Transcript Principles of MKTG - Raymond J. Harbert College of Business

Principles of
Marketing
Chapter 3:
Analyzing the Marketing
Environment
Competition for a
Differential Advantage
• Easiest way to gain a differential advantage is
by, first, understanding and addressing
one’s customers’ wants/needs better than the
competition.
Dr. James Carver – Auburn University
Marketing Environment
• Consists of actors and forces outside
marketing that affect marketing
management’s ability to build and maintain
successful relationships with target
customers.
•
Review: What was the 2nd point in the marketing
concept?
Dr. James Carver – Auburn University
Marketing Environment
Microenvironment
• Actors close to the company
that affect its ability to serve
its customers.






Company itself
Suppliers
Marketing intermediaries
Customer markets
Competitors
Publics
Macroenvironment
• Larger societal forces that
affect the microenvironment
(i.e., shape opportunities &
pose threats to the company)






Dr. James Carver – Auburn University
Demographic
Economic
Natural
Technological
Political
Cultural
Demography
• The study of human populations in terms of:
•
Market (~Physical) Characteristics
Location*,
 Size*, or
 Density*

•
•
All termed, yet not defined in text (Rosenbloom ‘04,’08,’12; Dunne, Lusch, Carver ‘11,’13)
Population (~Personal) Characteristics
Age Distribution,
 Education,
 State of Marriage*,
 Household Structure,
 Ethnic Makeup, etc.

•
All updated per the U.S. Bureau of Census, Statistical Abstract of the United States: 2012 and/or any other cites
included within the following notes.
Dr. James Carver – Auburn University
“Physical” Characteristics
of a Market*
• Common variables include:
 Location
•
Geographical extent of a market, its location, and its
distance from the firm
 Size
•
The number of customers making up a market
Not the dollar volume b/c it can vary significantly and is not
necessarily correlated with number of customers
 Where firms = 1 person or customer (i.e., in b2b markets)

 Density
•
The number of customers per unit of area
Dr. James Carver – Auburn University
“Shifting” in Market Geography*
• American’s mobility is increasing
 Change
•
This is twice that of British & French and 4 times Irish
 12%
•
•
•
residence approx. 12 times on average
of population moved in 2010
75% remained in same county
25% to new county but same state
8% moved to new state
•
Total is more than 100% due to moving more than once in the year
Dr. James Carver – Auburn University
“Shifting” in Market Geography*
• Moving South and West over last 200 years
 Eight
•
fastest growing between 2000 and 2010
Nevada, Arizona, Utah, Idaho, Texas, North Carolina,
Georgia, and Florida respectively
 Projected
•
•
growth between now and 2050
South and West by 44% and 45% respectively
Midwest only 10% and Northeast by only 7%
 Micromarketing
•
Tailoring merchandise and marketing programs to the
specific needs and wants of one’s targeted
neighborhood or community
Dr. James Carver – Auburn University
Age Distribution*
• “Graying of America”
 Overall
•
1980 = 30 yrs.; 2010 ≈ 37 yrs.
 Largely
•
78 million
GenX or “Baby Busters”: 1965 to 1977* (book states till 1976)

•
due to Boomers, but tempered by GenY
Boomers: 1946 to 1964

•
increase in the median age
47 million
GenY, “Millennials” or “Echo Boomers”: 1978 to 1994

80 million
Dr. James Carver – Auburn University
Education*
• Single greatest predictor of income potential
• As of 2010…
 87%
over 25 had a high school degree
 30% had a bachelor’s or advanced degree
 30% of each men & women receiving college
degrees
•
Yet 30% more women enrolled each year since 2000

By 2020, 60% of all degrees will be given to women
 “Average
•
American”
33.6 million over age 25with “some college”
Dr. James Carver – Auburn University
State of Marriage*
• Average age when people marry is increasing
 1970:
•
Less than 10% of males & 6% of females 30-34 not
married
 2010:
•
37% of males & 27% of females 30-34 not married
 Increasingly
•
never marrying too…
15% of males & 11% of females between 45 and 54
never married
Dr. James Carver – Auburn University
Household Structure
• Household are the basic unit for most
consumer products. Thus,
 Markets
are commonly understood and measured
in terms of households.
• But what’s the “typical” household?
Dr. James Carver – Auburn University
Household Structure*
• The “typical” household (as of 2010):
•
No kids in over 55% of all households

•
•
•
Combo of: “empty nesters”, DINKS, “home aloners”, etc.
Over ¼ are “home aloners” (approx. 31.4 million)
Unmarried “Mingles” have grown 383% since 1980 &
represent over 6% of all households
“Boomerang Effect” is increasing

50% of 2008 grads returned home; 4 out of 10 were still there
over a year later
(Monster Survey in “They’re Baaa-aack,” St. Louis Post-Dispatch, May 3, 2008: 23)
•
“Sandwich generational”, or “trigenerational”, families
on the rise (parents, grandparents, and children) live
together in the same house.
Dr. James Carver – Auburn University
Ethnic Makeup*
• Movement towards Emerson’s “Melting Pot”
 Non-Hispanic
•
whites
Today: 68%; Projected 2050: 46%
 Hispanics
•
Today: 15%; Projected 2050: 30%
 African-American
•
Today: 13%; Projected 2050: 15%
 Asian-American
•
Today: 5%; Projected 2050: 10%
Dr. James Carver – Auburn University
Ethnic Makeup*
• Ethnic segments will continue to grow as a
percentage of the U.S. population. Thus,
•
Understand Hispanic shoppers
65% are under 35
 An average of 9 yrs. younger than overall U.S. population
 Teen pop. projected to rise 62% by 2020; 10% for all teens
 Understand that Hispanic shoppers are not homogeneous

•

•
Mexicans, Cubans, Spanish, etc. are all different
2nd generation and beyond are more mainstream
Remember that African-Americans represent a
significant population base, and the Asian-Americans
population is expected to double by 2050.
Dr. James Carver – Auburn University
Economic Environment
• Consists of factors that affect consumer
purchasing power and spending patterns.
• Marketers must monitor such things as:
 Changes
in income
 Consumer savings
 Income distribution
Dr. James Carver – Auburn University
Economic Environment
– Income Distribution*
• The distribution of wealth is non-uniform.
African-American: $38,200
 Hispanic: $40,000
 White: $61,200
 Asian-Pacific Islander: $74,600

 However,
•
•
•
income mobility is quite high in the U.S.
Over 50% of all taxpayers moved up at least one
quintile (1/5 of the population) in 10 years
Over 75% of top-one percent in ‘96 fell at least one
quintile by 2005
Income is stratified, but not constant as often purported
•
U.S. Treasury Department, Income Mobility in the U.S. From 1996 to 2005, November 13, 2007
Dr. James Carver – Auburn University
.
Economic Environment
– Personal Savings*
• Many criticize the U.S. economic system as
not rewarding personal savings.
 1981
high of 8.8% to 6.5% in 1990 to dismal 1.4%
in 2005
•
Trend is reversing due to “Great Recession”

 Yet
•
5.9% and 5.8% in 2009 and 2010 respectively (percent of
disposable)
government reporting neglects to account for:
Investment in the stock market

Overlooks the wealth effect*
•
Can increase overall spending without concurrent rise in disposable
income
Dr. James Carver – Auburn University
Natural Environment
• Involves natural resources that are needed as
inputs by marketers or that are affected by
marketing activities.
 Key
•
•
•
trends include:
Shortage of raw materials.
Increased pollution.
Increased government intervention.
 Many
firms now focus on creating
environmentally-sustainable strategies.
Dr. James Carver – Auburn University
Technological Environment
• Most dramatic force shaping our destiny.
 Changes
rapidly, creating new markets and
opportunities and/or danger of products becoming
obsolete.
 Challenge is to make practical, affordable new
products.
 Government bans unsafe products and sets safety
standards, resulting in higher research costs, and
longer time to market for new products.
Dr. James Carver – Auburn University
Political Environment
• Includes laws, government agencies, and
pressure groups that influence or limit various
organizations and individuals in a given
society.
 Marketing
•
•
•
activities face:
Increasing legislation.
Changing government agency enforcement.
Increased emphasis on ethics and socially responsible
behavior (including cause-related marketing).
Dr. James Carver – Auburn University
Cultural Environment
• The institutions and other forces that affect a
society’s basic values, perceptions,
preferences, and behaviors.
 Core
beliefs and values are passed on from parents
to children and are reinforced by schools,
churches, businesses, and government.
 Secondary beliefs and values are more open to
change.
•
Marketers may be able to change secondary beliefs, but
NOT core beliefs.
Dr. James Carver – Auburn University
Cultural Environment
• Society’s major cultural views are expressed
in people’s views of:
 Themselves
 Others
 Organizations
 Society
 Nature
 The
universe
Dr. James Carver – Auburn University