The Marketing Environment Chapter 4

Environmental Scanning What is environmental scanning? What is environmental scanning? “The process of continually acquiring information on events occurring outside the organization.” “The process of continually acquiring information on events occurring outside the organization.” Why is it important? Why is it important?

Environmental Forces Social Social Economic Economic Technological Technological Regulatory Regulatory Competitive Competitive

Social Forces Culture Culture Values Values Attitudes Attitudes Demographics Demographics Who is in the population and what is important to them? Who is in the population and what is important to them?

Culture & Values What Values are Important to Americans? What Values are Important to Americans? Changing Role of Women Changing Role of Women Working Longer Hours Working Longer Hours Source:

The Mature Household Born before 1945 Born before % of the population 23% of the population 75% of country’s wealth 75% of country’s wealth Healthcare is important issue Healthcare is important issue Cautious consumers Cautious consumers

Baby Boomers Born between Born between Largest group in population Largest group in population 75 million 75 million Want to age gracefully Want to age gracefully Rise in cosmetic/health products Rise in cosmetic/health products More brand loyal than younger groups More brand loyal than younger groups Source:

Generation X Born between million in U.S. One parent households “A lost generation” “Cut teeth” on technology Value religion, rituals, materialism “Global teens”: Similar experiences across national boundaries Source:

Generation Y Born after 1976 Born after % of the population 28% of the population Grew up with technology Grew up with technology Sons and daughters of Baby Boomers Sons and daughters of Baby Boomers Politically active Politically active Less racially sensitive Less racially sensitive Source:

Tweens Be“tween” being a child and a teenager Be“tween” being a child and a teenager Ages 8-12 Ages 8-12 $200 billion annually $200 billion annually Brand conscious Brand conscious But not necessarily brand loyal But not necessarily brand loyal Source:

Hispanics Buying Patterns Purchasing power: $1.4 trillion Purchasing power: $1.4 trillion Unity through language Unity through language Brand loyal Brand loyal Influenced by families and peers Influenced by families and peers Also influenced by advertising Also influenced by advertising Highly conservative Highly conservative Common religion Common religion Opinion leaders Opinion leaders Difficulties Difficulties Differing backgrounds Differing backgrounds Language barrier Language barrier

African-Americans Buying Patterns 12% of population 12% of population Purchasing power: $1.2 trillion Purchasing power: $1.2 trillion Lower annual income than whites Lower annual income than whites “Younger” subculture “Younger” subculture Technological focus Technological focus Increasing media presence Increasing media presence Price conscious Price conscious Unique buying patterns Unique buying patterns Source:

Asian Buying Patterns Highly educated Highly educated Strong family ties Strong family ties Hard working Hard working Hesitant to use credit Hesitant to use credit

Economic Forces “Deals with the income, expenditures, and resources that affect the cost of running a business or household” “Deals with the income, expenditures, and resources that affect the cost of running a business or household” Macroeconomic Macroeconomic Microeconomic Microeconomic

Macroeconomic Forces Deals with entire market- aggregate of all “players” within it. Deals with entire market- aggregate of all “players” within it. If consumers feel they will be better off, they will buy more. If consumers feel they will be better off, they will buy more. If consumers feel they will be worse off, they will opt to save money or be hesitant to spend it. If consumers feel they will be worse off, they will opt to save money or be hesitant to spend it. Source:

Microeconomic Forces Gross income Gross income Total amount of money earned annually by an individual Disposable Income Disposable Income Money remaining after paying taxes Discretionary Income Discretionary Income Money remaining after paying taxes and for necessities Source:

Technological Forces Becoming increasingly important Becoming increasingly important As technology becomes more commonplace, prices fall. As technology becomes more commonplace, prices fall. Designs new products or improves existing ones Designs new products or improves existing ones Improves systems and flow of information Improves systems and flow of information Internet Internet Intranet Intranet Extranet Extranet

Competitive Forces “Alternative firms that could provide a product to satisfy a specific market’s need” “Alternative firms that could provide a product to satisfy a specific market’s need” Perfect competition Perfect competition Monopoly Monopoly Oligopoly Oligopoly Monopolistic competition Monopolistic competition

Competitive Forces Porter’s Model Porter’s Model Barriers to Entry Barriers to Entry Buyer Power Buyer Power Supplier Power Supplier Power Degree of Rivalry Degree of Rivalry Substitutes Substitutes Source: model-porters-model/

Regulatory Forces “Restrictions state and federal laws place on business with regard to the conduct of its activities.” “Restrictions state and federal laws place on business with regard to the conduct of its activities.” Protect customers & companies Protect customers & companies Regulatory agencies Regulatory agencies Consumer Product Safety Commission Consumer Product Safety Commission Food & Drug Administration Food & Drug Administration Federal Trade Commission Federal Trade Commission

Regulatory Forces Place-Related Legislation Place-Related Legislation Exclusive dealing Exclusive dealing Requirement contracts Requirement contracts Exclusive territorial distributorships Exclusive territorial distributorships Tying arrangement Tying arrangement Promotion-Related Legislation Promotion-Related Legislation Federal Trade Commission Federal Trade Commission