Principles Of Marketing Dersi 3. Ünite Özet

The Marketing Environment

Marketing environment is composed of actors and forces that affect the company’s ability to serve its customers successfully and create superior value for them. While evaluating environmental forces, we may consider the SWOT analysis. SWOT analysis is a technique that takes the findings of marketing audit and categorizes key points as strengths, weaknesses, opportunities or threats. marketing environment includes both microenvironment and macroenvironment. The microenvironment consists of actors close to the company that affect its ability to create superior customer value. These actors are the company, suppliers, marketing intermediaries, customers, competitors and publics. Therefore, these close actors to the company represent weaknesses and strengths of the company. For marketers, examining the microenvironment is very important because its factors identify the strengths and weaknesses of the organization. The macroenvironment consists of the larger societal forces that influence the microenvironment. They are categorized as demographic, economic, natural, technological, legal, political, and cultural forces.

The Microenvironment

The microenvironment is made up of factors that influence the organization, and generally consists of the elements such as the company, suppliers, marketing intermediaries, competitors, publics, and customers.

The Company

In a company, top management sets the company’s mission, and all the objectives and strategies are set based on this mission. Therefore, in designing marketing plans, marketing management should consider top management. in a company, all departments like finance, research & development and production should work together in order to create superior customer value.

Suppliers

Suppliers are the providers of the resources needed by the company to produce its goods and services. They affect companies considerably and have a vital role in the company’s overall customer value delivery system. A supplier could easily cause a negative effect on a company by supplying defective materials or parts. Moreover, if a supplier fails to meet delivery on time, this will inevitably affect the company’s delivery of products to customers timely. Therefore, most organizations need to monitor their suppliers and ensure that they are providing suitable products. Importance of being on time, regular and sustainable supply directs today’s marketers to treat their suppliers as their partners in creating and delivering customer value.12 This means that companies should develop and maintain good relations with their suppliers.

Marketing Intermediaries

Marketing intermediaries are firms that help companies to promote, sell and distribute their products to final customers. Without marketing intermediaries, many companies cannot satisfy customers’ needs and wants properly. Creating long-term, successful relations with marketing intermediaries is crucial. Marketing intermediaries are resellers, physical distribution firms, marketing services agencies and financial intermediaries.

• Resellers are distribution channel companies that help the company to find and/or sell customers. Wholesalers and retailers that buy and resell merchandise to their own customers are examples of resellers. There are big resellers like WalMart, Metro and Migros. These resellers have usually more power than many small producers. They can dictate business terms or even shut manufacturers out of a market
• Physical distribution firms help companies to stock and move goods from their points of origin to their final destinations. By balancing cost, delivery, speed and safety factors, a company must determine the best ways to store and ship goods.
• Marketing services agencies are made up of marketing research companies, advertising agencies, media firms, public relations companies, and marketing consultancy companies that help the company to reach its target and promote its products in suitable markets its target and promote its products in suitable markets.
• Financial intermediaries include banks, credit companies, insurance companies and other finance companies.

Competitors

Any company that offers same or similar products is generally identified as a competitor of another company operating in the same sector. Companies are competing with their competitors on price, product quality, variety, availability, features and after-sales services. Marketing managers need to know the closest suitable substitutes that are offered by competitors to satisfy consumers’ needs and wants. In a broad perspective, all companies in market strive against all others for consumers’ budget, which is generally a limited amount.

Competitors can be defined as companies supplying similar products or companies competing for the consumer’s financial resources while the ultimate goal of marketers is to serve a product that meets consumers’ needs and wants better than competitors. Companies should monitor their competitors and the relevant sectors.

Publics

Publics are the groups of people who have an interest in the marketer’s ability to achieve their objectives. Publics can be categorized into seven types:

1. Financial publics influence company’s ability to get financial funds. Banks, investors, and stockholders are the main financial publics.
2. Media publics: Press, television, radio and social media are the main media publics. Today, columnists, bloggers, and YouTubers are the powerful actors in the communication process because they have a considerable effect on consumers. So companies send them sample products or invite them to new restaurants and hotels for their evaluation and comments.
3. Government publics: Establishing a favorable relationship with the government and taking governments’ actions into account is vital for companies. Product safety, truth in advertising and consumer rights can be complicated for companies. So, they need to consult with their lawyers. Companies try to influence government decisions by lobbying, trade associations and defending their interests.
4. Citizen action publics: Today, consumers are becoming more powerful against companies and for conscious consumers just good products and services are not enough to give a purchase decision. Consumer organizations, environmental groups, minority groups and other pressure groups generally question the marketing activities of companies in terms of the impact on the society’s welfare. Public relation departments can help companies stay in touch with consumer and citizen action groups.
5. Local publics. Other publics of company are neighborhood residents and community organizations. Companies should not ignore the community needs and problems. Local publics expect companies to engage with local community in some way.
6. General public. A company needs to manage its general image in general publics. The public’s overall image of the company affects buying behavior. Social responsibility projects are a way of creating an overall positive image in general public
7. Internal publics: Internal publics include company’s workers, managers, volunteers and board of directors. Large companies use newsletters and Intranets to inform and motivate their internal publics.

Customers

Consumer markets consist of individuals and households who buy goods and services for personal consumption. Business markets purchase products and services for further processing or to use in their production process. On the other hand, reseller markets are composed of retailers and wholesalers who purchase products and services to resell at a profit. Government markets comprise government agencies that buy goods and services in order to produce public services or transfer the products and services to others who need them. Finally, consumers, producers, resellers and governments in other countries make up international markets. Each market type has distinctive characteristics that calls for a careful study by the seller. While consumers buy for their own use, business buyers purchase in order to help sales to their own customers.

The Macroenvironment

The Demographic Environment

Demographics is the study of the measurable aspects of population structures and profiles, including factors as age, size, gender, race, occupation, and location. Changes in the world demographic environment have significant implications for marketing. Thus, marketers ought to keep watch on demographic trends and demographic developments in their markets. Changing age and family structure, geographic shifts, changes in the workforce and more diverse markets are the examples of trends in the demographic environment..

Latest demographic data of Turkish Statistical Institute (Turkstat) can be interpreted as whilst population of Turkey is aging, it still has a young population compared to developed Western countries. Conspicuously enough, demographic shifts have a significant influence on marketing. Marketers must scan demographic trends and try to find new product and market opportunities for their company. Another demographic trend is marriage at later ages and having fewer children. According to households’ types, there are some trends that may affect some sectors and companies. In Turkey, both one-person households and single-parent (fathers or mothers) households are increasing.29 Marketers must increasingly consider the special needs of nontraditional households, which might differ much from traditional families with more members. The average household size is also decreasing. This means that birth rates are descreasing, too. Although having fewer children may seem like a threat to some companies, this may mean that people are spending more on fewer children. Six pocket syndrome is defined as six people were spending money for one child as a consequence of the one-child policy in China which lasted 35 years. The number of working women/ mothers are increasing. This trend may affect childcare services, house-cleaning services, restaurants, frozen food, clothing and even cosmetic sectors positively. Today, many marketers are targeting working women.

Generational Marketing

Generations are assumed to have as much influence on buying and purchasing as demographic factors like income, education, and gender do, perhaps even more. To succeed in generation marketing companies must understand how motivation of consumers correlates with underlying values of their generation. Generations have different characteristics.

Baby Boomers: Baby Boomers are the generation born between 1946 and 1964. Baby boomers value individuality, self-expression, and optimism. They define themselves with careers in terms of their characteristics, lifestyles, and attitudes and many of them are workaholics. While some are retired, many are planning to continue working and then move on to an active retirement. Health, energy, and fitness are the main goals for them. As a generation, they are self-centered and skeptical towards authority. They don’t like bureaucracy. They are more interested in politics, pet care, nature, reading books and personal health care. Baby boomers are an optimistic generation in terms of general attitudes. They believe in opportunities and often try to make a positive difference in the world in an idealistic way.

Generation X: Generation X is made up of individuals born between 1964 and 1978. They reached adulthood in tough economic times, and this had significant implications for Generation X. Gen Xers regard themselves as self-sufficient individuals, capable of solving all kinds of problems. For Gen Xers, technology is not a barrier but a facilitator. Generation X is more pragmatic and individualistic. They are pessimistic, skeptical and almost frustrated at everything. They are very educated but are not good team players. Gen Xers balance family, personal, and work lives. Generation X makes up 42% of Internet users in Turkey. They may not be sure of their decisions, and often demand assurance for safety of options. Marketers can help them in planning their future and balancing business, family and personal lives.

Generation Y: This generation is desribed as Consumers of this generation as a generation born between 1979 and 2000. have met cables since their birth; they played computer games, surfed on the web, downloaded music, used instant messaging and connected with their friends via mobile phones. They are socially very conscious and sensitive to environmental issues. They are confident, selective and impatient. Eight fundamental values of Gen Y are; selection, individualization, detailed review, integrity, business association, speed, entertainment, and innovation. They can do more than one job at the same time; they use their mobile phones for almost everything: reaching information, social networking, communicating with friends, finding job opportunities, purchasing products, comparing prices, exploring travel alternatives. This generation creates significant opportunities for marketers through the Internet and other technologies used. They prefer to interact with friends and messages on social network sites like Facebook and Twitter. Many of the Gen Y are content creators, distributors, and users. Marketers are trying to reach and persuade this generation by online viral campaigns, brand ambassadors, sponsorships, cool events, product placements, and videos.

Generation Z: Those born after 2000 are defined as Generation Z.46 Their parents married at later ages compared to the previous generations. They have faced global terrorism, consequences of 9/11 attacks, violence at schools, economic uncertainty, stagnation, and mortgage crisis. Gen Z is the new conservatives with their traditional beliefs, family cohesion, self-control and more responsible behavior. They are accustomed to high technology and multiple sources of information with message bombardment from all sides. They have never lived without the Internet. Gen Z values realism. The digital world is the only world that they know. The digital age shapes their lives. If brands want to keep pace with this generation, they need to adapt to the values and attitudes of this generation.

Generation Alpha: Alpha Generation is defined as the generation born after 2010. It is expected that Generation Alpha will reach a size of 2 billion worldwide by 2025. Alpha children will grow up with their iPads on their hands, will never live without a smartphone and will have the ability to share an idea online in seconds. Great technological changes make Alfa Generation the most transformational generation among other generations.

The Economic Environment

Economic environment consists of factors that affect consumer purchasing power and spending patterns. To assess the economic environment, companies should evaluate the factors that influence consumers’ and businesses’ buying patterns. Countries are classified as industrial, subsistence and developing economies in terms of income levels and income’s distribution. Industrial economies represent rich markets that can afford to buy many different products and services. On the other extreme are subsistence economies that consume most of their own agricultural and industrial output and offer few market opportunities for the companies. Between these two extremes, there are developing economies that offer outstanding marketing. The economy of the United States is the largest economy in the world. Economic factors can have a dramatic effect on consumer spending and buying behavior. Especially during the financial crises, consumers look for more value. Value marketing involves offering financially cautious buyers greater value— the right combination of quality and service at a fair price. Marketers should also pay attention to income distribution as well as income levels. Over the past several decades, income inequality has increased. This means that riches have become richer, the middle class has become poorer, and the poor are still poor. This distribution of income has created a segmented market. Many companies like Gucci and Prada aggressively target affluent customers. Other companies such as BİM and A101 target those with less income.

The Natural Environment

Marketers should be cautious about several trends in the natural environment. The first trend involves growing shortages of raw materials. There may be problems in supply of renewable resources such as forests and nonrenewable resources such as oil, coal, and minerals. Increased pollution is another environmental trend that affects society. Production and disposal processes and product packages may damage natural environment: water resources, air, and soil. Environmentally conscious customers are considering the companies’ environmental strategies in their purchase decisions. Therefore, companies should be responsible for natural environment and show that they are sensitive and respectful to environment. Government intervention is another rising trend about the natural environment. Governments try to protect natural resources and ensure clean environment with laws and regulations. With the increasing concerns about the nature, a new trend called green movement has emerged. Visionary companies conduct environmental strategies and practices to improve sustainability regardless of any forcing law and regulation. Many companies are serving customers with environmentally responsible products, recyclable and biodegradable packaging, less pollution and more energy-sufficient solutions.65 Moreover, green marketing is an increasing trend. Green marketing is the effort of companies to choose packaging, design and other aspects of the product that are nature-friendly.

The Technological Environment

Technological innovations and technological improvements have had an extensive effect in all areas of marketing. First of all, through technology, new products and implications are invented. In addition, technology facilitates development of new processes and materials. Changes in energy, transportation, information, and communication technologies increase the productivity and business efficiency. Shifts in major technologies such as nanotechnology, biotechnology, and artificial intelligence also have implications for marketers.

The Legal and Political Environment

The political and legal environment covers external factors controlled by governments, both international, national, local authorities extends, and other trade or activity oriented by regulatory bodies. The legal and political environment includes regulatory environment, whether such regulation comes directly from governments or industry-based bodies. Governments should protect companies from each other; protect consumers from unfair business practices along with protecting the interests of society against unrestrained business behavior. There are laws and legislation about almost every marketing decision such as advertisements targeting children, age constraints to participate sweepstakes and contest, false advertisements, sales campaigns, door to door selling, product safety.

Emphasis on Ethics and Socially Responsible Actions

Code of ethics is written standards of behavior to which everyone in the organization must subscribe. Some rules and regulations developed and implemented have the force of law, while others are voluntarily done. Enlightened companies encourage their managers to look beyond what regulatory system allows and simply “do the right thing.” These socially responsible firms actively seek out ways to protect long-run interests of their consumers and environment. Cause-related marketing is a marketing strategy in which an organization serves its society by promoting and supporting a worthy cause or by allying itself with not-for-profit organizations to solve a social problem. Cause-related marketing may provide opportunity to a company both to increase its sales volume and to improve its image as a socially responsible company.

The Cultural Environment

Culture is the set of shared beliefs, attitudes and behaviors of a large population group. Cultural changes over the same period include a major shift in eating habits due to an increase in tourism, world travel and greater globalization of food markets. Cultural environment includes lifestyles, norms, traditions and customs, habits, religion and beliefs. These factors affect how people in a society think, and therefore, how they consume. Companies should consider target country’s culture. Culture has effects on consumption patterns. For instance, Muslims and Jews don’t eat pork; Hindus don’t eat beef.