Many companies view the marketing environment as an uncontrollable element to which they must react and adapt. They passively accept the marketing environment and do not try to change it. They analyse the environmental forces and design strategies that will help the company avoid the threats and take advantage of the opportunities the environ- ment provides.
Other companies take a proactive stance towards the marketing environment. Rather than simply watching and reacting, these firms take aggressive actions to affect the publics and forces in their marketing environment. Such companies hire lobbyists – people whose profession is to persuade politicians of a point of view – to influence legislation affecting their industries and stage media events to gain favourable press coverage. They run adver- torials (advertisements expressing editorial points of view) to shape public opinion. They pursue legal actions and make complaints to regulators to keep competitors in line, and they form contractual agreements to control their distribution channels better.
Often, companies can find positive ways to overcome seemingly uncontrollable environ- mental constraint. However, marketing management cannot always control environmental forces. In many cases, it must settle for simply watching and reacting to the environment.
For example, a company would have little success trying to influence geographic population shifts, the economic environment or major cultural values. But whenever possible, smart marketing managers will take a proactive rather than reactive approach to the marketing environment.
In this chapter and the next two chapters, you’ll examine the environments of marketing and how companies analyse these environments to understand the marketplace and consumers better. Companies must constantly watch and manage the marketing environment in order to seek oppor- tunities and ward off threats. The marketing environment comprises all the actors and forces influencing the com- pany’s ability to transact business effectively with its target market.
1 Describe the environmental forces that affect the com- pany’s ability to serve its customers
The company’s microenvironment consists of other actors close to the company that combine to form the company’s value-delivery network or that affect its abil- ity to serve its customers. It includes the company’s internal environment – its several departments and management levels – as it influences marketing decision making. Marketing-channel firms – suppliers and mar- keting intermediaries, including resellers, physical distri- bution firms, marketing services agencies and financial intermediaries – cooperate to create customer value.
Five types of customer markets include consumer, busi- ness, reseller, government and international markets.
Competitors vie with the company in an effort to serve customers better. Finally, various publics have an actual or potential interest in or impact on the company’s abil- ity to meet its objectives.
The macroenvironment consists of larger societal forces that affect the entire microenvironment. The six forces making up the company’s macroenvironment include demographic, economic, natural, technological, political and cultural forces. These forces shape opportu- nities and pose threats to the company.
2 Explain how changes in the demographic and eco- nomic environments affect marketing decisions Demography is the study of the characteristics of human populations. Today’s demographic environment shows a changing age structure, shifting family profiles, geo- graphic population shifts, a better-educated and more white-collar population, and increasing diversity. The economic environment consists of factors that affect buy- ing power and patterns. The economic environment is characterised by more consumer concern for value and shifting consumer spending patterns. Today’s squeezed
consumers are seeking greater value – just the right combination of good quality and service at a fair price.
The distribution of income also is shifting. The rich have grown richer, the middle class has shrunk and the poor have remained poor, leading to a two-tiered market.
Many companies now tailor their marketing offers to two different markets – the affluent and the less affluent.
3 Identify the major trends in the firm’s natural and tech- nological environments
The natural environment shows three major trends: short- ages of certain raw materials, higher pollution levels and more government intervention in natural resource management. Environmental concerns create marketing opportunities for alert companies. The marketer should watch for four major trends in the technological environ- ment: the rapid pace of technological change, high R&D budgets, the concentration by companies on minor prod- uct improvements, and increased government regulation.
Companies that fail to keep up with technological change will miss out on new product and marketing opportunities.
4 Explain the key changes in the political and cultural environments
The political environment consists of laws, agencies and groups that influence or limit marketing actions. The political environment has undergone three changes that affect marketing worldwide: increasing legislation regu- lating business, strong government agency enforcement, and greater emphasis on ethics and socially responsible actions. The cultural environment is made up of institu- tions and forces that affect a society’s values, perceptions, preferences and behaviours. The environment shows long-term trends towards a ‘we society’, a lessening trust of institutions, greater appreciation for nature, and the search for more meaningful and enduring values.
5 Discuss how companies can react to the marketing environment
Companies can passively accept the marketing environ- ment as an uncontrollable element to which they must adapt, avoiding threats and taking advantage of oppor- tunities as they arise. Or they can take a proactive stance, working to change the environment rather than simply reacting to it. Whenever possible, companies should try to be proactive rather than reactive.
THE JOURNEY YOU’VE TAKEN Reviewing the concepts
NAVIGATING THE KEY TERMS
Baby boomers 83 Cultural environment 101 Demography 81
Economic environment 89 Engel’s laws 92
Generation X 83
Generation Y 84 Macroenvironment 78 Marketing environment 77 Marketing intermediaries 79 Microenvironment 78 Millennials 84
Natural environment 92 Political environment 97 Public 80
Technological environment 93
NOTES AND REFERENCES
1 Information from Robert J. Benes, Abbie Jarman and Ashley Williams, ‘2007 NRA Sets Records’, accessed at www.chefmagazine.com/nra.htm, September 2007; also www.
thecoca-colacompany.com/presscenter/presskit_fs.html and www.cokesolutions.com, accessed November 2009.
2 World POPClock, US Census Bureau, accessed online at www.census.gov, August 2014.
This website provides continuously updated projections of the US and world populations.
3 Adapted from information in Janet Adamy, ‘Different Brew: Eyeing a Billion Tea Drink- ers, Starbucks Pours It On in China’, Wall Street Journal, 29 November 2006, p. A1.
Also see ‘Where the Money Is’, Financial Times, 12 May 2007, p. 8; and Melissa Allison,
‘Starbucks Thrives in China’, McClatchy-Tribune Business News, 14 January 2009.
4 See ‘China’s Dependency-Ratio Turning Point’ at the Huffington Post, 12 September 2014, and ‘Asian Demography: The Flight from Marriage’, The Economist, 20 August 2011, p. 19.
5 See europa.eu/about-eu/facts-figures/living/index_en.htm, accessed 15 August 2014.
6 Anushka Asthana and Vanessa Thorpe, ‘Whatever happened to the original Generation X?’, Observer, 23 January 2005, available from http://www.guardian.co.uk/uk/2005/jan/23/
britishidentity.anushkaasthana
7 ‘Mixed Success: One Who Targeted Gen X and Succeeded – Sort Of’, Journal of Finan- cial Planning, February 2004, p. 15. Also see Neil Leslie, ‘Farther Along on the X Axis’, American Demographics, May 2004, pp. 21–4.
8 See ‘Overlooked and Under X-Ploited’, American Demographics, May 2004, p. 48; and Howard Schneider, ‘Grunge Marketing’, Mortgage Banking, November 2004, p. 106.
9 Jessica Tsai, ‘Who, What, Where, When, Y’, Customer Relationship Management, November 2008, pp. 24–8; and John Austin, ‘Automakers Try to Reach Gen Y: Carmakers Look for New Marketing Approaches, Technological Advances to Attract Millennials’, McClatchy-Tribune Business News, 1 February 2009.
10 See for example the Telegraph article ‘Charting the rise of Generation Yawn: 20 is the new 40’ at www.telegraph.co.uk/women/womens-life/11061434/Charting-the-rise-of-Gen- eration-Yawn-20-is-the-new-40.html, accessed September 2014.
11 Statistics from the EU report ‘European Social Statistics – 2013’, available from epp.
eurostat.ec.europa.eu
12 Statistics from the EU report ‘Key Figures on Europe – 2013’, available from epp.eurostat .ec.europa.eu
13 World Health Organization information obtained from http://www.who.int/tobacco/
global_data/country_profiles/euro/en/, accessed 17 May 2008.
14 Information obtained from UNESCO at stats.uis.unesco.org and ‘European Social Statistics – 2013’, available from epp.eurostat.ec.europa.eu
15 ‘The Ethnic Population of England and Wales Broken Down by Local Authority’, Guardian, http://www.guardian.co.uk/news/datablog/2011/may/18/ethnic-population- england-wales#data, accessed 29 August 2011.
16 Ellen Florian, ‘Queer Eye Makes Over the Economy’, Fortune, 9 February 2004, p. 38.
See also Gillian K. Oakenfull and Timothy B. Greenlee, ‘Queer Eye for a Gay Guy: Using Market-Specific Symbols in Advertising to Attract Gay Consumers Without Alienating the Mainstream’, Psychology and Marketing, May 2005, pp. 421ff.
17 Howard L. Hughes, Pink Tourism: Holidays of Gay Men and Lesbians (Wallingford:
CABI Publishing, 2006).
18 http://www.youtube.com/manchestergayvillage, accessed 29 August 2011.
19 http://www.melbourne.com.au/gay.htm, accessed 29 August 2011.
20 Information accessed at http://www.germany-tourism.co.uk/EGB/attractions_events/
gaygermany.htm, 29 August 2011.
21 Information from ‘Stagecoach Group Case Studies: Carbon Neutral Travel’, accessed at http://www.stagecoachgroup.com/scg/csr/casestudies/cntravel, 29 August 2011; ‘Pollu- tion Prevention Pays’, accessed at http://solutions.3m.com/wps/portal/_l/en_US/_s.155/11 3842/_s.155/115848, June 2005; ‘Sustainability Key to UPS’s Environmental Initiatives’, accessed at www.pressroom.ups.com/mediakits/factsheet/0,2305,1140,00.html, June 2005.
22 See ‘Wal-Mart Expands RFID Requirements’, McClatchy-Tribune Business News, 30 January 2008; David Blanchard, ‘Wal-Mart Lays Down the Law on RFID’, Industry Week, May 2008, p. 72; David Blanchard, ‘The Five Stages of RFID’, Industry Week, January 2009, p. 50; and information accessed online at www.autoidlabs.org, April 2009.
23 R&D figures from ‘R&D Expenditure’, accessed at http://epp.eurostat.ec.europa.eu/
statistics_explained/index.php/R_%26_D_expenditure
24 ‘Consolidated Versions of the Treaty on European Union and of the Treaty Establishing the European Community’, Official Journal of the European Communities, 2002.
25 See Jack Neff, ‘Unilever, P&G War Over Which Is Most Ethical’, Advertising Age, 3 March 2008, p. 1; and information from www.beautifullengths.com, accessed August 2009.
26 Read the whole story at http://www.telegraph.co.uk/men/fashion-and-style/10797932/Is- this-Britains-most-influential-haircut.html, accessed October 2014.
27 www.thefuturescompany.com, accessed 1 September 2011.
28 Karen Von Hahn, ‘Plus ỗa Change: Get Set for Cocooning 2.0’, Globe and Mail (Toronto), 3 January 2008, p. L1; and Liza N. Burby, ‘Tips for Making Your Home a Cozy Nest, or
“Hive”’, Newsday, 23 January 2009, accessed at www.newsday.com/services/newspaper/
printedition/exploreli/ny-hocov6007466jan23,0,2603167.story.
29 Information accessed at http://www.independent.ie/national-news, June 2008.
CHAPTER 4