Marketing Instructor Abdel Fatah Afifi MA&T, MBA, PCT, ACPA 2 nd Semester 2009/2010

Afifi, UP, Marketing, 2nd Semester Chapter 3 SCANNING THE MARKETING ENVIRONMENT

Afifi, UP, Marketing, 2nd Semester L E A R N I N G O B J E C T I V E S After reading this chapter you should be able to: 1 Explain how environmental scanning provides information about social, economic, technological, competitive, and regulatory forces. 2 Describe how social forces such as demographics and culture and economic forces such as macroeconomic conditions and consumer income affect marketing. 3 Describe how technological changes can affect marketing. 4 Discuss the forms of competition that exist in a market, key components of competition, and the impact of competition on corporate structures. 5 Explain the major legislation that ensures competition and regulates the elements of the marketing mix.

Afifi, UP, Marketing, 2nd Semester Environmental forces affecting the organization, as well as its suppliers and customers

Afifi, UP, Marketing, 2nd Semester Scanning the Marketing Environment

Afifi, UP, Marketing, 2nd Semester Environmental Scanning and Environmental Management  Environmental Scanning  Environmental Scanning is the process of collecting information about the external marketing environment to identify and interpret potential trends  Environmental Management  Environmental Management involves marketers ’ efforts toward achieving organizational objectives by predicting and influencing the competitive, political-legal, economic, technological, and social-cultural environments.

Afifi, UP, Marketing, 2nd Semester The Competitive Environment  Competitive Environment  Competitive Environment: The interactive process that occurs in the marketplace among marketers of directly competitive products, marketers of products that can be substituted for one another, and marketers competing for the consumer ’ s purchasing power. Monopoly Deregulation movement Oligopoly

Afifi, UP, Marketing, 2nd Semester Directly Competitive Products Indirectly Competitive Products  Involves products than can be substituted for one another All Consumer Purchases  Occurs in the sense that all firms compete for the buyers ’ purchases Types of Competition

Afifi, UP, Marketing, 2nd Semester Should we compete? If so, in what markets should we compete? How should we compete? Developing a Competitive Strategy

Afifi, UP, Marketing, 2nd Semester  Time-based competition  Time-based competition is a strategy of developing and distributing goods and services more quickly than competitors Time-based competition

Afifi, UP, Marketing, 2nd Semester The Political-Legal Environment  Component of the marketing environment consisting of laws and interpretations of laws that require firms to operate under competitive conditions and to protect consumer rights.

Afifi, UP, Marketing, 2nd Semester Maintaining a Competitive Environment  Began in the late 19th century  Aimed at to maintaining a competitive environment by reducing the trend toward monopolies  Included:  Sherman Antitrust Act  Clayton Act  Federal Trade Commission Government Regulation

Afifi, UP, Marketing, 2nd Semester Regulating Competition  Began during the depression era of the 1930s  Meant to protect independent merchants against competition from larger chain stores Government Regulation

Afifi, UP, Marketing, 2nd Semester  Protecting Consumers  Began mainly in the 1960s  Increased focus on consumer protection  Newest regulatory frontier is cyberspace  Included:  Consumer product safety  Electronic Signature  Aviation security Government Regulation

Afifi, UP, Marketing, 2nd Semester  Environment Marketers must consider the economic environment of other nations Changes in foreign currency rates may affect marketing decisions Recessions in one part of the world may be offset by prosperity in another The International Economic

Afifi, UP, Marketing, 2nd Semester The Technological Environment  Represents the application of knowledge in science, inventions, and innovations to marketing. Applying technology helps Fidelity improve customer service

Afifi, UP, Marketing, 2nd Semester The Social-Cultural Environment  The relationship between marketing and society and its culture Garden Burger is a leader in marketing meatless products that satisfy demands of vegetarians and health-conscious consumers

Afifi, UP, Marketing, 2nd Semester  Importance in International Marketing Decisions The social-cultural context often exerts a more pronounced influence on marketing decision- making in the international sphere than in the domestic arena Importance in International Marketing Decisions

Afifi, UP, Marketing, 2nd Semester A social force within the environment designed to protect the consumer by exerting legal, moral, and economic pressures on business and government. John F. Kennedy ’ s Statement of Consumer Rights  The right to choose freely  The right to be informed  The right to be heard  The right to be safe Consumerism

Afifi, UP, Marketing, 2nd Semester  Ethical Problems in Marketing research Alleged invasions of personal privacy Gathering marketing information in exchange for money or free offers  Ethical Problems in Product Strategy Product quality Planned obsolescence Brand similarity Packaging Ethical Issues in Marketing

Afifi, UP, Marketing, 2nd Semester  Ethical Problems in Distribution Strategy Determining the appropriate degree of control over a channel Determining whether a company should distribute its products in marginally profitable outlets that have no alternative source of supply  Ethical Problems in Pricing Probably the most regulated aspect Most unethical pricing behavior is also illegal Ethical Issues in Marketing

Afifi, UP, Marketing, 2nd Semester  Ethical Problems in Promotional Strategy The source of the majority of ethical questions Ethically questionable personal selling  Gifts and bribes Questionable advertising Promotion of questionable features Questionable WWW related promotional practices Ethical Issues in Marketing

Afifi, UP, Marketing, 2nd Semester Social Responsibility in Marketing  Social Responsibility Marketing philosophies, policies, procedures, and actions that have the enhancement of society ’ s welfare as a primary objective

Afifi, UP, Marketing, 2nd Semester The Four-Step Pyramid of Corporate Social Responsibility 1. Philanthropy 2. Ethics 3. Legality 4. Economics

Afifi, UP, Marketing, 2nd Semester Traditionally concerned managers ’ relationships with customers, employees, and stockholders Extended to relations with government and the general public Today, corporate responsibility has expanded to cover the entire societal framework in the US and throughout the world Marketing ’ s Responsibilities

Afifi, UP, Marketing, 2nd Semester Ecology Planned obsolescence Pollution Recycling Green Marketing Marketing and Ecology

Afifi, UP, Marketing, 2nd Semester Consumer Income  The microeconomic trends in terms of consumer income are also important issues for marketers.  Having a product that meets the needs of consumers may be of little value if they are unable to purchase it.  A consumer ’ s ability to buy is related to income, which consists of gross, disposable, and discretionary components.

Afifi, UP, Marketing, 2nd Semester consumer ’ s ability to buy A consumer ’ s ability to buy is related to income, which consists of: 1. Gross, 2. Disposable, and 3. Discretionary components.

Afifi, UP, Marketing, 2nd Semester Gross Income The total amount of money made in one year by a person, household, or family unit is referred to as gross income

Afifi, UP, Marketing, 2nd Semester Disposable Income Disposable income, is the money a consumer has left after paying taxes to use for food, shelter, clothing, and transportation.

Afifi, UP, Marketing, 2nd Semester Discretionary Income discretionary income, is: The money that remains after paying for taxes and necessities. Discretionary income is used for luxury items.

Afifi, UP, Marketing, 2nd Semester Question What is the difference between a consumer ’ s disposable and discretionary income?