Transcript PHMY 529 - The Environment of MARKETING

MKTG 504 - The Environment
of MARKETING
Marketers react to the
environment
Dr. Dennis Pitta
University of Baltimore
The Environments of
Marketing
Technological Environment
Economic Environment
Competitive Environment
Sociological Environment
Political-Legal Environment
Global Environment
Let’s look at an example….
Monroe calculator Features
weighs 65 lbs
uses 120/220 volt current
mechanical keys enter data
mechanical gears perform calculations
electrical motors move the gears and the
display
multiplication = multiple addition
division = something strange
Monroe calculator
Advantages
higher accuracy than hand calculation
faster than hand calculation
Monroe calculator
BENEFITS
It worked…
Reduced worker
effort
Higher accuracy
NON-BENEFITS
Not Portable
When you divide by
0 it ______________
Dust is a problem
Square root?
Too expensive
($1,000!!!)
Display Devices for Calculators
The Number Wheel Behind a
Window (e.g. Monroe Calculators)
Multifilament Vacuum Tubes ( e.g.
Burroughs)
Burroughs calculator
FEATURES
MULTI-FILAMENT VACUUM TUBES
weighs 50 lbs
uses 120 volt current
mechanical keys enter data
circuits make calculations and light
filaments
multiplication, division, square root = real
calculation
$750
Burroughs calculator
BENEFITS
It worked…
Reduced worker
effort
Higher accuracy
No division error
problem
Dust not a problem
Advanced functions
Less expensive
Easier to repair
NON-BENEFITS
Not Portable
Display Devices for Calculators
L. E. D.. (Light Emitting Diodes) (e.g.
Novus, Bowmar)
L. C. D.. (Liquid Crystal Displays) (e.g.
Casio, Panasonic)
L. E. D. calculators
FEATURES
Run on batteries (but don’t leave them
on..)
Integrated circuits allow advanced
calculations
Weigh less than a pound
Initially cost $US125 for 4 functions plus
square root
L. E. D. calculators
BENEFITS
It worked as well as
the others
Higher accuracy
No division error
problem
Dust not a problem
Advanced functions
Less expensive
PORTABLE!
NON-BENEFITS
Battery life not
infinite
L. C. D. calculators
FEATURES
Run on batteries with very low current
drain
Integrated circuits allow advanced
calculations
Weigh less than a pound
Initially cost $50 for 4 functions plus
square root
L. C. D. calculators
BENEFITS
It worked as well as
the others
Higher accuracy
No division error
problem
Dust not a problem
Advanced functions
Less expensive
PORTABLE!
Solar!!
NON-BENEFITS
Does not work in the
dark
What effect have the changes in
display devices had on
competition?
_______________________
_______________________
_______________________
Technological Environment
Technology = Knowledge to do new or
old tasks better
Invention = result of technology
Innovation = result of introducing
inventions in the marketplace
Technology and Marketing
Impact on Competition
Impact on Costs and Productivity
Impact on the Marketing Mix (Product,
Price, Promotion, Distribution)
Economic Environment
The Business Cycle = cyclical changes
in the economy
Stages in the Business Cycle
Prosperity
Recession
DEPRESSION
Recovery
Inflation
Decline in buying power due to
price levels rising more rapidly
than incomes.
Unemployment
Occurs when people want
to work and actively look
for work, but are unable to
find employment.
THE COMPETITIVE ENVIRONMENT
PERFECT COMPETITION
MONOPOLISTIC COMPETITION
OLIGOPOLY
MONOPOLY
Perfect Competition
Many Small sellers.
Many Small Buyers.
Homogeneous Product.
No Entry/Exit Barriers.
 Perfect Information.
All buyers buy and all sellers sell under the
same conditions.
Monopoly
ONE SELLER
PRICE: What the market will bear.
Oligopoly
Few Sellers
Entry into Industry - Difficult
Action of one firm affect others
Each firm has a large share of the
industry’s customers.
What is competition like in
the deodorant category?
Name three brands ____________
_____________ _____________
What are the prices like?
What do the advertisements say?
Monopolistic Competition
Each seller’s product
DIFFERENTIATED (Somewhat).
The higher the differentiation, the
more control the seller has over price.
(No close substitutes.)
The Post-Industrial Service
Economy
Increasing proportion of U.S. Jobs in
services.
Service industries provide more high
or low paying jobs - less in the middle.
Marketers who target high or low end
consumers should do well, those who
target the middle may not do well.
Political-Legal Environment
Government the major element of the
Political- Legal environment
Actions of Government
..the US example
Regulating and stabilizing the
economy.
Facilitating the marketing functions:
Transportation - highways
Communication - U. S. P. S.
Marketing Information - statistical data
Customer
Marketing and the Law
Protecting Competition
Sherman Antitrust Act
“Every contract, combination, or
conspiracy in restraint of trade.”
Robinson-Patman Act
“Like discounts on like grade and
quantity”
Marketing and the Law
Protecting Consumers
Wheeler-Lea Act
“Unfair or deceptive acts or
practices in commerce”
Government and the
competitive Environment
In other words, the FTC and the
Competitive Environment
Which one does the FTC target?
Monopoly
Oligopoly
Monopolistic
Perfect Competition
Government and the
competitive Environment
In other words, the FTC and the
Competitive Environment
Which one does the FTC target?
Monopoly
Oligopoly 
Monopolistic
Perfect Competition
Why does the FTC target
Oligopolies?
All the monopolies have been
identified - or are not significant.
An Oligopoly could be “A MONOPOLY
IN OLIGOPOLY CLOTHING!”
Government and the
Competitive Environment
The FTC uses a technique which
stresses:
STRUCTURE (COMPETITIVE
STRUCTURE)
CONDUCT (COMPETITIVE
TECHNIQUES)
and PERFORMANCE (R.O.I.)
Quantitative measures
OLIGOPOLY? => if the top five firms
have more than _____% market share
Conduct?? => what are the techniques
used in the industry?
ROI? => if it is greater than ____%
Remedies
The US government can:
cross license the brand
break up the company (ala Microsoft)
How Do Marketers Compete?
Imitation
Differential Advantage
Price Competition
Non-Price Competition
Enhanced services
Filling a niche
Different distribution
Hypothetical Market
Structure & Competition
Market
leader
40%
Expand Market
Defend Market Share
Expand Market Share
Market
challenger
30%
Attack leader
Status quo
Market
nicher
Market
follower
20%
Imitate
10%
Specialize
Optimal Market Share
Profitability
Optimal market share
0%
25%
50%
75%
Market share
100%
Socio-Cultural
Environment
The Marketer’s relationship to society.
Important because a marketer’s
market exists in the socio-cultural
environment.
- Changes in socio-cultural
environment important for “needs.”
Social Responsibilities.
Global Environment
Global economics,
competition, technology
and politics affect even
domestic marketers.
Environmental Monitoring
The process by which a
marketing organization,
identifies, analyzes, and
forecasts the impact of relevant
environmental forces on it.
Upcoming Topics
Segmentation