Chapter 3 Flashcards
environmental scanning
the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends
3 marketing environments
1) Macro
2)Micro
3) Internal
macro environment
Things that are outside of your control, the big picture
- 5 sources
5 Environmental Forces (Macro environment)
- Social Forces
- Economic Forces
- Technological Forces
- Regulatory Forces
- Natural Forces
social forces
the demographic characteristics of the population and its culture
demographics
describing a population according to selected characteristics such as age, gender, ethnicity, income, and occupation
The U.S. Population
It’s becoming larger, older, more diverse
4 Generational Cohorts
- Baby boomers
- Gen X
- Gen Y (millennials)
- Gen Z
Baby Boomers (1946-1964)
The 78 million people born during the baby boom, following World War II and lasting until the early 1960s
- retiring quickly/wealthiest generation
- Interest in health/fitness, retirement, housing, financial planning, appearance
- Also called “sandwich generation” because they balance obligations to their parents/children
Generation X (1965-1980)
- Self-reliant, supportive of racial/ethnic diversity, better educated than previous generation
-Lifestyles are a blend of caution, pragmatism, traditionalism - Makes less money than baby boomers
- Dominant force in many markets
- Spends more on food, housing, apparel, entertainment
- Also called “baby bust”: the number of children born each year was declining
Generation Y (Millennials) (1981-1996)
-Also called “Echo boom”: increasing births, baby boomers having children
- Music, sports, video games, computers, smartphones
- Interested in distinctive, memorable, & personal experiences
- work-life balance & purposeful work
- Strong, willed, passionate about environment, optimistic
Generation Z (1997-2010)
-hard-working, financially responsible, independent multitaskers, embrace diversity/inclusivity
- Natural look, social media, learn online
- Pays more for products if it promotes environmental issues, social justice, gender, equality
Blended family
one formed by merging two previously separated units into a single household (stepparents/stepchildren)
Multicultural marketing programs
combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races
Culture
the set of values, ideas, and attitudes that are learned and shared among the members of a group
Value consciousness
the concern for obtaining the best quality, features, and performance of a product or service for a given price that drives consumption behavior
Economic Forces
consist of the general economic conditions and trends - unemployment, inflation, interest rates, economic growth - that may affect an organization’s performance
Economy
pertains to the income, expenditures, and resources that affect the cost of running a business and household
2 Aspects of economic forces
- Macroeconomic view of the marketplace
- Microeconomic perspective of consumer income
Macroeconomic conditions
performance of economy based on indicators such as GDP, unemployment, price changes(inflation/deflation)
Inflationary economy
the cost to produce and buy products/services escalates as prices increase
Microeconomic consumer income
Consumers ability to buy is related to income
3 Types of Income
- Gross income
- Disposable income
- Discretionary income
Gross income
the total amount of money made in one year by a person, household, or family unit
Disposable income
the money a consumer has left after paying taxes to use for necessities such as food, housing, clothing, and transportation
Discretionary income
the money that remains after paying for taxes and necessities
-used for luxury items (cruises, etc)
index of consumer confidence
measures people’s attitudes toward the economy
Technological Forces
Outcomes of changes in the technology that managers use to design, produce, or distribute goods and services
Technology
inventions or innovations from applied science or engineering research
Technological changes
Authentication, technology, digital ledger, technology/block chain, AI, digital assistants, wearable technology
Ways technology impacts customer value
- Reduces Costs of products
- Improve the quality of products
- Provides new products that we’re not previously feasible
Marketspace
an information and communication based
electronic exchange environment mostly occupied by sophisticated computer and telecommunication technologies and digitized offerings
Electronic commerce (e-commerce)
the activities that use electronic communication in the inventory, promotion, distribution, purchase, and exchange of products and services
Internet of Things (IoT)
the network of products embedded with connectivity-enabled electronics
cord-cutting
choosing streaming services over cable television
Media Fragmentation
The impact of the internet and digital media on traditional media, such as newspapers and broadcast television. The addition of many new websites and social media divides or fragments the audience into smaller parts
Competition
alternative firms that could provide a product to satisfy a specific market’s needs
Factors that drive competition
- Barriers to Entry
- Power of buyers and suppliers
- Existing competitors and substitutes
- Barriers to Entry
Business practices/conditions that make it difficult for new firms to enter the market
Ex: capital requirements, advertising expenditures, product identity, distribution access, and the cost to customers of switching suppliers
- Power of buyers & suppliers
Powerful buyers exist when they are few in number, no switching costs, or the product represents a significant share of the buyers total cost.
Supplier gains power when product is critical to the buyer & when it has built up the switching costs
- Existing competitors & substitutes
Competition depends on industry growth
Competition is more evident in slow growth settings
Regulatory Forces
laws protecting competition, laws affecting marketing mix actions, self-regulation
Regulation
restrictions state and federal laws place on business with regard to the conduct of its activities
-Protects companies/consumers
Sherman Antitrust Act (1890)
Prevents development of monopolies
Clayton Act (1914)
Strengthened Sherman Antitrust Act
forbids certain actions that are likely to lessen competition, although no actual harm has yet occurred
Robinson-Patman Act (1936)
Prevents price discrimination among businesses
Product-related legislation
Copyright and trademark laws that protect companies; packaging and labeling laws that protect consumers
Lanham Act
provides trademark protection
Consumerism
a movement advocating greater protection of the interests of consumers
Pricing-Related Legislation
price fixing and price discounting
Price fixing (per se)
Courts see price fixing itself as illegal
Distribution-related legislation
- Exclusive Dealing (Can’t force someone to only sell your product)
- Requirement Contracts (Can’t force store to carry a product for a specific number of years)
- Exclusive Territorial Distributorship (manufacturer grants distributor the sole rights to sell a product in a specific geographical area)
- Tying Arrangement (Can force the store to sell other products as well from your company)
Advertising & promotion-related distribution
Closely monitored by the FTC
Federal Trade Commission (FTC)
Concerned with deceptive/misleading advertising & unfair business practices
Has the power to issue cease/desist orders & order corrective advertising
Food and Drug Administration (FDA)
regulates food and drug products sold to the public
Self-regulation
an alternative to government control where an industry attempts to police itself
Better Business Bureau (BBB)
A system of nongovernmental, independent, local regulatory agencies supported by local businesses that helps settle problems between customers and specific business firms
-trustworthy business
natural forces
The effects of nature such as wind, water or when something happens for no apparent reason because of the effects of gravity\
Energy, global warming, climate change
green marketing
marketing efforts to produce, promote, and reclaim environmentally sensitive products
Greenwashing
the exaggerated or false marketing of a product, good, or service as environmentally friendly
Micro environment
the actors close to the company that affect its ability to serve its customers - the company, suppliers, marketing intermediaries, customer markets, competitors, and publics
micro environment factors
1) consumers/customers
2) competitors
3) stakeholders
4) suppliers
5) channels
internal environment
the controllable elements inside an organization, including its people, its facilities, and how it does things that influence the operations of the organization
-Full control
internal environment factors
1) top management
2) personnel
3) other departments
