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Introduction to Marketing

#3 Analyzing the Marketing Environment

2014 Fall

YouTube

1 trillion video views worldwide – that’s 140 views for every man, woman, and child on globe.

More video is uploaded on YouTube in one month than the three major U.S. networks created in 60 years.

Special-interest channels that have no place on network or cable TV.

YouTube + Kraft A message “A Philadelphia Cream Cheese is a versatile cooking

ingredient and not just something you smear on bagels. “Real Women of Philadelphia” Paula Deen How to recipe videos

Marketing Environment

Marketing environment: All the actors and forces influencing the company’s ability to transact business effectively with its target market.

Includes: Microenvironment

forces close to the company that affect its ability to serve its customers.

Macroenvironment larger societal forces that affect the whole microenvironment.

Marketing Environment

company

Company

Customers Intermediaries

Suppliers

Competitors

Publics

Demographic

Economic

Natural

Technological Political

Cultural

Macroenvironment

Microenvironment

Microenvironment

Microenvironment

company

Company

Customers

Intermediaries

Suppliers

Competitors

Publics

Microenvironment

Forces Affecting a Company’s Ability to Serve Customers

Company’s Microenvironment

Company’s Internal Environment- functional areas such as top

management, finance, and manufacturing, etc.

Suppliers - provide the resources needed to produce goods and

services.

Marketing Intermediaries - help the company to promote, sell,

and distribute its goods to final buyers.

Customers - five types of markets that purchase a company’s

goods and services.

Competitors - those who serve a target market with similar

products and services.

Publics - any group that perceives itself having an interest in a

company’s ability to achieve its objectives.

Company’s Microenvironment

Company’s Microenvironment – Company’s Internal Environment

Marketing Department

Other departments • Top management • Finance • Research and

Development • Purchasing • Operations • Accounting

Company’s Microenvironment – Company’s Internal Environment

http://www.youtube.com/watch?v=YR5Cejq2uyc

2009 Honda Civic Musical Road

Company’s Microenvironment – Suppliers

Importance of supplier relationship management (SRM)

What can go wrong?

Supply shortage

Supply delay

Labor strikes

Rising supply costs

What can happen?

Price increase

Lower customer satisfaction

Defective products

Company’s Microenvironment – Suppliers

2009–2011 Toyota vehicle recalls The first recall was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration…

2009–2011 Toyota vehicle recalls Even after the recent massive recall following unanticipated acceleration problems, the company did not point blame at the accelerator part supplier. Instead, Toyota took blame for a faulty part design and even issued a statement supporting the “long-term and valued supplier.” In all, creating satisfied suppliers helps Toyota produce lower-cost, higher-quality cars, which in turn results in more satisfied customers.

Company’s Microenvironment – Suppliers

Company’s Microenvironment – Marketing Intermediaries

Resellers: distribution channel firms that help the company find customers or make sales of them (wholesalers and retailers)

Company’s Microenvironment – Marketing Intermediaries

http://www.youtube.com/watch?v=RbkS8AnqNGU

Company’s Microenvironment – Marketing Intermediaries

Company’s Microenvironment – Marketing Intermediaries

Physical distribution firms: help the company stock and move goods from their points of origin to their destinations

Financial intermediaries: include banks, credit companies, insurance companies, etc.

Company’s Microenvironment – Marketing Intermediaries

Marketing services agencies: Advertising agencies, media firms, marketing consulting firms that help the company target and promote its products to their right markets

List of advertising agencies by revenue

Product Placement

Company’s Microenvironment – Marketing Intermediaries

Any form of audiovisual commercial communication consisting of the inclusion of or

reference to a product, a service or the trade mark thereof so that it is featured within a

program.

Company’s Microenvironment – Marketing Intermediaries

http://www.youtube.com/watch?v=hashPaU7Dpk

ETRADE top 5 baby commercials by Grey Group*

*Grey Global Group: a unit of communications conglomerate WPP Group

http://www.youtube.com/watch?v=2qf8OGLqE1s

Company’s Microenvironment – Marketing Intermediaries

By Minneapolis advertising agency Carmichael Lynch

http://www.youtube.com/watch?v=EuLOCSMS-3k

Company’s Microenvironment – Marketing Intermediaries

Company’s Microenvironment – Marketing Intermediaries

Company’s Microenvironment – Competitors

Trast is a Korean brand for arthritis. Arthritis is inflammation of joints. Targeting men and women over 50, Trast adopted so called “color marketing.” At that time there was another leading brand called Ketotop and Trast entered the market 2 years after Ketotop did. But after they adopted this color marketing, Trast successfully became the leader of the market.

http://www.youtube.com/watch?v=pBtQDXuKVAo

Company’s Microenvironment – Competitors

Kellogg’s cereals were consumed around the globe with around

40% of the US ready-to-eat market. Kellogg’s had over 20 plants in

18 countries worldwide, with yearly sales reaching above US $6

billion. However, Kellogg’s was under pressure with competition

from General Mills and other close rivals. The cereal industry had

been stagnant for over a decade and Kellogg’s looked beyond its

traditional markets in Europe and United States…

Company’s Microenvironment – Competitors

No competitor = Success?

http://brandalyzer.wordpress.com/2010/02/07/kelloggs-in-india/

Company’s Microenvironment – Competitors

Kellogg’s decided that India is a suitable target for its cereal products.

Kellogg’s thought that even if they can manage a two percent market

share in India, they will have 18 million consumers, a market larger

than the US itself. But…

Indians were not too used to this style of breakfast.

So apart from marketing the product, Kellogg’s had

an extra challenge to market this style of breakfast

to Indians.

Company’s Microenvironment – Competitors

Korean Breakfast

American (Western) Breakfast

Company’s Microenvironment – Competitors

Company’s Microenvironment – Competitors

Chinese Breakfast

Company’s Microenvironment – Competitors

Indian Breakfast

Company’s Microenvironment – Publics

A public is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. Financial publics Media publics Government publics Citizen-action publics Local publics General publics Internal publics

Hurricane Sandy, a late-season post-tropical cyclone, swept through the Caribbean and up the East Coast of the United States in late October 2012. The storm left dozens dead, thousands homeless and millions without power. Total damage is expected to be in the billions of dollars.

Company’s Microenvironment – Publics

What do you think P&G’s Tide did?

Company’s Microenvironment – Publics

Company’s Microenvironment – Publics

P&G’s Tide Loads of Hope program recognizes the importance of community publics. It washes, dries, and folds loads of clothes for families struck by local disasters.

http://www.youtube.com/watch?v=XGcBgc4xPTI

Macroenvironment

company

Demographic

Economic

Natural

Technological Political

Cultural

Macroenvironment

Macroenvironment

Forces that Shape Opportunities and Pose Threats to a Company

Company’s Macroenvironment

Demographic - monitors population in terms of age, sex, race,

occupation, location and other statistics.

Economic - factors that affect consumer buying power and patterns.

Natural - natural resources needed as inputs by marketers or that

are affected by marketing activities.

Technological - forces that create new product and market

opportunities.

Political - laws, agencies and groups that influence or limit

marketing actions.

Cultural - forces that affect a society’s basic values, perceptions,

preferences, and behaviors.

Company’s Macroenvironment

Macroenvironment - Key U.S. Demographic Trends

Age Structure Population is getting older

Family Structure Marrying later, fewer children,

working women, and nonfamily households

Geographic Shifts Moving to suburbs

Increased Education Increased college attendance and white-collar workers

Racial Diversity 73% Caucasian, 12% African-American,

10% Hispanic & 3.4% Asian

Macroenvironment - Demographic Factors

In China, Starbucks targets the “Me generation” positioning itself as a new kind of informal but indulgent meeting place.

Macroenvironment - Demographic Factors

Macroenvironment - Demographic Factors

Macroenvironment - Demographic Factors

http://www.youtube.com/watch?v=CchE-MGmPt8

Targeting Gen Xers

* Generation X: The 49 million people born between 1965 and 1976 in the “birth

dearth” following the baby boom.

Macroenvironment - Demographic Factors

* Millennials (or Generation Y) The 83 million children of the baby boomers, born between 1977 and 2000.

Reaching Millennials: The Barack Obama presidential campaign’s master of cutting-edge social media, such as www.my.barackobama.com, was optimized for Millennial appeal. It still is. You can contact with “Obama everywhere.”

Increasing Diversity – Targeting the LGBT

• 6 to 7 percent of U.S. adults

• Buying power of &790 billion

Macroenvironment - Demographic Factors

Macroenvironment - Demographic Factors

Increasing Diversity – Targeting the LGBT

American Airlines has a dedicated LGBT sales team, sponsors gay community

events and offers a special gay-oriented Web site (www.aa.com/rainbow) that

features travel deals.

Macroenvironment - Economic Environment

Key economic concerns

Economic Development

Changes in Consumer Spending Pattern

Changes in Income

Macroenvironment - Economic Environment

Economic environment:

To capture India’s growing middle

class, Tata Motors introduced the

small, affordable Tata Nano. “Can

you imagine a car within the

reach of all?” Asks this

advertisement. “Now you can.”

Macroenvironment – Natural Environment

Factors Affecting

the Natural

Environment

More Government Intervention

Shortages of Raw Materials

Increased Costs of Energy

Increased Pollution

Macroenvironment – Natural Environment

Environmental sustainability

PepsiCo is working to reduce its environmental footprint. For example, solar power now provides three-quarters of the heat used in Frito-Lay’s Modesto, California, Sunchips plant and Sunchips themselves come from the world’s first 100 percent compostable package.

Macroenvironment – Natural Environment

Environmental sustainability

Lush is known for its efforts to campaign on environmental issues with staff and customers and to reduce its environmental impact in product design, manufacturing and selling.

Unilever's sustainability plan aims to slash the carbon, water and waste impact of its products in half over the next 10 years.

Macroenvironment – Natural Environment

Environmental sustainability

Macroenvironment – Technological Environment

Rapid Pace of

Change

High R & D

Budgets

Increased

Regulation

Issues in the Technological Environment

Focus on Minor

Improvements

Macroenvironment – Technological Environment

American Apparel uses RFID to tract and manage inventory in many of its retail stores. RFID tags can store information and can be read from up to a several feet away, without line-of-sight, so they are especially helpful for inventory management and security. Manufacturers who put RFID tags on their products can add information about individual items, such as when it was made, how, and by whom.

Macroenvironment – Technological Environment

3D Printer

Google Glasses

Macroenvironment – Technological Environment

http://www.youtube.com/watch?v=B3lrcOhmp9g QR code

http://www.youtube.com/watch?v=JDyRSYGcFVM Lytro camera

Macroenvironment – Technological Environment

Macroenvironment – Political Environment

Key Trends in the

Political Environment

Increased Legislation

Greater Concern for Ethics

Changing Enforcement

Macroenvironment – Political Environment

Social responsibility

Social responsibility is a form of self-regulation that businesses adopt as a part

of their corporate conscience and citizenship. Often referred to as corporate

social responsibility or CSR, this policy spurs businesses to develop means to

monitor the public’s social perception of them as a responsible business.

Macroenvironment – Political Environment

Cause-related marketing

“Buy a pink mixer from KitchenAid and support breast cancer research.”

“Purchase a special edition of Dawn dish soap and save the wildlife in danger.”

Macroenvironment – Cultural Environment

Of Organizations

Of Nature

Of Oneself

Of Society

Of the Universe

Of Others Views

That Express Values

Macroenvironment – Cultural Environment

Keneeth Cole targets fashion individualists. “25 years of nonuniform thinking”

Looking at the Global Marketing Environment

*Tariffs taxes on certain imported products designed to raise revenue or protect domestic firms.

In retaliation for a European Union ban on U.S. hormone-treated beef, the United States threatened high tariffs on – of all things – Roquefort cheese and other popular European food imports.

Looking at the Global Marketing Environment

*GATT (General Agreement on Tariffs and Trade) 62 year old treaty designed to promote world trade by reducing tariffs and other international trade barriers

*WTO (World Trade Organization) Acts as an umbrella organization, overseeing GATT, mediating global disputes, helping developing countries build trade capacity, and imposing trade sanctions

Looking at the Global Marketing Environment

Burger King cannot be Burger King in Australia?

Looking at the Global Marketing Environment

When Burger King moved to expand its operations into Australia, it found that its business name was already trademarked by a takeaway food shop in Adelaide. As a result, Burger King provided the Australian franchisee, Jack Cowin, with a list of possible alternative names…..Cowin selected the "Hungry Jack" brand name, one of Pillsbury's US pancake mixture products, and slightly changed the name to a possessive form by adding an apostrophe 's' forming the new name Hungry Jack's.