The Macroenvironment
The company and all the other actors operate in a larger macroenvironment of forces that shape
opportunities and pose threats to the company. Figure shows the six major forces in the company’s
macroenvironment. Even the most dominant companies can be vulnerable to the often turbulent and
changing forces in the marketing environment. Some of these forces are unforeseeable and
uncontrollable. Others can be predicted and handled through skillful management. Companies that
understand and adapt well to their environments can thrive. Those that don’t can face difficult times. One-
time dominant market leaders such as Xerox, Sears, Sony, Blockbuster, and Kodak have learned this
lesson the hard way. In the remaining sections of this chapter, we examine these forces and show how
they affect marketing plans.
The Demographic Environment
Demography is the study of human populations in terms of size, density, location, age, gender, race,
occupation, and other statistics. The demographic environment is of major interest to marketers because it
involves people, and people make up markets. The world population is growing at an explosive rate. It
now exceeds 7.5 billion people and is expected to grow to more than 8.6 billion by the year 2030.5 The
world’s large and highly diverse population poses both opportunities and challenges. Changes in the
world demographic environment have major implications for business. Thus, marketers keep a close eye
on demographic trends and developments in their markets. They analyze changing age and family
structures, geographic population shifts, educational characteristics, and population diversity.
Age Structure of the Population
Population contains several generational groups. Here, we discuss the five major groups—the baby
boomers, Generation X, the millennials, Generation Z, and Generation Alpha—and their impact on
today’s marketing strategies.
, people born during the post–World War II baby boom from 1946 to 1964. Over the years, the baby
boomers have been one of the most powerful forces shaping the marketing environment. The youngest
boomers are now in their mid-50s; the oldest are in their 70s and well into retirement.
The baby boomers are the wealthiest generation. The boomers constitute a lucrative market for financial
services, new housing and home remodeling, new cars, travel and entertainment, eating out, health and
fitness products, and just about everything else.
It’s fashionable for some marketers these days to look past the boomers, instead targeting the highly
coveted millennial generation. Some may stereotype the older boomers as stuck in the past, out of touch,
and not interested in new products. However, it would be a mistake to think of older boomers as phasing
out or slowing down. Rather than viewing themselves that way, many of today’s boomers see themselves
as entering new life phases.
More active boomers have no intention of abandoning their youthful lifestyles as they age. For example,
adults over 50 now account for 80 percent of luxury travel spending in America. Contrary to the popular
belief that they are staid in their ways, one recent survey found that 82 percent of boomers are open to
new brands. Anything but tech-phobic, boomers are also digitally active and increasingly social media
savvy. Some 70 percent of baby boomers now use mobile internet. And they are the fastest-growing
shopper demographic online, outspending younger generations two to one.
Thus, although boomers may buy lots of products that help them deal with issues of aging—from
vitamins to blood pressure monitors to Good Grips kitchen tools—they tend to appreciate marketers who
appeal to their youthful thinking rather than their advancing age. For example, after its research showed
that older consumers were “perplexed, annoyed, and amused” by how little brands seemed to understand
them, British insurance company Sun Life ran a “Welcome to life after 50” campaign challenging the
stereotypes. In one ad, a distinguished older gentleman exits a boring cruise via a zip line into a cocktail
bar, while a sunbathing beauty turns heads before removing her floppy hat to reveal that she is a “woman
of 62.” Sun Life’s “Welcome to life after 50” website and blog are filled with stories about “amazing
over-50s putting old on hold and making the world a better place.”
Generation X. The baby boom was followed by a “birth dearth,” creating another generation of 55
million people born between 1965 and 1980.12 Author Douglas Coupland calls them Generation X
because they lie in the shadow of the boomers. Considerably smaller than the boomer generation that
precedes them and the millennials who follow, the Generation Xers are a sometimes-overlooked “in-
between” consumer group. Although they seek success, they are less materialistic than the other groups;
they prize experience, not acquisition. For many of the Gen Xers who are parents and homeowners,
family comes first—both children and their aging parents—and career second.
From a marketing standpoint, the Gen Xers are a more skeptical bunch. They are sensible shoppers who
research products heavily before they consider a purchase, prefer quality to quantity, and tend to be less
receptive to overt marketing pitches. But once they find a brand, they tend to be more loyal than other
generational groups. They are more receptive to irreverent ad pitches that make fun of convention and
tradition. Many Gen Xers grew up before the internet and adapted to digital technology during young
adulthood. Most are now fully connected and embrace the benefits of new technology. For instance, one
study found that more Gen Xers shop online than boomers or millennials. At the same time, however, Gen
X viewers watch more network-produced TV shows than millennials.
The Gen Xers, now mostly in their 40s and early 50s, have grown up and are taking over. They have
increasingly displaced the lifestyles, culture, and values of the baby boomers. They are firmly into their
careers, and many are proud homeowners with growing families. They are the most educated generation
to date, and they possess hefty annual purchasing power. With so much potential, many brands and
organizations focus on Gen Xers as a prime target segment. For example, a full 82 percent of Gen Xers
own their own homes, making them an important segment for home-and-hearth marketers.
Millennials. Born between 1981 and 1996, these children of the baby boomers number 75 million or
more, dwarfing the Gen Xers and now larger than the baby boomer segment. The 20- to 30-something
millennials, by their sheer numbers, wield substantial buying power and make up a huge and attractive
market, both now and in the future.
One thing that all millennials have in common is their comfort with digital technology. They don’t just
embrace technology; it’s a way of life. The millennials were the first generation to grow up in a world
filled with computers, mobile phones, satellite TV, iPods and iPads, and online social media. As a result,
they engage with brands in an entirely new way, such as with mobile or social media. In one recent survey
of millennials, when asked where they do most of their shopping, 75 percent said online mobile or online
laptop. Ninety-two percent preferred to do their banking over a web or mobile device.
More than sales pitches from marketers, millennials seek authenticity, value, and opportunities to shape
their own brand experiences and share them with others. Compared with other generational groups, they
tend to be frugal, practical, connected, mobile, and impatient. “The millennials are open to connecting
with brands, drawn to bite-size content (paid or not), and intrigued by new information, product-wise,”
notes one analyst. “However, the main [caution] is that it all needs to get done in an [efficient], digestible,
and fluid manner.”
Many brands have fielded specific products and marketing campaigns aimed at millennial needs and
lifestyles. For example, in financial services, several app-based payment and banking brands have arisen
that appeal to mobile-first millennial consumers.
Generation Z. Hard on the heels of the millennials is Generation Z, young people born between 1997 and
2012. This tweens to young twenty-somethings group is now the largest generation alive. They are also
the most ethnically and culturally diverse generation. Gen Zers spend an estimated $43 billion to $143
billion annually of their own money and influence up to $333 billion of family [Link] young
consumers also represent tomorrow’s markets—they are now forming brand relationships that will affect
their buying well into the future. Even more than the millennials, the defining characteristic of Gen Zers
is their utter fluency and comfort with digital technologies. Generation Z takes Wi-Fi, smartphones,
tablets, internet-connected game consoles, and digital and social media for granted—they’ve always had
them—making this group highly mobile, connected, and social. “If they’re awake, they’re online,” quips
one analyst. They have “digital in their DNA,” says another.
Gen Zers blend the online and offline worlds seamlessly as they socialize and shop. According to recent
studies, despite their youth, more than half of all Generation Z tweens and teens do product research
before buying a product or having their parents buy it for them. Some 39 percent of Gen Zer girls find
shopping inspiration from social media, 35 percent read newsletters from brands, and 33 percent don’t
mind when brands work with influencers they like. Of Gen Zers who shop online, more than half prefer
shopping online in categories ranging from electronics, books, music, sports equipment, and beauty
products to clothes,
shoes, and fashion accessories.
Companies in almost all industries market products and services aimed at Generation Z. However,
marketing to Gen Zers and their parents presents special challenges. Traditional media and brick and
mortar stores are still important to this group. But marketers knowthey must meet Gen Zers where they
hang out and shop. Increasingly, that’s in the online and mobile worlds.
Today’s youth are notoriously fickle and hard to pin down. The key is to engage these young consumers
and let them help to define their brand experiences. For example, to engage young consumers more
deeply, lifestyle apparel retail American Eagle (AE) even invited Gen Zers to create its latest marketing
campaign. Selected through social media, 10 Gen Z “cast members” used their phones and disposable
cameras to create self-portraits of themselves in their own environments. The campaign ran across AE’s
own and other social media, where cast members also shared their individual stories and American Eagle
experiences. “Social media is a valuable platform for self-expression for digital-native Gen Z consumers,”
says one retail analyst. “Turning the creative over to the [GenZ] cast members [let AE] showcase the
individuality of its style and promote diversity, empowerment, and inclusion,” helping AE to “make
authentic, emotional connections with its Gen Z consumer base.”
Generation Alpha. The latest generational group is Generation Alpha, kids born after 2012. Although
still a relatively small market, by 2025 this group will grow larger even than the millennials. The Alphas
hold great promise for marketers. “Generation Alpha will be the most formally educated generation ever,
the most technology-supplied generation ever, and globally the wealthiest generation ever,” claims the
social researcher who gave the group its name.
The emerging Generation Alpha group already exerts substantial influence on the household buying
decisions of its mostly millennial parents. Born about the same time that the Apple iPad first appeared,
today’s kids take technology for granted. “Forget pleas for a puppy. Today’s kids demand gadgets,” says
an analyst, who quotes a pint-sized participant in a recent video as saying, “I’d rather have an iPad—
better than a dog.”
Gen Alphas are an important gateway to their parents. In one recent survey, 81 percent of U.S. Gen Alpha
parents said their latest technology purchase—including smartphones, tablets, and TVs—was influenced
by the activities and needs of their children. But Gen Alpha influence reaches well beyond technology.
Research has shown that kids influence family decisions ranging from entertainment options and eating
out to car purchases and family vacations.
More than just influencers, Gen Alphas are important future consumers who are just beginning to
establish brand preferences. By winning them over early, marketers hope to build loyalty that will carry
into their later lives. For example, Fitbit now markets Fitbit Ace, a simple-to-use activity-monitoring
device for children that was a popular gift during the recent holiday season. According to Fitbit’s CEO,
the Ace is expanding the brand’s user base by helping to “create long-term relationships within the
family.”
An important Generation Alpha marketing concern involves children’s privacy and their vulnerability to
marketing pitches. Companies marketing to this group must do so responsibly or risk the wrath of parents
and public policy makers.