(...) cannot be changed or affected easily in short run. While some of these forces are unforeseeable and uncontrollable, others can be predicted and handled through skillful management.
1- 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. According to the definition of the United Nations, the proportion of elderly population between 8% and 10% means that the population of the relevant country is “old”, a proportion that is over 10% means “too old”.
2- 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.
Baby Boomers: (...) were born between the end of the Second World War and 1964 when birth rates intensified. (...) value individuality, self-expression, and optimism. (...) define themselves with careers in terms of their characteristics, lifestyles, and attitudes and many of them are workaholics. Health, energy, and fitness are the main goals for them. (...) are self-centered and skeptical towards authority. (...) have turned to areas such as health club memberships, tightening body creams, supplementary foods, anti-aging products, hair transplants, hair dyes and organic product consumption. (...) don’t like bureaucracy (...) if they have a reason to fight, they give everything they have. If they believe that they buy a superior product with a good value, they will be less price-focused. (...) more interested in politics, pet care, nature, reading books and personal health care. (...) believe in opportunities (...) try to make a positive difference in the world in an idealistic way. (...) competitive and look for ways to change the system. In their early years, travel, food, and culture began to travel internationally to new and distant countries. Subsequently, they pay attention to mobility in their lives. Baby boomers have traveled more than the previous generations; have seen more places and have high expectations for the future.
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. (...) regard themselves as self-sufficient individuals, capable of solving all kinds of problems. (...) technology is not a barrier but a facilitator. (...) pragmatic and individualistic. (...) pessimistic, skeptical, (...) are very educated but are not good team players, (...) balance family, personal, and work lives. (...) makes up 42% of Internet users in Turkey, (...) usually shop from value-oriented retailers. 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. (...) both cynical and informed about products, advertising, and shopping.
Generation Y (Millennials): (...) born between 1979 and 2000. (...) socially very conscious and sensitive to environmental issues. (...) confident, selective and impatient. (...) grown at a time when there has been endless and rapid changes (...) Eight fundamental values of Gen Y are; selection, individualization, detailed review, integrity, business association, speed, entertainment, and innovation. A steady stream of information has become a rule for this generation. They can do more than one job at the same time. (...) This generation creates significant opportunities for marketers through the Internet and other technologies used. However, the Gen Y wants to decide when, where, and how they communicate by themselves. (...) prefer to interact with friends and messages on social network sites (...) Content is the king for this generation. It is imperative to make the content portable from one platform to another without any limitations. 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, (...) 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. (...) accustomed to high technology and multiple sources of information with message bombardment from all sides. (...) values realism, peer acceptance, (...) look for belonging.
Those who are employed in the marketing sector are now technologically facing more advanced new consumer groups.
Generation Alpha: (...) generation born after 2010. (...) the most transformational generation.
3-The Economic Environment
Economic environment consists of factors that affect consumer purchasing power and spending patterns.
Macroeconomic factors deal with the management of demand in the economy; the main mechanisms that governments use are interest rate controls, taxation policy, and government expenditure. If government increases expenditure (or reduces taxation), there will be more money in the economy and demand will rise; if tax is increased (or expenditure cut), there will be less money for consumers to spend which as a result demand will shrink. Rises in interest rates tend to reduce demand, as home loans become more expensive and credit card charges rise.
Micro-economic factors are to do with the way people spend their incomes. Some countries are defined as industrial economies. 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.
Value marketing involves offering financially cautious buyers greater value—the right combination of quality and service at a fair price. Consumers’ interest on private labels increase on economically hard times. A private label product is manufactured by a contract or third-party manufacturer and sold under a retailer’s brand name.
Over the past several decades, income inequality has increased. 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.
4- The Natural Environment
Natural disasters like earthquakes and flood affect companies. Marketers should be cautious about several trends in the natural environment.
The first trend involves growing shortages of raw materials. Therefore, companies are searching for new sources of energy.
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.
Government intervention is another rising trend about the natural environment. Governments try to protect natural resources and ensure clean environment with laws and regulations. Regulation of natural environment can be an opportunity or threat. Environmental sustainability is meeting the present needs of consumers while preserving and protecting the limited natural resources for future generations. Green marketing is the effort of companies to choose packaging, design and other aspects of the product that are nature-friendly.
5- The Technological Environment
Changes in energy, transportation, information, and communication technologies increase the productivity and business efficiency. Changes in the technology provides new ways to satisfy the customer needs as in the case of music listening. When monitoring technological environment or entering a foreign market, research and development (R&D) expenditures of competitors and related countries are of key indicators.
6- 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. Although the legal environment relates to laws and regulations associated with consumers and business practices, the political environment relates to the period of interaction between business, society, and government before those laws are enacted, when they are still being formed, or are in dispute. (...) Companies should also consider EU legislation, which takes precedence over national law. (...) government controls in business are as follows: patent legislation, taxation, safety regulations, contract law, consumer protection legislation and control of working hours. (...) Companies are increasingly developing their own code of ethics. They are now developing policies, guidelines, and other responses to complex social responsibility issues. (...) Similar to mission and vision statements of companies, we may find the code of ethics in the companies’ websites. (...) 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. For each product sold, company donates an amount of money out of the price customer paid for product to a non-profit organization or a worthy social cause.
7- The Cultural Environment
Culture includes religion, language, customs, behaviors, and beliefs. 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.
Global companies may affect a society’s culture in long run. In international markets, there are two main marketing options as standardization and adaptation. In standardization, the company uses same strategies and campaigns in different cultures. In adaptation strategy, companies make changes in marketing mix based on the culture of different countries.