THE MARKETING ENVIRONMENT

THE MARKETING ENVIRONMENT Culture (covered under International Marketing) Demographics Social Technology Economic Political and Legal Factors

Some Things That Have Changed In Our Lifetime… Widespread use of high speed, high bandwidth and wi-fi Internet access Online shopping by mainstream consumers and individualized product recommendations Movies streamed online rather than DVDs mailed or rented in stores Spread of digital photography, “selfies” Widespread use of cell phones Smart phones replacing more limited scope cell phones Emergence of social networking sites GPS technology becoming available to consumers Increased concerns about security (since 9/11/2001)

Japan: Actual and Projected Population Figures

China: Actual and Projected Population Figures

SOCIAL FACTORS Values—tensions Value of privacy and security vs. convenience “Green” products vs. Cost Convenience Performance “Component lifestyles”

Case: Hostess (Twinkies) In 2011, Hostess, the manufacturer of Twinkies, was unable to negotiate a cost effective deal with its main union This happened on top of a “triple whammy” that had hit packaged goods manufacturers: Costs of ingredients had gone up due to increased costs of petroleum (needed for fertilizer, transportation, and processing) A consolidation in the supermarket industry and the entry of Walmart’s supercenters had put downward pressure on wholesale prices The recession had caused a number of customers who in the past bought national brand items to switch to store brands and lower tier brands. In 2013, Hostess entered bankruptcy. The firm was sold off.

Ford Motor Co. Historically, U.S. high schools have provided driver education. In many other countries, this has not been offered, so getting a driver’s license is more expensive and difficult. With services such as Uber as a flexible and cost effective alternative, many younger people have less interest in driving their own cars Fewer young people get driver’s licenses As driver education learning has started to fade, passing the on-the-road-test later may be more difficult Many young people today spend a significant amount of money on cell phones and service plains, significantly “draining” on the resources available to buy cars To appeal to younger customers (and others), Ford has tried to add an increasing amount of technology to their cars, but so have competitors Increased fuel prices and uncertainty on future prices reduce the attractiveness of owning a car

Case: Boeing Possible increase in trade barriers Political developments affect opportunities to sell to different countries (e.g., Iran) Political changes in export assistance Uncertainty about long term fuel prices Under high fuel prices, the Boeing 787 can reduce costs Under lower fuel costs, the A380 can reduce labor costs Very long lead time in developing the next generation of planes Fluctuating World economy can dramatically affect demand for new aircraft with very short notice “Glut” of nearly new places available during global recessions Long backlog in orders during prosperity