1. Copyright ©2009 by Cengage Learning Inc. All rights reserved 1 Prepared by Amit Shah Frostburg State University CHAPTER 4 Designed by Eric Brengle B-books, Ltd. Marketing Lamb, Hair, McDaniel 10 The Marketing Environment

2. Copyright ©2009 by Cengage Learning Inc. All rights reserved Target Market 2 LO 1 Target Market A defined group most likely to buy a firm’s product.

3. Copyright ©2009 by Cengage Learning Inc. All rights reserved Social Factors 3 LO 2 Values Attitudes Lifestyle

4. Copyright ©2009 by Cengage Learning Inc. All rights reserved Social Factors 4 LO 2 Social Factors Influence: Products purchased Prices paid for products Effectiveness of promotions How, where, and when people purchase

5. Copyright ©2009 by Cengage Learning Inc. All rights reserved Social Factors 5 LO 2 Self-Sufficiency Upward Mobility Work Ethic Conformity Core American Values

6. Copyright ©2009 by Cengage Learning Inc. All rights reserved The Influence of Values on Buying Habits 6 LO 2 Ranked Characteristics of Product Quality Reliability Durability Easy maintenance Ease of use Trusted brand name Low price

7. Copyright ©2009 by Cengage Learning Inc. All rights reserved Component Lifestyles 7 LO 2 Component Lifestyles Component Lifestyles The practice of choosing goods and services that meet one’s diverse needs and interests rather than conforming to a single, traditional lifestyle.

8. Copyright ©2009 by Cengage Learning Inc. All rights reserved Demographic Factors 8 LO 3 Demography The study of people’s vital statistics, such as their age, race and ethnicity, and location.

9. Copyright©2009 by Cengage Learning Inc. All rights reserved Tweens 9 LO 3  Pre- and early adolescents, age 9 to 14  Population of 20 million  Purchasing power of $21 billion in 2008  View TV ads as “just advertising”  Emerging as “the richest generation” and the “most influential generation in history”

10. Copyright©2009 by Cengage Learning Inc. All rights reserved Teens 10 LO 3  Population of 25 million in U.S.  Purchasing power of $195 billion annually  Approximately 72 hours per week tuned in electronically  68 percent of teens have created profiles on MySpace, Zanga, or Facebook  Shopping has become social sport: 62 percent love to shop

11. Copyright©2009 by Cengage Learning Inc. All rights reserved Generation Y  Born between 1979 and 1994  Population of 73 million  Purchasing power of $200 billion annually  Researchers have found Gen Yers to be: –Impatient –Family-oriented –Inquisitive –Opinionated –Diverse –Time managers –“Street Smart” –Connected 11 LO 3

12. Copyright©2009 by Cengage Learning Inc. All rights reserved Generation X  Born between 1965 and 1978  Population of 40 million  Savvy and cynical consumers  More protective and involved with their kids  Value the importance of education  Avid buyers of the latest clothes, technology, and recreational products 12 LO 3

13. Copyright©2009 by Cengage Learning Inc. All rights reserved Baby Boomers  Born between 1946 and 1964  Population of 77 million— the largest demographic segment  $2 trillion in spending power a year  Income will continue to grow as they keep working  Four segments of baby boomers: “Looking for balance” “Confident and living well” “At ease” “Overwhelmed” 13 LO 3

14. Copyright ©2009 by Cengage Learning Inc. All rights reserved Growing Ethnic Markets 14 LO 4  Spending power of ethnic markets in 2008: – Hispanics-- $1 trillion – African Americans-- $921 billion – Asian Americans-- $526 billion  Diversity can result in bottom-line benefits to companies.

15. Copyright©2009 by Cengage Learning Inc. All rights reserved Marketing to Hispanic Americans 15 LO 4  The population’s diversity creates challenges for targeting this group.  Hispanics tend to be brand loyal, but are not aware of many U.S. brands.  68% of U.S. Hispanics have home Internet access.

16. Copyright©2009 by Cengage Learning Inc. All rights reserved Marketing to African Americans 16 LO 4  Many firms are creating products for the African American market.  Promotional dollars and media choices directed toward African Americans continue to increase.

17. Copyright©2009 by Cengage Learning Inc. All rights reserved Marketing to Asian Americans 17 LO 4  Younger, better educated, and have highest average income of all groups  Sometimes called a “marketer’s dream  Many products have been developed for Asian American market.  Cultural diversity within the Asian American market complicates promotional efforts.

18. Copyright©2009 by Cengage Learning Inc. All rights reserved Ethnic and Cultural Diversity 18 LO 4  Multiculturalism: occurs when all major ethnic groups in an area (city, county, or census tract) are roughly equally represented  U.S. trend is toward greater multiculturalism  America’s racial and ethnic patterns have taken on distinctly regional dimensions

19. Copyright ©2009 by Cengage Learning Inc. All rights reserved Economic Factors 19 LO 5 Consumer’s Income Inflation Recession

20. Copyright ©2009 by Cengage Learning Inc. All rights reserved Purchasing Power 20 LO 5 Purchasing Power Purchasing Power A comparison of the relative cost of a set standard of goods and services in different geographic areas.

21. Copyright ©2009 by Cengage Learning Inc. All rights reserved Inflation 21 LO 5 Inflation A measure of the decrease in the value of the money, expressed as the percentage reduction in value since the previous year.

22. Copyright ©2009 by Cengage Learning Inc. All rights reserved Recession 22 LO 7 Recession A period of economic activity characterized by negative growth, which reduces demand for goods and services.

23. Copyright ©2009 by Cengage Learning Inc. All rights reserved Recession Marketing Strategies Improve existing products and introduce new ones Maintain and expand customer services Emphasize top-of-the-line products and promote product value 23 LO 5

24. Copyright ©2009 by Cengage Learning Inc. All rights reserved External Marketing Environment 24 LO 1 Demographics Social Change Social Change Economic Conditions Economic Conditions Political & Legal Factors Political & Legal Factors Technology Competition Environmental Scanning Target Market External Environment (uncontrollable) Ever-Changing Marketplace Product Distribution Promotion Price Product Distribution Promotion Price Internal (within the organization) Marketing mix

25. Copyright ©2009 by Cengage Learning Inc. All rights reserved Technological Factors 25 Innovation is becoming a global process. 25 most innovative firms achieved average profit margin growth of 3.4% per year LO 6

26. Copyright ©2009 by Cengage Learning Inc. All rights reserved Technological Factors U.S. excels at basic and applied research. Many firms use the market concept to guide research. New technology internally creates a long-term competitive advantage. External technology – Creates more efficient operation or better products – May render existing products obsolete 26 LO 6

27. Copyright ©2009 by Cengage Learning Inc. All rights reserved Political and Legal Factors 27 LO 7  New technology  Society  Businesses  Consumers Laws and Regulations Protect:

28. Copyright ©2009 by Cengage Learning Inc. All rights reserved Federal Legislation 28 LO 7 Sherman Act Clayton Act Federal Trade Commission Act Celler-Kefauver Antimerger Act Hart-Scott-Rodino Act Sherman Act Clayton Act Federal Trade Commission Act Celler-Kefauver Antimerger Act Hart-Scott-Rodino Act Regulate competitive environment Robinson-Patman Act Regulate pricing practices Wheeler-Lea Act Control false advertising

29. Copyright ©2009 by Cengage Learning Inc. All rights reserved Regulatory Agencies 29 LO 7 Consumer Product Safety Commission Federal Trade Commission Food & Drug Administration Protects consumer safety in and around their homes Prevents unfair methods of competition in commerce Enforces safety regulations for food and drug products

30. Copyright ©2009 by Cengage Learning Inc. All rights reserved Competitive Factors 30 LO 8 How many competitors? How big are competitors? How interdependent is the industry? Control