vii.a.2 scanning marketing environment hha mcgraw-hill

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Slide 3-1

SCANNING THE MARKETING

ENVIRONMENT

CHAPTER


Environmental Scanning

Environmental scanning is the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends.


FIGURE 3-1 Environmental forces affecting the organization, as well as its suppliers and customers


FIGURE 3-2 An environmental scan of today’s marketplace


Social Forces

The social forces of the environment include the demographic characteristics of the population and its values.


Demographics

Demographics describes a population according to selected characteristics such as age, gender, ethnicity, income, and occupation.


SOCIAL FORCES

•  Social Forces

•  Demographics

§  The World Population at a Glance §  The U.S. Population

•  Households & Population shifts §  Generational Cohorts

•  Baby Boomers

•  Generation X

•  Generation Y

•  Generational Marketing

•  Millennials


Generation Cohorts

Baby boomers is the generation of children born between 1946 and 1964.

Generation X includes the 15% of the U.S. population born between 1965 and 1976.

Generation Y includes the 72 million Americans born between 1977 and 1994.


SOCIAL FORCES

•  Demographics

§  Racial and Ethnic Diversity

•  Multicultural Marketing

•  Culture

§  Changing Values


Culture incorporates the set of values, ideas, and attitudes that are learned and shared among the members of a group.

Culture


Multicultural marketing consists of combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races.

Multicultural Marketing


FIGURE 3-3 Racial and ethnic concentrations in the United States (excluding whites)


Concept Check

1. Why are many companies developing multicultural marketing programs?

A: (1) The racial and ethic diversity of the U.S. is changing rapidly due to the increases in the African American, Asian, and Hispanic populations, which increases their economic impact. (2) An accurate understanding of the culture of each group is essential if marketing efforts are to be successful.


Concept Check

2. How are important values such as “health and fitness” reflected in the marketplace today.

A: Millions of Americans are trying to live a healthier lifestyle. In response, companies have developed vitamins, exercise equipment, fitness drinks, magazines, and other products to target these consumers.


ECONOMIC FORCES

•  Economy

•  Macroeconomic Conditions

§  Gross Income: Total income earned

§  Disposable Income: Gross Income - Tax

•  Consumer Income

§  Discretionary Income: Disposable Income - $ for necessity


Concept Check

1. What is the difference between a consumer’s disposable and discretionary income?

A: Disposable income is the money a consumer has left after paying taxes to use for food, clothing, and shelter. Discretionary income is the money that remains after paying taxes for necessities.


FIGURE 3-4 Income distribution of U. S. households


TECHNOLOGICAL FORCES

•  Technology

•  Technology of Tomorrow

•  Technology’s Impact on Customer Value


Concept Check

2. How does technology impact customer value?

A: (1) Consumers assess value on the basis of other dimensions, such as quality, service, and relationships, due to the decline in the cost of technology. (2) Technology provides value through the development of new products. (3) Technology has changed the way existing products are produced through recycling and precycling.


TECHNOLOGICAL FORCES

•  Electronic Business Technologies

§  Intranet

§  Extranets

§  Marketspace

§  Electronic Commerce


COMPETITIVE FORCES

•  Competition

•  Alternative Forms of Competition

§  Pure Competition

§  Monopolistic Competition

§  Oligopoly

§  Pure Monopoly

•  Small Businesses as Competitors


FIGURE 3-A Continuum of competition


FIGURE 3-B Porter’s five competitive forces


Competition refers to the alternative firms that could provide a product to satisfy a specific market’s need.

Competition


Barriers to entry are business practices or conditions that make it difficult for new firms to enter the market.

Barriers to Entry


Restructuring occurs when firms strive for more efficient corporations that can compete globally by reducing duplicate efforts in multiple company locations, closing or changing unprofitable plants and offices, and laying off employees.

Restructuring


REGULATORY FORCES

•  Regulation

•  Protecting Competition §  Sherman Antitrust Act (1890): forbid restraint of trade, monopoly §  Clayton Act (1914): prevent increasing barriers of entry §  Robinson-Patman Act (1936): prohibit price discrimination


REGULATORY FORCES

§  Company Protection

•  Patent Law

•  Product-Related Regulation

•  Copyright Law

•  Digital Millennium Copyright Act (1998)


REGULATORY FORCES

§  Consumer Protection

•  Nutritional Labeling & Educational Act (1990)

•  Consumerism (since 1960)


•  Consumer Product Safety Act (1972)

§  Consumer Product Safety Commission


Consumerism is a grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions.

Consumerism


REGULATORY FORCES

§  Both Company and Consumer Protection

•  Landham Act (1946): protect trademark owners •  Trademark Law Revision Act (1988): company’s rights secured before actual use •  Madrid Protocol (2003): facilitates the protection of US trademarks throughout the world •  Federal Dilution Act (1995): prohibit using a trademark on a uncompetitive product



REGULATORY FORCES

•  Pricing-Related Legislation: regulates price fixing & price discounting

§  Exclusive Dealing (reseller agrees to see only 1 manuf.’s products)

•  Distribution-Related Legislation

§  Requirement Contracts (buy from 1 seller) §  Exclusive Territorial Distributorships (sole distributor in the area) §  Tying Arrangement (buyer is required to buy another item in the line)


REGULATORY FORCES

•  Advertising- and Promotion-Related Legislation

•  Cease and Desist Order: stop unfair practices •  Corrective Advertising

•  Control through Self-Regulation

§  FTC Act of 1914

§  Do Not Call Registry (telemarketing) §  CAN-SPAM Act (2004): restrict information collection, unsolicited email promotions, & specify Simple opt-out


Self-regulation is an alternative to government control where where an industry attempts to police itself.

Self-Regulation


Concept Check

3. How does the Better Business Bureau encourage companies to follow its standards for commerce?

A: Companies must agree to follow BBB standards before they are allowed to display the BBB logo.


The economy pertains to the income, expenditures, and resources that affect the cost of running a business and household.

Economy


Technology refers to inventions or innovations from applied science or engineering research.

Technology


Marketspace is an information- and communication-based electronic exchange environment mostly occupied by sophisticated computer and telecommunication technologies and digitized offerings.

Marketspace