Lamb, Hair, McDaniel
2012-2013
CHAPTER 4
The Marketing Environment
Copyright ©2012 by Cengage Learning Inc. All rights reserved
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Chapter 1
Learning Outcomes
1
2
3
4
2
Discuss the external environment of
marketing, and explain how it affects a firm
Describe the social factors that affect
marketing
Explain the importance to marketing
managers of current demographic trends
Explain the importance to marketing
managers of growing ethnic markets
Learning Outcomes
5
6
7
8
3
Identify consumer and marketer reactions to
the state of the economy
Identify the impact of technology on a firm
Discuss the political and legal environment
of marketing
Explain the basics of foreign and domestic
competition
The External
Marketing Environment
The external environment
of marketing and how it
affects a firm
1
4
Target Market
“A group of people or organizations for which
a firm designs, implements and maintains
a marketing mix intended to meet the needs
of that group.” (or, the group most likely to
buy a product)
• Age affects consumers
behavior, needs & desires
• External elements affect
consumers’ needs and desires
5
1
The External Environment
Unless marketing managers understand the
external environment, the firm cannot
intelligently plan for the future.
Environmental Management
When a firm implements strategies that
attempt to shape the external
environment within which it operates.
6
1
Environmental ScanningRemember this Slide? (Ch. 2)
Helps identify Opportunities and Threats
Designing a marketing strategy is based on six
major environmental forces or factors:
 Economic
 Political/Legal
 Technological
 Social
 Competitive
 Demographic
7
5
Social Factors (1)
Factors affecting marketing
1.
2.
3.
4.
5.
6.
Social
Demographic
Economic
Technological
Political/Legal
Competitive
2
8
Social Factors
Attitudes
Values
Lifestyle
Remember “values” from Chapter 3?
9
2
American Values
Core American
Values
Emerging Trends
Self-Sufficiency
Getting off the grid
Upward Mobility
Meaningful green
Work Ethic
EcoTechMed
Conformity
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2
The Influence of
Values on Buying Habits
Ranked Characteristics of Product Quality
Reliability
Durability
Easy maintenance
Ease of use
Trusted brand name
Low price
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2
Component Lifestyles
•The practice of choosing goods & services that meet
one’s diverse needs and interests rather than
conforming to a single, traditional lifestyle.
•Today’s consumers want multifunctional products
•Consumers are no longer defined by their occupation
•Component lifestyles increase the complexity of
buying habits
http://www.youtube.com/watch?v=Mig7E5FtaAI&feature=related
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2
Changing Roles of Families and
Working Women
• Growth of dual-income families has resulted in
increased purchasing power
• Approx. 59% of females aged 16-65 are working
• Working wives bring in 45% of family income
• Working women have had a
greater effect on marketing
than any other social change.
http://www.youtube.com/watch?v=t7wmPWTnDbE
(remember cause-related marketing, chapter 3?)
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2
Technology and Time Use
• Leisure time = less than 6 hours a day !!
• About 40 percent of American adults check
work email on vacation !!
• Constant digital immersion
can decrease a person’s
attention span.
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http://www.youtube.com/watch?v=uzvyDGLqCIE&feature=results
_video&playnext=1&list=PL56210C21DA3C7A2B
2
Demographic Factors (2)
The importance to
marketing managers
of current
demographic trends
3
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Demographic Factors
People are the basis for any market
• Demographic characteristics are strongly
related to buyer behavior
• Demographic cohorts have their own needs,
values, and consumption patterns
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3
Tweens
 Pre- and early adolescents
 Ages 8 - 12
 Population of 20 million
 They spend about $50 billion annually
 Their parents spend $150 billion annually
 They view TV ads as “just advertising”
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3
Teens
 Ages 13-19
 Population of about 25 million
 They spend approximately 72 hours per
week tuned in electronically
 They view shopping as a social sport
 FB: 50 million teens (effect on marketers?)
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3
Generation Y
• Born between 1979 and 1994
• Ages 19-33
• Surpassed population of baby boomers
• Those born in 1994 fit closer to the Teens
• Those born in 1979 have established
careers and started families
• Purchasing power of $200 billion annually
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3
Generation X
• Born between 1965 and 1978
• Ages 34-47
• Population of 40 million
• Independent, resilient,
adaptable, cautious, skeptical
• 71 percent have children under the age of 18
• Home ownership is an important goal
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• Avid buyers of the latest clothes,
technology, and recreational products
3
Baby Boomers
• Born between 1946 and 1964
• Ages 48-66
• Population of 75 million
• Working longer to compensate
for economic downturn, which
affected retirement savings
• Services directed at seniors is one of the
fastest growing business markets
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3
Growing Ethnic Markets
The importance to
marketing managers of
growing ethnic markets
4
22
Growing Ethnic Markets
•
Estimated purchasing power of ethnic
markets in 2013:
•
Hispanics: $1.5 trillion
• African Americans: $1.2 billion
• Asian Americans: $775 billion
•
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The minority population of the United
States in 2011 reached 110 million.
4
Marketing to
Hispanic Americans

Hispanic population’s diversity creates
challenges for targeting this market.
 12 million Hispanics aged 20-34 in
the U.S.
 94 percent of U.S. Hispanics have
home Internet.

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Highly responsive to new media:
mobile marketing and social media
marketing.
4
Marketing to
African Americans
25
•
47 percent are between 18
and 49 years old
•
More firms are creating
products for the African
American market.
•
Promotional dollars and
media choices directed
toward African Americans
continue to increase.
4
Marketing to
Asian Americans
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•
Younger, better educated, and have highest
average income of all groups
•
Early adopters of latest digital gadgets
•
Cultural diversity within the Asian American
market complicates promotional efforts
4
Economic Factors (3)
Consumer and
marketer reactions to the
state of the economy
5
27
Economic Factors
/
a-Consumers
Income
b-Purchasing
Power
c-Inflation
d-Recession
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5
a-Consumers’ Incomes
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•
Median U.S. household income
in 2010 was approximately $50,000
•
Incomes have risen at a slow pace
in recent years
•
Education is the primary
determinant of earning potential
5
b-Purchasing Power
A comparison of income versus the
relative cost of a set standard of
goods and services in different
geographic areas.
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5
c-Inflation
A measure of the decrease in
the value of money, expressed
as the percentage reduction in
value since the previous year.
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5
d-Recession
A period of economic activity
characterized by negative
growth, which reduces
demand for goods and
services.
32
5
Technological Factors (4)
The impact of
technology on a firm
6
33
Research
Basic Research
Pure research that aims to
confirm an existing theory or to
learn more about a concept
phenomenon.
An attempt to develop new or
Applied Research improved products
34
6
Political and Legal Factors (5)
The political and
legal environment
of marketing
7
35
Political and Legal Factors
Laws and Regulations Protect:




New technology
Society
Businesses
Consumers
http://www.youtube.com/watch?v=sqS83f-NUww
http://www.youtube.com/watch?v=DF39Ygp53mQ
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7
Federal Legislation
Regulate
competitive
environment
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•
•
•
•
•
•
Sherman Act
Clayton Act
Federal Trade Commission Act
Celler-Kefauver Antimerger Act
Hart-Scott-Rodino Act
Foreign Corrupt Practices Act
Regulates
pricing
practices
Robinson-Patman Act-- $$$
Controls
false
advertising
Wheeler-Lea Act
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State Laws
•
Legislation that affects marketing varies
state by state.
•
California: bans trans fats in restaurants and
bakeries
• NYC: soft drink ban, prohibits servings of no
larger than 16 ounces (Mayor Bloomberg)
38
7
Regulatory Agencies
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Consumer
Product Safety
Commission
Protects consumer safety in
and around their homes
Federal Trade
Commission
Prevents unfair methods of
competition in commerce
Food & Drug
Administration
Enforces safety regulations for
food and drug products
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Competitive Factors (6)
Competition for
Market Share
and Profits
• Firms must work harder
to maintain profits and
market share.
40
Global
Competition
• More foreign firms
are entering U.S.
market.
• Foreign firms in
U.S. now compete
on product quality.
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