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Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1
Lamb, Hair, McDaniel
CHAPTER 4
The Marketing Environment
2011-2012
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Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 2
The ExternalMarketing Environment
Discuss the external environment of marketing, and explain how it affects a
firm
LO1
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 3
Target Market
A defined group most likely to buy a product
• Changes as consumers age
• External elements change consumers’ desires
LO1
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 4
The External Environment
• Unless marketing managers understand the external environment, the firm cannot intelligently plan for the future.
when a company implements strategies that attempt to shape the external environment within which it operates.
Environmental Management is…
LO1
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 5
Social Factors
Describe the social factors that affect marketing
LO2
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 6
Social Factors
ValuesValues
AttitudesAttitudes
LifestyleLifestyle
LO2
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 7
Social FactorsSocial Factors Influence:Social Factors Influence:
Products purchasedProducts purchased
Prices paid for productsPrices paid for products
Effectiveness of promotionsEffectiveness of promotions
How, where, and when people purchaseHow, where, and when people purchase
LO2
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 8
American Values
Self-SufficiencySelf-Sufficiency
Upward MobilityUpward Mobility
Work EthicWork Ethic
ConformityConformity
Core American Values
LO2
Getting off the gridGetting off the grid
Meaningful greenMeaningful green
EcoTechMedEcoTechMed
Emerging Trends
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 9
The Influence ofValues on Buying Habits
Ranked Characteristics of Product Quality
Reliability
Durability
Easy maintenance
Ease of use
Trusted brand name
Low price
LO2
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 10
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
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 11
Role of Families and Working Women
• Growth of dual-income families results in increased purchasing power
• Approximately 59 percent of work-age females are in the workforce
• Working wives bring in 45 percent of the total family earnings.
• The phenomenon of working women has probably had a greater effect on marketing than any other social change.LO2
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 12
There Is Never Enough Time
• It is estimated that over 80 percent of the working population is worried about having too little time.
• About 40 percent of American adults get less than 7 hours of sleep on weekdays.
• About 74 percent of working adults engage in multitasking.
LO2
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 13
Demographic Factors
Explain the importance to marketing managers of
current demographic trends
LO3
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 14
Demographic Factors
People are the basis for any market
• Demographic characteristics relate to buyer behavior
• Demographic cohorts have their own needs, values, and consumption patterns.
LO3
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 15
Tweens
Pre- and early adolescents, age 8 to 12
Population of 20 million
Directly spend about $50 billion annually
Parents spend $150 billion on tweens annually
View TV ads as “just advertising”
LO3
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 16
Teens
Population of about 25 million
Spend approximately 72 hours per week tuned in electronically
View shopping as a social sport
58 percent shop online
LO3
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 17
Generation Y Born between 1979 and 1994
Surpassed population of baby boomers in 2010
Two Stages: 1) Those born in 1994 fit closer to the Teen cohort. 2) Those born in 1979 have established careers and started families.
Purchasing power of $200 billion annually
Researchers have found Gen Yers to be:– Inquisitive Quick shoppers– Opinionated Want fulfillment– Diverse Multitaskers– Time managers Environmentally aware
LO3
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 18
Generation X Born between 1965 and 1978
Population of 40 million
Independent, resilient, adaptable, cautious, and skeptical
71 percent have children under age 18
Home ownership is an important goal
Avid buyers of the latest clothes, technology, and recreational products
LO3
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 19
Baby Boomers
Born between 1946 and 1964
Population of 75 million
Working longer to compensate for economic downturn, which affected retirement savings
The market of services directed at seniors is one of the fastest growing business markets
LO3
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 20
Growing Ethnic Markets
Explain the importance to marketing managers of growing ethnic markets
LO4
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 21
Growing Ethnic Markets
Estimated purchasing power of ethnic markets in 2013:
– Hispanics: $1.4 trillion– African Americans: $1.2 billion– Asian Americans: $752 billion
The minority population of the United States in 2011 reached 110 million.
Companies are recognizing that diversity can result in bottom-line benefits.
LO4
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 22
Marketing to Hispanic Americans
The Hispanic population’s diversity creates challenges for targeting this market.
Hispanics tend to be brand loyal, but are not aware of many mainstream U.S. brands.
68 percent of U.S. Hispanics have home Internet access.
LO4
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 23
Marketing toAfrican Americans
47 percent are between 18 and 49 years
More firms are creating products for the African American market.
Promotional dollars and media choices directed toward African Americans continue to increase.
LO4
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 24
Marketing to Asian Americans
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.
LO4
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 25
Economic Factors
Identify consumer and marketer reactions to the
state of the economy
LO5
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 26
Economic Factors
Purchasing Power
Inflation
Recession
LO5
Consumers’ Income
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 27
Consumers’ Incomes• Median U.S. household income
in 2010 was approximately $52,000.
• Incomes have risen at a slow pace in recent years.
• Education is the primary determinant of earning potential.
LO5
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 28
Purchasing Power
LO5
a comparison of income versus the relative cost of a set standard of goods and services in different geographic areas.
Purchasing Power is…
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 29
Inflation
LO5
a measure of the decrease in the value of money, expressed as the percentage reduction in value since the previous year.
Inflation is…
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Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 30
Recession
LO5
a period of economic activity characterized by negative growth, which reduces demand for goods and services.
Recession is…
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 31
Technological Factors
Identify the impact of technology on a firm
LO6
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 32
Research
Basic ResearchBasic Research
Applied ResearchApplied Research
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
LO6
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 33
Stimulating Innovation
LO6
Build scenarios
Enlist the Web
Talk to early adopters
Use marketing research
Create an innovative environment
Cater to entrepreneurs
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 34
Political and Legal Factors
Discuss the political and legal environment
of marketing
LO7
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 35
Political and Legal Factors
New technology Society Businesses Consumers
Laws and Regulations Protect:Laws and Regulations Protect:
LO7
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 36
Federal LegislationSherman ActClayton ActFederal Trade Commission Act Celler-Kefauver Antimerger ActHart-Scott-Rodino ActForeign Corrupt Practices Act
Sherman ActClayton ActFederal Trade Commission Act Celler-Kefauver Antimerger ActHart-Scott-Rodino ActForeign Corrupt Practices Act
Regulate competitive
environment
Robinson-Patman Act Robinson-Patman ActRegulate pricing
practices
Wheeler-Lea Act Wheeler-Lea ActControl
falseadvertising
LO7
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 37
State Laws
• Legislation that affects marketing varies state by state.• Oregon: limits utility advertising to 0.5 percent of
net income.
• California: bans trans fats in restaurants and bakeries.
LO7
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 38
Regulatory Agencies
Consumer Product Safety Commission
Consumer Product Safety Commission
Federal Trade Commission
Federal Trade Commission
Food & Drug AdministrationFood & Drug
Administration
Protects consumer safety in and around their homes
Prevents unfair methods ofcompetition in commerce
Enforces safety regulations for food and drug products
LO7
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 39
Bureaus of the FTC
LO7
• Reviews mergers and acquisitions• Challenges anti-competitive conduct• Promotes competition• Provides information
• Enforces federal laws that protect consumers• Empowers consumers with information• Communicates with consumers about fraud and identity theft
Bureau of Competition
Bureau of Consumer Protection
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 40
Consumer Privacy
CAN-SPAM Act
Children’s Online Privacy Protection Act Rule
Government ActionsGovernment Actions
LO7
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 41
Competitive Factors
Explain the basics of foreign and domestic
competition
LO8
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 42
Competitive Factors
How many competitors?
How big are competitors?
How interdependent isthe industry?
Control
LO8
Chapter 4 Copyright ©2012 by Cengage Learning Inc. All rights reserved 43
Competitive Factors
Competition for Market Share
and Profits
• Firms must work harder to maintain profits and market share.
Global Competition
• More foreign firms are entering U.S. market.
• Foreign firms in U.S. now compete on product quality.
LO8