The Marketing Environment
THE MARKETING ENVIRONMENT The external forces that directly or indirectly influence a firm’s acquisition and allocation of resources and its creation of products
Uncontrollable Factors Social Economic Product Price Place Promotion Customer Technological Regulatory Competitive
THE ENVIRONMENT AFFECTS EVERYONE
Proper Scan Identify CORRECT environment Identify key facts and trends Proper scale: global, national, regional, local Proper industry Determine key competitors Identify key facts and trends Earlier is better Assess impact quickly/accurately Localize trends if business is local Use scan to make forward-looking decisions
Competitive Forces Competition: firms that market similar or substitute products Who does your customer consider when looking to satisfy the need for what you do? When analyzing competition: Consider the competitive structure Identify key competitors SWOT Competitive advantages Marketing mix
Total Budget (Indirect) Competitors Types of Competition Brand Competitors Product Competitors Generic Competitors Total Budget (Indirect) Competitors
Competitive Structures Monopoly One competitor Many, typically big, barriers No close product substitutes Maintain monopoly status No competition Pure competition
Competitive Structures Oligopoly Few competitors Some barriers Homogeneous or differentiated products Focus on competitor reactions to events No competition Pure competition
Competitive Structures Monopolistic Competition Many competitors Fewer barriers Product differentiation, many substitutes Focus on differentiating product/brand No competition Pure competition
Competitive Structures Pure Competition Unlimited competitors no barriers to entry Countless substitutes Theoretical situation No competition Pure competition
Economic Forces Economic Conditions Buying Power Willingness to Spend
Business Cycle A pattern of economic fluctuations that has four stages Prosperity Recession Depression Recovery
Buying Power and Willingness to Spend Buying Power = resources (typically money) that can be traded in an exchange Gross income: total income Disposable income: after tax money used for necessities Discretionary income: money left over after covering taxes and necessities Willingness to Spend is closely related to Ability to Buy “Cash or credit”
Legal/Regulatory and Political Forces Legislation Legal decisions by courts Regulatory agencies Self-regulatory forces Marketers Adjust to conditions Influence through contributions
Legal and Regulatory Forces Regulatory Agencies Federal Trade Commission (FTC) Food and Drug Administration (FDA) Federal Communications Commission (FCC) Environmental Protection Agency (EPA) Self-Regulatory Forces Better Business Bureau National Advertising Review Board (NARB)
Technology Technology is the application of knowledge and tools to solve problems and/or perform tasks more efficiently Inventions or innovations
Technology Characterized by: Falling costs Increasingly new products/rapid obsolescence of old products Can transform entire industries and/or societies
Social The influences in a society and its culture(s) that change people’s attitudes, values and/or lifestyles Examples Demographic shifts “Going green” Increasing customer sophistication Population migration