Chapter 3

The Marketing Environment

McDonalds

Background
1955- Ray Kroc, bought a string of seven

restaurants owned by Richard & Maurice McDonald for $2.7 million. More than 31, 800 restaurants worldwide Serve 50 million customers per day Sales of $60 billion annually Brand Symbol- The Golden Arches Nations most visited fast food chain

Problems
1997-2003 :Market share fell by 3%

2002 :Company posted First ever quarterly

loss Consumers were looking for fresher, better tasting food & upscale atmospheres. Americans seeking healthier options Faced litigations & lawsuits for health problems & obesity

Solution
2003- Turn-around plan Plan to Win

Back to Basics: Speedy service, training employees, re-imaging restaurants, forever young brand. If You Cant Lick Em join Em: Experimented new restaurant concepts to expand customer base. Its what I eat and what I do..im lovin it: Launched an education campaign to build awareness to living balanced, active lifestyles.

McDonalds assembled a Global Advisory Council in the areas of nutrition, wellness & activity to provide input on menu choice, variety & promoting physical fitness. Introduced a trimmer Ronald McDonald. Expanded his role as Chief Happiness Officer to be global ambassador of fun & fitness. Refreshed its Goactive.com website, offering tips on leading a balanced active lifestyle. McDonalds Passport to Play in-school program.

 Improving the Fare: McDonalds has worked

to provide more choice & variety on its menu.

Go Active Happy Meal Chicken McNuggets Premium Salads

Current Situation
Sales have increased by 33% & profits have

tripled.

Customers need change & we want to change with them

Marketing Environment
The actors & forces outside marketing that

affect marketing managements ability to build & maintain successful relationships with target consumers
Marketing Environment is made up of : 1. Micro environment 2. Macro environment

Microenvironment
The actors close to the company that affect its ability to serve its customers-- the Company Suppliers Marketing Intermediaries Customer Markets Competitors Publics

The Company

Marketing Management takes company groups into account: Top Management Finance R&D Purchasing Operations Accounting All these groups should think consumer.

Providing superior customer value & satisfaction!

Suppliers
Provide resources needed by the company to

produce its goods & services

Marketing managers must watch supply

availability- supply shortages or delays, labor strikes, monitor price trends

Marketing Intermediaries
Help the company to promote, sell & distribute its products to final buyers. Include:
Resellers Physical distribution firms Marketing service agencies Financial intermediaries

 Resellers: Are distribution channel firms that

help the company find customers or make sale to them. Eg, Walmart, Target, Home Depot
Physical

Distribution firms: Help the company to stock & move goods from their points of origin to their destinations. Services Agencies: Are the marketing research firms, advertising agencies, media firms, & marketing consultant firms.

Marketing

Customers
Company needs to study five types of customer markets:
Consumer markets Business Markets Reseller Markets Government Markets

International markets

 Consumer markets: consist of individuals &

households that buy goods & products for personal consumption. Business Markets: buy goods & services for further processing or for use in production process. Government Markets: Made up of government agencies that buy goods & services to produce public services. International Markets: consist of buyers in other countries, including consumers, producers, resellers & governments.

Competitors
To be successful a company must provide

greater customer value & satisfaction than its competitors. They must also gain strategic advantage by positioning their offerings against competitors offerings in consumers minds.

Publics
Any group that has an actual or potential

interest in or impact on an organizations capability to achieve its objectives.

Macro environment
The larger societal forces that affect the microenvironment:

Demographic Economic Natural Technological Political Cultural

Demographic Environment: The study of human population in terms of: Size Density Location Age Gender Race Occupation

 Changing Age Structure of the Population

Changing American Family

Geographic shifts in Population Better educated more white-collar, more

professional population. Increasing Diversity

Changing Age Structure

2006- US population stood at 300 million.

2030- May reach 364 million.

US population contains several generational

groups:

The Baby Boomers Generation X Generation Y

 The Baby Boomers: The 78 million people

born during the baby boom following World War 11 (1946- 1964).

Form the most affluent American group. Create diverse target segment for business. Age: Early 40s to late 60s Constitute a lucrative market for housing, financial services, travel & entertainment & retirement schemes.

 Generation X: The 45 million people born

between 1965-1976 in the birth dearth following the baby boom.

First generation latchkey kids Grown up during times of recession & corporate downsizing Care about environment, are less materialistic Want better quality of life, more interested in job satisfaction Family first, career second Represent $1.4 trillion in annual purchasing power

 Generation Y: The 72 million children of baby

boomers born between 1977- 1994.

Fluent with the computer, digital & Internet technology. Provided creative marketing opportunities for products like clothes, movies, beverages. Automobile industry aggressively targeting Gen Y.

Changing American Family

23%- Married couples with children

28%- Married couples without children

16%- Single Parents 32%- Non-family households Divorced/ Separated Increase in working women

Geographic Shifts in Population

Migratory movements between & within

countries Buying differs according to different regions Shift from rural to metropolitan areas Micropolitan areas Shift in workplaces telecommute

Better-Educated, More White-Collar, More Professional Population

85% >25 yrs- completed high school
25%- completed college Rising no of educated people increases

demand for quality products, books, magazines, travel & Internet services. High school/ college/ universities More white collar jobs

Increasing Diversity
US home of diversity

67%- White
14.4%- Hispanics 13.4%- African Americans Large companies like P& G, Sears, Levis

Strauss targeting diverse groups. Targeting Disabled people

Economic Environment
Factors that affect consumer buying power &

spending patterns

Changes in Income

Early 2000- Recession Squeezed consumer Value marketing- greater quality at fair price Upper-class consumers Middle-class consumers Working class Underclass

Income Distribution

Natural Environment
Natural resources that are needed as inputs

by marketers or marketing activities

that

are

affected

by

Shortages of raw material (air, water, forests, coal, oil) Increased pollution Increased govt intervention Environmentally sustainable strategies

Technological Environment
Forces that create new technologies, new

product & market opportunities

Antibiotics Robotic Surgery Miniaturized Electronics Laptops Cellphones Internet Nuclear Missiles Chemical Weapons Credit cards

Political Environment
Laws,

government agencies & pressure groups that influence & limit various organizations & individuals in a given society

Increasing legislation

Competition Fair Trade practices Environmental protection Product safety Truth in advertising Consumer Privacy Packaging & labeling

 Cause Related marketing: Exercising social

responsibility & building a positive image, companies are now linking themselves to worthwhile causes. Primary form of corporate giving. Lets companies do well by doing good. Linking purchases of a companys products or services with fund raising activities or charitable organizations. Ariel: gave Rs1 to needy chidren on purchase of detergent pack

Cultural Environment
Institutions & other forces that affect societys

basic values, perceptions, preferences & behaviors

Core beliefs: passed on from parents to children & re-enforced by schools, businesses & governments. Secondary beliefs: are open to change.

Shifts in Secondary Cultural Values

Peoples view of themselves

Peoples view of others

Peoples view of Organizations Peoples view of Society Peoples view of Nature Peoples view of the Universe

 Peoples view of themselves Personal pleasure Fun, change, escape Self-realization through religion, occupation People use products, brands & services as

means of self expression Marketers can target products & services based on self views. MasterCard: There are some things in life that money cant buy. For everything else theres a MasterCard

 Peoples view of others

Cocooning- people are going out less with others & staying home more to enjoy home comforts. Trend of upgrading outdoor living spaces. Adding outdoor barbeques, jacuzzis for family & friends.

 Peoples view of Organizations

Attitude variability towards corporations, govt agencies, trade unions, universities etc. Work seen as required chore to earn moneynot to see work as a satisfaction source.

 Peoples view of Society

Sept 11 Iraq War

Patriotic Products & promotions

 Peoples view of Nature

Rising trend towards natural organic things BodyShop Earthbound Farm- largest producer of organic salads, fruits & vegetables

 Peoples View of the Universe

Spiritualism- finding solace in religionHinduism, Christianity, Islam, & Judism