Chapter 4 The Marketing Environment

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4
The Marketing Environment
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Chapter 4
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Learning Outcomes
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
Chapter 4
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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
Chapter 4
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The External
Marketing Environment
Discuss the external
environment of marketing,
and explain how it affects a
firm
Chapter 4
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Target Market
A defined group most likely to buy a product
• Changes as consumers age
• External elements change consumers’
desires
Chapter 4
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The External Environment
• Unless marketing managers understand the
external environment, the firm cannot
intelligently plan for the future.
Environmental Management
is…
when a company implements strategies
that attempt to shape the external
environment within which it operates.
Chapter 4
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Social Factors
Describe the social factors
that affect marketing
Chapter 4
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Social Factors
Attitudes
Values
Lifestyle
Chapter 4
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Social Factors
Social Factors Influence:
Products purchased
Prices paid for products
Effectiveness of promotions
How, where, and when people purchase
Chapter 4
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American Values
Core American
Values
Emerging Trends
Self-Sufficiency
Getting off the grid
Upward Mobility
Meaningful green
Work Ethic
EcoTechMed
Conformity
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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
Chapter 4
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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
Chapter 4
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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.
Chapter 4
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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.
Chapter 4
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Demographic Factors
Explain the importance
to marketing managers of
current demographic trends
Chapter 4
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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.
Chapter 4
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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”
Chapter 4
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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
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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:
–
–
–
–
Chapter 4
Inquisitive
Opinionated
Diverse
Time managers
Quick shoppers
Want fulfillment
Multitaskers
Environmentally aware
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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
Chapter 4
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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
Chapter 4
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Growing Ethnic Markets
Explain the importance to
marketing managers of
growing ethnic markets
Chapter 4
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Growing Ethnic Markets

Estimated purchasing power of ethnic
markets in 2013:
–
–
–
Chapter 4
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.
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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.
Chapter 4
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Marketing to
African 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.
Chapter 4
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Marketing to
Asian Americans
Chapter 4

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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Economic Factors
Identify consumer and
marketer reactions to the
state of the economy
Chapter 4
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Economic Factors
Consumers’
Income
Purchasing
Power
Inflation
Recession
Chapter 4
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Consumers’ Incomes
Chapter 4
•
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.
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Purchasing Power
Purchasing Power is…
a comparison of income
versus the relative cost of a
set standard of goods and
services in different
geographic areas.
Chapter 4
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Inflation
Inflation is…
© iStockphoto.com/Valentin Mosichev
a measure of the decrease in
the value of money,
expressed as the percentage
reduction in value since the
previous year.
Chapter 4
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Recession
Recession is…
a period of economic activity
characterized by negative
growth, which reduces
demand for goods and
services.
Chapter 4
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Technological Factors
Identify the impact of
technology on a firm
Chapter 4
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Research
Basic Research
Applied Research
Chapter 4
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
Chapter 4
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Political and Legal Factors
Discuss the political and
legal environment
of marketing
Chapter 4
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Political and Legal Factors
Laws and Regulations Protect:




Chapter 4
New technology
Society
Businesses
Consumers
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Federal Legislation
Regulate
competitive
environment
Regulate
pricing
practices
Control
false
advertising
Chapter 4
Sherman Act
Clayton Act
Federal Trade Commission Act
Celler-Kefauver Antimerger Act
Hart-Scott-Rodino Act
Foreign Corrupt Practices Act
Robinson-Patman Act
Wheeler-Lea Act
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State Laws
•
Legislation that affects marketing varies
state by state.
•
•
Chapter 4
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
Chapter 4
Consumer
Product Safety
Commission
Protects consumer safety in
and around their homes
Federal Trade
Commission
Prevents unfair methods of
competition in commerce
Food & Drug
Administration
Enforces safety regulations for
food and drug products
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Bureaus of the FTC
• Reviews mergers and acquisitions
Bureau of
Competition
• Challenges anti-competitive conduct
• Promotes competition
• Provides information
• Enforces federal laws that protect
Bureau of
Consumer
Protection
Chapter 4
consumers
• Empowers consumers with information
• Communicates with consumers about
fraud and identity theft
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Consumer Privacy
Government Actions
 CAN-SPAM Act
 Children’s Online Privacy Protection Act
Rule
Chapter 4
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Competitive Factors
Explain the basics
of foreign and domestic
competition
Chapter 4
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Competitive Factors
How many competitors?
Control
How big are competitors?
How interdependent is
the industry?
Chapter 4
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Competitive Factors
Competition for
Market Share
and Profits
• Firms must work
harder to maintain
profits and market
share.
Chapter 4
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
Method
Review the videos from chapters 2 and 3.
How do the decision Method makes reflect
the marketing environment?
Chapter 4
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