3 | 2copyright © houghton mifflin company. all rights reserved. part two environmental forces,...

3 | 2Copyright © Houghton Mifflin Company. All rights reserved.

Part TwoEnvironmental Forces, Social

Responsibility, And Ethics

3.The Marketing Environment

4.Social Responsibility And Ethics In Marketing

Chapter 3The Marketing Environment


Objectives

• Recognize importance of environmental scanning and analysis

• Understand how competitive/economic factors affect organizations’ ability to compete and customers’ ability/willingness to buy products

• Identify political forces in marketing environment

• Understand how laws, government regulations, and self-regulatory agencies affect marketing

• Explore effects of new technology on society and on marketing

• Analyze sociocultural issues marketers must deal with as they make decisions.


Environmental Scanning

The process of collecting information about the forces in the marketing environment.


Scanning Involves:

• Observation• Secondary Sources

– Business– Trade– Government– General-interest publications– Marketing research

• Cautions– Know how to use information– Don’t gather too much information


Environmental Analysis

The process of assessing and interpreting the information gathered through environmental scanning.


Responding To Environmental Forces

• Accept as uncontrollable- passive and reactive

• Attempt to influence and shape them-proactive

– Constructive

– Bring desired results

– Are limits


Competition

Other organizations that market products that are similar to or can be substituted for a marketer’s products in the same geographic area.


Types Of Competitors

• Brand- products with similar features and benefits for same customers at similar prices

• Product- same product class but products with different features, benefits, and prices

• Generic- different products that solve same problem or satisfy same basic customer need

• Total Budget- compete for limited financial resources of same customers


Monopoly

A competitive structure in which an organization offers a product that has no close substitutes, making that organization the sole source of supply.

Royal Mail Monopoly


Oligopoly

A competitive structure in which a few sellers control the supply of a large proportion of a product.


Monopolistic Competition

A competitive structure in which a firm has many potential competitors and tries to develop a marketing strategy to differentiate its product.


Pure Competition

A market structure characterized by an extremely large number of sellers, none strong enough to significantly influence price or supply.


Types Of Competitive Structures


Monitoring Competition

• Price- most competitors monitor

• Do more than analyze information

• Develop ongoing system for gathering information

• Understand market - customer needs

• Helps in recognition of own strategy flaws


Economic Forces

• Economic Conditions

• Buying Power

• Willingness to Spend


Business Cycle

A pattern of economic fluctuations that has four stages: prosperity, recession, depression, and recovery.


Economic Conditions

• Prosperity- low unemployment, high total income, ensure buying power

• Recession- unemployment rises, total buying power declines, stifling consumer/business spending

• Depression- unemployment high, wages are low, total disposable income at a minimum, consumers lack confidence in the economy

• Recovery- economy moves from recession/depression to prosperity


Buying Power

Resources, such as money, goods, and services that can be traded in an exchange.


Income

For an individual, the amount of money received through wages, rents, investments, pensions, and subsidy payments for a given period.


Types Of Income

• Disposable - after-tax

• Discretionary - disposable income available for spending and saving after an individual has purchased the basic necessities of food, clothing, and shelter


Wealth

The accumulation of past income, natural resources, and financial resources.

As people’s wealth increases:

1.Make current purchases

2.Generate income

3.Acquire large amounts of credit


Willingness To Spend

An inclination to buy because of expected satisfaction from a product, influenced by the ability to buy and numerous psychological and social forces.


Political Forces

• Legislation enacted

• Legal decisions interpreted by courts

• Regulatory agencies created and operated

• Marketers

– Adjust to conditions

– Influence through contributions


Top Corporate DonorsBy Political Party


Legal AndRegulatory Forces

• Procompetitive legislation- preserves competition

• Consumer Protection legislation– Protect people from harm– Prohibit hazardous products– Information disclosure– Particular marketing activities

• Encourage compliance

• Regulatory Agencies

• Self-Regulatory forces


Major Laws AffectingMarketing Decisions


Federal Trade Commission

An agency that regulates a variety of business practices and curbs false advertising, misleading pricing, and deceptive packaging and labeling.


Federal Trade Commission Enforcement Tools

Federal Trade Commission Website

Source: www.ftc.gov.


Major Federal Regulatory Agencies


Direct-To-Consumer Pharmaceutical Guidelines


Self-Regulatory Forces

• Trade Associations• Better Business Bureau• National Advertising Review Board• Advantages– Less expensive– More realistic

• Limitations– Nonmember firms do not have to abide– Lack of enforcement tools– Often less strict


Technology

The application of knowledge and tools to solve problems and perform tasks more efficiently.


Effects Of Technology

• Dynamics- constant change

• Reach- moves throughout society

• Self-sustaining- catalyst to spur faster development


Sociocultural Forces

The influences in a society and its culture(s) that change people’s attitudes, beliefs, norms, customs, and lifestyles.


Issues Of Sociocultural Forces

• Demographic and diversity characteristics

– Age, gender, race, ethnicity

– Marital/parental status, income, education

• Cultural values

– Health

– Family

– Environment

• Consumerism- efforts to protect consumers’ rights


U.S. Population Projections By Race

Source: U.S. Bureau of the Census, Statistical Abstract of the United States, 2000; Reed Business Info, July 11, 2005.

3 | 2copyright © houghton mifflin company. all rights reserved. part two environmental forces,...

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