SCANNING THE MARKETING

ENVIRONMENT

CHAPTER

External Marketing Environment

DemographicsDemographics

SocialChangeSocial

Change

EconomicConditionsEconomicConditions

Political & Legal FactorsPolitical &

Legal Factors

TechnologyTechnology

CompetitionCompetition

EnvironmentalEnvironmentalScanningScanning

Target Market

ProductDistributionPromotion

Price

ProductDistributionPromotion

Price

External Environment External Environment is not controllableis not controllable

Ever-ChangingEver-ChangingMarketplaceMarketplace

An environmental scan of today’s marketplace

A lack of time to do anything but work, commute to work, handle family situations, do

housework, shop, eat, sleep...

Social Forces-The Poverty of Time

SOCIAL FORCES- Demographics

Implications?

The World Population at a Glance – 6.4 billion

Growth in developing nations

Shift of age structure of populations

Rising income levels and living standards

The U.S. Population – 297 Million Growth by immigration = niche markets

Generational Cohorts

• Baby Boomers-‘46-’64

• Generation X-’65-’76

• Generation Y-’77-’94 - (Millennials) techno-savvy, live for today

-Increased earnings-seek youth-Well educated, more tolerant, practical

Social Forces - Demographics

SOCIAL FORCES

• Demographics

Population Shifts toward West & South – Why?

• Metropolitan Statistical Area – 362-80%50,000- urban center; suburban collar up to 2.5MEx-Chicago

• Micropolitan Statistical Area-573-10%•10,000-50,000 urban center; large suburb collarEx-Carbondale

ECONOMIC FORCES -Economy

• Macroeconomic Conditions– Inflation-rise in prices without rise in wages– Recession-drop in income, production and employment

• Microeconomic Conditions– Consumer Income

Gross Income – 100% of earnings Disposable Income-85% of earningsDiscretionary Income-15% of earnings

ECONOMIC FORCES

Implications?

Disposable vs Discretionary income

Income Distribution of U. S. Households

• New technology is a weapon against inflation and recession

• U.S. excels at basic research• Japan excels at applied research

• Information technology and the Internet have increased productivity

Technological Factors

COMPETITIVE FORCES -Competition

REGULATORY FORCES

• Protecting Competition

Sherman Antitrust Act (1890) – no monopolies

Clayton Act (1914)- no monopoly activity

Robinson-Patman Act (1936)-no differential pricing to undercut “little” guy

REGULATORY FORCES

Company Protection

• Patent Law-for ideas and inventions

• Product-Related Regulation

• Copyright Law -for written works

• Digital Millennium Copyright Act (1998) -for DVD’s, MP3’s & software

REGULATORY FORCES

Consumer Protection

• Nutritional Labeling & Education Act (1990)

•The above and other laws came about due to cultural shift towards Consumerism

• Product-Related Regulation

• Consumer Product Safety Act (1972)

Consumer Product Safety Commission

REGULATORY FORCES

• Advertising and Promotion-Related Legislation

•Penalties are:•Cease and Desist Order• Corrective Advertising

FTC Act of 1914-no deceptive ads or practices

Do Not Call Registry Children’s online privacy Protection Act 1998 CAN-SPAM Act (2004)

Environmental Scanning

Environmental scanning is the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends.

Environmental scanning is the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends.

Demographics

Demographics describes a population according to selected characteristics such as age, gender, ethnicity, income, and occupation.

Demographics describes a population according to selected characteristics such as age, gender, ethnicity, income, and occupation.

Baby Boomers

Baby boomers is the generation of children born between 1946 and 1964.Baby boomers is the generation of children born between 1946 and 1964.

Generation X

Generation X includes the 15% of the U.S. population born between 1965 and 1976.

Generation X includes the 15% of the U.S. population born between 1965 and 1976.

Generation Y

Generation Y includes the 72 million Americans born between 1977 and 1994.Generation Y includes the 72 million Americans born between 1977 and 1994.

Culture incorporates the set of values, ideas, and attitudes that are learned and shared among the members of a group.

Culture incorporates the set of values, ideas, and attitudes that are learned and shared among the members of a group.

Culture

The economy pertains to the income, expenditures, and resources that affect the cost of running a business and household.

The economy pertains to the income, expenditures, and resources that affect the cost of running a business and household.

Economy

Technology refers to inventions from basic engineering research or innovations from applied science research.

Technology refers to inventions from basic engineering research or innovations from applied science research.

Technology

Competition refers to the alternative firms that could provide a product to satisfy a specific market’s need.

Competition refers to the alternative firms that could provide a product to satisfy a specific market’s need.

Competition

Consumerism is a grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions.

Consumerism is a grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions.

Consumerism