ch 15 (unit 3)

Question 1

what includes all the forces that affect a company’s ability to do business?

immediate environment
marketing environment
external environment
marketing forces

Answer 1

marketing environment

Question 2

what is an example of an external environment force?

political
economic
social
all of these

Answer 2

all of these

Question 3

__ help get the product to customers and can help fulfill functions such as sales and distribution

intermediaries
suppliers
employees
shareholders

Answer 3

intermediaries

Question 4

which factors in the external environment is the customer base?

environmental
economic
social
none of the above

Answer 4

social

Question 5

which external environment factor includes anything that affects innovation?

social
technological
economic
environmental

Answer 5

technological

Question 6

true or false: opportunities and threats are both internally focused

Answer 6

false

Question 7

what are attributes of a company that give it a competitive advantage or superior position

weaknesses
opportunities
threats
strengths

Answer 7

strengths

Question 8

which of these are NOT possible sources for external environment scanning?

employee feedback, customer feedback, customer insight research
industry experts industry and government reports
social media and magazines
personal or management intuition

Answer 8

personal or management intuition

Question 9

which factor in the external environment includes all factors that influence the wealth or buying power of consumers?

social
political
economic
legal

Answer 9

economic

Question 10

what is the first step for scanning the environment?

predict
identify trends and patterns
observe
interpret

Answer 10

observe

Question 11

the marketing environment

Answer 11

The marketing environment includes all of the forces that affect a company’s ability to do business.

There are so many forces in the environment that affect a company and its business strategies. These forces in the marketing environment have been grouped into two main categories: the immediate environment and the external environment.

in the image: marketing to suppliers, intermediaries and employees BUT the economic factor surrounds them all

Question 12

the immediate environment (aka microenvironment)

Answer 12

The immediate environment (sometimes referred to as microenvironment) includes players (such as companies, people, groups, or organizations) that can directly influence a company’s ability to market successfully.

in the image: marketing to suppliers, intermediaries and employees BUT the economic factor DOES NOT surrounds them all

Question 13

the external environment (aka macronevironment)

Answer 13

The external environment (sometimes referred to as macroenvironment) includes the uncontrollable forces that affect the company and all actors in the immediate environment and that establish the surrounding context in which business is conducted. These external environment forces include political, economic, social, technological, legal, and environmental forces.

Question 14

the immediate environment explanation

Answer 14

To understand the immediate environment, picture a football game where your favorite football team is getting ready to take the field. (And if you don’t like football, then begrudgingly picture a random team anyway.) Think of all of the people on the field, in the stands, and what the field looks like. If we were to relate this scenario to the business world, the football would represent the product and the marketer would be one of the players on the home team. Of course, the goal is to score a touchdown and win the game. But there are a lot of other players on the field as well, and each one of those has some impact on whether or not the ball gets past the goal line.

Question 15

actors in the immediate environment

Answer 15

INTERMEDIARIES
Intermediaries help get the product to customers and can help fulfill functions such as sales and distribution. The chapter on distribution listed several types of intermediaries, including wholesalers, retailers, agents, brokers, and dealers. While conflict can occur with and between intermediaries, it’s important to take time to find intermediary partners that are a good fit for a company.

EMPLOYEES
Employees affect everything from product sales to customer service. And as discussed in the section on services marketing, the employees are sometimes responsible for the product itself.

SHAREHOLDERS
Shareholders are investors in a company and have a stake and even influence in the decisions that are made. In fact, for many marketers, part of their job is to communicate how well a product or company is doing to the shareholders.

CUSTOMERS
Of all of the actors in the immediate environment, the customer is the main focus of the company. Not only do customers influence the purchases of other customers in the market (by word of mouth), but the wants and needs of the customer are the very starting point for marketing

COMPETITORS
The actions of competitors can shape a marketer’s strategy. Powerful competitors in a market can even set the price of a particular product or service. They can also validate your product ideas, help educate a target market, and drive product innovation.

SUPPLIERS
Suppliers directly influence a company. If suppliers increase prices, then the marketer must decide whether or not to increase prices as well to maintain a certain profit margin. The marketer must also make sure that suppliers maintain a certain quality level. If the supplier produces sub-par products, then that affects customer satisfaction and brand image.

Question 16

the external environment and an explanation

Answer 16

in the image: marketing straight to the economic, political, legal, technological, environmental and social factors

Think of the football game illustration again. If the immediate environment actors are the players on the field, then the external environment is what surrounds the field. If it rains or if the temperature reaches 100 degrees Fahrenheit, then that affects the ability of all of the players and shifts their strategies. If a football association makes new rules for the game, then all teams change game plans to match the newly created rules.

Question 17

external environment forces

Answer 17

Political
Economic
Social
Technological
Legal
Environmental (Note: some sources call this the natural environment category)

PESTLE

Question 18

external economic forces explained and examples: political

Answer 18

Political forces cover the stability and general state of politics in the region. The political environment is especially important to note when both marketing internationally and when gauging the changes in the domestic environment as the political stability of a country can affect the risk level of doing business there

Examples of Political Forces:
Political stability in general
Trade agreements
Tariff policy
Tensions between domestic political groups

Question 19

external economic forces explained and examples: economic

Answer 19

The economic forces in the external environment include all factors that influence the wealth or buying power of consumers, including inflation, income, employment, interest rates, and productivity.
It is probably obvious why some of these factors are important and influence purchasing; if a consumer does not have the income to afford a product, then they will not purchase it.

Examples of Economic Forces:
Per capita Gross Domestic Product (GDP) in a country
Disposable income per capita
The prime interest rate
The employment rate
Exchange rates
Consumer confidence: (The Conference Board, an organization that promotes business leader development, generates The Consumer Confidence Survey, which “reflects prevailing business conditions and likely developments for the months ahead. This monthly report details consumer attitudes and buying intentions, with data available by age, income, and region.”

Question 20

external economic forces explained and examples: social

Answer 20

• The social forces in the external environment include demographic characteristics and the culture of the population, including cultural values and personal values. The social forces in the environment represent the very market — and target market — itself. This force is the customer base.
• If the demographics of the market as a whole change, then this changes the very makeup and viability of the market segments. For instance, if one is marketing to young married couples and fewer couples decide to get married, then the marketer’s target market group decreases in size.

Examples of Social Factors:
(Demographic) age distribution of the population, population growth
(Demographic) marital status and average age of first marriage
Generational differences in consumption
Religion and faith
(Cultural and personal values) work ethic, environmental sustainability
Job mobility preference (tendency to stay at one job or change jobs often)
Cultural values such independence / individualism versus a team orientation; a tendency toward indulgence or restraint (Note that a framework called Hofstede’s cultural dimensions is a great resource for in-depth research on how cultural values affect members of a country.)

Question 21

external economic forces explained and examples: technological

Answer 21

The technological forces include anything that affects innovation, including technological advances, hardware and software capabilities, and the state of learning in general.
Innovation in technology over the last fifty years has changed almost every aspect of business. Technological changes are constantly shaping marketing, from how marketers collect consumer insight research, to how the product is produced, stored, distributed, purchased, and delivered to the customer. It is a rapidly shifting landscape which marketers need to be aware of. Listed below are just a few of the overarching themes and trends that mark the technological landscape and how they are affecting marketing.

Examples of Technological Factors:
Computer processing speed
Wireless capabilities
Automation capabilities
Size of processor chips
Cell phone functionality

Question 22

external economic forces explained and examples: legal

Answer 22

Legal forces include the regulatory systems that affect business at the local, regional, national, and international levels. A government’s legal decisions can have a widespread impact on the region’s policies. This is true for business policies at both local and national levels. Legal forces influence how business must be conducted.

Examples of Legal Forces:
Health and safety laws
Regulations for business formation
Employment laws
Antitrust laws against monopolies
Intellectual property, trademark, copyright law

Question 23

external economic forces explained and examples: environmental (natural)

Answer 23

The environmental force of the environment includes elements of the climate, weather, or natural resources that affect production, purchasing, or other economic activity.
The natural environment can affect the supply of raw materials to the manufacturer, which eventually affects the product cost of goods sold. Other natural factors such as weather patterns especially affect the marketing and sale of services. For instance, unexpected weather patterns can affect tourism sales and attendance at sporting events, festivals, and even outdoor shopping areas. As an example, if it doesn’t snow, then ski resorts won’t have revenue from skiers.
Climate change alters natural habitats and the resources and raw materials that come from those habitats. Listed below are a few examples of natural environment events and their impact on the business ecosystem.

Examples of Natural Forces:
Raw materials available
Weather patterns
Terrain of area
Natural disasters such as fires, hurricanes, floods, or tornadoes
Climate and / or climate change

Question 24

environmental scanning

Answer 24

Environmental scanning is the process of gathering and interpreting data in the immediate and external environments to identify possible opportunities and threats and to develop strategic plans from them.

Question 25

united states consumer sentiment has done what since 2008?

Answer 25

it has increased ever since 2008
decreased only for a short time (2012)

Consumer sentiment is an aggregate expression of attitudes, feelings, values, motivations and behaviors of people within a particular market.

Question 26

SWOT analysis

Answer 26

One framework a marketer can use as a tool when environmental scanning is called the SWOT analysis. The letters in SWOT stand for Strengths, Weaknesses, Opportunities, and Threats. This gives a marketer a good overall picture of a company’s or product’s situation in the environment.

Strengths
These are internal attributes of a company or product that give it a competitive advantage or superior position. These can include brand equity, product features, employee training and skill set, intellectual property, industry knowledge, industry relationships, and more.

Weaknesses
These are internal deficiencies in the company or product that are potential problem areas. These can include product attributes that the consumers see as subpar, cash flow or funding problems, staffing or training shortcomings, and more.

Opportunities and Threats
Opportunities and threats are both externally focused. Opportunities are situations that occur in the environment that a firm can take advantage of. Threats, on the other hand, are situations in the environment that could have a negative impact on the company or product.

Question 27

process for scanning the external environment

Answer 27

1. Observe
2. Identify trends and patterns
3. Interpret
4. Predict
5. Analyze
6. Strategize

Scanning the external environment relates directly to the forces in the external environment, PESTLE, that were covered earlier. Marketers should proactively scan relevant marketing environment forces for potential opportunities and threats. They should also proactively compile data to find trends, and beyond that, drivers of change. (A trend is a pattern, while a driver is a factor that is causing change or behavior.)

Question 28

steps for scanning the external environment (explained with greater detail)

Answer 28

1. OBSERVE (what is happening) in each of the external environment categories of PESTLE.
2. IDENTIFY TRENDS AND PATTERNS relevant to your company and industry.
   Scan customer behavior to detect future trends
   Look toward the innovators, thought leaders, and influencers — those who adopt a product early on in the product life cycle. Those who try things before everyone else. What are they doing? They could be the predictors of future mass market consumption.
3. INTERPRET why this is happening.
   Ask: What underlying forces are driving this trend?
4. PREDICT what will happen because of this trend.
   Ask: Will this trend continue in the same direction?
   Ask: How will buyer behavior change?
   Ask: How will the trend affect the immediate environment? How will this affect our competitors, suppliers, and intermediaries?
   Ask: Is this trend an opportunity or a threat?
5. ANALYZE how your strengths and weaknesses relate to these future changes.
   Ask: Do we have the competitive positioning to take advantage of this opportunity?
   Ask: Will these trends cause a threat to us because of an area of weakness?
6. STRATEGIZE how you can take advantage of opportunities and prepare for threats.
   Ask: How do we deal with upcoming threats?
   Ask: Is this opportunity within our core competency? If not, do we need to diversify?
   Ask: What do we need to do now to be ahead of the game in one year, two years, five years?

Question 29

Questions to ask for specific external environmental forces of PESTLE:

Answer 29

POLITICAL: What upcoming elections or legislation might affect the product, project, marketing, or business in general?

ECONOMIC: How might economic trends affect consumer buying power?

SOCIAL: What cultural trends might affect consumption tastes? What demographic groups are growing or shrinking and how might this affect target markets or potential target markets?

TECHNOLOGICAL: What might new technology change about how customers purchase? How might it make the marketing process or company more efficient? What product characteristics might it make possible?

LEGAL: How might these new laws or potential legislation affect us and our competitors?

ENVIRONMENTAL: What is happening in the environment that might affect raw materials or demand for the product or service?