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
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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
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The External
Marketing Environment
Discuss the external
environment of marketing,
and explain how it affects a
firm
1
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4
Target Market
A defined group most likely to buy a product
• Changes as consumers age
• External elements change consumers’
desires
5
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1
The External Environment
Unless marketing managers understand the
external environment, the firm cannot
intelligently plan for the future.
Environmental Management
is…
when a company implements strategies
that attempt to shape the external
environment within which it operates.
6
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1
Social Factors
Describe the social factors
that affect marketing
2
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Social Factors
Attitudes
Values
Lifestyle
8
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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 and
services that meet one’s diverse needs
and interests rather than conforming to
a single, traditional lifestyle.
Today’s consumers want multifunctional products
No longer defined only by occupation
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2
Role of Families and Working Women
• Growth of dual-income families results in
increased purchasing power
• Approximately 59 percent of work-age
females are in the workforce
• Working wives bring in 45 percent of the
total family earnings.
• The phenomenon of working women has
probably had a greater effect on marketing
than any other social change.
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2
Technology and Time Use
• Leisure time accounts for 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.
13
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2
Demographic Factors
Explain the importance
to marketing managers of
current demographic trends
3
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14
Demographic Factors
People are the basis for any market
• Demographic characteristics relate to buyer
behavior
• Demographic cohorts have their own
needs, values, and consumption patterns.
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3
Tweens
 Pre- and early adolescents, age 8 to 12
 Population of 20 million
 Directly spend about $50 billion annually
 Parents spend $150 billion on tweens
annually
 View TV ads as “just advertising”
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3
Teens
 Population of about 25 million
 Spend approximately 72 hours per week
tuned in electronically
 View shopping as a social sport
 50 million teens around the world are on
Facebook
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3
Generation Y
• Born between 1979 and 1994
• Surpassed population of baby boomers
• Two Stages: 1) Those born in 1994 fit closer
to the Teen cohort. 2) 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
• Population of 40 million
• Independent, resilient, adaptable,
cautious, and skeptical
• 71 percent have children under age 18
• Home ownership is an important goal
• Avid buyers of the latest clothes,
technology, and recreational products
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3
Baby Boomers
• Born between 1946 and 1964
• Population of 75 million
• Working longer to compensate for
economic downturn, which affected
retirement savings
• The market of services directed at seniors
is one of the fastest growing business
markets
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3
Growing Ethnic Markets
Explain the importance to
marketing managers of
growing ethnic markets
4
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21
Growing Ethnic Markets
•
Estimated purchasing power of ethnic
markets in 2013:
•
•
•
•
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Hispanics: $1.5
trillion
African Americans: $1.2 billion
Asian Americans: $775 billion
The minority population of the United States
in 2011 reached 110 million.
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4
Marketing to
Hispanic Americans

The Hispanic population’s diversity creates
challenges for targeting this market.
 12 million Hispanics aged 20-34 in the United
States
 94 percent of U.S. Hispanics have home
Internet access.

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Highly responsive to new media: mobile
marketing and social media marketing
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4
Marketing to
African Americans
• 47 percent are between 18 and 49
years old
24
•
More firms are creating products
for the African American market.
•
Promotional dollars and media
choices directed toward African
Americans continue to increase.
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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.
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4
Economic Factors
Identify consumer and
marketer reactions to the
state of the economy
5
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26
Economic Factors
Consumers’
Income
Purchasing
Power
Inflation
Recession
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5
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.
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5
Purchasing Power is…
a comparison of income
versus the relative cost of a set
standard of goods and
services in different
geographic areas.
29
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5
Inflation is…
a measure of the decrease in
the value of money, expressed
as the percentage reduction in
value since the previous year.
30
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5
Recession is…
a period of economic activity
characterized by negative
growth, which reduces
demand for goods and
services.
31
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5
Technological Factors
Identify the impact of
technology on a firm
6
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32
Research
Basic Research
Applied Research
33
Pure research that aims to
confirm an existing theory or to
learn more about a concept
phenomenon.
An attempt to develop new or
improved products
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6
Stimulating Innovation
Build scenarios
Enlist the Web
Talk to early adopters
Use marketing research
Create an innovative environment
Cater to entrepreneurs
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6
Political and Legal Factors
Discuss the political and
legal environment
of marketing
7
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35
Political and Legal Factors
Laws and Regulations Protect:




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New technology
Society
Businesses
Consumers
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7
Federal Legislation
Regulate
competitive
environment
Regulate
pricing
practices
Control
false
advertising
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•
•
•
•
•
•
Sherman Act
Clayton Act
Federal Trade Commission Act
Celler-Kefauver Antimerger Act
Hart-Scott-Rodino Act
Foreign Corrupt Practices Act
Robinson-Patman Act
Wheeler-Lea Act
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7
State Laws
•
Legislation that affects marketing varies
state by state.
•
Oregon: limits utility advertising to 0.5 percent of
net income.
• California: bans trans fats in restaurants and
bakeries.
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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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7
Bureaus of the FTC
• Reviews mergers and acquisitions
Bureau of
Competition
• Challenges anti-competitive conduct
• Promotes competition
• Provides information
• Enforces federal laws that protect
Bureau of
Consumer
Protection
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consumers
• Empowers consumers with information
• Communicates with consumers about
fraud and identity theft
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7
Consumer Privacy
Government Actions
 CAN-SPAM Act
 Children’s Online Privacy Protection Act
Rule
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7
Competitive Factors
Explain the basics
of foreign and domestic
competition
8
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42
Competitive Factors
How many competitors?
Control
How big are competitors?
How interdependent is
the industry?
43
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8
Competitive Factors
Competition for
Market Share
and Profits
• Firms must work
harder to maintain
profits and market
share.
44
Global
Competition
• More foreign firms
are entering U.S.
market.
• Foreign firms in
U.S. now compete
on product quality.
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8
Chapter 4 Video
Scholfield Honda
Scholfield Honda demonstrates its commitment
to green living and it understanding that
customers who are interested in green living will
purchase from establishments who have the
same commitment.
© 2013 by Cengage Learning Inc. All Rights Reserved.
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