CHAPTER
SCANNING THE
MARKETING
ENVIRONMENT
External Marketing Environment
External Environment
is not controllable
Social
Change
Demographics
Ever-Changing
Marketplace
Economic
Conditions
Product
Distribution
Promotion
Price
Competition
Target Market
Political &
Legal Factors
Environmental
Scanning
Technology
An environmental scan of today’s marketplace
Social ForcesThe Poverty of Time
A lack of time to do anything but
work, commute to work, handle
family situations, do housework,
shop, eat, sleep...
SOCIAL FORCES- Demographics
 The World Population at a Glance – 6.4 billion
Growth in developing nations
Shift of age structure of populations
Rising income levels and living standards
Implications?
Social Forces - Demographics
 The U.S. Population – 297 Million
 Growth by immigration = niche markets
 Generational Cohorts
• Baby Boomers-‘46-’64 -Increased earnings-seek youth
• Generation X-’65-’76 -Well educated, more tolerant, practical
• Generation Y-’77-’94 - (Millennials) techno-savvy, live for today
SOCIAL FORCES
• Demographics
 Population Shifts toward West & South – Why?
• Metropolitan Statistical Area – 362-80%
50,000- urban center; suburban collar up to 2.5M
Ex-Chicago
• Micropolitan Statistical Area-573-10%
•10,000-50,000 urban center; large suburb collar
Ex-Carbondale
ECONOMIC FORCES -Economy
• Macroeconomic Conditions
– Inflation-rise in prices without rise in wages
– Recession-drop in income, production and employment
• Microeconomic Conditions
– Consumer Income
Gross Income – 100% of earnings
Disposable Income-85% of earnings
Discretionary Income-15% of earnings
ECONOMIC FORCES
 Disposable vs Discretionary income
Implications?
Income Distribution of U. S. Households
Technological Factors
•
New technology is a weapon against inflation
and recession
•
U.S. excels at basic research
Japan excels at applied research
•
•
Information technology and the Internet have
increased productivity
COMPETITIVE FORCES -Competition
REGULATORY FORCES
• Protecting Competition
 Sherman Antitrust Act (1890) – no monopolies
 Clayton Act (1914)- no monopoly activity
 Robinson-Patman Act (1936)no differential pricing to undercut “little” guy
REGULATORY FORCES
• Product-Related Regulation
 Company Protection
• Patent Law
-for ideas and inventions
• Copyright Law
-for written works
• Digital Millennium Copyright Act (1998)
-for DVD’s, MP3’s & software
REGULATORY FORCES
• Product-Related Regulation
 Consumer Protection
• Nutritional Labeling & Education Act (1990)
• Consumer Product Safety Act (1972)
 Consumer Product Safety Commission
•The above and other laws came about
due to cultural shift towards Consumerism
REGULATORY FORCES
• Advertising and Promotion-Related
Legislation
 FTC Act of 1914-no deceptive ads or practices
•Penalties are:
•Cease and Desist Order
• Corrective Advertising
 Do Not Call Registry
 Children’s online privacy Protection Act 1998
 CAN-SPAM Act (2004)
Environmental Scanning
Environmental scanning is the process
of continually acquiring information on
events occurring outside the organization
to identify and interpret potential trends.
Demographics
Demographics describes a population
according to selected characteristics such
as age, gender, ethnicity, income, and
occupation.
Baby Boomers
Baby boomers is the generation of
children born between 1946 and 1964.
Generation X
Generation X includes the 15% of the
U.S. population born between 1965 and
1976.
Generation Y
Generation Y includes the 72 million
Americans born between 1977 and 1994.
Culture
Culture incorporates the set of values,
ideas, and attitudes that are learned and
shared among the members of a group.
Economy
The economy pertains to the income,
expenditures, and resources that affect the
cost of running a business and household.
Technology
Technology refers to inventions from
basic engineering research or innovations
from applied science research.
Competition
Competition refers to the alternative
firms that could provide a product to
satisfy a specific market’s need.
Consumerism
Consumerism is a grassroots movement
started in the 1960s to increase the
influence, power, and rights of consumers
in dealing with institutions.