Intro to Marketing: Ch.3

Ch.3:
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many businesses operate in environments where:
important forces change.
Environmental Scanning:
Process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends
Taking into account the uncontrollable factors
There are five environmental forces businesses must monitor(STREC):
1) social
2) technological
3) regulation
4) economic
5) competitive
By identifying trends related to each of the environmental forces:
businesses can develop and maintain successful marketing programs.
several trends that most businesses are monitoring include
1) the increasing diversity of U.S. population
2) the growing economic impact of China and India
3) the dramatic growth of customer-generated content
Uncontrollable Factors:
1) Social Forces
2) Technological Forces
3) Regulatory Forces
4) Economic Forces
5) Competitive Forces
Uncontrollable Factors: 1) Social Forces:
1) Demographics (Characteristics used to describe a population such as age, gender, ethnicity, income, and occupation)
2) Culture (Values, ideas, and attitudes learned and shared among the members of a group)
Demographics: Age and Generational Cohorts:
1) Baby Boomers ((78 million people born 1946-1964) One of the most powerful forces shaping the marketing environment, 30% of population)
2) Generation X ((45 million people born 1965-1976) More skeptical, cynical of frivolous marketing pitches promising easy success)
3) Generation Y (Echo Boomers) ((72 million people born1977-1994) Fluent and Comfy with computer, digital, and Internet Tech)
4) Generation Z ( (1995-Present) Grown up with The World Wide Web, children of the Generation X, Digital Natives)
Uncontrollable Factors: 2) Technological Forces:
Technology: refers to inventions or innovations from applied science or engineering research
can replace existing products and services.
can also have an effect on customer value by reducing the cost of products, improving the quality of products, and providing new products that were not previously feasible.
Electronic commerce is transforming the way companies do business.
Uncontrollable Factors: 3) Regulatory Forces:
-Regulation exists to protect companies and consumers.
-pricing and distribution laws are designed to create a competitive marketplace withe fair prices and availability.
-Regulation related to promotion and advertising reduces deceptive practices and provides enforcement through the Federal Trade Commission.
Uncontrollable Factors: 4) Economic Forces:
1) the strong relationship between consumer’s expectations about the economy and their spending
2) Skirt Length Theory
“The theory that the direction the stock market is going in can be predicted by changes in the lengths of skirts. The idea states that if skirts are long, markets are headed into a downturn, and if skirts are getting shorter, the market is on an upswing.”
Uncontrollable Factors: 5) Competitive Forces:
There are four forms of competition:
1) pure competition
2) monopolistic competition
3) oligopoly
4) monopoly
The key components of competition include:
1) the likelihood of new competitors
2) the power of buyers and suppliers
3) the presence of competitors and possible substitutes
Why must we consider environmental forces when establishing marketing strategies?
Uncontrollable & high impact