The Marketing Environment THE MARKETING ENVIRONMENT The external

The Marketing Environment

THE MARKETING ENVIRONMENT The external forces that directly or indirectly influence a firm’s acquisition and allocation of resources and its creation of products

Uncontrollable Factors Social Economic Product Price Customer Promotion Place Regulatory Competitive Technological

THE ENVIRONMENT AFFECTS EVERYONE

Proper Scan Identify CORRECT environment ü Proper scale: global, national, regional, local ü Proper industry ü Determine key competitors Identify key facts and trends ü Earlier is better ü Assess impact quickly/accurately ü Localize trends if business is local Use scan to make forward-looking decisions

Competitive Forces Competition: firms that market similar or substitute products ü Who does your customer consider when looking to satisfy the need for what you do? When analyzing competition: ü Consider the competitive structure ü Identify key competitors § SWOT § Competitive advantages § Marketing mix

Types of Competition Brand Competitors Product Competitors Generic Competitors Total Budget (Indirect) Competitors

Competitive Structures Monopoly One competitor Many, typically big, barriers No close product substitutes Maintain monopoly status No competition Pure competition

Competitive Structures Oligopoly Few competitors Some barriers Homogeneous or differentiated products Focus on competitor reactions to events No competition Pure competition

Competitive Structures Monopolistic Competition Many competitors Fewer barriers Product differentiation, many substitutes Focus on differentiating product/brand No competition Pure competition

Competitive Structures Pure Competition Unlimited competitors no barriers to entry Countless substitutes Theoretical situation No competition Pure competition

Economic Forces Economic Conditions Buying Power Willingness to Spend

Business Cycle A pattern of economic fluctuations that has four stages ü Prosperity ü Recession ü Depression ü Recovery

Buying Power and Willingness to Spend Buying Power = resources (typically money) that can be traded in an exchange ü Gross income: total income ü Disposable income: after tax money used for necessities ü Discretionary income: money left over after covering taxes and necessities Willingness to Spend is closely related to Ability to Buy ü “Cash or credit”

Legal/Regulatory and Political Forces Legislation Legal decisions by courts Regulatory agencies Self-regulatory forces Marketers ü Adjust to conditions ü Influence through contributions

Legal and Regulatory Forces Regulatory Agencies ü Federal Trade Commission (FTC) ü Food and Drug Administration (FDA) ü Federal Communications Commission (FCC) ü Environmental Protection Agency (EPA) Self-Regulatory Forces ü Better Business Bureau ü National Advertising Review Board (NARB)

Technology is the application of knowledge and tools to solve problems and/or perform tasks more efficiently ü Inventions or innovations

Technology Characterized by: ü Falling costs ü Increasingly new products/rapid obsolescence of old products Can transform entire industries and/or societies

Social The influences in a society and its culture(s) that change people’s attitudes, values and/or lifestyles Examples ü Demographic shifts ü “Going green” ü Increasing customer sophistication ü Population migration