Marketing Management
Marketing
Environments
Paul Dishman, Ph.D.
Department of Business Management
Marriott School of Management
Brigham Young University
Lecture 3
1
Marketing Management
Paul Dishman, Ph.D.
Economic
environment
2
Marketing Management
Place
g n
tin tio
ke za
ar ni em
M ga yst
or s
Political/
legal
environment
Product
M
pl ark
sy ann etin
s t in g
em g
Target Price
customers
o
imrga Mar
pl niz ke
em at tin
en ion g
ta a
tio nd
n
Suppliers
in M a
fo rk
sy rm eti
st at ng
em io
n
Marketing
intermediaries
Technical
environment
Publics
Promotion
Competitors
Social/
cultural
environment
Paul Dishman, Ph.D.
Environmental Forces
Social
Economic
Technological
Regulatory
Competitive
3
Marketing Management
Paul Dishman, Ph.D.
Social Forces
1. Demographic shifts
2. Cultural changes
4
Marketing Management
Paul Dishman, Ph.D.
Social Trends
• move toward “natural” and healthful products
and lifestyles
• growing number and importance of older
Americans
• population shifts to remote suburbs and small
towns
• greater desire for product simplicity and
honesty in advertising
5
Marketing Management
Paul Dishman, Ph.D.
The Population Trend
• 1999 U.S. Population estimated at 272 million
• number of people ages 20-34 has declined since
1990 and the number over 65 has increased
• mature households (age 50+) represent the
fastest growing age segment and possess 75%
of the net worth of U.S. households
6
Marketing Management
Paul Dishman, Ph.D.
Population Shifts in the U.S.
• In the 1980s and 1990s the U.S. population has
shifted toward Western and Sunbelt states.
• Through 2025 three states--California, Texas,
and Florida--will account for 45 percent of the net
population change in the U.S.
• From the 1930s to 1980s the population shifted
from cities to suburbs.
• 1990s the population is shifting again from
suburbs to more remote suburbs called exurbs
and to smaller towns called penturbia.
7
Marketing Management
Paul Dishman, Ph.D.
Major Population Segments
8
•
Baby Boomers: generation of 78 million born between
1946 and 1965, accounts for 56-58 percent of purchases
of most consumer product and service categories.
•
Generation X: 17 % of the U.S. population born between
1965 and 1976. Consumers who are self-reliant,
entrepreneurial, supportive of diversity; better educated
than previous generations; not prone to extravagance
and likely to prefer lifestyles, products, and services that
are very different from baby boomers.
•
Baby Boomlet: Americans born after 1976; also
described as Generation Y or the Net Generation.
Marketing Management
Paul Dishman, Ph.D.
The Net Generation
•
80 million people under the age of 22 who have grown up
with the new technologies, becoming authorities in their
use.
• As the Internet has become the focus of the digital age,
the Net Generation has become the first group to use it
consistently for:
9
- entertainment
- communication
- information/education
- shopping
Marketing Management
Paul Dishman, Ph.D.
Changes in the American Family
• 30 years ago 40% of all households consisted
of married couples with children; this number
has declined to 25%.
• 25% of all households consist of people who
live alone
• 28% of married households are without children
• the fastest growing types of households are
those with
– single parents
– other family members
– unrelated persons
10
Marketing Management
Paul Dishman, Ph.D.
Racial and Ethnic Diversity
• Slightly more than one in four U.S. residents is
African-American, Hispanic, Asian, or a
representative of another racial or ethnic
group.
• The racial and ethnic composition of the U.S.
population is expected to change even more by
2010, as since 1990:
–
–
–
–
11
Hispanic population growth
Asian population growth
African-American population growth
White population growth
Marketing Management
35+%
35+%
11+%
3.6%
Paul Dishman, Ph.D.
The Changing Role of Women
• The percentage of women in the work force rose
from 46 to 60 percent between 1975 and 1998.
• Women account for 11% of the officers and
directors of the 500 largest corporations in the
U.S.
• Women account for more than half of all:
– financial managers
– accountants and auditors
– technical writers
– economists
– public relations specialists
– authors
12
Marketing Management
Paul Dishman, Ph.D.
Economic Forces
1. Macroeconomic conditions
2. Consumer income
13
Marketing Management
Paul Dishman, Ph.D.
Economic Cycles
Economic Conditions
Levels of Business Activity
Recovery
Prosperity
Recession
Depression
Recovery
Time
14
Marketing Management
Paul Dishman, Ph.D.
Economic Trends
• dramatic growth of electronic commerce
• increase in per-capita income and standard of
living
• U.S. firms adjust to crises in international
markets
• economic growth reduces concern about
inflation and budget deficit
15
Marketing Management
Paul Dishman, Ph.D.
Consumer Expectations
Consumer expectations of an inflationary or
recessionary U.S. economy is an important
element of environmental scanning.
Consumer spending, which accounts for twothirds of U.S. economic activity, is affected by
expectations of the future.
16
Marketing Management
Paul Dishman, Ph.D.
University of Michigan Consumer Sentiment Index
and Automobile Sales
Consumer Sentiment Index (CSI)
190
170
150
130
110
90
70
50
30
Vehicle sales (millions of units)
18.0
16.0
14.0
12.0
10.0
8.0
6.0
CSI
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
Vehicle sales
Note: The consumer sentiment index is calculated by subtracting the share of consumers who think it is a
bad time to buy from those who think it is a good time to buy and then adding 100.
17
Marketing Management
Paul Dishman, Ph.D.
Consumer Income
A consumer’s ability to buy is related to income, which
consists of:
– gross income: the total amount of money made in
one year by a person, household, or family unit;
– disposable income: the money a consumer has left
after paying taxes
– discretionary income: the money that remains after
paying for taxes and necessities.
18
Marketing Management
Paul Dishman, Ph.D.
Average Annual Household Spending by Category
1987
1997
Food
Alcoholic
Beverages
Housing
Apparel and
Services
Transportation
Health Care
Entertainment
Personal Care
Products and Services
Readings
Education
Tobacco Products
Miscellaneous
$0
2000
4000
6000
8000
10000
Source: Bureau of Labor Statistics, 1987 and 1997, Consumer Expenditure Surveys; calculations by the Author
19
Marketing Management
Paul Dishman, Ph.D.
Income distribution of U.S. households
$100,000 or more:
9%
Under $10,000:
11%
$75,000-– $99,999:
9%
$10,000–$14,999:
8%
$50,000–$74,999:
18%
$35,000–$49,999:
16%
20
Marketing Management
$15,000–$24,999:
15%
$25,000–$34,999:
13%
Paul Dishman, Ph.D.
Technological Forces
1. Changing technology
2. Technology’s impact on customer value
21
Marketing Management
Paul Dishman, Ph.D.
Technological Trends
• increased use of information and
communication technology
• growing focus on the Internet as consumers
and businesses go online
• expanded computer power and growth of
“smart” products
• growing use of electronic money or “e-cash”
22
Marketing Management
Paul Dishman, Ph.D.
Regulatory Forces
1. Laws protecting competition
2. Laws affecting marketing mix actions
3. Self-regulation
23
Marketing Management
Paul Dishman, Ph.D.
Laws
Wacky, Outdated Laws Still on the Books
• In Utah, birds have the right of way on all highways.
• In Omaha, Nebraska, barbers are forbidden from shaving
their customers’ chests.
• In Oklahoma people who make “ugly faces” at a dog may
be fined and/or jailed.
• In Georgia, it is illegal to change the clothes on a
storefront mannequin unless
the shades are down.
• In South Bend, IN, monkeys are forbidden to smoke
cigarettes.
• In Alaska, it is illegal to serve alcoholic beverages to a
moose.
24
Marketing Management
Paul Dishman, Ph.D.
Regulatory Trends
• increasing emphasis on free trade and
deregulation
• greater concern for pollution and global warming
• new legislation related to information collection
and privacy
• new legislation to encourage consumer savings
25
Marketing Management
Paul Dishman, Ph.D.
Legislation Protecting Competition
Major legislation has been passed to encourage
competition, which is deemed desirable because
it permits the consumer to determine which
competitors will succeed or fail. Relevant
legislation includes:
Sherman Antitrust Act (1890)
- forbids restraint of trade
Clayton Act (1914)
- forbids actions that lessen competition
Robinson-Patman Act (1936)
- unlawful to discriminate in prices charged for same product
26
Marketing Management
Paul Dishman, Ph.D.
Other Legislation
Other Federal legislation is aimed at:
•
•
•
•
•
•
products
companies
consumers (consumerism)
both company and consumer
pricing (fixing/unfair/discriminatory)
distribution (exclusive dealing, requirement
contracts, exclusive territorial distributorships, and
typing arrangements)
• Advertising and promotion controls
• self-regulation
27
Marketing Management
Paul Dishman, Ph.D.
Other Legislation
Other Federal legislation is aimed at:
•
•
•
•
•
•
products
companies
consumers (consumerism)
both company and consumer
pricing (fixing/unfair/discriminatory)
distribution (exclusive dealing, requirement contracts,
exclusive territorial distributorships, and typing
arrangements)
• Advertising and promotion controls
• self-regulation
28
Marketing Management
Paul Dishman, Ph.D.
Competitive Environment
29
Marketing Management
Paul Dishman, Ph.D.