Transcript Marketing Management - BYU Marriott School

Marketing Management
Marketing’s
Relationship to the
Firm and Society
Paul Dishman, Ph.D.
Department of Business Management
Marriott School of Management
Brigham Young University
Lecture 3
Marketing Management
Marketing
intermediaries
Economic
environment
Technical
environment
Product
Suppliers
Place
Target Price
customers
Publics
Promotion
Political/
legal
environment
Social/
cultural
environment
Competitors
Paul Dishman, Ph.D.
Marketing Management
Environmental Forces
Social
Economic
Technological
Regulatory
Competitive
Paul Dishman, Ph.D.
Marketing Management
Social Forces
1. Demographic shifts
2. Cultural changes
Paul Dishman, Ph.D.
Marketing Management
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
Paul Dishman, Ph.D.
Marketing Management
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
Paul Dishman, Ph.D.
Marketing Management
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.
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Marketing Management
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Major Population Segments
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.
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Marketing Management
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:
- entertainment
- communication
- information/education
- shopping
Paul Dishman, Ph.D.
Marketing Management
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
Paul Dishman, Ph.D.
Marketing Management
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:
–
–
–
–
Hispanic population growth
Asian population growth
African-American population growth
white population growth
35+%
35+%
11+%
3.6%
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Marketing Management
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
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– authors
Marketing Management
Economic Forces
1. Macroeconomic conditions
2. Consumer income
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Economic Cycles
Economic Conditions
Levels of Business Activity
Recovery
Prosperity
Recession
Depression
Recovery
Time
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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
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Marketing Management
Consumer Expectations
Consumer expectations of an inflationary or
recessionary U.S. economy is an important
element of environmental scanning.
Consumer spending, which accounts for
two-thirds of U.S. economic activity, is
affected by expectations of the future.
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Marketing Management
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
is a
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Ph.D.
bad time to buy from those who think it is a good time to buy and then adding 100.
Marketing Management
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.
Paul Dishman, Ph.D.
Marketing Management
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
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Marketing Management
Income distribution of U.S.
households
Under $10,000:
$100,000 or more:
9%
11 %
$75,000–$99,999:
9%
$10,000–$14,999:
8%
$50,000–$74,999:
18%
$35,000–$49,999:
16%
$15,000–$24,999:
15%
$25,000–$34,999:
13%
Paul Dishman, Ph.D.
Marketing Management
Technological Forces
1. Changing technology
2. Technology’s impact on customer value
Paul Dishman, Ph.D.
Marketing Management
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”
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Marketing Management
Regulatory Forces
1. Laws protecting competition
2. Laws affecting marketing mix actions
3. Self-regulation
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Marketing Management
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.
Paul Dishman, Ph.D.
Marketing Management
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
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Marketing Management
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
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Marketing Management
Other Legislation
Other Federal legislation is aimed at:
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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
Paul Dishman, Ph.D.