variations of staple menu We broadly define culture as the shared meanings, beliefs, morals, values, and customs of a group of people. Transmitted by words, literature, and institutions, culture is passed down from generation to generation and learned over time.  Our various cultures influence what, why, how, where, and when we buy. 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. Firms often remove brands from the market because of their poor overall sales, but this strategy can backfire when those brands have strong regional support. For example, the removal of a chowder cracker caused such upheaval among Northeastern consumers that the firm hired a tall ship to reintroduce the cracker to its New England market, where consumers had threatened to boycott all products from the company if the cracker was not returned.

11 Demographics Provides an easily understood snapshot of the typical consumer in a specific target market Marketers use data about shoppers to target offers. Demographics indicate the characteristics of human populations and segments, especially those used to identify consumer markets. Ask students: What are some typical demographics? Answer: age, gender, income, education. Demographic segmentation is probably the most common form of segmentation because the information is so widely available. Website: U.S. Census Website

12 Jump to Appendix 2 long image description
Generational Cohorts Consumers in a generational cohort—a group of people of the same generation—have similar purchase behaviors because they have shared experiences and are in the same stage of life. Applying age as a basis to identify consumers is quite useful to marketers, as long as it is used in conjunction with other consumer characteristics. Four major groups are described in the text: Gen Z, Gen Y (also called Millenials), Gen X, and Baby Boomers. Group activity: Have students brainstorm a list of the defining characteristics of their generation. Ask students: How does your generation differ from previous generations, such as you parents’? What macroenvironmental forces have had the most impact on your generation? Video Link: Jump to Appendix 2 long image description

13 Income Purchasing power is tied to income. Many middle class families feel the decline in purchasing power in recent years. The “middle-class squeeze” is a very real global phenomenon. Many developing countries face similar income inequities to those found in the United States. Pay gaps also cause problems for many new college graduates who find they cannot afford to live on their own and must move back in with their parents.

14 Education is related to income, which determines spending power
Ask students: Do you plan to continue your education after graduation? Many students believe they will never return to school after they finish their bachelor’s degree, but modern conditions make this choice more and more unlikely. Lifelong learning of new skills and new knowledge has become key to survival in the global economy Photo 1: ©Fancy Photographer/Veer, Photo 2: Brand X Pictures

15 Gender Male/female roles have been shifting.
Marketing has changed to reflect these shifts. Firms are careful about gender neutrality in positioning their products. Women now make up more than 60 percent of the college population. Years ago gender roles appeared clear, but those male and female roles have been blurred. In particular, women today outperform men scholastically, earn higher grades on average, and graduate from both high school and college at greater rates.  Ask students: How do you believe this will affect the workplace in the future? Ask students: Do you believe that there are still significant gender differences? What are they?

16 Ethnicity By 2050, minorities will represent 50% of the population. Nearly 30% will be Hispanic Hispanic buying power was projected to reach $1.3 trillion in 2015, a cumulative increase of around 25 percent compared with The 50 million Hispanic consumers in the United States have increasing influences on mainstream U.S. culture.  Ask students: What steps can and should marketers take to respond to the changing ethnic mix of the United States? Many marketers already have adjusted their marketing mix to meet the needs of ethnically diverse segments better. This YouTube video is for a Carlos Mencia Bud Light superbowl ad about teaching English. YouTube link:

17 Social Trends Health and Wellness Concerns Greener Consumers Privacy Concerns This graphic introduces significant social trends. Video: “What's Hot and Not in Celebrity Magazine Covers” Ask students: Why are traditional celebrities not catching consumers’ attention? Ask students: How are tabloids going to continue to entice readers to buy their content? Celebrity Magazine Covers

18 Technological Advances
Technology has impacted every aspect of marketing New products New forms of communication New retail channels Arguably the single most important change in the way we live is the introduction of new technology. Consumers have constant access to the Internet everywhere through services such as wifi, mobile hotspots, 4G, and LTE. Smartphones using the iOS and Android systems allow for greater computing, data storage, and communication. These examples of advanced technology make consumers increasingly dependent on the help they receive from the providers of the technology. Wireless payments through mobile applications (m-wallets) and the use of radio frequency identification device (RFID) technology are two additional technological developments having an impact on marketing. Ask students: What new technologies have you seen at retailers? AP Photo/Ric Feld

19 Economic Situation Foreign currency fluctuations Combined with inflation and interest rates affect firms’ ability to market goods and services Marketers monitor the general economic situation, both in their home country and abroad, because it affects the way consumers buy merchandise and spend money. Some major factors that influence the state of an economy include the rate of inflation, foreign currency exchange rates, and interest rates. Depending on the time of year, discuss projections about Christmas shopping, vacation planning, or home buying. Various economic factors affect each of these areas. The web link leads to the Consumer Confidence Index which takes into account how consumers feel about how the economy is doing. This economic indicator relates directly to spending. Website: Conference Board Website

20 Political/Regulatory Environment: Competitive Practice and Trade Legislation
1890: Sherman Antitrust Act 1914: Clayton Act 1914: Federal Trade Commission 1936: Robinson-Putman Act This list includes the major legislation designed to ensure a competitive marketplace and clearly demonstrates the U.S. government’s long history of enacting laws that protect fair trade.

21 PROGRESS CHECK (2 of 2) What are the six key macroeconomic factors?
Differentiate between country culture and regional culture. What are some important social trends shaping consumer values and shopping behavior? Culture, demographics, social trends, technological advances, economic situation, and political/regulatory environment. Country culture is the entire country but regional culture is based on the region or area within the country. Health and wellness concerns, green marketing, and privacy concerns.

22 Glossary

23 Glossary-1 Country culture involves visual nuances of a country’s culture such as artifacts, behavior, dress, symbols, physical settings, ceremonies, language differences, colors and tastes, and food preferences, as well as language. Country culture involves visual nuances of a country’s culture such as artifacts, behavior, dress, symbols, physical settings, ceremonies, language differences, colors and tastes, and food preferences, as well as language. Return to slide

24 Glossary-2 Culture is the shared meanings, beliefs, morals, values, and customs of a group of people. Culture is the shared meanings, beliefs, morals, values, and customs of a group of people. Return to slide

25 Glossary-3 Demographics indicate the characteristics of human populations and segments, especially those used to identify consumer markets. Demographics indicate the characteristics of human populations and segments, especially those used to identify consumer markets. Return to slide

26 Glossary-4 A generational cohort is a group of people of the same generation—typically have similar purchase behaviors because they have shared experiences and are in the same stage of life.  A generational cohort is a group of people of the same generation. Return to slide

27 Glossary-5 The political/regulatory environment comprises political parties, government organizations, and legislation and laws. The political/regulatory environment comprises political parties, government organizations, and legislation and laws. Return to slide

28 Glossary-6 Regional culture involves the region in which people live in a particular country. Regional culture involves the region in which people live in a particular country. Return to slide

29 Image Descriptions Appendix

30 Appendix 1 A Marketing Environment Analysis Framework
Consumers are in the center surrounded by the immediate environment, which includes company, competition, and corporate partners. This in turn is surrounded by the macroenvironment, which includes demographics, social, technology, economic, political/legal, and culture. Return to slide

31 Appendix 2 Generational Cohorts
Gen Z was born between 2001 and Age in 2017 was 0 to 15 years old. Gen Y was born between1977 and Age in 2017 was 16 to 39 years old. Gen X was born between1965 and Age in 2017 was 40 to 51 years old. Baby Boomers was born between 1946 and Age in 2017 was 52 to 70 years old. Return to slide

32 Marketing Chapter 5 The End The End

What are the immediate environment factors?

What is consumer's immediate environment?

What are the four components of the immediate environment?

Which of the following is part of the immediate environment to understanding the marketing environment?