Chapter 5 MARK3000

Marketing environment
Uncontrollable elements outside of any firm that may affect firm’s performance
Environment scanning
systematic analysis of outside elements that may affect firm’s performance in marketing environment
Immediate/Corporate Environment
-Control: company has some control in this environment
-Includes company’s capabilities, competitors, and corporate partners
1) Company capabilities: focus on satisfying customer needs that match their core competencies
2) Corporate partners: Include distributors, suppliers, etc; parties that work together with a focal firm to make a product
3) Competitors: each firm has to monitor environment and come up with competing products
-Less control, but firm has to be ready to react

-Important for companies to understand:
a) competitors’ strengths and weaknesses
b) what other competitors are doing and their tactics

Macro-environment/ External Environment
-Control: company has NO control

-Includes impacts of:
1) Demographic- population stats
2) Cultural/Social- values and beliefs
3) Economic- income and business
4) Technology-innovation
5) Political and legal- laws
6) Competitive- what other firms are doing

-Consumers influenced by these factors and therefore, firm is influenced by these factors

1) Cultural Factors
-Two dimensions of culture to take into consideration:
1) Culture of the Country
-Country: language, dress, etc.
2) Culture of Region within the country
-Region: South v. North v. Midwest
-different clothes, food, etc. preferences in different regions
-Each of our cultures influence what, how, why, where, and when we buy
Culture
-Shared meanings, beliefs, morals, values, and customs of a group of people

-Includes:
-Values, beliefs, practices, customers
-History, heritage, upbringing

Country culture
-Entails easy to spot visible nuances that are particular to a country, such as dress, symbols, ceremonies, language, colors and food preferences

-Includes heritage, history, upbringing

Regional culture
-Influence of the area within a country in which people live

-Includes food and clothing preferences

2) Social Trends Factor
-US society has become a consumer society–shapes consumer values

1)Thrift: as consumer income is decreasing, prices are increasing
-people want to spend less and save more
-people want to bargain shop and search for discounts, good deals

2) Health/wellness concerns: health concerns are critical and widespread
-especially childhood obesity
-New advertising guidelines require marketers to produce food in reasonable proportioned size
-Products have to adjust to this trend
*New trend of “healthy living”
-Advertisers have to promote that in their products
-This has opened new markets

3) Greener consumers: consumers willing to pay more for greener products
-green marketing
-green washing
-increase in demand for green oriented products
-new markets opened from recycling products

4) Privacy concerns: consumers sense a loss of privacy around the world
-Internet: create explosion of accessibility to consumer information, improvements in computer storage facilities, and manipulation of information
-Ex: Ashley-Madison website
-Most companies moving resources away from telephone campaigns

5) Time Poor Society: no free time
-Consumers now have divided attention–not paying attention to advertisements
-Marketers response: turn to Internet ads instead of TV and radio to better reach consumers

Green marketing
-Strategic effort by firms to supply consumers with environmentally friendly products
Green washing
-Exploiting a consumer by disingenuously marketing products as environmentally friendly, with the goal of gaining public approval and sales
3) Demographics
Demographics: characteristics of human populations and segments, especially those used to identify consumer markets
-By: age, race, income, education, ethnicity, or generational cohorts

**Easiest way to classify people

**Provide an easily understood snapshot of the typical consumers in a specific target market

Ethnicity Stats
-Minorities are 37% of US population

-About 1/2 of children belong to a minority group

-Assimilation but strong interest in preserving native heritage

Demographics-Education
*Related to income, determines spending power
-Higher education leads to higher incomes
-Education levels can determine purchase behavior (combined with income or job)
-Important for marketers to understand the relationships between education, income, and job
Demographics- Generational Cohorts
-Group of people of the same generation have similar purchase behaviors because they have shared experiences and are in the same stage of life
-Gen Z, Gen Y, Gen X, Baby Boomers, Millennials
Generation Z
Gen Z: 2001-2014
-“Digital Natives”

A) Born into a world:
1)already full of electronic stuff and digital technologies (Internet, social networks)
-More globally connected than previous generations
-Better appreciation for cultural diversity
2) National and international terrorism, often facilitated by technology
3) Widespread environmental concerns

B) Gen Z kids are similar to their Generation X parents:
-Watch the same TV channels as Gen X
-Like the same video games–> leading to family oriented video games
-Gen Z people still go shopping with their Gen X parents, so they develop liking towards the same brands

C) Characteristics:
-socially connected
-cynical towards ads
-easy access to information

Gen Y
Gen Y: 1977-2000
“Millennials”

A) Children of baby boomers:
*Biggest cohort since the original postwar baby boom: 75+ million
-Varies the most in age (wide range of life cycles)
-Entering the workforce now

B) Gen Y members have different expectations and requirements than other cohorts
-Puts strong emphasis of balancing work and life
-Consider marriage secondary and not necessary

C) Similar around of the world:
-Similar lifestyles, music, entertainment, and clothing (“uniform”–> jeans, sneakers, T-shirts)

-Characteristics:
-Inquisitive, diverse, time managers, multi-taskers, identify with brand, tech savvy,

Generation X
Gen X: 1965-1976

A) Big Focus on Children:
-First generation of “latchkey children”- grew up in homes where both parents worked
-50% have divorced parents
-Big focus on children “helicopter parents”

B) More spending power than other cohorts
-Tend to get married and buy a house later in life
-Biggest spenders at mass merchandisers

C) Shopping Habits: *Astute consumers
-Less interested in shopping and more risk adverse
-Less likely to believe ads or what salespeople tell them
-Shopping savvy from young age
-More cynical

D) Value education and convenience

Baby Boomers
Baby Boomers: 1946-1964

A) Size:
-After WWII, birth rate increased sharply–> 78 million Baby Boomers
-Largest population of 50+ consumers US has ever seen (oldest Boomers are collecting social security)

B) Interests:
-Spending time with adult children and grandchildren
-Individualistic
-High priority on leisure time
-Love Rock and Roll
-Heavy internet users: tend to do research before online purchasing

C) Believe they will always be able to take care of themselves: strong feeling of economic security
-Obsessed with maintaining youth
-Postponing retirement
-Control 80% of personal wealth

Current US Demographics
-320 mill people

-115 mill households

-More women than men

-Median age= 37 years old

4) Technology Advances
-Impacted every aspect of marketing
*new products
*new forms of communication
*new retail channels

-Technology has improved value of products and services

-Make consumers dependent on the help new products/services can provide

5) Economic Factors
-Marketers monitor general economic situation in US and abroad because it affects the way consumers purchase merchandise and spend money

-Major economic factors:
*Inflation
*Foreign currency exchange rates
*Interest rates
*Business cycles
*Employment levels

Inflation
-Refers to the persistent increase in prices of goods and services
What happens to consumer purchase behavior when inflation increases?
-Consumers do not buy less food, but they do buy more inexpensive things

*Win:
-Grocery stores and inexpensive restaurants

*Lose:
-Expensive restaurants
-Luxury stores: jewelry stores, luxury cars, boat stores, etc.

Foreign currency fluctuations (exchange rates)
-Changes in the value of a country’s currency relative to the currency of another country

-can influence consumer spending

Interest rates
Interest rate: cost of borrowing money from the bank to consumers

-With higher interest rates, consumers want to save more because they earn more for loaning the bank their money

-With lower interest rates, consumers borrow more

Business Cycles
*Recession: falling income/ employment/ production
-Focus on value

*Recovery: rising income/ employment/production
-Focus on buying now for better times later

*Prosperity: high income/ employment/production
-Focus on convenience/reward

*Depression: low income/ employment/production
-Focus on basic needs

6) Political/ Legal Factors
**Political/Legal environment: political parties, government, legislation, and laws and regulations put into the world to protect competition and consumers
*Legislation protects consumers from…
-marketers cant put false info that can mislead consumers
-cannot use dangerous materials in products
-firms must follow fair and reasonable business practices when they communicate with consumers
Legislation enacted to protect consumers
SHERMAN
Can
Forget
ROBINSON
Whatever
NAFTA
——————————
•Sherman Antitrust Act- no monopolies

•Clayton Act- prevents price fixing

•Federal Trade Commission- unfair pricing

•Robinson-Putman Act- outlaws price discrimination

•Wheeler Lea Act- unfair methods of competition

•NAFTA- open up North American borders for trade
-Allows free trade between countries