chapter 4 copyright ©2012 by cengage learning inc. all rights reserved 1 4 the marketing...

Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1

4The Marketing Environment

Professor Close


LO 1 Discuss the external environment of marketing, and explain how it affects a firm

LO 2 Describe the social factors that affect marketing

LO 3 Explain the importance to marketing managers of current demographic trends

LO 4 Explain the importance to marketing managers of growing ethnic markets

Learning Outcomes


LO 5 Identify consumer and marketer reactions to the state of the economy

LO 6 Identify the impact of technology on a firm

LO 7 Discuss the political and legal environment of marketing

LO 8 Explain the basics of foreign and domestic competition

Learning Outcomes


The ExternalMarketing Environment

Discuss the external environment of marketing, and explain how it affects a

firm


Target Market

A defined group most likely to buy a product

• Changes as consumers age

• External elements change consumers’ desires


The External Environment

• Unless marketing managers understand the external environment, the firm cannot intelligently plan for the future.

when a company implements strategies that attempt to shape the external environment within which it operates.

Environmental Management is…


Social Factors

Describe the social factors that affect marketing


Social Factors

ValuesValues

AttitudesAttitudes

LifestyleLifestyle


Social FactorsSocial Factors Influence:Social Factors Influence:

Products purchasedProducts purchased

Prices paid for productsPrices paid for products

Effectiveness of promotionsEffectiveness of promotions

How, where, and when people purchaseHow, where, and when people purchase


American Values

Self-SufficiencySelf-Sufficiency

Upward MobilityUpward Mobility

Work EthicWork Ethic

ConformityConformity

Core American Values

Getting off the gridGetting off the grid

Meaningful greenMeaningful green

EcoTechMedEcoTechMed

Emerging Trends


The Influence ofValues on Buying Habits

Ranked Characteristics of Product Quality

Reliability

Durability

Easy maintenance

Ease of use

Trusted brand name

Low price


Component Lifestyles

The practice of choosing goods and

services that meet one’s diverse needs

and interests rather than conforming to

a single, traditional lifestyle.

Today’s consumers want multifunctional products

• No longer defined only by occupation


Role of Families and Working Women

• Growth of dual-income families results in increased purchasing power

• Approximately 59 percent of work-age females are in the workforce

• Working wives bring in 45 percent of the total family earnings.

• The phenomenon of working women has probably had a greater effect on marketing than any other social change.


There Is Never Enough Time

• It is estimated that over 80 percent of the working population is worried about having too little time.

• About 40 percent of American adults get less than 7 hours of sleep on weekdays.

• About 74 percent of working adults engage in multitasking.


Demographic Factors

Explain the importance to marketing managers of

current demographic trends


Demographic Factors

People are the basis for any market

• Demographic characteristics relate to buyer behavior

• Demographic cohorts have their own needs, values, and consumption patterns.


Tweens

Pre- and early adolescents, age 8 to 12

Population of 20 million

Directly spend about $50 billion annually

Parents spend $150 billion on tweens annually

View TV ads as “just advertising”


Teens

Population of about 25 million

Spend approximately 72 hours per week tuned in electronically

View shopping as a social sport

58 percent shop online


Generation Y Born between 1979 and 1994

Surpassed population of baby boomers in 2010

Two Stages: 1) Those born in 1994 fit closer to the Teen cohort. 2) Those born in 1979 have established careers and started families.

Purchasing power of $200 billion annually

Researchers have found Gen Yers to be:– Inquisitive Quick

shoppers– Opinionated Want

fulfillment– Diverse

Multitaskers– Time managers

Environmentally aware


Generation X Born between 1965 and 1978


Independent, resilient, adaptable, cautious, and skeptical

71 percent have children under age 18

Home ownership is an important goal

Avid buyers of the latest clothes, technology, and recreational products


Baby Boomers

Born between 1946 and 1964


Working longer to compensate for economic downturn, which affected retirement savings

The market of services directed at seniors is one of the fastest growing business markets


Growing Ethnic Markets

Explain the importance to marketing managers of growing ethnic markets


Growing Ethnic Markets

Estimated purchasing power of ethnic markets in 2013:– Hispanics: $1.4 trillion– African Americans: $1.2 billion– Asian Americans: $752 billion

The minority population of the United States in 2011 reached 110 million.

Companies are recognizing that diversity can result in bottom-line benefits.


Marketing to Hispanic Americans

The Hispanic population’s diversity creates challenges for targeting this market.

Hispanics tend to be brand loyal, but are not aware of many mainstream U.S. brands.

68 percent of U.S. Hispanics have home Internet access.


Marketing toAfrican Americans

47 percent are between 18 and 49 years

More firms are creating products for the African American market.

Promotional dollars and media choices directed toward African Americans continue to increase.


Marketing to Asian Americans

Younger, better educated, and have highest average income of all groups

Early adopters of latest digital gadgets.

Cultural diversity within the Asian American market complicates promotional efforts.


Economic Factors

Identify consumer and marketer reactions to the

state of the economy


Economic Factors

Purchasing Power

Inflation

Recession

Consumers’ Income


Consumers’ Incomes• Median U.S. household income

in 2010 was approximately $52,000.

• Incomes have risen at a slow pace in recent years.

• Education is the primary determinant of earning potential.


Purchasing Power

a comparison of income versus the relative cost of a set standard of goods and services in different geographic areas.

Purchasing Power is…


Inflation

a measure of the decrease in the value of money, expressed as the percentage reduction in value since the previous year.

Inflation is…

© iS

tock

phot

o.co

m/V

alen

tin M

osic

hev


Recession

a period of economic activity characterized by negative growth, which reduces demand for goods and services.

Recession is…


Technological Factors

Identify the impact of technology on a firm


Research

Basic ResearchBasic Research

Applied ResearchApplied Research

Pure research that aims to confirm an existing theory or to learn more about a concept phenomenon.

An attempt to develop new or improved products


Stimulating Innovation

Build scenarios

Enlist the Web

Talk to early adopters

Use marketing research

Create an innovative environment

Cater to entrepreneurs


Political and Legal Factors

Discuss the political and legal environment

of marketing


Political and Legal Factors

New technology Society Businesses Consumers

Laws and Regulations Protect:


Federal LegislationSherman ActClayton ActFederal Trade Commission Act Celler-Kefauver Antimerger ActHart-Scott-Rodino ActForeign Corrupt Practices Act

Sherman ActClayton ActFederal Trade Commission Act Celler-Kefauver Antimerger ActHart-Scott-Rodino ActForeign Corrupt Practices Act

Regulate competitive

environment

Robinson-Patman Act Robinson-Patman ActRegulate pricing

practices

Wheeler-Lea Act Wheeler-Lea ActControl

falseadvertising


State Laws

• Legislation that affects marketing varies state by state.• Oregon: limits utility advertising to 0.5 percent of

net income.• California: bans trans fats in restaurants and

bakeries.


Regulatory Agencies

Consumer Product Safety Commission

Consumer Product Safety Commission

Federal Trade Commission

Federal Trade Commission

Food & Drug AdministrationFood & Drug

Administration

Protects consumer safety in and around their homes

Prevents unfair methods ofcompetition in commerce

Enforces safety regulations for food and drug products


Bureaus of the FTC

• Reviews mergers and acquisitions• Challenges anti-competitive conduct• Promotes competition• Provides information

• Enforces federal laws that protect consumers

• Empowers consumers with information• Communicates with consumers about

fraud and identity theft

Bureau of Competition

Bureau of Consumer Protection


Consumer Privacy

CAN-SPAM Act

Children’s Online Privacy Protection Act Rule

Government Actions


Competitive Factors

Explain the basics of foreign and domestic

competition


Competitive Factors

How many competitors?

How big are competitors?

How interdependent isthe industry?

Control


Competitive Factors

Competition for Market Share

and Profits

• Firms must work harder to maintain profits and market share.

Global Competition

• More foreign firms are entering U.S. market.

• Foreign firms in U.S. now compete on product quality.


Chapter 4 Video

MethodReview the videos from chapters 2 and 3. How do the decision Method makes reflect

the marketing environment?

chapter 4 copyright ©2012 by cengage learning inc. all rights reserved 1 4 the marketing...

Documents

cengage learning

marketing slide

firm slide

external marketing environment

occupation slide

legal environment of

low price slide

influence of values