1. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University 3 - 1 CHAPTER 3 Scanning the Marketing Environment

2. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University After reading this chapter you should be able to: Understand how environmental scanning provides information about social, economic, technological, competitive, and regulatory forces. Explain how social forces such as demographics and culture and economic forces such as macroeconomic conditions and consumer income affect marketing. Describe how technological changes can affect marketing. 3 - 2

3. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University After reading this chapter you should be able to: Understand the forms of competition that exist in a market, key components of competition, and the impact of competition on corporate structures. Explain the major legislation that ensures competition and regulates the elements of the marketing mix. 3 - 3

4. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Environmental Scanning in the New Millennium The business environment is constantly changing. What may have been true three years ago is now no longer certain or even may have disappeared completely. Environmental scanning is therefore crucial for any business. This is not just in the start up phase, but on-going. There are five primary environmental influences a marketer should be concerned about: 1.Social 2.Economic 3.Technological 4.Competitive 5.Regulatory 3 - 4

5. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Influence of Environmental Factors on Marketing 3 - 5

6. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Social Forces - Demographics Social forces include the demographic characteristics of the population and its values. Changes in these forces can have a dramatic impact on marketing programs. Demographics is describing the population according to characteristics such as age, gender, ethnicity, income and occupation. The Australian population over the last 30 years has become more ethnically diverse, and is increasingly living in non-traditional families. Australia’s population is now well over 21 million, increasing from 10 million in only 48 years. 3 - 6

7. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University 3 - 7 Olay Ad Which population group is this advertiser trying to reach?

8. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Social Forces – The Baby Boom, Gen X, Gen Y and Gen Now Apart from changing demographics, generational change can also affect marketers. Marketers have defined generations into different categories according to the era they were born into. 3 - 8

9. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Social Forces - Culture Culture can also be a powerful social force on marketing programs. Culture includes the set of values, ideas and attitudes that are learned and shared among members of a group. Culture in Australia is always changing, and the Australian culture of BBQ’s, meat pies and kangaroo’s is a thing of the past. Australia is one of the most competitive markets in the world and Australians always rank as amongst the hardest working employees. Australia is still to many, the land of the lucky country. 3 -3 - 3 - 9

10. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Hiving Hiving refers to social activities that bring people into contact with each other around a central home base. As an example of this in practice, we are now likely to spend thousands of dollars on a home theatre system instead of going to the local cinema. Sales of associated products, such as widescreen TV’s, DVD’s, DVD Recorders and even cinema style recliners have boomed in recent times. We play computer games online against millions of other competitors, and spend hours every month on Facebook or MySpace. Hiving has definitely changed many marketing programs for products associated with this social change. 3 - 10

11. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Climate Change Climate change is increasingly having an impact on marketing programs. All around the world companies are changing their marketing programs to be more environmentally friendly. Many companies now sell ‘green’ products, such as hybrid cars or green power, or allow consumers the choice to carbon offset. Global warming has also seen a boom in sales of products such as air conditioning. Source:http://www.actewagl.com.au/greenchoic e/, viewed January 28 2008 3 - 11

12. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.Explain the term hiving. 2.What are the marketing implications of racial and ethnic diversity in Australia and New Zealand? 3.What is global warming? Give an example of how it may affect the marketing of a product? 1. Hiving refers to social activities that bring people into contact with each other around a central home base. 2. The marketing implications of racial and ethnic diversity has been a change in the way some products, such as food, are marketed. 3. Global warming is an increase in temperatures around the world. Marketing of cars now focuses on fuel efficiency and recycling, and less on engine size and power as in the past. 3 - 12

13. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Economic Forces Economic forces pertains to the income, expenditures and resources that affect the cost of running a business or household. Key economic indicators marketers consider are disposable income, or how much money is left to spend after taxes, along with discretionary income. Discretionary income is the money that remains after paying for taxes and the necessities. Marketers also consider the impact of inflation, interest rates and consumer confidence. It is also worth knowing what products prices are rising or falling faster than inflation. 3 - 13

14. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Reserve Bank of Australia The Reserve Bank is Australia’s central bank. It is an important in the fiscal management of the Australian economy through its power to raise or lower interest rates. It’s website has lots of useful resources and is well worth a visit. www.rba.gov.au

15. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Technological Forces Everyone in this room uses the internet every day. That alone says how powerful the impact of technological forces are in our society and on consumers. However, it is not just the internet that has changed our way of doing business. Electronic commerce also means computers now control nearly every aspect of purchasing and logistics in every major company in Australia. Technology also depreciates quickly due to the rapid degree of change in these products. DVD’s have quickly killed the VCR. CD’s are dying because of MP3’s. 3 - 15

16. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Technology’s Impact on Customer Value This rapid change in technology and technology related products has also impacted upon customer value. When DVD recorders were first introduced into Australia in 2001 their price was $3000. Now you can get one for below $500. DVD’s themselves have dropped in price from $30 for one disc in 2001 to 50c now. Marketers need to be aware of how technology can impact upon current and future customers perspective of value of their product. 3 - 16

17. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Electronic Business Technologies and the Internet As we discussed earlier everyone uses the internet. The internet has made the modern consumer the most powerful and knowledgeable consumer ever. Thanks to Google we can find out anything and everything we want to know about a product we want. Companies also use intranets for internal marketing activities. Extranets have been set up between some companies as this speeds up purchasing and shipping of products. Extranets are used extensively in the FMCG sector. 3 - 17

18. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Woolworths Extranets Woolworths uses extranets with several large suppliers to ensure that it’s shelves are always stocked with the products you want when you want them. 3 - 18

19. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Competitive Forces Competition in an environmental scan refers to the alternative firms that could provide a product to satisfy a specific market’s needs. The four basic types of competition that a marketer will come across are: 1.Pure competition 2.Monopolistic competition 3.Oligopoly 4.Monopoly 3 3 - 19

20. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Regulatory Forces All business decisions are influenced either directly or indirectly by regulation. Regulation is the restrictions governments place on business with regard to its activities. In Australia there are two major pieces of legislation that impact upon marketers: the Trade Practices Act 1974 (Cth) and state based Fair Trading Acts. The Trade Practices Act is administered by the Australian Competition and Consumer Commission (ACCC) and by Fair Trading departments at a state level. These acts are constantly changing so all marketers need to keep up to date with consumer legislation at all times. 3 - 20

21. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Anti-Competitive Practices Part IV of the Trade Practices Act deals with anti-competitive conduct. This part is also constantly undergoing change so please check the ACCC website or the Act itself to ensure that you know the current law. Some of the areas that are dealt with by Part IV include: –Market Sharing –Misuse of Market Power –Exclusive Dealing –Price Discrimination –Predatory Pricing –Price Fixing –Resale Price Maintenance 3 - 21

22. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University ACCC The ACCC website (www.accc.gov.au) provides excellent consumer and business advice across many industries.www.accc.gov.au It is worth paying a visit too and educating yourself about your rights as a consumer, including if you can take back that dress that isn’t the right colour! Oooops! 3 - 22

23. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Australian Consumers Association The Australian Consumers Association is Australia’s largest consumer rights organisation. They have a large influence on government regulations in the area of consumer affairs. A visit to their website or reading their magazine is always useful for any consumer. 3 - 23

24. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.What is the difference between a consumer’s disposable and discretionary income? 1. Disposable income is the money left after paying taxes for food, clothing, and shelter. Discretionary income is the money that remains after paying taxes for necessities. 2. In pure competition there are a ______ number of sellers. 2. large 3 - 24

25. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University 3 - 25 1. What is the difference between a consumer’s disposable and discretionary income? A. Disposable income is the money left after paying taxes for food, clothing, and shelter. Discretionary income is the money that remains after paying taxes for necessities. Concept Check

26. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University 2. In pure competition there are a ______ number of sellers large Concept Check 3 - 26

27. Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University 3. What is a network organisation? A : An organisation that uses the Web as a management tool, giving everyone in the organisation the ability to access and process information at any time and from any location. Concept Check 3 33 3 3 - 27