Chapter The Dynamic Marketing Environment 2 After studying this chapter you should be able to explain: The concept of environmental marketing. How external environmental forces affect marketing. How external factors (markets, suppliers, intermediaries) affect marketing. How nonmarketing resources affect a firm’s marketing.

Chapter 2 Theme: Looking for opportunities while avoiding threats in the marketplace…

Key Factors that Help or Hurt Company Success: Company’s Internal Environment Company’s External Marketing Environment Includes: –Microenvironment - forces close to the company that affect its ability to serve its customers. –Macroenvironment - larger (typically uncontrollable) forces that affect most companies

Two Levels of External Forces have an Effect on Marketing: MicroMicro influences consist of suppliers, marketing intermediaries, and customers. MacroMacro influences include demographics, economic conditions, culture, and laws.

Six Interrelated Macroenvironmental Forces can Affect an Organization’s Marketing Program: Demographics Competition Political and legal forces Economics conditions Social and cultural forces Technology

Macroenvironment MNEMONICS Mac’s Dog Can’t Pee on Every Single Tree Or: DCPEST

Environmental Monitoring Environmental Monitoring (Scanning) is the process of: –gathering information regarding the external environment, –analyzing that information, and –forecasting the impact of whatever trends the analysis suggests.

COMPANY’S MARKETING PROGRAM Demo- graphics Economic condition s Political and legal forces Social and cultural forces Competition Technology Macroenvironmental Forces Macroenvironmental Forces

Demographics Age Income Gender Education Race/Ethnicity

Some Key U.S.Demographic Trends Changing Age Structure Population is aging; many divisions Changing American Family Later marriage, fewer children, working women, and nontraditional households Geographic Shifts Moving to the Sunbelt, suburbs, “micropolitan areas” Better-Educated & More White-Collar Increased college attendance and white-collar workers

Race/Ethnicity What’s happening in U.S. in regards to race/ethnicity? Increasing Diversity…….. NM is a window to the future....

Social Forces Changing Minorities Major Ethnic Groups as a percent of total: 2001: Wht/NH (71.0) Black (12.9) Hispanic (12.1) 2005: Wht/NH (69.3) Black (13.1) Hispanic (13.3) 2020: Wht/NH (63.8) Black (13.8) Hispanic (17.0) 2050: Wht/NH (52.8) Black (14.7) Hispanic (24.3) Source: January 13, 2000

Social Forces Changing Age Structure

Social Forces Changing Age Structure Source: January 27,

Social Forces Changing Age Structure Source: January 27,

Social Forces Changing Age Structure Source: January 27,

Social Forces Changing Family Structure

Social Forces Population Growth

Most Recent Population Estimate: What is the population of the United States? Approximately 313 Million people (As of Feb. 6, 2012)

Age Distribution of the U.S. Population (78 million people born ) One of the most powerful forces shaping the marketing environment, 30% of population (45 million people born ) More skeptical, cynical of frivolous marketing pitches promising easy success (72 million people born ) Fluent and comfortable with computer, digital, and Internet technology (Net-Gens)

Importance of Age Why are Baby-Boomers so important to Marketers? 76 million of them Who are Baby-Busters / Gen. X-er’s? Generation Y

Economic Conditions The Business Cycle - 3 stages: –Prosperity –Recession –Recovery Learn it on your own...

Economic Conditions Inflation Inflation - Increase in prices of goods and services. Interest Rates Interest Rates - How do they affect marketers? Donnie’s Z-28 purchase

Political and Legal Forces Monetary and Fiscal Policies Social Legislation and Regulation

Social and Cultural Forces Environmental Consciousness Changing Gender Roles –Changing back some though.... More manly men. A Premium on Time Physical Fitness and Health

Technological Environment Faster pace of technological change; products are outdated at a rapid pace. Almost unlimited opportunities being developed daily in health care, space industry, robotics, and bio-genetic field. Challenge is not only technical, but also commercial – make practical, affordable versions of products.

Technological Forces Some of the most dramatic technological changes occurring now are: –the declining cost and size, and increasing power, of microprocessors; –the convergence of television, personal computer, and telephone technologies; –the pervasive trend toward “connectedness” through the World Wide Web; –the emergence of biotechnology as a key component of the economy.

Environmental Monitoring Environmental Monitoring (Scanning) is the process of: –gathering information regarding the external environment, –analyzing that information, and –forecasting the impact of whatever trends the analysis suggests.

Additional Environmental Monitoring Examples

KOSS Corporation (1981) Show tape (10 min.) What happened to KOSS?

What’s going on in the Macroenvironment that Sirius/XM Needs to be aware of? (opportunities/Threats)