Marketing
Chapter 2
Environmental Analysis
Gilbert A. Churchill, Jr.
J. Paul Peter
Slide
2-1
Factors in the Environment
Marketing
Mix
Ever-Changing
Marketplace
Social
Natural
Target
Market
Economic
Competition
Product
Place
Promotion
Price
Political &
Legal Factors
Technology
Environmental
Scanning
Slide
2-2
Environmental Scanning
Opportunity
Threat
Technological Advances
(Positive Change)
Personal
Computer
Industry
Typewriter
Industry
Increase in Crime Rate
(Negative Change)
Home
Security
Industry
Tourism
Industry
The practice of tracking external changes that can affect markets, including demand
for goods and services.
Slide
2-3
Economic Environment
Economic
Environment
Competitive
Environment
P
P
Political
and Legal
Environment
TM
Technological
Environment
P
P
Social
Environment
Natural
Environment
The overall economy, including business cycles, consumer income and
spending pattern.
Slide
2-4
Figure
2.2
Basic Pattern of a Business Cycle
Level of
Business
Activity
Prosperity
Prosperity
Recovery
Recession
Recession
Time
The pattern of the level of business activity
Slide
2-5
Consumer Factors
Indicators
Consumer Income
Inflation
A rise in the overall price level.
Gross
Income
The total amount of money earned in one year
by an individual or household.
Disposable
Income
The money an individual or household has left
after paying taxes.
Discretionary The money an individual or household has left
after paying taxes and living expenses.
Income
Slide
2-6
The Political and Legal Environment
Economic
Environment
Competitive
Environment
P
P
Political
and Legal
Environment
TM
Technological
Environment
P
P
Social
Environment
Natural
Environment
The laws, regulations and political pressures affecting marketers.
Slide
2-7
Political & Legal Factors
Legislation
Impact on Marketing
Sherman Act
(1890)
Prohibits combination, contracts, or
conspiracies to trade or monopolization
Clayton Act
(1914)
Prohibits, price discrimination, tying clauses,
and exclusive dealer arrangements
FTC Act
(1914)
Created the FTC and gave it investigatory power
to deal with antitrust powers
RobinsonPatman Act
(1936)
Prohibits sellers from offering different deals to
different customers for like grade & quantity
Slide
2-8
The Social Environment
Economic
Environment
Political
and Legal
Environment
Competitive
Environment
P
P
TM
Technological
Environment
P
P
Social
Environment
Natural
Environment
The people in a society and their values, beliefs and behaviors.
Slide
2-9
Figure
2.4
Population Changes: 1990-2010
Alaska
Hawaii
Percent gain
15.0 to 50.1
5.0 to 14.9
0 to 4.9
Loss
Source: U.S. Bureau of the Census, Current population Reports, Series P-25. No. 1053, Projections
of the population of States by Age, Sex, and race: 10\990
Slide
2-10
Social Responsibility & Ethics
Issues
Definition
Concern for the social consequences of a
Social
person’s or institution’s acts as they may affect
Responsibility
the interests of others.
Ethics
The moral principles and values that govern the
way an individual or group conducts its
activities.
Marketing
Ethics
The principles, values, and standards of conduct
considered appropriate for marketers.
Morals
Vs
Laws
Morals - rules people develop as a result of cultural
values and norms.
Laws - values and standards enforced by the courts.
Slide
2-11
The Natural Environment
Economic
Environment
Political
and Legal
Environment
Competitive
Environment
P
P
TM
Technological
Environment
P
P
Social
Environment
Natural
Environment
The natural resources available to or affected by the organization.
Slide
2-12
Natural Environment
Issues
Definition
Demarketing
A marketing strategy used to decrease the
consumption of a product (e.g., electricity).
Green
Marketing
Marketing efforts designed to minimize negative
effects on the physical environment or to
improve its quality (e.g., Gillette, P & G, Post).
Cause-related
Marketing
Marketing designed to promote a cause or an
issue (e.g., Target).
Social
Marketing
Firms attempt to encourage positive behavior
(e.g., increase literacy, discourage drunk driving).
Slide
2-13
The Technological Environment
Economic
Environment
Competitive
Environment
P
P
Political
and Legal
Environment
TM
Technological
Environment
P
P
Social
Environment
Natural
Environment
Scientific knowledge, innovations and inventions that result from research.
Slide
2-14
Technology Environment
Issues
Definition
Internet
An international network of computers that provides
people global communication and access to million of
information resources.
HTML
Hyper Text Mark-up Language - the language used to
design web pages.
World Wide
Web
A hypertext system that allows users to receive text,
graphics, video, and sound by clicking on particular
words and images.
Browser
A software program that runs on a personal computer and
provides graphical user interface to the WWW (e.g.,
Netscape Navigator, Microsoft Internet Explorer).
Slide
2-15
Where Are WWW Users Located?
Oceania 4%Other 2%
Asia 2%
Canada &
Mexico 8%
Europe 11%
United States 73%
Source: GVU’s Fifth WWW User Survey, 1996
Slide
2-16
Internet Security and Privacy Issues
Electronic Cash
Key
Security/Privacy
Internet
Considerations
Cookies
Firewalls
Spamming
Slide
2-17
Competitive Environment
Economic
Environment
Competitive
Environment
P
P
Political
and Legal
Environment
TM
Technological
Environment
P
P
Social
Environment
Natural
Environment
All the organizations that could potentially create value for the organization’s
customers.
Slide
2-18
Competitive Factors
Type
Description
Monopoly
One Seller, No Close Substitutes
Monopolistic
Competition
Large Number of Sellers, Products
Distinguishable
Oligopoly
Few Sellers, High Barriers to Entry,
Seek Nonprice Advantage
Pure
Competition
Many Sellers, Identical Products, Focus on
Lower Product and Distribution Costs
Slide
2-19
Figure
2.5
Types of Competitive Forces
Threat of
New
Entrants
Bargaining
Power of
Suppliers
Source: Adapted with permission from Michael F.
Porter, “Industry Structure and Competitive
Strategy: Keys to Productivity:, Financial Analysts
Journal, July-August 1980. ©1980. The Financial
Analysts Federation, Charlottesville, VA. All rights
reserved.
Rivalry
among
Existing
Competitors
Threat of
Substitute
Products
Bargaining
Power of
Buyers