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LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 3, YOU SHOULD BE ABLE TO: Explain how environmental scanning provides information about social, economic, technological, competitive, and regulatory forces. Describe how social forces such as demographics and culture can have an impact on marketing strategy. LO2 Discuss how economic forces such as macroeconomic conditions and consumer income affect marketing. LO3 3-2

Describe how technological changes can affect marketing. LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 3, YOU SHOULD BE ABLE TO: LO4 Describe how technological changes can affect marketing. Discuss the forms of competition that exist in a market and key components of competition. LO5 Explain the major legislation that ensures competition and regulates the elements of the marketing mix. LO6 3-3

WE LIVE IN EXCITING TIMES SAMSUNG ELECTRONICS 3-4

Explain how environmental scanning provides information about social, economic, technological, competitive, and regulatory forces. LO1 3-5

ENVIRONMENTAL SCANNING LO1 Environmental Scanning Tracking Environmental Trends Example: Coffee Marketers An Environmental Scan of Today’s Marketplace 3-6

FIGURE 3-1 Environmental forces affect the organization, its suppliers, and its customers 3-7

FIGURE 3-2 An environmental scan of today’s marketplace shows the many important trends that influence marketing 3-8

Describe how social forces such as demographics and culture can have an impact on marketing strategy. LO2 3-9

SOCIAL FORCES Social Forces Demographics World Population LO2 Social Forces Demographics World Population Asian Population 3-10

FIGURE 3-3 Changing distribution of the world population 3-11

DEMOGRAPHICS—GENERATIONAL COHORTS SOCIAL FORCES DEMOGRAPHICS—GENERATIONAL COHORTS LO2 Baby Boomers: 1946 - 1964 Generation X: 1965 - 1976 Generation Y: 1977 - 1994 Millennials: 1995 + Generational Marketing 3-12

Olay, Hyatt, and Motorola Which generational cohort is being reached? 3-13

DEMOGRAPHICS—THE ASIAN HOUSEHOLD SOCIAL FORCES DEMOGRAPHICS—THE ASIAN HOUSEHOLD LO2 3 and 2 Generation Households Single-person Households Blended Family 3-14

FIGURE 3-4 Household data of selected Asian Countries in 2006 Source: Euromonitor International 3-15

DEMOGRAPHICS—POPULATION SHIFTS SOCIAL FORCES DEMOGRAPHICS—POPULATION SHIFTS LO2 Migration to growth regions Migration from rural to urban areas Metropolitan areas in Asia 3-16

FIGURE 3-5 Migrant-contributing countries and migrant-receiving countries in Asia 3-17

FIGURE 3-6 Some metropolitan areas in Asia 3-18

DEMOGRAPHICS—RACIAL & ETHNIC DIVERSITY SOCIAL FORCES DEMOGRAPHICS—RACIAL & ETHNIC DIVERSITY LO2 Ethnicity Homogenous Heterogeneous Multicultural marketing program 3-19

FIGURE 3-7 Racial and ethnic breakdown of some countries in Asia 3-20

The Changing Attitudes and Roles of Men and Women SOCIAL FORCES CULTURE LO2 Culture The Changing Attitudes and Roles of Men and Women Asian Values Value Consciousness 3-21

Discuss how economic forces such as macroeconomic conditions and consumer income affect marketing. LO3 3-22

MACROECONOMIC CONDITIONS ECONOMIC FORCES MACROECONOMIC CONDITIONS LO3 Economy Inflation Recession Consumer Confidence 3-23

FIGURE 3-8 Real GDP growth of the world, the Asia-Pacific region, Japan, and China. 3-24

43 out of 52 markets declined FIGURE 3-9 The Nielsen Consumer Confidence Index (2H,2008) 2H 2008 Changes 1H08 vs.2H07 Changes 2H08 vs.1H08 Global average 84 84 43 out of 52 markets declined

ECONOMIC FORCES Gross Income Disposable Income Discretionary Income CONSUMER INCOME LO3 Gross Income Disposable Income Discretionary Income 3-26

FIGURE 3-10 Household gross income and disposable income in 2006 3-27

Describe how technological changes can affect marketing. 3-28

TECHNOLOGY OF TOMORROW TECHNOLOGICAL FORCES TECHNOLOGY OF TOMORROW LO4 Dramatic Technological Changes Nanotechnology High Definition TV Voice over Internet Protocol Services 3-29

What products might be replaced with these? 3-30

Impact on Customer Value TECHNOLOGICAL FORCES EFFECTS ON MARKETING LO4 Impact on Customer Value Plummeting Costs of Tech-Based Products New Products Developed Production of Existing Products Changed Recycling Precycling 3-31

Sunpower group enables customers to recover useful by-products and reduce pollution charges 3-32

ELECTRONIC BUSINESS TECHNOLOGIES TECHNOLOGICAL FORCES ELECTRONIC BUSINESS TECHNOLOGIES LO4 Marketspace Electronic Commerce Intranet Extranets 3-33

Discuss the forms of competition that exist in a market and key components of competition. LO5 3-34

ALTERNATIVE FORMS OF COMPETITION COMPETITIVE FORCES ALTERNATIVE FORMS OF COMPETITION LO5 Pure Competition Monopolistic Competition Oligopoly Pure Monopoly 3-35

COMPONENTS OF COMPETITION COMPETITIVE FORCES COMPONENTS OF COMPETITION LO5 Barriers to Entry Power of Buyers and Sellers Existing Competitors and Substitutes Small Businesses as Competitors 3-36

USING MARKETING DASHBOARDS Assessing Competition is a Key to Success The Effect of Price Reductions on Sales Increases 3-37

Explain the major legislation that ensures competition and regulates the elements of the marketing mix. LO6 3-38

Protecting Competition REGULATORY FORCES LEGISLATION LO6 Regulation Protecting Competition Fair Trade Commission of Japan – Anti Monopoly Act – Law Prohibiting Unfair Competition 3-39

Product-Related: Company Protection REGULATORY FORCES LEGISLATION LO6 Product-Related: Company Protection Patent Law Copyright Law Intellectual Property Office of Singapore – Patents Act (Cap 221) – Copyright Act (Cap 63) 3-40

Product-Related: Consumer Protection REGULATORY FORCES LEGISLATION LO6 Product-Related: Consumer Protection Nutritional Labeling Malaysian Food Regulations (1985) Consumers rights Consumerism 3-41

Product-Related: Company and Consumer Protection REGULATORY FORCES LEGISLATION LO6 Product-Related: Company and Consumer Protection Trademarks Registered trademarks e.g. Xerox U.S. Supreme Court: Trademark Colors 3-42

Kleenex, Band-Aid, and Q-Tips Are these becoming generic trademarks? 3-43

REGULATORY FORCES Pricing-Related Price Fixing LEGISLATION LO6 Pricing-Related Price Fixing Thailand – Price Fixing & Anti Monopoly Act (1979) Price Discounting 3-44

Distribution (Place)-Related REGULATORY FORCES LEGISLATION LO6 Distribution (Place)-Related Exclusive Dealing Requirement Contracts Exclusive Territorial Distributorships Tying Arrangement 3-45

Advertising and Promotion-Related REGULATORY FORCES LEGISLATION LO6 Advertising and Promotion-Related Deceptive, misleading or unfair Cease and Desist Order Corrective Advertising National Do Not Call Registry Self-Regulation 3-46