SCANNING THE MARKETING ENVIRONMENT CHAPTER 3

FIGURE 3-1 Environmental forces affecting the organization, as well as its suppliers and customers

SOCIAL FORCES Demographics The Population Trend Mature household The Baby Boom, Generation X, and Generation Y Baby boomers Generation X Generation Y Name some examples of demographics

Key US Demographic Trends Changing Age Structure Population is aging; many divisions Changing American Family Later marriage, fewer children, working women, and nontraditional households Geographic Shifts Moving to the Sunbelt, suburbs, “micropolitan areas” Better-Educated & More White-Collar Increased college attendance and white-collar workers Increasing Diversity 72% Caucasian, 13% African-American, 11% Hispanic & 3% Asian

Group Discussion Identify a company that has done a good job of reacting to: Baby Boomers, or Generation X, or Generation Y What did the company do well? Compare this company to one that has done a poor job. What did they do poorly? Can you see how demographics can affect a company. External force that the company can not change, but must work with.

Social Forces The American Family Population Shifts Blended family Population Shifts Racial and Ethnic Diversity

Social Forces Regional Marketing Culture The Changing Attitudes and Roles of Women Changing Values Value consciousness

1. Explain the term regional marketing. Concept Check 1. Explain the term regional marketing. A: A strategy of developing marketing plans to reflect specific area differences in taste, perceived needs, or interests.

2. What are the marketing implications of blended families? Concept Check 2. What are the marketing implications of blended families? A: Products may have to be redesigned to reflect this societal change, such as Hallmark creating cards for step-parents, step-siblings, etc.

Economic Forces Macroeconomic Conditions

Economic Forces Gross Income Total amount of money made in one year by a person, household or family unit Disposable Income Money left over after paying taxes Discretionary Income Money that remains after paying for taxes and necessities

Technology of Tomorrow Electronic Business Technologies Technological Forces Technology of Tomorrow Electronic Business Technologies Marketspace Electronic commerce Internet and World Wide Web Commercial online services Intranet Extranets

Alternate Forms of Competition Competitive Forces Alternate Forms of Competition Pure competition Monopolistic competition Oligopoly Monopoly Components of Competition Barriers to Entry Existing Competitors and Substitutes

FIGURE 3-E Continuum of competition

FIGURE 3-F The five competitive forces

Concept Check 1. What is the difference between a consumer’s disposable and discretionary income? A: Disposable income is the money a consumer has left after paying taxes to use for food, clothing, and shelter. Discretionary income is the money that remains after paying for taxes and necessities.

2. In pure competition there are _______ number of sellers. a large Concept Check 2. In pure competition there are _______ number of sellers. a large

Protecting Competition Product-Related Legislation Regulatory Forces Protecting Competition Product-Related Legislation Company Protection Consumer Protection Consumerism Both Company and Consumer Protection

Regulatory Forces Pricing Related Legislation Distribution-Related Legislation Advertising and Promotion-Related Legislation Control Through Self-Regulation

Environmental Scanning The process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends is called environmental scanning.

Social Forces The social forces of the environment include the demographic characteristics of the population and its values.

Demographics Describing the population according to selected characteristics such as their age, gender, ethnicity, income, and occupation is referred to as demographics.

Mature Households Mature households are headed by people over 50 years old and represent the fastest-growing age segment in the population.

Baby Boomers The generation of children born between 1946 and 1964 is know as the baby boomers.

Generation X Generation X includes the 15% of the U.S. population born between 1965 and 1976.

Generation Y Generation Y refers to Americans born after 1976, the year that many baby boomers began having children.

Blended Family A blended family is formed when divorced people remarry and merge into a single household.

Regional Marketing Regional marketing focuses on developing marketing plans to reflect specific area differences in taste preferences, perceived needs, or interests.

Culture Culture incorporates the set of values, ideas, and attitudes of a homogenous group of people that are transmitted from one generation to the next.

Value Consciousness Value consciousness is the concern for obtaining the best quality, features, and performance of a product for a given price.

Economic Forces The economy pertains to the income, expenditures, and resources that affect the cost of running a business and household.

Gross Income The total amount of money made in one year by a person, household, or family unit is referred to as gross income.

Disposable Income Disposable income is the money a consumer has left after paying taxes to use for food, shelter and clothing.

Discretionary Income Discretionary income is the money that remains after paying for taxes and necessities.

Technology Technology refers to inventions or innovations from applied science or engineering research.

Marketspace Marketspace is an information- and communication-based electronic exchange environment mostly occupied by sophisticated computer and telecommunication technologies and digitized offerings.

Electronic Commerce Any activity that uses some form of electronic communication in the inventory, exchange, advertisement, distribution, and payment of goods and services is often called electronic commerce

Internet The Internet is an integrated global network of computers that gives users access to information and documents.

World Wide Web The World Wide Web is part of the Internet that supports a retrieval system that formats information and documents into Web pages.

Commercial Online Services Commercial online services offer electronic information and marketing services to subscribers who are charged a monthly fee.

Intranet An Intranet is an Internet/Web based network used within the boundaries of an organization.

Extranets Extranets use Internet-based technologies to permit communication between a company and its suppliers, distributors, and partners.

Regulation Regulation consists of restrictions state and federal laws place on business with regard to the conduct of its activities.

Consumerism Consumerism is a “grassroots” movement to increase the influence, power, and rights of consumers in dealing with institutions.

Competition Competition refers to the alternative firms that could provide a product to satisfy a specific market’s needs.

Barriers to Entry Barriers to entry are business practices or conditions that make it difficult for new firms to enter the market.

Self-Regulation In self-regulation an industry attempts to police itself.