CHAP 4 MARKETING ENVIRONMENT Flashcards
External environment of marketing
A target market is a group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges. Instead, managers react to changes in the external environment and attempt to create a more effective marketing mix. Then marketing managers can create a marketing mix to effectively meet the needs of target customers.
Social factors that affect marketing
Social change is perhaps the most difficult external variable for marketing managers to forecast, influence, or integrate into marketing plans. Social factors include our attitudes, values, and lifestyles. Component lifestyles increase the complexity of consumers’ buying habits. Social media are making profound changes in the way people obtain and consume information—consumers are interacting; sharing beliefs, values, ideas, and interests; and, of course, making purchases at a dizzying rate. Marketers have learned that social media are not like network television, where a message is pushed out to a mass audience. Instead, social media enable firms to create conversations with customers and establish meaningful connections. In other words, social media marketing can humanize brands.
The importance of current demographic trends
Another uncontrollable variable in the external environment—also extremely important to marketing managers—is demography, the study of people’s vital statistics, such as age, race and ethnicity, and location. Demographics are significant because the basis for any market is people.
The importance of growing ethnic markets
The American demographic profile is rapidly changing as racial and ethnic groups continue to grow. The minority population today is about 118 million. By 2050, around one in three U.S. residents will be Hispanic. The United States will flip completely to a majority-minority makeup in 2035, meaning that whites of European ancestry will make up less than 50 percent of the population.
Consumer and marketer reactions to the state of the economy
In addition to social and demographic factors, marketing managers must understand and react to the economic environment. The three economic areas of greatest concern to most marketers are consumers’ incomes, inflation, and recession. In recent years, U.S. incomes have risen at a slow pace. When income is high relative to the cost of living, people have more discretionary income. That means they have more money to spend on nonessential items (in other words, on wants rather than needs). During a time of inflation, businesses seeking to increase their profit margins can do so only by increasing their efficiency. During times of recession, the gross domestic product falls for two consecutive quarters. By 2008, the recession had spread around the globe.
Impact of technology on a firm
Technological success is based upon innovation, and innovation requires imagination and risk taking. Bringing new technology to the marketplace requires a corporate structure and management actions that will lead to success. The United States excels in basic research and, in recent years, has dramatically improved its track record in applied research. Innovation is increasingly becoming a global process. Without innovation, U.S. companies can’t compete in global markets.
Political and legal environment of marketing
Business needs government regulation to protect innovators of new technology, the interests of society in general, one business from another, and consumers. Some key federal laws that affect marketing are the Sherman Act, Clayton Act, Federal Trade Commission Act, Robinson–Patman Act, Wheeler–Lea Amendments to the FTC Act, Lanham Act, Celler–Kefauver Antimerger Act, Foreign Corrupt Practices Act, Federal Food and Drug Act, Federal Hazardous Substances Act, Kefauver-Harris Drug Amendment, Consumer Credit Protection Act, Child Protection and Toy Safety Act, Public Health Smoking Act, Poison Prevention Labeling Act, National Environmental Policy Act, Public Health Cigarette Smoking Act, Consumer Product Safety Act, Child Protection Act, Children’s Online Privacy Protection Act, Aviation Security Act, Homeland Security Act, Do Not Call Law, CAN-SPAM Act, Credit Card Act, Restoring American Financial Stability Act, Patient Protection and Affordable Care Act, and Hart–Scott–Rodino Act. Many laws, including privacy laws, have been passed to protect the consumer as well. The Consumer Product Safety Commission, the Consumer Financial Protection Bureau (discussed in Section 4-7a), the Federal Trade Commission, and the Food and Drug Administration are the four federal agencies most directly and actively involved in regulating marketing activities.
The basics of foreign and domestic competition
The competitive environment encompasses the number of competitors a firm must face, the relative size of the competitors, and the degree of interdependence within the industry. Management has little control over the competitive environment confronting a firm. Many foreign competitors also consider the United States to be a ripe target market. In the past, foreign firms penetrated U.S. markets by concentrating on price, but the emphasis has switched to product quality
