The Marketing Environment Principles of Marketing Chapter 3 Updated 2003
Dec 29, 2015
The Marketing Environment
Principles of MarketingChapter 3Updated 2003
External Marketing Environment Marketers must alter marketing
mix (4 p’s) because of changes in the environment.
Marketers can control marketing mix, but not external environment that continually mold & reshape the target market.
Environmental Scanning Organizations assemble a team of
specialists to continually collect and evaluate environmental information.
Goal is to identify future market opportunities and threats.
Environmental Management When a company implements
strategies that attempt to shape the external environment within which it operates.
Try to influence technological, competitive, and political/legal environments.
Uncontrollable External Environmental Factors
1. Social2. Demographic3. Economic4. Technological & Resource5. Political & Legal6. Competitive
1. Social Factors Most difficult variable to forecast,
influence or integrate into marketing plans.
Attitudes Values Lifestyles
Social Factors . . . Influence:
products people buy, prices paid for products, effectiveness of specific promotions,
and the how, where, when people expect to
purchase products.
Changing Role of Families & Working Women
Greater effect on marketing than any other social change.
58% of all females between 16 and 65 years old are now in the workforce.
Two-career families have greater HH income, but less available time for family activities.
Changing Role of Families & Working Women . . .
Women are very concerned about the environment.
Surge in daycare centers, preschools, adult-care centers.
Women pay more for products/services than men.
2. Demographic Factors Age, race, ethnicity, location Strongly related to consumer
buyer behavior. Good predictors of how the target
market will respond to a specific marketing mix.
GenerationsDescription Years Born Millions/
peopleCharacteristics
Generation “Next” or Millennials
1982-2002(1980 – 2002)
70 million Tech-savvyEducatedMulticultural
Generation “Y”(subset of “X”)
1976-1981(1979 – 1994)
81 million(X + Y)
Edgy, focused on urban style, retro style
Generation “X”
1961-1981(1965-1978)
See above Cynical, media savvy, rebellious
Baby Boomers
1946-1964(1946-1964)
76 million High disposable income, value-driven
Silent Generation
1925 - 1945 35 million Conformists, now grandparents of “Millennials”
Personalized Economy Delivers goods/services at a good
value on demand. Customization
Cable TV channels Immediacy
Banks in grocery stores Value
price competitively/create innovations
Americans On the Move Average U.S. citizen moves every 6
years. Reasons:
employment “young” retirees telecommuters commercial development in rural
areas
Growing Ethnic Markets 1960: 90% of U.S. pop. was white 1990: 80% of U.S. pop. was white Three primary racial/ethnic
minorities: African-Americans U.S. Hispanics Asian-Americans
Multiculturalism
All major ethnic groups in an area are roughly equally represented.
Hispanic is the largest minority group now in U.S.
Census (1990) identified 110 different ethnic groups in U.S.
Strategies for Marketing in a Diverse Society
1. Many niches within ethnic markets - requires micromarketing strategies.
2. Maintain brand’s core identity while straddling different languages, cultures, ages, incomes.
3. Seek common interests, motivations or needs among ethnic groups - “stitching niches”
3. Economic Factors
1. Rising Incomes2. Inflation3. Recession
Rising Incomes 2/3 of all American HH’s earn a
“middle class” income: $18,000 - $75,000.
Over 8% of HH’s earn over $75,000, up from 2.6% in 1980.
Trend toward dual-income families leading contributor.
Provides more discretionary income.
Inflation Inflation causes consumers to do
two things: Decrease brand loyalty to search for
lowest prices Take advantage of coupons and sales
to stock up on items
Recession Period of economic activity when
income, production, and employment fall – which reduces demand.
This can be countered by: Improving existing products/introducing new
ones. Maintain & expand customer services. Emphasize top-of-the-line products and
promote product value.
4. Technological & Resource Factors New technology can assist firm in
coping with many other environmental factors. Example: New processes can reduce
production costs and help firm fight inflation/recession.
Technological & Resource Factors . . . U.S. is not creating new technology
as fast as in the past. U.S. companies have trouble
transforming results of basic/pure research into goods/services.
Applied research attempts to develop new or improved products.
Technological & Resource Factors . . . Many U.S. companies seek short-term
profits and take minimal risk. This leads to development of line
extensions vs. new innovations. Several political/cultural alterations
could encourage innovations. Tax incentives Changes in org. structure Company encouragement of risk taking
5. Political & Legal Govt. establishes many operating
rules for businesses. Legal rules/restrictions affect every
aspect of the marketing mix. Govt. needs business to generate
revenue. Regulate competitive environment
Regulatory Agencies Consumer Product Safety
Commission Federal Trade Commission Food and Drug Administration
6. Competitive Factors # competitors a firm must face Relative size of competitors Degree of interdependence within
industry
Basic Models of Competition Monopoly
Firm is the industry Utility co.’s,
Monopolistic Competition Large # suppliers offer similar, but
not identical products. Laundries, hair stylists, lawyers
Basic Models of Competition. . . Oligopoly
Small # firms dominate market Auto, tire, etc.
Pure Competition Large # of sellers marketing a
standardized product
Global Competition In the past, foreign firms entered
U.S. markets by emphasizing price, now it’s quality.
U.S. companies battle one another in global markets as intensively as in the U.S.
Ethical Decision Making Extent of ethical problems within
organization Top-management actions on ethics Potential magnitude of the consequences Social consensus Probability of harmful outcome Length of time between
decision/consequences # of people affected See Exhibit 3.6, page 83
Corporate Social Responsibility Business’s concern for society’s
welfare Pyramid of Corporate Responsibility
(Exhibit 3.8, page 86) Economic – be profitable Legal – obey the law Ethical – be ethical Philanthropic – be a good corporate
citizen