The Marketing Environment Copyright © Houghton Mifflin Company. All rights reserved. PowerPoint Presentation by Charlie Cook 3 3 Part One Marketing and

The Marketing Environment

Copyright © Houghton Mifflin Company. All rights reserved.Copyright © Houghton Mifflin Company. All rights reserved. PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie Cook

33

Part OnePart OneMarketingMarketing

and Itsand ItsEnvironmentEnvironment

Copyright © Houghton Mifflin Company. All rights reserved. 3–2

Chapter Learning Objectives• To recognize the importance of environmental scanning

and analysis

• To understand how competitive and economic factors affect organizations’ ability to compete and customers’ ability and willingness to buy products

• To identify the types of political forces in the marketing environment

• To understand how laws, government regulations, and self-regulatory agencies affect marketing activities

• To explore the effects of new technology on society and on marketing activities

• To analyze sociocultural issues that marketers must deal with as they make decisions


Chapter Outline

• Examining and Responding to the Marketing Environment

• Competitive Forces• Economic Forces• Political Forces• Legal and Regulatory Forces• Technological Forces• Sociocultural Forces


Examining and Responding to the Marketing Environment• Environmental Scanning

–The process of collecting information about forces in the marketing environment

• Observation• Secondary sources• Market research

• Environmental Analysis–The process of assessing and interpreting the

information gathered through environmental scanning• Accuracy• Consistency• Significance


Examining and Responding to the Marketing Environment (cont’d)• Responding to Environmental Forces

–Reactive approach• Passive view of environment as uncontrollable• Current strategy is cautiously adjusted to accommodate

environmental changes

–Proactive approach• Actively attempts to shape and influence environment• Strategies are constructed to overcome market challenges

and take advantage of opportunities


Competitive Forces

Types of Competition

Competition Other organizations that market products that are similar to or can be substituted for a marketer’s products in same geographic area

Brand competitors Firms that market products with similar features and benefits to the same customers at similar prices

Generic competitors Firms that provide very different products that solve the same problem or satisfy the same basic customer need

Total budget competitors

Firms that compete for the limited financial resources of the same customers

Copyright © Houghton Mifflin Company. All rights reserved. 3–7TABLE 3.1


Competitive Forces (cont’d)

• Monitoring Competition–Helps determine competitors’ strategies and their

effects on firm’s strategies–Guides development of competitive advantage and

adjusting firm’s strategy–Provides ongoing information about competitors–Assists in maintaining a marketing orientation


Economic Forces

• Business Cycle–A pattern of economic fluctuations that has four stages:

Prosperity

Recession

Depression

Recovery

Po

siti

ve E

con

om

ic I

nd

icat

ors

Time


Economic Forces (cont’d)

Stages in the Business Cycle

Prosperity Low unemployment and high total income create high buying power

Recession Rising unemployment reduces total buying power; consumer and business spending decline

Depression Unemployment extremely high, wages and total disposable income are very low, and there is a lack of consumer confidence

Recovery Economy is moving out of recession or depression towards prosperity



• Buying Power–Resources, such as money, goods, and services, that

can be traded in an exchange–Income

• Disposable income• Discretionary income

–Wealth


American Customer Satisfaction Index

Source: “American Customer Satisfaction Index, “ University of Michigan Business School, May 21, 2001, www.bus.umich.edu/research/nqrc/natscores.html. FIGURE 3.1



• Willingness to Spend–An inclination to buy because of expected satisfaction

from a product, influenced by the ability to buy and numerous psychological and social forces

–Expectations influencing the willingness to spend:• Future employment• Income levels• Prices• Family size• General economic conditions (e.g., rising prices)


Political Forces

• Reasons for Maintaining Relations with Elected Officials and Politicians–To influence the creation of laws and regulations

affecting industries and specific businesses–Governments are potentially large customers–Political officials can assist in securing foreign markets–Campaign contributions of corporate-related individuals

and political action committees may provide influence–Lobbyists work to communicate businesses’ concerns

about issues affecting their industries and markets


Legal and Regulatory Forces

• Sherman Antitrust Act (1890)• Clayton Act (1914)• Federal Trade

Commission Act (1914) • Robinson-Patman Act (1936)• Wheeler-Lea Act (1938) • Lanham Act (1946) • Celler-Kefauver Act (1950) • Fair Packaging and Labeling Act (1966)


Legal and Regulatory Forces (cont’d)

• Magnuson-Moss Warranty (FTC) Act (1975)• Consumer Goods Pricing Act (1975)• Antitrust Improvements Act (1976)• Trademark Counterfeiting Act (1980)• Trademark Law Revision Act (1988)• Nutrition Labeling and Education Act (1990)• Telephone Consumer Protection Act (1991)• Federal Trademark Dilution Act (1995)• Digital Millennium Copyright Act (1995)• Children’s Online Privacy Protection Act (2000)



• Procompetitive Legislation–Laws designed to:

• preserve competition• prevent the restraint of trade and the

monopolizing of markets• prevent illegal competitive trade practices

• Consumer Protection Legislation–Laws enacted to protect customers from:

• adulterated and mislabeled food and drugs• deceptive trade practices and the sale of hazardous

products• the invasion of personal privacy and the misuse of

personal information by firms



• Encouraging Compliance with Laws and Regulations–Movement is toward greater organizational

accountability for misconduct of employees.

• Regulatory Agencies–Federal Trade Commission (FTC) influences marketing

activities most; can seek civil penalties and require corrective advertising

• Self-Regulatory Forces–Better Business Bureau–National Advertising Review

Board (NARB)



Technological Forces

• Technology–The application of knowledge and tools to solve

problems and perform tasks more efficiently

• Impact of Technology–Dynamic means constant change–Reach refers to how technology

quickly moves through society.–The self-sustaining nature of

technology as the catalyst for even faster development


Technological Forces (cont’d)

• Adoption and Use of Technology–Failing to adopt new technology can cause a loss of

market leadership.–Protecting the firm’s inventions is critical.–Using a technology assessment allows

the firm to foresee the effects of new products and processes on the firm.


Top Ten Activities for Wireless Web Device Users

FIGURE 3.2

Source: “New Survey Indicates Wireless Web Penetration Highest among Young Affluent Males,” TNS Intersearch, press release, Feb. 7, 2001, http://www.intersearch.tnsofres.com/.


Sociocultural Forces

• Sociocultural Forces–The influences in a society and its culture(s) that

change people’s attitudes, beliefs, norms, customs, and lifestyles

• Demographic Diversity and Characteristics–Increasing proportion of older consumers–Rising number of single adults–Entering another baby boom–Increasingly multicultural U.S. society


U.S. Population Projections by Race

Source: Bureau of the Census, Statistical Abstract of the United States, 2000 (Washington, DC: Government Printing Office, 2001), p. 17. FIGURE 3.3


Sociocultural Forces (cont’d)

• Cultural Values–Primary source of values is the family–Values influence:

• Eating habits (healthier foods)• Alternative health and medical treatment choices• Attitudes toward marriage• Concern for the natural environment

• Consumerism–Organized efforts by individuals, groups, and

organizations to protect consumers’ rights


After reviewing this chapter you should:

• Recognize the importance of environmental scanning and analysis.

• Understand how competitive and economic factors affect organizations’ ability to compete and customers’ ability and willingness to buy products.

• Be able to identify the types of political forces in the marketing environment.

• Understand how laws, government regulations, and self-regulatory agencies affect marketing activities.

• Know the effects of new technology on society and on marketing activities.

• Be able to analyze sociocultural issues that marketers must deal with as they make decisions.


Chapter 3 Chapter 3 Supplemental SlidesSupplemental Slides


Key Terms and Concepts

• The following slides (a listing of terms and concepts) are intended for use at the instructor’s discretion.

• To rearrange the slide order or alter the content of the presentation–select “Slide Sorter” under View on the main menu.–left click on an individual slide to select it; hold and drag

the slide to a new position in the slide show.–To delete an individual slide, click on the slide to select,

and press the Delete key.–Select “Normal” under View on the main menu to return

to normal view.


Important Terms

• Environmental Scanning–The process of collecting information about forces in

the marketing environment

• Environmental Analysis–The process of assessing and interpreting the

information gathered through environmental scanning

• Competition–Other organizations that market products that are

similar to or can be substituted for a marketer’s products in same geographic area


Important Terms

• Brand Competitors–Firms that market products with similar features and

benefits to the same customers at similar prices

• Generic Competitors–Firms that provide very different products that solve the

same problem or satisfy the same basic customer need

• Total Budget Competitors–Firms that compete for the limited financial resources of

the same customers

• Business Cycle–A pattern of economic fluctuations that has four stages:

prosperity, recession, depression, and recovery


Important Terms

• Buying Power–Resources, such as money, goods, and services, that

can be traded in an exchange

• Willingness to Spend–An inclination to buy because of expected satisfaction

from a product, influenced by the ability to buy and numerous psychological and social forces


Important Terms

• Sherman Antitrust Act (1890)• Clayton Act (1914)• Federal Trade

Commission Act (1914) • Robinson-Patman Act (1936)• Wheeler-Lea Act (1938) • Lanham Act (1946) • Celler-Kefauver Act (1950) • Fair Packaging and Labeling Act (1966)


Important Terms

• Magnuson-Moss Warranty (FTC) Act (1975)• Consumer Goods Pricing Act (1975)• Antitrust Improvements Act (1976)• Trademark Counterfeiting Act (1980)• Trademark Law Revision Act (1988)• Nutrition Labeling and Education Act (1990)• Telephone Consumer Protection Act (1991)• Federal Trademark Dilution Act (1995)• Digital Millennium Copyright Act (1995)• Children’s Online Privacy Protection Act (2000)


Important Terms

• Technology–The application of knowledge and tools to solve

problems and perform tasks more efficiently

• Sociocultural Forces–The influences in a society and its culture(s) that

change people’s attitudes, beliefs, norms, customs, and lifestyles

• Cultural Values–Primary source of values is the family

• Consumerism–Organized efforts by individuals, groups, and

organizations to protect consumers’ rights


Transparency Figure 3D Ranking Products Consumers Would Cut Back on if Spending Decreased

Source: USA Today, October 1, 2001 p. 3D. Used by permission.


Transparency Figure 3E

Average U.S. Family Income

• According to the 2000 Census, the average U.S. family earned $63,410 annually, and the breakdown of earnings was:

Less than $15,00010.4%

$15,000–$34,99923.3%

$35,000–$49,99916.8%

$50,000–$74,99922.0%

$75,000–$99,99912.3%

$100,000–$149,9999.7%

$150,000+5.5%

Source: 2000 U.S. Census.


Transparency Figure 3G

Purchasing Behavior of Engaged vs. Single Women

Source: American Demographics, May 2001, p.13. Adapted with permission.

.


Transparency Figure 3H

U.S. Poverty Rates for Minorities

Source: USA Today, October 10, 2001 p.A1. Used by permission.

Documents

The Marketing Environment Copyright © Houghton Mifflin Company. All rights reserved. PowerPoint Presentation by Charlie Cook 3 3 Part One Marketing and