Chapter 3

Question 1

What does a company’s marketing environment consist of?

Answer 1

The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers

Question 2

Define microenvironment

Answer 2

The actors close to the company that affect its ability to serve its customers

Question 3

Define macroenvironment

Answer 3

Larger societal forces that affect the microenvironment

Question 4

What are the 6 elements of the microenvironment?

Answer 4

The company itself, suppliers, marketing intermediaries, competitors, publics, customers

Question 5

What do suppliers do?

Answer 5

Provide the resources needed by the company to produce goods/services

Question 6

What must marketing managers do in terms of suppliers?

Answer 6

Watch supply availability (shortages, delays, labor strikes) and monitor the price trends of their key inputs

Question 7

What do marketing intermediaries do?

Answer 7

Help the company promote, sell and distribute its products to final buyers (business between the company and customer)

Question 8

Give 4 types of intermediaries & define

Answer 8

• Resellers - Distribution channel firms that help the company find customers or make sales to them (e.g. wholesalers, retailers)
• Physical Distribution Firms - Help the company stock and move goods from point of origin to destinations (e.g. UPS)
• Marketing Services Agencies - Marketing research firms, advertising agencies, media firms & consulting firms that help the company target & promote products to right markets
• Financial Intermediaries - Banks, credit companies, insurance companies that help finance transactions or insure against risks associated with buying/selling goods

Question 9

What must marketers do in relation to competitors?

Answer 9

Gain strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of consumers

Question 10

Define ‘public’

Answer 10

Any group that has an actual or potential interest in or impact an org’s ability to achieve its objectives

Question 11

Name & define the 7 publics

Answer 11

• Financial - Influence the company’s ability to obtain funds
• Media - Carry news, features and editorial opinions
• Government - Management must take government developments into account
• Citizen-Action - Marketing decisions may be questioned by consumer orgs, environmental groups etc
• Local - Neighbourhood residents/community orgs
• General - The general public’s image of the company affects its buying
• Internal - Workers, managers, volunteers and the board of directors

Question 12

Give the 5 types of customer markets

Answer 12

• Consumer - Individuals and households that buy goods/services for personal consumption
• Business - Buy goods/services for use in their production process
• Reseller - Buy goods/services to resell at a profit
• Government - Gov agencies that buy goods/services to produce public services
• International - Buyers in other countries inc. consumers, producers, resellers, governments

Question 13

Give the 6 elements of the macroenvironment

Answer 13

Demographic, economic, natural, technological, political, cultural

Question 14

What is the term used to describe how companies analyse the macroenvironment?

Answer 14

Environment Scanning - Shows a business how they can take advantages of opportunities & avoid threats in the environment

Question 15

What is demography?

Answer 15

The study of the human population (people) in terms of size, density, location, age, gender, race, occupation etc

Question 16

What are the 6 major demographic trends affecting businesses?

What is the current US population & how is it rising?

Answer 16

• An ageing US population - The population is getting older as baby boomers retire
• Generational marketing
• Changing family structure
• Geographic shifts In population
• Better-educated, more white-collar, more professional population
• Increasing diversity
• Nearly 321 million
• 364 million by 2030

Question 17

What is generational marketing?

Give the 4 generations

Answer 17

Adapting products/services/marketing actions for a given generation

• Baby Boomers
• Generation X
• Millennials
• Generation Z

Question 18

5 characteristics of baby boomers

Two companies targeting

Answer 18

• Born between 1946 and 1964
• 78 million of them
• 35% of the population
• 50% of total consumer spending
• 70% of nation’s disposable income

L’Oréal
Jitterbug - great call

Question 19

5 characteristics of Gen X

Two companies targeting

Answer 19

• Born between 1965 and 1976
• 49 million of them
• Increasing parental divorce rates & high employment for their mothers made them first gen of ‘latchkey kids’
• Cautious economic outlook & health conscious
• Skeptical of marketing

Henry’s Hard Soda
Lowe’s - home improvements

Question 20

6 characteristics of millennials

4 brands targeting

Answer 20

• Born between 1977 and 2000
• Children of baby boomers
• 83 million of them
• Technology - a way of life
• Engage with brands in new ways - mobile/social media
• Consumer-gen marketing - shape own brand experiences

Disney, Amazon, Netflix, Apple

Question 21

7 characteristics of Gen Z

One company targeting

Answer 21

• Born after the year 2000
• Future consumers - brands want to target
• 72 million girls & boys
• Spend $344 billion annually and influence another $200 billion of their parents money
• Utter fluency with digital technologies
• Research before buying or have parents buy things for them
• Children of Gen X

Art Class

Question 22

Which is the top consumer group and which is second?

Which gen is largely ignored by marketers?

Answer 22

Millennials
Baby Boomers

Generation X

Question 23

A sentence about effectiveness of generational marketing

Answer 23

Less effective than segmenting by lifestyle, life stage or common values but still useful & easier to implement - might be better to combine both

Question 24

5 points about changing structure of American fam

Answer 24

• Married coupled with children under 18 - 19% of households
• Married couples w/out Children - 23%
• Single parents - 14%
• Nonfamily households - 34%
• Both husband & wife work in 60% of all married-couple families

Question 25

2 points about geographic shifts in population

Answer 25

* 12% of all US residents move each year * US population shifted to Sunbelt states * Americans move from rural to metropolitan areas

Question 26

5 points about being more educated, white collar, professional

Answer 26

* In 2012, 88% of pop over aged 25 have completed high school * 32% completed college * Between 2010-2020, 30 detailed occupations projected to have highest growth rate * 17 require some type of postgrad ed * People becoming more affluent

Question 27

6 points about increasing diversity

Answer 27

* US become a ‘salad bowl’ - various groups mixed together but retained cultural differences * US pop - 62% white, 17% Hispanic, 13% Africans American * Asian-American pop now 5% of pop * By 2060, Hispanics 28% of pop * Many companies now target gay/lesbian * An attractive segment is disabled - 57 million adults

Question 28

# Define economic environment 3 main trends

Answer 28

Factors that affect consumer purchasing power and spending patterns * Less middle-class * More affluent consumers * More poverty

Question 29

2 major trends in economics

Answer 29

* Changes In consumer spending | * Income distribution

Question 30

3 points about consumer spending

Answer 30

* Recently Americans have spent freely, fuelled by income growth, stock market boom & housing value increases * But global economic crisis changed this free-spending attitude - back to basics * Value Marketing - Just the right combo of product quality and fair price

Question 31

3 points about income distribution

Answer 31

* ID in US very skewed * top 5% of Americans earn 22% of country’s adjusted gross income and top 20% earn 50% of all income * Bottom 40% get 11.5% Of total income

Question 32

# Define natural environment 2 points about it 3 trends in NE

Answer 32

Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities * Hard to predict, can have massive impact * Companies are developing environmentally sustainable strategies * Shortages of raw materials * Increased pollution * Increased Government intervention

Question 33

E.g of natural environment

Answer 33

Sony - March 2011 tsunami in Japan damaged 9 Sony plants and caused a $3.2 billion loss

Question 34

One point about technological environment One advan, one disadvan 5 e.gs

Answer 34

Most dramatic force - changes markets most rapidly Create new markets and opps, but every new tech replaces an old one (Paper map - GPS -google maps) 3D printing, virtual reality, internet, laptops, robotic surgery

Question 35

# Define political environment 2 trends

Answer 35

Laws, gov agencies & pressure groups that influence/limit orgs and individuals in society Legislation regulating business Increased CSR/ethics

Question 36

What does government develop to guide commerce? 3 reasons more Business legislation has been enacted

Answer 36

Public policy * Protect companies from each other * Protect consumers from unfair practices * Protect societal interests against unrestrained business behaviour

Question 37

What have more businesses began to adopt? What has created a new set of social/ethical issues?

Answer 37

Socially responsible behaviour Boom in online, mobile & social media marketing

Question 38

# Define cause-related marketing Two points about it

Answer 38

Where companies link themselves to worthwhile causes to exercise their social responsibility and build more positive images/brand rep * Some companies are founded on CR missions and use Business to make the world a better place - ‘values-led business’ ‘caring capitalism’ * CRM has become primary form of corporate giving - links purchases with benefitting worthwhile causes

Question 39

Why has CRM caused some controversy?

Answer 39

Some worry that CRM is more a strategy for selling than giving - that ‘cause-related marketing’ is really ‘cause-exploitative marketing’

Question 40

Give 2 examples of CRM

Answer 40

* AT&T ‘It can wait’ - AT&T joined with companies such as Verizon & T-Mobile to urge people never to text and drive - powerful campaign video. ‘No text is worth the risk. It can wait’ * Pink Lid Campaign - Yoplait was no 1 yog In America, started ‘Save Lids to Save Lives’ campaign - every Oct company sells yogs with pink lids. Consumers send lids to Center or enter code, so Yoplait donates $0.10 per lid to breast cancer charity - minimum donation of $500,000 and cap of $1.5 million

Question 41

# Define cultural environment Two points about it

Answer 41

Institutions and other forces that affect a society’s basic values, perceptions, preferences and behaviours - how values change in society * Core beliefs and values are stable, passed on through gens and reinforced in school, but secondary beliefs and values are more open to change * Marketers want to predict cultural shifts to spot new opps/threats

Question 42

6 major cultural trends

Answer 42

* People’s views of themselves - people use products/brands to express themselves * People’s views of others - ‘mass mingling’ - people using social media to connect more * People’s views of orgs - people expect orgs to carry out society’s work and many people view work as a chore * People’s views of society - attitudes change * People’s views of nature - recently people have realised that it can be destroyed - US organic food market generated $53.5 bill in sales last year, doubling over 5 years * People’s views of universe - religious conviction dropping off, 33% of Americans say they don’t have a faith

Question 43

What two ways do companies respond to the marketing environment?

Answer 43

* Proactive - companies develop strategies to change the environment, create/shape new industries and structures. Instead of watching & reacting to environment events, they take action to affect forces in their microenvironment (e.g post on social media to change public opinion) - can overcome seemingly uncontrollable events * Reactive - marketing management can’t always control environmental forces so have to watch and react. E.g hard to control geographic, cultural, economic environments