1. The Marketing Environment
Chapter 4 The Marketing Environment
Chapter 4
The Marketing Environment
MKTG10
Lamb, Hair, and McDaniel
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Chapter 4 The Marketing Environment
LEARNING OUTCOMES
4-1 Discuss the external environment of marketing and explain how it affects a firm
4-2 Describe the social factors that affect marketing
4-3 Explain the importance to marketing managers of current demographic trends
4-4 Explain the importance to marketing managers of growing ethnic markets
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Chapter 4 The Marketing Environment
LEARNING OUTCOMES
4-5 Identify consumer and marketer reactions to the state of the economy
4-6 Identify the impact of technology on a firm
4-7 Discuss the political and legal environment of marketing
4-8 Explain the basics of foreign and domestic competition
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4. The External Marketing Environment
Chapter 4 The Marketing Environment
The External Marketing Environment
4-1
Discuss the external environment of marketing, and explain how it affects a firm
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Chapter 4 The Marketing Environment
Target Market
A group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the need of that group, resulting in mutually satisfying exchanges.
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6. Understanding the External Environment
Chapter 4 The Marketing Environment
Understanding the External Environment
Unless marketing managers understand the external environment, the firm cannot intelligently plan for the future.
Environmental Management is…
when a company implements strategies that attempt to shape the external environment within which it operates.
Notes:
The factors within the external environment that are important to marketing mangers can be classified as social, demographic, economic, technological, political and legal, and competitive.
You must first understand how customers buy, where they buy, what they buy, and when they buy.
You must understand what drives consumer decisions.
You must identify the most valuable customers and understand their needs.
You must understand the competition.
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7. Describe the social factors that affect marketing
Chapter 4 The Marketing Environment
Social Factors
4-2
Describe the social factors that affect marketing
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Chapter 4 The Marketing Environment
Social Factors
Social factors include:
Social factors influence the products people buy, the price paid, the effectiveness of specific promotions, and how, where, and when people expect to purchase products.
Values
Attitudes
Lifestyles
Notes:
Social change is perhaps the most difficult external variable for marketing managers to forecast, influence, or integrate into marketing plans.
Social factors influence the products people buy, the price paid, the effectiveness of specific promotions, and how, where, and when people expect to purchase products.
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Chapter 4 The Marketing Environment
Values
A value is a strongly held and enduring belief.
Human values give us a sense of what is or isn’t important in one’s life.
Values are believed to strongly influence attitudes and lifestyles
Notes:
A value is a strongly held and enduring belief. The four basic values shown influenced the attitudes and lifestyles during the first 200 years of the United States. They are:
Self-sufficiency: Every person should stand on his or her own two feet.
Upward mobility: Success comes with getting an education, working hard, and playing by the rules.
Work ethic: Hard work, dedication to family, and frugality are moral and right.
Conformity: No one should expect to be treated differently from everybody else.
Values are formed through interaction with family, friends, and influencers such as teachers, religious leaders, and politicians. The environment can also play a role in shaping values.
U.S. consumers rank the characteristics of product quality as (1) reliability, (2) durability, (3) easy maintenance, (4) ease of use, (5) a trusted brand name, and (6) a low price.
Discussion/Team Activity:
What environmental influences have affected the values of Americans?
Examples: Great Depression, Women’s Role in the Workplace, Hippie Revolution of 1960s, the September 11 terrorist attack.
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An example of American Values
The American society is greatly influenced by a set of four values:
Self-sufficiency: Every person should stand on his or her own two feet.
Upward mobility: Success comes with getting an education, working hard, and playing by the rules.
Work ethic: Hard work, dedication to family, and frugality are moral and right.
Conformity: No one should expect to be treated differently from everybody else
People typically form values through interactions with family, friends, and other influencers.
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11. The Role of Social Media in Communication and shaping our behavior
Chapter 4 The Marketing Environment
The Role of Social Media in Communication and shaping our behavior
Social media are making profound changes in the way we obtain and consume information. Social networking has changed the game when it comes to opinion sharing. Now, consumers can reach many people at once with their views—and can respond to brands and events in real time. Teenagers and young adults are more likely to view social networks as a valuable source of information.
Notes:
There is some evidence that social media users feel a greater sense of companionship and support than non-social media users.
Successful use of social media requires more than receiving likes on Facebook, but creating a relationship based on shared interests with the consumer.
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12. How Firms Use Social Media
Chapter 4 The Marketing Environment
How Firms Use Social Media
A starting point for a firm using social media is to monitor what is being said about the brand. In addition to monitoring, the firm must respond to both positive and negative buzz about the company or brand. Social media can also be used to amplify a promotional campaign by inviting consumers to join the conversation about a brand.
Notes:
If Facebook were a country, it would be the world’s third largest behind China and India.
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Chapter 4 The Marketing Environment
Demographic Factors
4-3
Explain the importance to marketing managers of current demographic trends
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Chapter 4 The Marketing Environment
Demographic Factors
Demography is the study of people’s vital statistics, such as age, race, ethnicity and location.
Demographic variable is extremely important to marketing managers
Demographics are significant because the basis for any market is people.
Demographic characteristics relate to buyer behavior
Demographic cohorts have their own needs, values, and consumption patterns.
Notes:
An uncontrollable variable in the external environment is demography: the study of people’s vital statistics, such as age, race and ethnicity, and location.
Demographic characteristics are strongly related to consumer buyer behavior.
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15. Identify consumer and marketer reactions to the state of the economy
Chapter 4 The Marketing Environment
Economic Factors
4-5
Identify consumer and marketer reactions to the state of the economy
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Chapter 4 The Marketing Environment
Economic Factors The four economic areas of greatest concern to marketers are consumers’ incomes, purchasing power, inflation, and recession.
Consumers’
Income
Purchasing Power
Inflation
Recession
Notes:
The four economic areas of greatest concern to marketers are consumers’ incomes, purchasing power, inflation, and recession.
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Chapter 4 The Marketing Environment
Consumers’ Incomes
As disposable income rise, more families and individuals can afford the ‘good life’.
Education is the primary determinant of earning potential
Earnings/ income define our shopping behavior
Notes:
Income fell the most in the South, West, and Florida. These areas also had the largest declines in home values and housing construction.
With jobs scarce, many people have accepted pay cuts to keep their current jobs or taken less-paying—but available—jobs.
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Chapter 4 The Marketing Environment
Purchasing Power is…
measured by comparing income to the relative cost of a standard set of goods and services in different geographic areas, usually referred to as the cost of living.
Notes:
Increased standards of living are a function of purchasing power.
When income is high relative to cost of living, people have more discretionary income. That means they have more money to spend on nonessential items.
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Chapter 4 The Marketing Environment
Inflation is…
a measure of the decrease in the value of money, expressed as the percentage reduction in value since the previous year.
Notes:
1. In times of low inflation, businesses seeking to increase their profit margins can do so only by increasing their efficiency.
2. The buyer will not pay more for a product than the subjective value he/she places on it.
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Chapter 4 The Marketing Environment
A recession is…
a period of economic activity characterized by negative growth, which reduces demand for goods and services.
Notes:
Beginning in December 2007, the collapse of inflated housing prices triggered what became the global recession of 2007–2009.
The declining stock market, growing unemployment, and collapsing home prices have all taken a toll on consumer confidence and influenced all kinds of purchasing decisions.
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21. Technological Factors
Chapter 4 The Marketing Environment
Technological Factors
4-6
Identify the impact of technology on a firm
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22. Technological Factors
Chapter 4 The Marketing Environment
Technological Factors
Technology is the most dramatic variable of all external environment
Its dynamic, always changing, and hence needs to be carefully watched and updated.
Technology and innovation provides a firm with competitive advantage.
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23. Political and Legal Factors
Chapter 4 The Marketing Environment
Political and Legal Factors
4-7
Discuss the political and legal environment of marketing
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24. Political and Legal Factors
Chapter 4 The Marketing Environment
Political and Legal Factors
Business needs government regulations to protect innovators of new technology, the interests of society in general, one business from another, and consumers.
Government needs business for generation of taxes.
Every aspect of the marketing mix is subject to laws and restrictions. It is the responsibility of marketing managers to understand and conform to these laws, while creating new programs to accomplish marketing objectives.
Notes:
Business needs government regulations to protect innovators of new technology, the interests of society in general, one business from another, and consumers.
Government needs business for generation of taxes.
Every aspect of the marketing mix is subject to laws and restrictions. It is the responsibility of marketing managers to understand and conform to these laws, while creating new programs to accomplish marketing objectives.
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25. of foreign and domestic competition
Chapter 4 The Marketing Environment
Competitive Factors
4-8
Explain the basics
of foreign and domestic competition
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Competitive Factors
Chapter 4 The Marketing Environment
How many competitors?
How big are competitors?
How interdependent is the industry?
Control
Notes:
The competitive environment encompasses the number of competitors a firm must face, the relative size of the competitors, and the degree of interdependence within the industry.
Management has little control over the competitive environment.
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Chapter 4 The Marketing Environment
Competitive Factors
Market Share
and Profits
Firms must work harder to maintain profits and market share.
Global
Competition
More foreign firms are entering U.S. market.
Foreign firms in U.S. now compete on product quality.
Notes:
Technological advances can usher in a whole new set of competitors that can change a firm’s business model.
Many foreign competitors are considering the U.S. to be a ripe target market. In the past, foreign firms penetrated U.S. markets on price. Today, they compete on product quality.
Global competition is discussed in Chapter 5.
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