HOW DO YOU ATTRACT 1 BILLION CUSTOMERS? MOVE FAST AND BREAK THINGS! Facebook and the Influence of Environmental Forces

Environmental Scanning Collecting external marketing environment information to identify and interpret potential trends Trends represent significant opportunities or threats to the company Example: Consumer Product Safety Commission issued a recall of American Girl Craft Pearly Beads & Ribbon Bracelets kits, citing high levels of lead in some of the beads

Environment Competitive environment Marketing environment

Figure 3.1 - Elements of the Marketing Mix within an Environmental Framework

ALTERNATIVE FORMS OF COMPETITION COMPETITIVE FORCES ALTERNATIVE FORMS OF COMPETITION LO 3-5 Competition Pure Competition Monopolistic Competition Oligopoly Pure Monopoly

FIGURE 3-A Continuum of competition

Types of Competition Direct Indirect Among marketers of similar products Example: Alternative suppliers in the cell phone market such as Verizon and AT&T Indirect Involves products that are easily substituted Example: In the fast-food industry, pizza competes with chicken, hamburgers, and tacos

Types of Competition Competition among all firms that compete for consumers’ purchases All firms compete for a limited number of dollars that consumers can or will spend Example: The purchase of a Honda Accord might compete with a Norwegian Cruise Line cruise

FIGURE 3-1 Environmental forces affect the organization, its suppliers, and its customers

The Macroenvironment Key Demographic Trends World population growth Now 6.2 billion Projected to reach 7.9 billion by 2025

The Macroenvironment Key Demographic Trends Changing American household Geographic population shifts Better-educated, more white-collar workforce Increasing Diversity

The Economic Environment Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. The Economic Environment Gross domestic product (GDP) - Sum of all goods and services produced by a nation in a year Economic environment - Factors that influence consumer buying power and marketing strategies Business cycle - Pattern of stages in the level of economic activity

Chapter 1 Economic Cycles

MACROECONOMIC CONDITIONS ECONOMIC FORCES MACROECONOMIC CONDITIONS LO 3-3 Economy: Refers to the income and resources that affect running a business or household Inflation /Deflation Recession

The Technological Environment The technological environment represents the application of knowledge in science, inventions, and innovations to marketing. Applying technology helps Fidelity improve customer service

The Political-Legal Environment Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. The Political-Legal Environment Consists of laws and their interpretations that require firms to operate under competitive conditions and to protect consumer rights Ignorance or non-compliance can result in fines, negative publicity, and civil damage suits

PROTECTING COMPETITION REGULATORY FORCES PROTECTING COMPETITION LO 3-6 Regulations: Restrictions places on business conduct Sherman Antitrust Act (1890): Forbids conspiracies in trade Clayton Act (1914): Forbids actions likely to lessen competition Robinson-Patman Act (1936): Unlawful to discriminate in prices charged to different purchasers

Responding to the Marketing Environment Reactive: Passive Acceptance and Adaptation Companies design strategies that avoid threats and capitalize upon opportunities. Proactive: Environmental Management Use of lobbyists, PR, advertorials, lawsuits, complaints, and contractual agreements to influence environmental forces.

UNDERSTANDING ETHICAL MARKETING BEHAVIOR LO 3-7 Ethics: The moral principles and values that guide actions and decisions of individuals or groups.

FIGURE 3-2 A framework for understanding ethical behavior

Social Responsibility in Marketing Marketing philosophies, policies, procedures, and actions that have the enhancement of society’s welfare as a primary objective Four dimensions of social responsibility: Economic Legal Ethical Philanthropic

Social Responsibility and Ethics Ethical = morally right Socially Responsible = society views as best Promote well-being Promote harmony, stability Influence elections Draw crowds to events Responsible marketing can...

Figure 3.5 - The Four Step Pyramid of Social Responsibility