The Marketing The Marketing EnvironmentEnvironment

Chapter 3Chapter 3

Environmental ScanningEnvironmental Scanning

What is environmental scanning?What is environmental scanning? ““The process of continually acquiring The process of continually acquiring

information on events occurring outside information on events occurring outside the organization.”the organization.”

Why is it important? Why is it important?

Environmental ForcesEnvironmental Forces

SocialSocial EconomicEconomic TechnologicalTechnological CompetitiveCompetitive RegulatoryRegulatory

Social ForcesSocial Forces

Demographic characteristics of the Demographic characteristics of the population and its values.population and its values. Who is in the population and what is Who is in the population and what is

important to them?important to them? Defined asDefined as

DemographicsDemographics CultureCulture

The Mature HouseholdThe Mature Household

55 years old or older55 years old or older 23% of the population23% of the population

75% of country’s wealth75% of country’s wealth Healthcare is important issue Healthcare is important issue Cautious consumersCautious consumers

Source: Mower & Minor. “Consumer Behavior: A Framework.” Source: Mower & Minor. “Consumer Behavior: A Framework.” Prentice-Hall, New Jersey, 2001.Prentice-Hall, New Jersey, 2001.

Baby BoomersBaby Boomers

Born between 1946-1964Born between 1946-1964 Largest group in populationLargest group in population

30% of the population30% of the population Want to age gracefullyWant to age gracefully

Rise in cosmetic/health productsRise in cosmetic/health products More brand loyal than younger groupsMore brand loyal than younger groups

Source: Mower & Minor. “Consumer Behavior: A Framework.” Source: Mower & Minor. “Consumer Behavior: A Framework.” Prentice-Hall, New Jersey, 2001.Prentice-Hall, New Jersey, 2001.

Generation XGeneration X

Born between 1965-1980Born between 1965-1980 17 million in U.S.17 million in U.S. ““A lost generation”A lost generation” ““Cut teeth” on technologyCut teeth” on technology Value religion, rituals, materialismValue religion, rituals, materialism ““Global teens”: Similar experiences Global teens”: Similar experiences

across national boundariesacross national boundaries

Source: Mower & Minor. “Consumer Behavior: A Framework.” Source: Mower & Minor. “Consumer Behavior: A Framework.” Prentice-Hall, New Jersey, 2001.Prentice-Hall, New Jersey, 2001.

Generation YGeneration Y

Born after 1976Born after 1976 28% of the population28% of the population Grew up with technologyGrew up with technology Sons and daughters of Baby BoomersSons and daughters of Baby Boomers

Politically activePolitically active Less racially sensitiveLess racially sensitive

Source: Mower & Minor. “Consumer Behavior: A Framework.” Source: Mower & Minor. “Consumer Behavior: A Framework.” Prentice-Hall, New Jersey, 2001.Prentice-Hall, New Jersey, 2001.

TweensTweens

Be“tween” being a child and a Be“tween” being a child and a teenagerteenager

Ages 8-12Ages 8-12 Brand consciousBrand conscious

But not necessarily brand loyal But not necessarily brand loyal

Other Social TrendsOther Social Trends

Family structureFamily structure Decline in “traditional” familyDecline in “traditional” family

Population LocationPopulation Location

Racial and Ethnic GroupsRacial and Ethnic Groups

Hispanic and African American Hispanic and African American populations are growingpopulations are growing

Ethnic groups tend to be highly Ethnic groups tend to be highly concentratedconcentrated

Social Forces- CultureSocial Forces- Culture

““The set of values, ideas, and The set of values, ideas, and attitudes of a homogeneous group of attitudes of a homogeneous group of people passed down from one people passed down from one generation to the next”generation to the next” Marketers must be aware of shiftsMarketers must be aware of shifts

Change of women’s role in societyChange of women’s role in society Changes in valuesChanges in values

Economic ForcesEconomic Forces

““Deals with the income, Deals with the income, expenditures, and resources that expenditures, and resources that affect the cost of running a business affect the cost of running a business or household”or household” MacroeconomicMacroeconomic MicroeconomicMicroeconomic

Macroeconomic ForcesMacroeconomic Forces

Deals with entire market- aggregate of Deals with entire market- aggregate of all “players” within it.all “players” within it. If consumers feel they will be better off, they If consumers feel they will be better off, they

will buy more.will buy more. As a result, the Consumer Sentiment Index As a result, the Consumer Sentiment Index

increasesincreases If consumers feel they will be worse off, they If consumers feel they will be worse off, they

will opt to save money or be hesitant to will opt to save money or be hesitant to spend it.spend it.

The Consumer Sentiment Index decreasesThe Consumer Sentiment Index decreases

Microeconomic ForcesMicroeconomic Forces

Gross incomeGross income Total amount of money earned annually Total amount of money earned annually

by an individualby an individual Disposable IncomeDisposable Income

Money remaining after paying taxesMoney remaining after paying taxes Discretionary IncomeDiscretionary Income

Money remaining after paying taxes and Money remaining after paying taxes and for necessitiesfor necessities

Technological ForcesTechnological Forces

Becoming increasingly importantBecoming increasingly important As technology becomes more As technology becomes more

commonplace, prices fall.commonplace, prices fall. Designs new products or improves existing Designs new products or improves existing

onesones Improves systems and flow of informationImproves systems and flow of information

InternetInternet IntranetIntranet ExtranetExtranet

Competitive ForcesCompetitive Forces

““Alternative firms that could provide Alternative firms that could provide a product to satisfy a specific a product to satisfy a specific market’s need”market’s need” Perfect competitionPerfect competition MonopolyMonopoly OligopolyOligopoly Monopolistic competitionMonopolistic competition

Competitive ForcesCompetitive Forces

Porter’s ModelPorter’s Model Barriers to EntryBarriers to Entry Buyer PowerBuyer Power Supplier PowerSupplier Power Degree of RivalryDegree of Rivalry SubstitutesSubstitutes

Regulatory ForcesRegulatory Forces

““Restrictions state and federal laws Restrictions state and federal laws place on business with regard to the place on business with regard to the conduct of its activities.”conduct of its activities.”

Protecting CompetitionProtecting Competition Sherman Anti-TrustSherman Anti-Trust Tariffs?Tariffs?

Regulatory ForcesRegulatory Forces

Product-Related LegislationProduct-Related Legislation Company ProtectionCompany Protection Consumer ProtectionConsumer Protection

ConsumerismConsumerism Protection for Both Protection for Both

TrademarksTrademarks

Pricing-Related LegislationPricing-Related Legislation ““Price-fixing”Price-fixing”

Regulatory ForcesRegulatory Forces

Place-Related LegislationPlace-Related Legislation Exclusive dealingExclusive dealing Requirement contractsRequirement contracts Exclusive territorial distributorshipsExclusive territorial distributorships Tying arrangementTying arrangement

Promotion-Related LegislationPromotion-Related Legislation Federal Trade CommissionFederal Trade Commission

Regulatory ForcesRegulatory Forces

Governmental v. Self-regulationGovernmental v. Self-regulation Non-complianceNon-compliance EnforcementEnforcement South Africa marketsSouth Africa markets