Lamb Hair Mc Daniel 2012 2013 CHAPTER 4

Lamb, Hair, Mc. Daniel 2012 -2013 CHAPTER 4 The Marketing Environment Copyright © 2012 by Cengage Learning Inc. All rights reserved 11 © Mark Herreid/Shutterstock. com © i. Stokphoto. com/Siniša Botaš 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

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

The External Marketing Environment The external environment of marketing and how it affects a firm 1 4

Target Market “A group of people or organizations for which a firm designs, implements and maintains a marketing mix intended to meet the needs of that group. ” (or, the group most likely to buy a product) • Age affects consumers behavior, needs & desires • External elements affect consumers’ needs and desires 5 1

The External Environment Unless marketing managers understand the external environment, the firm cannot intelligently plan for the future. Environmental Management When a firm implements strategies that attempt to shape the external environment within which it operates. 6 1

Environmental Scanning. Remember this Slide? (Ch. 2) Helps identify Opportunities and Threats Designing a marketing strategy is based on six major environmental forces or factors: § Economic § Political/Legal § Technological § Social § Competitive § Demographic 7 5

Social Factors (1) Factors affecting marketing 1. 2. 3. 4. 5. 6. Social Demographic Economic Technological Political/Legal Competitive 2 8

Social Factors Attitudes Values Lifestyle Remember “values” from Chapter 3? 9 2

American Values Core American Values Emerging Trends Self-Sufficiency Getting off the grid Upward Mobility Meaningful green Work Ethic Eco. Tech. Med Conformity 10 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 11 2

Component Lifestyles • The practice of choosing goods & services that meet one’s diverse needs and interests rather than conforming to a single, traditional lifestyle. • Today’s consumers want multifunctional products • Consumers are no longer defined by their occupation • Component lifestyles increase the complexity of buying habits http: //www. youtube. com/watch? v=Mig 7 E 5 Fta. AI&feature=related 12 2

Changing Roles of Families and Working Women • Growth of dual-income families has resulted in increased purchasing power • Approx. 59% of females aged 16 -65 are working • Working wives bring in 45% of family income • Working women have had a greater effect on marketing than any other social change. http: //www. youtube. com/watch? v=t 7 wm. PWTn. Db. E (remember cause-related marketing, chapter 3? ) 13 2

Technology and Time Use • Leisure time = 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. 14 http: //www. youtube. com/watch? v=uzvy. DGLq. CIE&feature=results _video&playnext=1&list=PL 56210 C 21 DA 3 C 7 A 2 B 2

Demographic Factors (2) The importance to marketing managers of current demographic trends 3 15

Demographic Factors People are the basis for any market • Demographic characteristics are strongly related to buyer behavior • Demographic cohorts have their own needs, values, and consumption patterns 16 3

Tweens Pre- and early adolescents Ages 8 - 12 Population of 20 million They spend about $50 billion annually Their parents spend $150 billion annually They view TV ads as “just advertising” 17 3

Teens Ages 13 -19 Population of about 25 million They spend approximately 72 hours per week tuned in electronically They view shopping as a social sport FB: 50 million teens (effect on marketers? ) 18 3

Generation Y • Born between 1979 and 1994 • Ages 19 -33 • Surpassed population of baby boomers • Those born in 1994 fit closer to the Teens • Those born in 1979 have established careers and started families • Purchasing power of $200 billion annually 19 3

Generation X • Born between 1965 and 1978 • Ages 34 -47 • Population of 40 million • Independent, resilient, adaptable, cautious, skeptical • 71 percent have children under the age of 18 • Home ownership is an important goal 20 • Avid buyers of the latest clothes, technology, and recreational products 3

Baby Boomers • Born between 1946 and 1964 • Ages 48 -66 • Population of 75 million • Working longer to compensate for economic downturn, which affected retirement savings • Services directed at seniors is one of the fastest growing business markets 21 3

Growing Ethnic Markets The importance to marketing managers of growing ethnic markets 4 22

Growing Ethnic Markets • Estimated purchasing power of ethnic markets in 2013: Hispanics: $1. 5 trillion • African Americans: $1. 2 billion • Asian Americans: $775 billion • • 23 The minority population of the United States in 2011 reached 110 million. 4

Marketing to Hispanic Americans § Hispanic population’s diversity creates challenges for targeting this market. § 12 million Hispanics aged 20 -34 in the U. S. § 94 percent of U. S. Hispanics have home Internet. § 24 Highly responsive to new media: mobile marketing and social media marketing. 4

Marketing to African Americans 25 • 47 percent are between 18 and 49 years old • More firms are creating products for the African American market. • Promotional dollars and media choices directed toward African Americans continue to increase. 4

Marketing to Asian Americans 26 • 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 4

Economic Factors (3) Consumer and marketer reactions to the state of the economy 5 27

Economic Factors / a-Consumers Income b-Purchasing Power c-Inflation d-Recession 28 5

a-Consumers’ Incomes 29 • 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 5

b-Purchasing Power A comparison of income versus the relative cost of a set standard of goods and services in different geographic areas. 30 5

c-Inflation A measure of the decrease in the value of money, expressed as the percentage reduction in value since the previous year. 31 5

d-Recession A period of economic activity characterized by negative growth, which reduces demand for goods and services. 32 5

Technological Factors (4) The impact of technology on a firm 6 33

Research Basic Research Applied Research 34 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 6

Political and Legal Factors (5) The political and legal environment of marketing 7 35

Political and Legal Factors Laws and Regulations Protect: New technology Society Businesses Consumers http: //www. youtube. com/watch? v=sq. S 83 f-NUww http: //www. youtube. com/watch? v=DF 39 Ygp 53 m. Q 36 7

Federal Legislation Regulate competitive environment 37 • • • Sherman Act Clayton Act Federal Trade Commission Act Celler-Kefauver Antimerger Act Hart-Scott-Rodino Act Foreign Corrupt Practices Act Regulates pricing practices Robinson-Patman Act-- $$$ Controls false advertising Wheeler-Lea Act 7

State Laws • Legislation that affects marketing varies state by state. California: bans trans fats in restaurants and bakeries • NYC: soft drink ban, prohibits servings of no larger than 16 ounces (Mayor Bloomberg) • 38 7

Regulatory Agencies 39 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 7

Competitive Factors (6) Competition for Market Share and Profits • Firms must work harder to maintain profits and market share. 40 Global Competition • More foreign firms are entering U. S. market. • Foreign firms in U. S. now compete on product quality. 8