chapter 4 the marketing environment 2014
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Lamb, Hair, McDaniel
The Marketing Environment
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Chapter 4
2012-2013
(C) 2014 Cengage Learning Inc. All Rights Reserved.
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Discuss the external environment of
marketing, and explain how it affects a firm
Describe the social factors that affect
marketing
Explain the importance to marketing
managers of current demographic trends
Explain the importance to marketing
managers of growing ethnic markets
(C) 2014 Cengage Learning Inc. All Rights Reserved 2
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Identify consumer and marketer reactions to
the state of the economy
Identify the impact of technology on a firm
Discuss the political and legal environment
of marketing
Explain the basics of foreign and domestic
competition
(C) 2014 Cengage Learning Inc. All Rights Reserved 3
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(C) 2014 Cengage Learning Inc. All Rights Reserved 4
The External Marketing Environment
Discuss the external
environment of marketing,
and explain how it affects a
firm
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(C) 2014 Cengage Learning Inc. All Rights Reserved 5
Target Market
A defined group most likely to buy a
product
• Changes as consumers age
• External elements change
consumers’ desires
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(C) 2014 Cengage Learning Inc. All Rights Reserved 6
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…
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Describe the social factors
that affect marketing
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Social Factors
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Social Factors
Values
Attitudes
Lifestyle
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(C) 2014 Cengage Learning Inc. All Rights Reserved 9
American Values
Self-Sufficiency
Upward Mobility
Work Ethic
Conformity
Core American
Values
Getting off the grid
Meaningful green
EcoTechMed
Emerging Trends
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The Influence of Values on Buying Habits
Ranked Characteristics of Product Quality
Reliability
Durability
Easy maintenance
Ease of use
Trusted brand name
Low price
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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 2
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(C) 2014 Cengage Learning Inc. All Rights Reserved 12
The Role of Social Media in Communication
Social Media allow the creation and exchange of user-generated content and include several formats that allow for: • One-to-one communication • One-to-many communication • Many-to-many communication
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Explain the importance to marketing managers of
current demographic trends
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Demographic Factors
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(C) 2014 Cengage Learning Inc. All Rights Reserved 14
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.
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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”
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Teens
Population of about 25 million
93 percent of U.S. Teens are on
the Internet
View shopping as a social sport
50 million teens around the world
are on Facebook
The average teen spends about
$45 per week
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(C) 2014 Cengage Learning Inc. All Rights Reserved 17
Generation Y
• Born between 1979 and 1994
• Surpassed population of baby boomers
• 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
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Generation X
• Born between 1965 and 1978
• Population of 40 million
• 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
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Baby Boomers
• Born between 1946 and 1964
• Population of 75 million
• 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
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(C) 2014 Cengage Learning Inc. All Rights Reserved 20
Growing Ethnic Markets
Explain the importance to marketing managers of growing ethnic markets
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(C) 2014 Cengage Learning Inc. All Rights Reserved 21
Growing Ethnic Markets
• Estimated purchasing power of ethnic
markets in 2013:
• Hispanics: $1.5 trillion
• African Americans: $1.2 billion
• Asian Americans: $775 billion
• The minority population of the United
States in 2011 reached 110 million.
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Marketing to Hispanic Americans
The Hispanic population’s diversity
creates challenges for targeting this
market.
60 percent of Hispanics are of Mexican
descent.
Highly responsive to new media:
mobile marketing and social media
marketing
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Marketing to African Americans
• 47 percent are between 18 and
49 years old
• More firms are creating
products for the African
American market.
• Promotional dollars and media
choices directed toward African
Americans continue to increase.
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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.
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Identify consumer and marketer reactions to the
state of the economy
(C) 2014 Cengage Learning Inc. All Rights Reserved 25
Economic Factors
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Economic Factors
Purchasing Power
Inflation
Recession
Consumers’
Income
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(C) 2014 Cengage Learning Inc. All Rights Reserved 27
Consumers’ Incomes
• Median U.S. household income in 2012 was approximately $50,000.
• Incomes have risen at a slow pace in recent years.
• Education is the primary determinant of earning potential.
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a comparison of income
versus the relative cost of a
set standard of goods and
services in different
geographic areas.
Purchasing Power is…
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a measure of the decrease in
the value of money, expressed
as the percentage reduction in
value since the previous year.
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Inflation is…
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a period of economic activity
characterized by negative
growth, which reduces
demand for goods and
services.
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Recession is…
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Identify the impact of technology on a firm
(C) 2014 Cengage Learning Inc. All Rights Reserved 31
Technological Factors
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Research
Basic Research
Applied
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
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Stimulating Innovation
Build scenarios
Enlist the Web
Talk to early adopters
Use marketing research
Create an innovative environment
Cater to entrepreneurs
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Discuss the political and legal environment
of marketing
(C) 2014 Cengage Learning Inc. All Rights Reserved 34
Political and Legal Factors
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Political and Legal Factors
New technology
Society
Businesses
Consumers
Laws and Regulations Protect:
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(C) 2014 Cengage Learning Inc. All Rights Reserved 36
Federal Legislation
• Sherman Act
• Clayton Act
• Federal Trade Commission Act
• Celler-Kefauver Antimerger Act
• Hart-Scott-Rodino Act
• Foreign Corrupt Practices Act
Regulate
competitive
environment
Robinson-Patman Act
Regulate
pricing
practices
Wheeler-Lea Act
Control
false
advertising
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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.
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Regulatory Agencies
Consumer Product Safety Commission
Federal Trade Commission
Food & Drug Administration
Protects consumer safety in
and around their homes
Prevents unfair methods of
competition in commerce
Enforces safety regulations
for food and drug products
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(C) 2014 Cengage Learning Inc. All Rights Reserved 39
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
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Consumer Privacy
CAN-SPAM Act
Children’s Online Privacy Protection
Act Rule
Government Actions
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Explain the basics of foreign and domestic
competition
(C) 2014 Cengage Learning Inc. All Rights Reserved 41
Competitive Factors
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Competitive Factors
How many competitors?
How big are competitors?
How interdependent is
the industry?
Control
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(C) 2014 Cengage Learning Inc. All Rights Reserved 43
Competitive Factors
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.
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Chapter 4 Video
GaGa’s Inc. GaGa’s Inc. produces a frozen dessert called Sherbetter in a variety of flavors.
GaGa’s is very small product line and Jim King, the founder and CEO,
discusses the challenges his company faces in their product category. He also reveals other environmental challenges
to his product.
CLICK TO PLAY
(C) 2014 Cengage Learning Inc. All Rights Reserved 44