Scanning The Marketing Environment

“ Someone is sitting in the shade today because someone planted a

tree a long time ago”

- Warren Buffet
 Why Plan??

• Environmental scanning: Process of collecting information about the external marketing environment
to identify and interpret potential trends. .
Example: Consumer reluctance to eat beef after confirmation of
mad cow disease was an opportunity for producers of organic beef.
Planning is deciding now what we are going to

do later, including how and when we are going

to do it.
 Marketing Environment

• “A company’s marketing environment consists of the actors and forces outside marketing that affect
management’s ability to build and maintain successful relationships with target customers.” (Philip
Kotler)

• The microenvironment consists of the following actors close to the company that affect its ability to
serve its customers: (1) The company (2) The suppliers (3) The marketing intermediaries (4) The
customer markets (5) The competitors (6) The public.

• The macro environment consists of the following larger societal forces that affect the
microenvironment: (1) Demographic (2) Economic (3) Natural (4) Technological (5) Political (6)
Legal (7) Cultural.
• The Company’s Microenvironment
• The Company’s Macroenvironemnt
• Responding to the Marketing Environment
Microenvironment Macro environment
 Marketing environment and strategy

• Economic
• Technology
• Political
• Legal
• Competitive
• Demographic
• Social
 DEMOGRAPHIC ENVIRONMENT

• Worldwide population growth

• Population age mix
• Ethinic and other markets
• Educational groups
• Household patterns
1. Demographic environment
• World wide population growth :
 The world population is showing explosive ( totaled 6.1 billion in 2000 and will exceed
7.9 billion by the year 2025)
 It can be source of major concern:
 Certain resources are limited and may run out at some point.
 Explosive population growth does not mean growing market unless have sufficient
purchasing power
• Population age mix
 National populations vary in their age mix. Mexico, has a very young
population and rapid population growth, at the other hand, Japan, a
country with one of the world oldest population.
Milk, diapers, school supplies, and toys would be important product
in Mexico, while adult products would be important in Japan.
A population can be subdivided into six age groups: pre school,
Infants ,school-age children, teens, young adults (age 25 to 40),
middle-aged adults (age 40 to 65), and older adults age ( age 65 and
up).
For marketers, the most populous age groups shape the marketing
environment.
 Ethnic and other markets
 Countries vary in ethnic and racial markets.
 At one extreme is Japan, where almost every one is Japanese; at the other is
USA, which is consists of 72 % white, African American 13 % and Latinos 11 %.
Each group has certain specific wants and buying habits.
 Yet, marketers must be careful not to overgeneralize about ethnic groups.

• Educational levels
The population classified into 5 educational groups: illiterates, high school
dropouts, high school degrees, college degrees, and professional degrees.
Each groups has certain specific wants and individual ability.
• House hold pattern
The traditional household consists of a husband, wife, and
children ( and some times grand parents).
Yet, in USA, one out of eight households is “diverse or non
traditional “ includes: single lives alone, adult live-together.
More people are divorcing or separating, choosing not to
marry, marrying later, or marrying without to have children.
Each groups has a distinctive set of needs and buying habits.
The economic environment
• Consumer psychology
• Income distribution
• Income levels and consumption patterns
Economic environment
 Markets require purchasing power as well as people.
 The purchasing power depends on :
 Current income
 Prices
 savings
 Debt and credit availability.
 Marketers must pay close attention to major trends in income and
consumer-spending behavior.
 Marketers often distinguish countries with five different income
distribution patterns : very low incomes, mostly low incomes, very
low-very high incomes, low, medium, high incomes, and mostly
medium incomes.
• Savings, debt, and credit availability.
Consumers expenditures are affected by savings, debt, and credit
availability.
The Japanese save about 13.1 % of their income, other wise, US
consumers about 4.7%.
The result has been that Japanese banks were able to loan money
to Japanese companies at a much lower interest rate than US
bank, so Japanese companies expand faster.
The bottom line is that marketers must pay careful attention to
major changes in incomes, cost of living, interest rates, savings,
and borrowing patterns because they can have a strong impact on
business.
 The Socio-cultural environment

• View of ourselves
• Views of others
• Views of organization
• View of society
• View of nature
• View of the universe
- High persistence of core cultural values
- Existence of subcultures
Socio-cultural environment

• High persistence of core cultural values.

 The people living in a particular society hold many core beliefs and values that tend to
persist. Most American still believe in work, in getting married and in being honest.
 Core beliefs and values are passed on from parents to children and are reinforced by major
institutions: schools, churches, mosque, business, and governments.
 Secondary beliefs and values are more open to change. Believing in the institution of
marriage is a core belief, believing that people ought to get married early is a secondary
beliefs.
 Marketers have some chance of changing secondary values but little chance of changing
core values.
More people are:

Divorcing or separating

Choosing not to marry

Choosing to marrying later

Marrying without intending to have children

Increased number of working women

Stay-at-home dads
• Western culture
• Moving from rural to metropolitan areas
• Changes in where people work
• Telecommuting
• Home office
• Changes in the workforce
• More educated
• More white collar
Natural environment involves the natural resources that are needed as inputs by
marketers or that are affected by marketing activities

Trends
• Shortages of raw material
• Increased pollution (Anti-pollution pressure)
• Increased government intervention
• Environmentally sustainable strategies
• Increased energy cost
 The natural environment

• Corporate environmentalism
• Environmental regulations
 THE TECHNOLOGICAL ENVIRONMENT

• Technological environment Application to marketing of knowledge based on discoveries in science,

inventions, and innovations.

• Technology leads to new products and improved existing products.

• Example: More fuel-efficient vehicle and hybrid Honda Civic.

• Government and not-for-profits often contribute to research and development, which can be very costly.
 The technological environment
• Accelerating pace of change
• Unlimited opportunities for innovations
• Varying R&D budgets
• Increased regulation of technological change
Technological environment
• One of the most dramatic forces shaping people’ lives is
technology
• Technology has released such wonders as penicillin, open heart
surgery, the birth control pill.
• It has released such horrors as hydrogen bomb, nerve gas,
submachine gun.
• Every technology is a force for “creative destruction” such as
autos hurt the rail roads, and television hurt the newspaper.
 The political-legal environment
• Incease in business legislation
• Growth of special interest groups
Political legal environment
• This environment is composed of laws, government agencies, and pressure
groups that influence and limit various organization and individuals.
• Business regulation
 Business regulation has three main purposes: to protect business from :
1)unfair competition, 2) unfair business practices and 3) to protect the
interests of society from unbridled business behavior.
 Marketers must have a good working knowledge of the major laws
protecting competition, consumers, and society.
• Growth of special interest groups.
 An important force affecting business is the consumerist movement, an
organized movements of citizens and government to strengthen the rights
and power of buyers in relation to sellers.
 The consumerists has advocated the true interests cost of loan, unit pricing,
the basic ingredients in a product, the nutritional quality of foods, the
freshness of product, and the true benefits of a product.
Competitive Factors
• Competitors
• Fight for market share or profits
• Tend to become similar (sodas, beer, any others?)
• Competitive barriers
• Position difficult to copy (any area of firm)
• Marketing helps maintain distinction (image, etc)
• Can usually avoid “head on” competition

• We love competition, why?

 Market Opportunity Analysis (MOA)

• Can the benefits involved in the opportunity be articulated convincingly to a defined target
market?

• Can the target market be located and reached with cost-effective media and trade channels?

• Does the company possess or have access to the critical capabilities and resources needed
to deliver the customer benefits?

• Can the company deliver the benefits better than any actual or potential competitors?

• Will the financial rate of return meet or exceed the company’s required threshold for
investment?
To achieve success, follow this…
• Build on strengths
• Resolve weaknesses
• Exploit opportunities
• Avoid threats
 Analyzing needs and trends in the macro environment

• Successful companies recognize and respond profitably to unmet needs

and trends.
• Companies could make a fortune if they could solve any of this problem:
a cure for cancer, chemical cures for mental diseases, desalinization of
seawater, etc.
• Many opportunities are found by identifying trends.