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Principles of Marketing

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Principles of Marketing ­ MGT301
VU
Lesson ­ 10
Lesson overview and learning objectives:
In last Lesson we discussed the marketing microenvironment factors or forces. Today we will
continue the topic of Marketing environment and will discuss the Macro environmental factors in
detail so our today's topic is:
B. MARKETING MACRO ENVIRONMENT
Marketing Environment
The Company's Macro environment
The company and all of the other actors operate in a larger macro environment of forces that
shape opportunities and pose threats to the company. There are six major forces (outlined below)
in the company's macro environment.  There are six major forces (outlined below) in the
company's macro environment.
Demographic
a.
Demographic.
b.
Economic.
Company
c.
Natural.
Cultural
Economic
d.
Technological.
Suppliers
Publics
Company
e.
Political.
f.
Cultural.
Political Competitors
Customers  Natural
a.
Demographic
Environment
Intermediaries
Demography is the study of human populations in
Technological
terms of size, density, location, age, sex, race,
occupation, and other statistics. It is of major
interest to marketers because it involves people and people make up markets. Demographic trends
are constantly changing. Some more interesting ones are.
1). The world's population (though not all countries) rate is growing at an explosive rate
that will soon exceed food supply and ability to adequately service the population. The greatest
danger is in the poorest countries where poverty contributes to the difficulties. Emerging markets
such as China are receiving increased attention from global marketers.
2).  The most important trend is the changing age structure of the population.  The
population is aging because of a slowdown in the birth rate (in this country) and life expectancy is
increasing. The baby boomers following World War II have produced a huge "bulge" in our
population's age distribution. The new prime market is the middle age group (in the future it will
be the senior citizen group). There are many subdivisions of this group.
a). Generation X--this group lies in the shadow of the boomers and lack obvious
distinguishing characteristics. They are a very cynical group because of all the difficulties that have
surrounded and impacted their group.
b). Echo boomers (baby boomlets) are the large growing kid and teen market. This group
is used to affluence on the part of their parents (as different from the Gen Xers).  One
distinguishing characteristic is their utter fluency and comfort with computer, digital, and Internet
technology (sometimes called Net-Gens).
c).  Generational marketing is possible, however, caution must be used to avoid
generational alienation.
Many in the modern family now "telecommute"--work at home or in a remote office and conduct
their business using fax, cell phones, modem, or the Internet In general, the population is
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Principles of Marketing ­ MGT301
VU
becoming better educated. The work force is be-coming more white-collar. Products such as
books and education services appeal to groups following this trend. Technical skills (such as in
computers) will be a must in the future. The final demographic trend is the increasing ethnic and
racial diversity of the population. Diversity is a force that must be recognized in the next decade.
However, companies must recognize that diversity goes beyond ethnic heritage.  One the
important markets of the future are that disabled people (a market larger any of our ethnic
minority groups).
b. Economic Environment
The economic environment includes those factors that affect consumer purchasing power and spending
patterns. Major economic trends in the United States include:
1). Personal consumption (along with personal debt) has gone up (1980s) and the early
1990s brought recession that has caused adjustments both personally and corporately in this
country. Today, consumers are more careful shoppers.
2). Value marketing (trying to offer the consumer greater value for their dollar) is a very
serious strategy in the 1990s. Real income is on the rise again but is being carefully guarded by a
value-conscious consumer.
3). Income distribution is still very skewed in the U. S. and all classes have not shared in
prosperity.  In addition, spending patterns show that food, housing, and transportation still
account for the majority of consumer dollars. It is also of note that distribution of income has
created a "two-tiered market" where there are those that are affluent and less affluent. Marketers
must carefully monitor economic changes so they will be able to prosper with the trend, not suffer
from it.
c.
Natural Environment
The natural environment involves natural resources that are needed as inputs by marketers or that are
affected by marketing activities.  During the past two decades environmental concerns have
steadily grown. Some trend analysts labeled the specific areas of concern were:
1). Shortages of raw materials. Staples such as air, water, and wood products have been
seriously damaged and non-renewable such as oil, coal, and various minerals have been seriously
depleted during industrial expansion.
2). Increased pollution is a worldwide problem. Industrial damage to the environment is
very serious. Far-sighted companies are becoming "environmentally friendly" and are producing
environmentally safe and recyclable or biodegradable goods.  The public response to these
companies is encouraging.  However, lack of adequate funding, especially in third world
countries, is a major barrier.
3). Government intervention in natural resource management has caused environmental
concerns to be more practical and necessary in business and industry.  Leadership, not
punishment, seems to be the best policy for long-term results. Instead of opposing regulation,
marketers should help develop solutions to the material and energy problems facing the world.
4).  Environmentally sustainable strategies.  The so-called green movement has
encouraged or even demanded that firms produce strategies that are not only environmentally
friendly but are also environmentally proactive. Firms are beginning to recognize the link between
a healthy economy and a healthy environment.
d.
Technological Environment
The technological environment includes forces that create new technologies, creating new product and
market opportunities.
1). Technology is perhaps the most dramatic force shaping our destiny.
2). New technologies create new markets and opportunities.
3). The following trends are worth watching:
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Principles of Marketing ­ MGT301
VU
a). Faster pace of technological change. Products are being technologically outdated at
a rapid pace.
b). There seems to be almost unlimited opportunities being developed daily. Consider
the expanding fields of health care, the space shuttle, robotics, and biogenetic industries.
c).  The challenge is not only technical but also commercial--to make practical,
affordable versions of products.
d). Increased regulation. Marketers should be aware of the regulations concerning
product safety, individual privacy, and other areas that affect technological changes. They must
also be alert to any possible negative aspects of an innovation that might harm users or arouse
opposition.
e.
Political Environment
The political environment includes laws, government agencies, and pressure groups that influence and
limit various organizations and individuals in a given society. Various forms of legislation regulate
business.
1). Governments develop public policy to guide commerce--sets of laws and regulations
limiting business for the good of society as a whole.
2). Almost every marketing activity is subject to a wide range of laws and regulations.
Some trends in the political environment include:
1). Increasing legislation to:
a). Protect companies from each other.
b). Protecting consumers from unfair business practices.
c). Protecting interests of society against unrestrained business behavior.
2). Changing government agency enforcement. New laws and their enforcement will
continue or increase. (See Table 3.2 for the various acts used to regulate and protect commerce
and our economy.)
3). Increased emphasis on ethics and socially responsible actions. Socially responsible firms
actively seek out ways to protect the long-run interests of their consumers and the environment.
a). Enlightened companies encourage their managers to look beyond regulation and "do
the right thing."
b). Recent scandals have increased concern about ethics and social responsibility.
c). The boom in e-commerce and Internet marketing has created a new set of social and
ethical issues. Concerns are Privacy, Security, Access by vulnerable or unauthorized groups.
f.
Cultural Environment
The cultural environment is made up of institutions and other forces that affect society's basic values,
perceptions, preferences, and behaviors.  Certain cultural characteristics can affect marketing
decision-making. Among the most dynamic cultural characteristics are:
1). Persistence of cultural values. People's core beliefs and values have a high degree of
persistence. Core beliefs and values are passed on from parents to children and are reinforced by
schools, churches, business, and government.
Secondary beliefs and values are more open to change.
2). Shifts in secondary cultural values. Since secondary cultural values and beliefs are open
to change, marketers want to spot them and be able to capitalize on the change potential. Society's
major cultural views are expressed in:
a).  People's views of themselves.  People vary in their emphasis on serving
themselves versus serving others. In the 1980s, personal ambition and materialism increased
dramatically, with significant implications for marketing.  The leisure industry was a chief
beneficiary.
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Principles of Marketing ­ MGT301
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b). People's views of others. Observers have noted a shift from a "me-society" to a
"we-society." Consumers are spending more on products and services that will improve their lives
rather than their image.
c).  People's views of organizations.  People are willing to work for large
organizations but expect them to become increasingly socially responsible.
Many companies are linking themselves to worthwhile causes. Honesty in appeals is
a must.
d). People's views of society. This orientation influences consumption patterns.
"Buy American" versus buying abroad is an issue that will continue into the next decade.
e). People's view of nature. There is a growing trend toward people's feeling of
mastery over nature through technology and the belief that nature is bountiful. However, nature is
finite. Love of nature and sports associated with nature are expected to be significant trends in the
next several years.
f). People's views of the universe. Studies of the origin of man, religion, and
thought-provoking ad campaigns are on the rise. Currently, Americans are on a spiritual journey.
This will probably take the form of "spiritual individualism."
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Table of Contents:
  1. PRINCIPLES OF MARKETING:Introduction of Marketing, How is Marketing Done?
  2. ROAD MAP:UNDERSTANDING MARKETING AND MARKETING PROCESS
  3. MARKETING FUNCTIONS:CUSTOMER RELATIONSHIP MANAGEMENT
  4. MARKETING IN HISTORICAL PERSPECTIVE AND EVOLUTION OF MARKETING:End of the Mass Market
  5. MARKETING CHALLENGES IN THE 21st CENTURY:Connections with Customers
  6. STRATEGIC PLANNING AND MARKETING PROCESS:Setting Company Objectives and Goals
  7. PORTFOLIO ANALYSIS:MARKETING PROCESS,Marketing Strategy Planning Process
  8. MARKETING PROCESS:Analyzing marketing opportunities, Contents of Marketing Plan
  9. MARKETING ENVIRONMENT:The Companyís Microenvironment, Customers
  10. MARKETING MACRO ENVIRONMENT:Demographic Environment, Cultural Environment
  11. ANALYZING MARKETING OPPORTUNITIES AND DEVELOPING STRATEGIES:MIS, Marketing Research
  12. THE MARKETING RESEARCH PROCESS:Developing the Research Plan, Research Approaches
  13. THE MARKETING RESEARCH PROCESS (Continued):CONSUMER MARKET
  14. CONSUMER BUYING BEHAVIOR:Model of consumer behavior, Cultural Factors
  15. CONSUMER BUYING BEHAVIOR (CONTINUED):Personal Factors, Psychological Factors
  16. BUSINESS MARKETS AND BUYING BEHAVIOR:Market structure and demand
  17. MARKET SEGMENTATION:Steps in Target Marketing, Mass Marketing
  18. MARKET SEGMENTATION (CONTINUED):Market Targeting, How Many Differences to Promote
  19. Product:Marketing Mix, Levels of Product and Services, Consumer Products
  20. PRODUCT:Individual product decisions, Product Attributes, Branding
  21. PRODUCT:NEW PRODUCT DEVELOPMENT PROCESS, Idea generation, Test Marketing
  22. NEW PRODUCT DEVELOPMENT:PRODUCT LIFE- CYCLE STAGES AND STRATEGIES
  23. KEY TERMS:New-product development, Idea generation, Product development
  24. Price the 2nd P of Marketing Mix:Marketing Objectives, Costs, The Market and Demand
  25. PRICE THE 2ND P OF MARKETING MIX:General Pricing Approaches, Fixed Cost
  26. PRICE THE 2ND P OF MARKETING MIX:Discount and Allowance Pricing, Segmented Pricing
  27. PRICE THE 2ND P OF MARKETING MIX:Price Changes, Initiating Price Increases
  28. PLACE- THE 3RD P OF MARKETING MIX:Marketing Channel, Channel Behavior
  29. LOGISTIC MANAGEMENT:Push Versus Pull Strategy, Goals of the Logistics System
  30. RETAILING AND WHOLESALING:Customer Service, Product Line, Discount Stores
  31. KEY TERMS:Distribution channel, Franchise organization, Distribution center
  32. PROMOTION THE 4TH P OF MARKETING MIX:Integrated Marketing Communications
  33. ADVERTISING:The Five Mís of Advertising, Advertising decisions
  34. ADVERTISING:SALES PROMOTION, Evaluating Advertising, Sales Promotion
  35. PERSONAL SELLING:The Role of the Sales Force, Builds Relationships
  36. SALES FORCE MANAGEMENT:Managing the Sales Force, Compensating Salespeople
  37. SALES FORCE MANAGEMENT:DIRECT MARKETING, Forms of Direct Marketing
  38. DIRECT MARKETING:PUBLIC RELATIONS, Major Public Relations Decisions
  39. KEY TERMS:Public relations, Advertising, Catalog Marketing
  40. CREATING COMPETITIVE ADVANTAGE:Competitor Analysis, Competitive Strategies
  41. GLOBAL MARKETING:International Trade System, Economic Environment
  42. E-MARKETING:Internet Marketing, Electronic Commerce, Basic-Forms
  43. MARKETING AND SOCIETY:Social Criticisms of Marketing, Marketing Ethics
  44. MARKETING:BCG MATRIX, CONSUMER BEHAVIOR, PRODUCT AND SERVICES
  45. A NEW PRODUCT DEVELOPMENT:PRICING STRATEGIES, GLOBAL MARKET PLACE