Transcript Chapter 1 - Weber State University

Lamb, Hair, McDaniel
2010-2011
CHAPTER 4
The Marketing Environment
1
Learning Outcomes
LO 1 Discuss the external environment of marketing,
and explain how it affects a firm
LO 2 Describe the social factors that affect marketing
LO 3 Explain the importance to marketing managers
of current demographic trends
LO 4 Explain the importance to marketing managers
of multiculturalism and growing ethnic markets
2
Learning Outcomes
LO 5 Identify consumer and marketer reactions to
the state of the economy
LO 6 Identify the impact of technology on a firm
LO 7 Discuss the political and legal environment
of marketing
LO 8 Explain the basics of competition
3
The External
Marketing Environment
Discuss the external
environment of
marketing,
and explain
how it affects a firm
LO1
4
Target Market
Defined group most likely to buy a product
• Changes as consumers age
• External elements change
consumers’ desires
LO1
5
External Marketing
Environment
Internal
(within the
organization)
External Environment
(uncontrollable)
Social
Change
Demographics
Ever-Changing
Marketplace
Marketing mix
Economic
Conditions
Product
Distribution
Promotion
Price
Competition
LO1
Environmental
Scanning
Target
Market
Political &
Legal Factors
Technology
6
Understanding Competition
• TJ Maxx offers designer brands at discount
prices
• 2009 campaign compares the stores prices to those at
boutiques and department stores:
– http://www.metacafe.com/watch/2591384/tj_maxx_commer
cial_6/
– Acknowledging budgetary restraints will drive budget
conscious shoppers to the store
LO1
7
Social Factors
Describe the social factors
that affect marketing
LO2
8
Social Factors
Attitudes
Values
Lifestyle
LO2
9
Social Factors
Social Factors Influence:
Products purchased
Prices paid for products
Effectiveness of promotions
How, where, and when people purchase
LO2
10
Social Factors
Core American Values
Self-Sufficiency
Upward Mobility
Work Ethic
Conformity
LO2
11
The Influence of
Values on Buying Habits
Ranked Characteristics of Product Quality
Reliability
Durability
Easy maintenance
Ease of use
Trusted brand name
Low price
LO2
12
12
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
LO2
13
13
Role of Families and
Working Women
• Growth of dual-income families results in
increased purchasing power
• Approximately 63% of work-age females are in
the workforce
• Women expect different things in life
– purchase bulk of technology products
– second largest group of home buyers after couples
• Single households outnumber married
households with kids
LO2
14
Demographic Factors
Explain the importance
to marketing managers of
current demographic trends
LO3
15
15
Demographic Factors
People are the basis for any market
• Demographic characteristics relate to
buyer behavior
• Uncontrollable
• Defined characteristics define
marketing direction
LO3
16
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Tweens
 Pre- and early adolescents, age 9 to 14
 Population of 29 million
 Purchasing power of $39 billion in 2009
 View TV ads as “just advertising”
 Emerging as “the richest generation”
and the “most influential generation in
history”
LO3
17
17
Generation Y
 Born between 1979 and 1994
 Population of 73 million
 Purchasing power of $200 billion annually
 Researchers have found Gen Yers to be:
–
–
–
–
–
–
–
–
LO3
Impatient
Family-oriented
Inquisitive
Opinionated
Diverse
Time managers
“Street Smart”
Connected
18
18
Generation X
 Born between 1965 and 1978
 Population of 40 million
 Savvy and cynical consumers
 More protective and involved with their kids
 Value the importance of education
 Avid buyers of the latest clothes, technology,
and recreational products
LO3
19
19
Baby Boomers
 Born between 1946 and 1964
 Population of 77 million—
the largest demographic segment
 $2 trillion in spending power a year
 Income will continue to grow as they keep working
 Four segments of baby boomers:
“Looking for balance”
“Confident and living well”
“At ease”
“Overwhelmed”
LO3
20
20
Current Demographic Trends
Tweens
Gen Y
Gen X
Baby Boom
8 to 14 yrs
29 million
1979-1994
60 million
1965-1978
40 million
1946-1964
77 million
Age
LO3
21
21
Growing Ethnic Markets
Explain the importance to
marketing managers of
multiculturalism and
growing ethnic markets
LO4
22
22
Growing Ethnic Markets

Spending power of ethnic markets in 2008:
–
–
–

LO4
Hispanics: $1
trillion
African Americans: $921 billion
Asian Americans: $526 billion
Diversity can result in bottom-line benefits
to companies.
23
Marketing to
Hispanic Americans

The population’s diversity creates challenges
for targeting this group.

Hispanics tend to be brand loyal, but are not
aware of many U.S. brands.

68% of U.S. Hispanics have home Internet
access.
 The NBA expands its appeal with pages
appealing directly to the spanish-language
market:
LO4
 http://www.nba.com/enebea/
24
24
Marketing to
African Americans
 Many firms are creating products
for the African American market.
 Promotional dollars and media
choices directed toward African
Americans continue to increase.
LO4
25
Marketing to
Asian Americans

Younger, better educated, and have highest
average income of all groups

Sometimes called a “marketer’s dream”

Many products have been developed for
Asian American market.

Cultural diversity within the Asian American
market complicates promotional efforts.
LO4
26
26
Ethnic and
Cultural Diversity

Multiculturalism: occurs when all major
ethnic groups in an area (city, county, or
census tract) are roughly equally
represented

U.S. trend is toward greater multiculturalism

America’s racial and ethnic patterns have
taken on distinctly regional dimensions
LO4
27
27
Multiculturalism and
Growing Ethnic Markets
LO4
28
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Why Multicultural Marketing?
“[With ethnic marketing] you're going to get more share
of the heart, more share of the mind, and ultimately, more
share of the wallet.”
 About one in three U.S. residents is a minority, representing over 100.7
million people.
 7 states more than tripled their Hispanic population between 1990 and
2000: Alabama, Arkansas, Georgia, North Carolina, South Carolina,
Tennessee, and Nevada.
 Twenty percent of babies born in the United States are Latino.
LO4
SOURCE: Mike Robinson, CEO LaVerdad Marketing & Media, http://www.laverdadmarketing.com/la_casa.htm;
Lisa Biank Fasig, "An Expanding Business for an Expanding Market," Business Courier of Cincinnati, September
7, 2007
29
Economic Factors
Identify consumer and
marketer reactions to the
state of the economy
LO5
30
30
Economic Factors
Consumer’s
Income
Inflation
Recession
LO5
31
Consumers’ Incomes
•
Median U.S. household income
in 2008 was approximately $49,000.
•
Incomes have risen at a slow pace.
•
Education is the primary determinant
of
earning potential.
LO5
32
The Financial
Power of Women
•
Women bring in half or more of the
household income
•
Women control 51.3 percent of the
private
wealth in the U.S.
•
Women control 80 percent of
household spending
LO5
33
Recession
Marketing Strategies
• Improve existing products and
introduce new ones
• Maintain and expand customer
services
• Emphasize top-of-the-line products
and promote product value
LO5
34
34
Thriving in an Economic Downturn
Wal-Mart saw double-digit profit growth during the
recent economic downturn. How? A shift in strategy
it calls Win/Play/Draw:
•
Win: Outmaneuver competitors with low prices on hot products (flatscreen TVs)
•
Play: Reduce range of offerings to feature “hot sellers” (its $20 L.e.i.
jeans)
•
Draw: Keep a stock of one-stop-shopping essentials (hardware,
pharmacy items)
LO5
35
Economic Factors
LO5
36
36
Technological Factors
Identify the impact of
technology on a firm
LO6
37
37
Research
Basic Research
Applied Research
LO6
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
38
38
RSS and Blogging
• RSS feeds deliver updated news
content according to users interests
• Blogs allow marketers a way to look
into consumer opinions with a simple
search
• Many blogs devoted to discussing
advertisements, here are 10 popular ones:
– http://www.blogs.com/topten/10-popularadvertising-blogs/
LO6
39
Political and Legal Factors
Discuss the political and
legal environment
of marketing
LO7
40
40
Political and Legal Factors
Laws and Regulations Protect:




LO7
New technology
Society
Businesses
Consumers
41
Federal Legislation
Regulate
competitive
environment
Regulate
pricing
practices
Control
false
advertising
LO7
Sherman Act
Clayton Act
Federal Trade Commission Act
Celler-Kefauver Antimerger Act
Hart-Scott-Rodino Act
Robinson-Patman Act
Wheeler-Lea Act
42
Regulatory Agencies
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
LO7
43
Powers of the FTC
Cease-and-Desist Order
Consent Decree
Affirmative Disclosure
Corrective Advertising
Restitution
Counteradvertising
LO7
44
Consumer Privacy
Government Actions
 Gramm-Leach-Bliley Act
 Health Insurance Portability and
Accountability Act (HIPPA)
 California’s Notice of Security Breach Law
LO7
45
Political and Legal
Environment of Marketing
LO7
46
46
Competitive Factors
Explain the basics of foreign
and domestic competition
LO8
47
47
Competitive Factors
How many competitors?
Control
How big are competitors?
How interdependent is
the industry?
LO8
48
Competitive Factors
Competition for Market
Share and Profits
• Firms must work
harder to maintain
profits and market
share.
LO8
Global Competition
• More foreign firms
are entering U.S.
market.
• Foreign firms in U.S.
now compete on
product quality.
49